Viper(US:VNOM)2023-02-22 17:41Financial Data and Key Metrics Changes - The fourth quarter of 2022 marked a record year for the company, with quarterly production setting a record on both an absolute and per unit basis for the third consecutive quarter [6] - The company reduced net debt by $100 million quarter-over-quarter and repurchased approximately 1 million units [7] - A distribution of $0.49 per unit is scheduled, which remains flat quarter-over-quarter despite a 10% decline in oil prices during the same period [10] Business Line Data and Key Metrics Changes - The company generated over $100 million in proceeds from non-core asset sales during 2022, including the sale of the Eagle Ford asset, which produced roughly 250 barrels of oil per day [9] - The company expects to deliver an 8% year-over-year growth in average production for 2023 without spending any capital [8] Market Data and Key Metrics Changes - The company is insulated from inflationary cost pressures due to its high-quality asset base and limited operating costs [11] - The company anticipates a nearly 10% annualized free cash flow yield at a $75 WTI price [11] Company Strategy and Development Direction - The company is focused on growing production without capital expenditures, emphasizing a disciplined capital allocation approach [7][11] - The strategy includes transitioning to 100% Permian assets for higher growth potential, as indicated by the sale of the Eagle Ford asset [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the production growth is expected to pick up in the second half of 2023, driven by the timing of larger Diamondback pads coming online [20][21] - The management expressed confidence in the mineral business's ability to grow despite slower growth rates from parent companies in the basin [17] Other Important Information - The company is actively evaluating the market for potential acquisitions, although the bid-ask spread remains wide for mineral assets [24][25] - The company has not seen significant changes in operational cadence from third-party operators, maintaining steady activity levels [26] Q&A Session Summary Question: Thoughts on shareholder distribution and unit buybacks - Management indicated that unit buybacks are still considered a good use of capital, especially when compared to lower-quality assets available in the market [12][13] Question: Rationale behind the sale of Eagle Ford asset - The management explained that the Eagle Ford asset had limited growth potential compared to the Permian, making it a strategic decision to sell [15][17] Question: Guidance for 2023 and expected growth - Management confirmed that growth is expected to ramp up in the second half of 2023, with specific timing related to Diamondback's activity [19][20] Question: Bid-ask spread in the market - Management noted that the bid-ask spread for mineral assets remains wide, influenced by historical pricing perceptions among mineral owners [24][25] Question: Operational cadence from third-party operators - Management reported steady activity levels and visibility into net wells being turned to production, which is encouraging for future growth [26][27]