Investor Presentation. February 2019

Transcription

1 Investor Presentation February 2019

2 Forward Looking Statements This presentation contains forward-looking statements within the meaning of the securities laws. All statements, other than statements of historical fact, included in this presentation that address activities, events or developments that Viper Energy Partners LP ( Viper, the Partnership, VNOM, we or our ) expects, believes or anticipates will or may occur in the future are forward-looking statements. The words believe, expect, may, estimates, will, anticipate, plan, intend, foresee, should, would, could, or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. However, the absence of these words does not mean that the statements are not forwardlooking. Without limiting the generality of the foregoing, these statements discuss future expectations, contain projections of results of operations or of financial condition or state other forwardlooking information and include statements with respect to, among other things, Viper s ability to make distributions on the common units and expectations of plans, strategies and objectives and anticipated financial and operating results of Viper. These statements are based on certain assumptions made by Viper based on management s expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Viper, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced in the Risk Factors section of Viper s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and in Viper s other filings with the Securities and Exchange Commission (the SEC ), risks relating to financial performance and results, current economic conditions and resulting capital restraints, prices and demand for oil and natural gas, availability of drilling equipment and personnel, availability of sufficient capital to execute our business plan, impact of compliance with legislation and regulations, successful results from our operators identified drilling locations, our operators ability to efficiently develop and exploit the current reserves on our properties, our ability to acquire additional mineral interests, our pending, completed or future acquisitions of mineral interests and other important factors that could cause actual results to differ materially from those projected. Any forward-looking statement speaks only as of the date on which such statement is made and Viper undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Non-GAAP Financial Measures Adjusted EBITDA is a supplemental non-gaap financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. Viper defines generally accepted accounting principles, or GAAP. Management believes Adjusted EBITDA is useful because it allows it to more effectively evaluate Viper s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of Viper s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company s financial performance, such as a company s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Viper defines cash available for distribution generally as an amount equal to its Adjusted EBITDA for the applicable quarter less cash needed for debt service and other contractual obligations and fixed charges and reserves for future operating or capital needs that the board of directors of Viper s general partner may deem appropriate. Viper s computations of Adjusted EBITDA and cash available for distribution may not be comparable to other similarly titled measures of other companies or to such measure in its credit facility or any of its other contracts. For a reconciliation of Adjusted EBITDA to net income (loss), please refer to Viper s filings with the SEC. Oil and Gas Reserves The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, and certain probable and possible reserves that meet the SEC s definitions for such terms. Viper discloses only estimated proved reserves in its filings with the SEC. Viper s estimated proved reserves as of December 31, 2016 contained in this presentation were prepared by Ryder Scott Company, L.P., an independent engineering firm, and comply with definitions promulgated by the SEC. Additional information on Viper s estimated proved reserves is contained in Viper s filings with the SEC. In this communication, Viper may use the terms resources, resource potential or potential resources, which the SEC guidelines prohibit Viper from including in filings with the SEC. Resources, resource potential or potential resources refer to Viper s internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques. Such terms do not constitute reserves within the meaning of the Society of Petroleum Engineer s Petroleum Resource Management System or SEC rules and does not include any proved reserves. Actual quantities that may be ultimately recovered by the operators of Viper s properties will differ substantially. Factors affecting ultimate recovery include the scope of the operators ongoing drilling programs, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of potential resources may change significantly as development of our properties by our operators provide additional data. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production, decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. 2

3 Viper: Investment Highlights 2018 Year In Review Visible 2019 Production Growth Differentiated Acquisition Strategy 4Q 18 distribution of $0.51, up 11% year over year; Company record full year distribution of $2.17 Increased mineral footprint by 55% and grew production by 57% in 2018 Completed first drop down transaction as well as conversion to a taxable entity Current yield remains ~6.8% (1) with multiple years of embedded organic growth remaining from undeveloped assets in premier shale plays; 4Q 17 to 4Q 18 organic growth rate of ~30% 2018 Annualized Return on Average Capital Employed of 15.6% 4Q 18 production of 20,191 Boe/d (69% oil), up 10% from 3Q 18 and 63% year over year Full year 2019 production guidance of 20,000 23,000 Boe/d; implies 24% annual organic growth 1H 2019 production guidance of 20,500 22,000 Boe/d; up 5% from 4Q rigs currently running and 619 active horizontal drilling permits on Viper s acreage Continue to use scale and expertise in the Permian Basin to consolidate the fragmented minerals market Deals focus on net asset value, yield, production and acreage accretion; expected to be immediately accretive to 2019 cash flow and production per million units Aim to acquire concentrated acreage positions with high NRIs and clear visibility to development under competent operators, with Diamondback acreage being core focus Acquired 5,281 net royalty acres for ~$615 million across 88 transactions during 2018 Further Sizeable Drop Down Opportunities Diamondback still owns an additional 1,186 net royalty acres in Pecos and Reeves counties; ~85% operated by Diamondback Including NRIs >75% related to its acquisition of Ajax, Diamondback also owns ~915 net royalty acres in the Midland Basin, primarily in Andrews, Martin and Upton counties Diamondback s acquisition of Energen contributes a further 266 net royalty acres as well as ~$60-80 million of cash flow related to a company wide NRI that is greater than 75% Remaining Diamondback assets expected to be dropped down after beginning active development with near-term cash flow visibility Viper s Continued Volume and Distribution Growth is a Direct Result of Organic Growth on Legacy Assets and Accretive Acquisitions Source: Partnership data and filings. Data as of 12/31/2018 unless otherwise noted. (1) Yield based on full year 2018 distribution and closing price as of 2/4/

4 Viper Energy Partners Overview Royalty ownership provides FCF advantage: Full year 2018 Return on Capital Employed of 15.6% Sustained EBITDA margin of >90% since 2014 Distributes 100% of available cash flow to unitholders Unlike working interest E&Ps, Viper does not require capital investment to grow Differentiated acquisition strategy: Focused on growing production on a per unit basis Viper buys assets with years of visible production growth Focused on consolidating the Permian Basin, which has proven to have the most growth in North America due to superior single-well economics 40 active rigs and 619 active horizontal drilling permits on Viper s acreage (1) Active Hz. Rigs on Viper s Acreage by Operator VNOM royalty acreage FANG royalty acreage FANG acreage Viper Mineral Assets PRIVATE 9 CXO 4 FANG 12 CPE 3 APA 2 OTHER 10 APC: 1 BP: 1 COP: 1 DVN: 1 PDCE: 1 PE: 1 ROSE: 1 SM: 1 WPX: 1 XOM: 1 Market Snapshot (2) NASDAQ Symbol: VNOM Market Cap: $3,964 million Net Debt: $388MM / Liquidity: $167 million Enterprise Value: $4,352 million Unit Count: 124 million Distribution Yield: 6.8% (FY 18) Net Royalty Acreage: 14,841 (37% FANG-operated) Source: Partnership data and filings. Financial data as of 12/31/2018 unless otherwise noted. (1) DrillingInfo as of 1/23/2019. Permits represent only active permits filed within the past 6 months that have not yet started drilling. (2) All market data based on VNOM s unit closing price on 2/4/

5 High Quality Growth Focused on Per Unit Returns Mineral acres provide organic growth without spending capital on drilling or operating expenses Acquisitions further contribute to accretive growth Operators have significant inventory and undeveloped resource remaining on Viper s current asset base, providing years of embedded organic growth at no additional cost Net Production (Boe/d) (Boe/d per mm units) 17, , ,432 $0.20 5, ,300 At IPO FY '15 FY '16 FY '17 FY '18 At IPO FY '15 FY '16 FY '17 FY '18 Per unit (in mm) Proved Developed Reserves Net Royalty / Mineral Acres (1) (MMBoe) (MMBoe per mm units) (Net royalty acres) (Net acre per mm units) , ,172 4,265 6,404 10, At IPO FY '15 FY '16 FY '17 FY '18 At IPO FY '15 FY '16 FY '17 FY '18 At IPO FY '15 FY '16 FY '17 FY '18 At IPO FY '15 FY '16 FY '17 FY '18 Per unit (in mm) Per unit (in mm) Viper s Annual Total Production and Distribution per Unit are Up 57% and 52% Year Over Year Source: Partnership data and filings. (1) Net royalty acres reflect all acquisitions closed through 12/31/

6 Year Over Year Growth and Forward Outlook Daily Production Net Royalty Acres Proved Reserves Adjusted EBITDA Distributions per Unit Year Over Year Growth ,023 9, $158 $ ,275 14, $267 $ Production and Cost Outlook Targeting ~25% y/y organic production growth in H 19E FY 19E MBoe/d $ $10.50 DD&A Under $1.00 Cash G&A $ $0.65 Non-Cash G&A Illustrative Impact of Increasing Oil Realizations on Annualized DPU Using Production Guidance (1) (per unit, annualized) $2.17 Low End of Guidance $2.20 $1.91 $2.44 $2.12 $2.74 $2.38 High End of Guidance $2.93 $2.55 $3.17 $2.76 $3.42 $ % 15.6% ROACE FY18 Actual (2) $45.00 $50.00 $56.13 $60.00 $65.00 $70.00 Realized Oil Price ($/Bbl) Source: Partnership data and filings. Financial data as of 12/31/2018. (1) Illustrative impact of increasing realized oil price on annualized distributions based on FY 2019 average production guidance range and 2018 average full year costs. Natural gas and NGL realizations reflects full year 2018 actual and are not sensitized. (2) $56.13 was actual realized price for

7 Viper: Unmatched Growth and Free Cash Flow Yield Assuming flat commodity prices in 2019, Viper is estimated to provide ~25% production growth and a ~7% distribution yield Unmatched combination of growth and yield presents differentiated investment opportunity 63.4% 6.6% 2019E Growth (1) LTM Yield 30.6% 56.7% 6.6% 24.0% 13.2% 12.7% 8.0% 5.3% 4.4% 8.3% VNOM VNOM US Minerals S&P US REIT Index 2018 Actual 9.4% 3.4% 5.9% 6.1% 1.9% 4.2% UTY Index E&Ps Gold Streamers (2) (3) 2019 Estimated 2.8% 0.8% 1.5% 1.2% 2.4% -1.6% Canadian Minerals (4) (5) Source: Bloomberg, Capital IQ, IBES, company disclosures, market data as of 2/1/2019. (1) Growth calculated as 2019E production growth except for REIT and UTY Indices, which show 2019E EBITDA growth. (2) US Minerals include FLMN, BSM, DMLP, KRP. (3) E&Ps include APA, APC, COP, DVN, MRO, NBL. (4) Gold Streamers include FRNV, OG, RGLD, WPM. (5) Canadian Minerals include FRU and PSK. 7

8 Value Proposition vs. Other Yield-Based Alternatives Relative to other yield-based investment alternatives, Viper offers a materially higher yield opportunity as well as unmatched margins, return on capital and growth LQA Yield (1) E Forward Yield Cash Margin (2) LQA Yield (1) 2019E Yield 91.7% 13.9% 51.8% 45.0% 32.5% 7.1% 9.1% 4.7% 6.9% VNOM Gold Streamers (3) S&P US REIT Index ROCE 2019E (4) UTY Index 3.5% 15.3% 6.8% 3.0% 4.4% 3.4% 1.4% 1.6% 5.7% 5.2% 4.3% VNOM S&P US REIT Index UTY Index Gold Streamers (3) VNOM UTY Index Gold Streamers (3) S&P US REIT Index Source: Bloomberg, Capital IQ, IBES, company disclosures; market data as of 1/29/2019. (1) Last quarterly dividend per latest available filing. (2) Cash margin per latest available filing. Shown for VNOM as realized price per boe less LOE, gathering and transportation, production taxes and cash G&A expenses per boe; shown as cash from operations over total revenue for all peers. (3) Gold Streamer peers include FNV, OR, RGLD, WPM. (4) ROCE defined as 2019E EBIT divided by capital employed as of the latest filing (total assets current liabilities). 8

9 Viper Versus Precious Metals Streaming Vehicles Viper has a very comparable business model to Precious Metals Streaming Vehicles while trading at a materially higher yield with significantly more expected growth Business Models Comparing Viper to Four Gold Streamer Peers (1) Leverage to commodity Natural resource development-driven growth Royalty model with limited to no direct operating / capital expenses High returns / high cash margins Long reserve / resource lives ROCE 2019E (2) Cash Margin (3) Viper 15.3% Gold Streamer Gold Streamer 7.2% 6.4% Gold Streamer 4.0% 2.7% Gold Streamer VNOM Gold Streamer #1 Gold Streamer #2 Gold Streamer #3 Gold Streamer #4 91.7% 75.1% 58.3% 44.6% 18.4% VNOM Gold Streamer #2 Gold Streamer #3 Gold Streamer #1 Gold Streamer #4 Large fragmented markets with acquisition opportunities Strong liquidity / balance sheet positions with no hedging LTM Yield (4) 6.6% 2.0% 1.7% 1.2% 1.2% VNOM Gold Streamer #4 Gold Streamer #3 Gold Streamer #2 Gold Streamer #1 Diversified operator exposure but limited operational control (except for VNOM/FANG relationship) 2019E Growth (5) 24.0% 13.7% 8.4% 1.8% -8.9% VNOM Gold Streamer #2 Gold Streamer #1 Gold Streamer #3 Gold Streamer #4 Source: Bloomberg; as of 2/1/2019. (1) Gold Streamer peers include FNV, OR, RGLD, WPM. (2) ROCE defined as 2019E EBIT divided by capital employed as of the latest filing (total assets current liabilities). (3) Cash margin per latest available filing. Shown for VNOM as realized price less cash costs divided be realized price and shown as cash from operations over total revenue for all peers. (4) Last quarterly dividend per latest available filing. (5) Estimated EBITDA growth for peers. Estimated production growth for VNOM. 9

10 Distributions ($/Unit) 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 Industry Leading Return on and Return of Capital Cumulative Quarterly Distributions Since IPO ($/Unit) $6.00 Cumulative Distributions Quarterly Distribution ROACE 20.0% $ % 17.0% 18.3% $0.580 $ % 16.0% $4.00 $3.00 $2.00 $1.00 $- 9.8% 8.8% 7.1% 5.9% 7.3% 4.7% $0.230 $0.200 $0.220 $0.190 $0.250 $0.250 $0.149 $ % 7.2% 8.8% 11.3% $0.258 $ % 12.9% 13.0% $0.302 $0.332 $0.337 $0.460 $0.480 $ Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q ' % 12.6% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% ROACE (1) Viper has Distributed $5.74/Unit Over the Last 18 Quarters Source: Partnership data and filings. Data as of 12/31/2018. (1) Return on average capital employed ( ROACE ) defined as adjusted EBIT divided by average total assets for current and prior period less average current liabilities for current and prior period. 10

11 Acquisition Machine Continues to Consolidate Since IPO in Q3 2014, Viper has closed over $1.2 billion in acquisitions across 296 transactions; continue to use size, scale and expertise to consolidate the fragmented private minerals market IPO (6/18/2014) Present (12/31/2018) Acreage Breakdown: Midland: 3,168 Acreage Breakdown: Midland: 6,411 Delaware: 7,750 Eagle Ford: : 2 deals 2015: 30 deals 2016: 63 deals 2017: 113 deals 2018: 88 deals Closed Acquisitions ($MM): $57.7 $43.9 $205.6 $340.4 $615.4 Source: Partnership data and filings. Present acreage as of 12/31/

12 2018 Acquisition Summary Basin Midland Delaware Eagle Ford Key Counties Selected Operator(s) Size (NRA) Purchase Price ($mm) Current Production (Boe/d) (1) Current Permits / Annualized Cash Flow (2) DUCs Drop Down Pecos 1,696 $ $ Deal 1 DeWitt Karnes Gonzalez / 681 $126 1,271 $ Deal 2 Eddy 181 $ $2.5 4 Deal 3 Loving Reeves Lea Various 223 $ $1.8 5 Deal 4 Midland Glasscock Various 176 $23 85 $1.2 6 Deal 5 Reeves Ward 155 $15 68 $1.0 3 Other FANG- Operated Other Non- Operated Reeves Pecos Ward Midland Loving Reeves Martin Midland 852 $ $ Various 1,318 $150 1,098 $ Totals 5,281 $615 4,117 $ For the Full Year 2018, VNOM Completed 88 Acquisitions Worth ~$615 Million Source: Partnership data and filings. Acquisitions include all closed deals through 12/31/2018. (1) Current production represents October 2018 actuals to reflect the most recent check stubs received. (2) Calculated as 4Q 18 realized price of $39.79/boe * current production for Permian deals. Eagle Ford deal calculated as estimated 4Q 18 realized price of $42.19/boe * current production. 12

13 Significant Undeveloped, Concentrated Resource Highly Concentrated Acreage in Midland Basin Illustrative Remaining Midland Basin Resource Assumed 25% lease royalty 6,411 VNOM Net Royalty Acres 6.7 Net Drilling Spacing Units (100% NRI) Assumed 1.5 mile lateral (240 NRA) 32 wells per 1.5 mile DSU ~215 illustrative net 100% NRI VNOM locations Estimated 900 MBoe EUR/well Net Revenue Interest: Higher (25%) ~194 MMBoe Total Resource % Developed % Undeveloped Lower (0.1%) No Producing Wells ~75 producing net locations (<35% developed) ~140 remaining net locations (>65% undeveloped; ~126 MMBoe) With <35% of estimated Midland net royalty acreage developed, Viper can offer multi-year organic growth without spending one dollar of capital Source: Partnership data. Note: NRI scale not evenly distributed between minimum and maximum. As of 12/31/2018, Viper s average royalty interest on an acreage weighted basis in the Midland Basin was 3.9%. 13

14 Significant Undeveloped, Concentrated Resource Highly Concentrated Acreage in Delaware Basin Net Revenue Interest: Higher (25%) Lower (0.1%) No Producing Wells Illustrative Remaining Delaware Basin Resource Assumed 25% lease royalty 7,750 VNOM Net Royalty Acres 8.1 Net Drilling Spacing Units (100% NRI) Assumed 1.5 mile lateral (240 NRA) 24 wells per 1.5 mile DSU ~195 illustrative net 100% NRI VNOM locations Estimated 1,000 MBoe EUR/well ~195 MMBoe Total Resource % Developed % Undeveloped ~15 producing net locations (<8% developed) ~180 remaining net locations (>92% undeveloped; ~180 MMBoe) With <10% of estimated Delaware net royalty acreage developed, Viper can offer multi-year organic growth without spending one dollar of capital Source: Partnership data. Note: NRI scale not evenly distributed between minimum and maximum. As of 12/31/2018, Viper s average royalty interest on an acreage weighted basis in the Delaware Basin was 3.1%. 14

15 Premium Assets Under Premier Operators Viper has a concentrated 14,161 net royalty acres in the Permian Basin and 681 net royalty acres in the Eagle Ford; ~37% of total acreage is operated by Diamondback Acreage Breakdown by County FANG-operated 3rd Party-operated FANG-operated acreage: 4,000 3,500 3,000 2,500 2,000 1,500 1, ,587 3,247 2,408 Pecos Spanish Trail Reeves Midland - Other 1,097 1, Loving Howard Other Eagle Ford Glasscock Ward Martin Viper Permit Exposure to Third Party Operators (1) 433 Pecos Spanish Trail 2,275 Howard 2,095 Glasscock Martin Midland Permits Delaware Permits Eagle Ford Permits Other / Source: Partnership data and filings and DrillingInfo. Net Royalty Acres reflect all acquisitions closed through 12/31/2018. (1) DrillingInfo as of 1/23/2019. Notable operators in Other category include: APA, Guidon, ECA, PXD and NBL. 15

16 Active, Visible Development on Viper s Acreage Shift toward pad development throughout the Permian Basin benefits Viper; better visibility to development and permit conversion ratios on Viper s concentrated acreage Cumulative days since permit (1) : Process of active development: A McClintic E Unit: 6-well pad Pioneer Viper NRI: 9.4% Permit filed Well spud Well completed First production B VNOM royalty acreage Active Rig D B Mariner Fee Unit: 4-well pad Marathon Viper NRI: 9.4% A C D E Mesquite 2-2 Unit: 3-well pad Anadarko Viper NRI: 7.0% Newton 43 Unit: 6-well pad Encana Viper NRI: 3.5% Colt 45 Unit: 7-well pad Endeavor Viper NRI: 3.1% C E Source: Partnership data and DrillingInfo. (1) Average for all Permian wells that were permitted and turned to production during

17 Drop Down Visibility from Diamondback Diamondback: Delaware Basin FANG royalty acreage Diamondback: Midland Basin Upton County Andrews / Martin Counties First drop down acreage FANG-operated Following the first drop down, Diamondback still owns 1,186 net royalty in Pecos and Reeves counties which are expected to be dropped down at a later point ~85% operated by Diamondback; FANG-operated portion is almost 50% the size of both current FANGoperated Pecos County and Spanish Trail Diamondback continues to concentrate development on acreage with royalties owned by Diamondback and Viper due to improved economics Delaware Basin Counties Energen Minerals Net Royalty Acres Lea 3 Loving 30 Reeves 71 Ward 55 Winkler 37 Total Delaware 195 VNOM royalty acreage FANG acreage FANG mineral acreage Including NRIs >75%, Diamondback owns ~915 net royalty acres in the Midland Basin, primarily in Andrews, Martin and Upton counties Midland Basin Counties Net Royalty Acres Gaines 27 Glasscock 7 Howard 1 Martin 25 Reagan 11 Total Midland 71 In addition to owning 266 net royalty acres, Energen has an estimated company wide ~77% NRI delivering $60-80mm of cash flow related to the >75% NRI at current production Expansive Opportunity Set for Further Accretive Drop Downs, Primarily Operated by Diamondback Source: Partnership data and filings. Data as of 12/31/

18 How Viper Defines a Net Royalty Acre Methodology for deriving Net Royalty Acreage differs widely across the industry Many companies calculate assuming there are eight royalty acres for every one net mineral acre (NMA) Viper derives its total net royalty acreage from net mineral ownership taking into consideration the royalty interest AND all other burdens Acreage Definition Comparison Viper s Formula for Net Royalty Acreage Net Mineral Acres Lease Royalty and other burdens Net Royalty Acres Viper believes its methodology more accurately defines its acreage for which it will receive revenue NRA Example Assuming Standard ¼ Royalty Viper Net Royalty Acres Viper Net Royalty Acres (Normalized to 1/8) 14, ,000 80, , , acre section 100% Mineral Interest 640 NMA Mineral Acres 640 NMA 160 NRA Royalty Acres 1,280 NRA Mineral Acres Royalty Acres Source: Partnership data and filings. Data as of 12/31/

19 Financial Overview Maintain Financial Flexibility Borrowing base increased to $555 million in connection with Fall 2018 redetermination Pay Substantially All Cash Available for Distribution to Unitholders No Hedging No capital requirements = no need to protect a capital program No Direct Operating or Capital Expenses Focus on mineral interests preserves low-cost structure Expected production and ad valorem taxes of 7.0% of royalty income Operators bear capital burden, allowing Viper to grow organically without having to reinvest cash flow Trading Liquidity Has Increased Viper's Corporate tax status election has opened up a broader investor base ($/day) $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Average Quarterly Daily Value Traded Q '16 2Q '16 Financial Strategy ~5x increase in daily value traded in 2018 relative to Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 2Q '18 3Q '18 4Q '18 Viper Capitalization ($ in millions) 12/31/2018 Cash $23 Rev olv ing Credit Facility 411 Borrowing Base 555 Availability Under Revolver 144 Liquidity $167 Net Debt / Annualized Q4 EBITDA 1.3x 2019 Guidance 1H 2019 Net Production - Mboe/d Total 2019 Net Production - Mboe/d Oil Production - % of Net Production 67% - 71% Unit Costs ($/boe) Gathering & Transportation (1) $ $0.60 Cash G&A Under $1.00 Non-Cash Equity Based Compensation $ $0.65 Depletion $ $10.50 Production and Ad Valorem Taxes (% of Revenue) (2) 7% Source: Partnership data and filings, and Bloomberg. Note: (1) All gathering and transportation to be netted from realized pricing going forward. (2) Includes production taxes of 4.6% for crude oil and 7.5% for natural gas and NGLs and ad valorem taxes. 19

20 Final Thoughts Viper Energy Partners offers yield, significant production growth, drop down visibility and upside to strength in commodity prices Deal flow remains robust and continues to increase Significant growth in assets and production; Net royalty acres and production increased by 55% and 63% respectively, year over year Minerals ownership offers organic growth without any capital costs or operating expenses Acquisitions focused on unitholder accretion: current yield, cash flow growth and visibility, acreage valuation, NAV Change to corporate tax status simplifies tax reporting and allows for a larger investor universe and a more liquid and attractive currency 20

21 Viper Energy Partners LP 500 West Texas Ave., Suite 1200 Midland, TX Kaes Van t Hof, President (432) minerals@viperenergy.com Adam Lawlis, Director, Investor Relations (432) ir@viperenergy.com 21