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Viper Energy Partners LP, a Subsidiary of Diamondback Energy, Inc., Announces Proposed Election to Change Tax Status From Pass-Through Partnership to a Taxable Entity
Viper does not expect this election to be taxable to Viper or its current unitholders, and Viper’s business model will not change. Viper also intends to continue to distribute all operating cash flow to unitholders on a quarterly basis consistent with its existing distribution policy and will look to continue to grow this distribution via both organic growth and accretive mineral acquisitions in oil-weighted basins. Viper believes this election will allow it to significantly expand its investor base, both in
Viper began evaluation of this action due to changes in
The Operating Subsidiary units and Class B Viper units owned by Diamondback will be exchangeable from time to time for Viper common units (that is, one Operating Subsidiary unit and one Class B Viper unit will be collectively exchangeable for one Viper common unit).
Diamondback, as the holder of a majority of the outstanding Viper common units, has approved the making of the election, which election and all other related transactions are expected to be effected on or after
Public unitholders will receive a final Schedule K-1 for the period from
“Viper’s tax status election will expand our investor universe to a broader range of investors, both domestic and international, who are looking for exposure to an oil and gas company that can grow at industry leading rates without spending any capital and maintaining 90% margins,” stated
Mr. Stice continued, “This decision was made after months of market and tax analysis, and we are very pleased that the relationship between Diamondback and Viper yet again allows Viper to differentiate itself from its peer group, both public and private. Viper will continue to grow its distributions organically via the significant undeveloped resource in its portfolio today and will also continue to be selective in acquiring high growth mineral assets in oil-weighted basins as opportunities present themselves. We feel there is significant opportunity ahead for Viper in the highly fragmented private mineral market because of the amount of private equity capital that has been deployed in the space over the last five years that will at some point require an exit.”
After the effectiveness of the tax status election and the completion of related transactions, the minerals business will continue to be conducted through the Operating Subsidiary, which will be taxed as a partnership for federal and state income tax purposes. This structure is anticipated to provide significant benefits to the business, including operational effectiveness, acquisition and disposition transactional planning flexibility, and income tax efficiency. We anticipate that all of these factors should collectively enhance the distributable cash flow to the Viper investors.
Viper is a limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in
Diamondback is an independent oil and natural gas company headquartered in
This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that Viper assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events, including specifically the statements regarding any pending, completed or future acquisitions discussed above. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Viper. Information concerning these risks and other factors can be found in Viper’s filings with the