What was the primary purpose of the Rattler Midstream LP offering?

The primary purpose of the Rattler Midstream LP offering was to raise capital through the sale of common units to the public. The net proceeds are intended to be distributed to Diamondback Energy, Inc. to reimburse it for certain capital expenditures and potentially reduce its outstanding debt.

What is Diamondback Energy's ongoing interest in Rattler Midstream LP after the offering?

Following the closing of the offering and related transactions, Diamondback Energy, through its subsidiaries, retains a significant interest in Rattler Midstream LP. They own approximately 71% of the voting interest and 71% of the economic, non-voting interest in Rattler Midstream Operating LLC, which in turn controls the general partner of Rattler Midstream LP.

What does the Exchange Agreement allow for?

The Exchange Agreement allows Diamondback's subsidiary, Energen Resources Corporation, to tender its Class B units and Rattler LLC units for redemption. In exchange, Energen can receive either common units of Rattler Midstream LP or a cash payment, based on the trading price of the common units. This provides a mechanism for future potential monetization of Diamondback's remaining interest in Rattler Midstream.

How does the designation of unrestricted subsidiaries impact Diamondback's debt obligations?

By designating Rattler Midstream Operating LLC, Rattler Midstream LP, and its General Partner as unrestricted subsidiaries under Diamondback's Credit Agreement and Indentures, these entities are released from their obligations and any liens on their assets or equity interests related to Diamondback's existing debt. This effectively segregates their financial liabilities from Diamondback's.

FANG 8-K: Material Agreements

Summary

Diamondback Energy, Inc. (FANG) filed an 8-K on May 28, 2019, to report on the closing of an initial public offering (IPO) for its indirect subsidiary, Rattler Midstream LP. The offering successfully sold 38,000,000 common units at $17.50 per unit, raising approximately $626.5 million in net proceeds. These proceeds are primarily intended to be distributed to Diamondback to reimburse capital expenditures, with a potential for some of the funds to indirectly repay Diamondback's revolving credit facility, where affiliates of the underwriters are lenders. Furthermore, the filing details an Exchange Agreement between Diamondback, its subsidiaries, and Rattler Midstream. This agreement governs the future exchange of Rattler Midstream LP's Class B units and Rattler Midstream Operating LLC units held by Diamondback's subsidiary, Energen Resources Corporation, for common units or cash. Additionally, Rattler Midstream Operating LLC, Rattler Midstream LP, and the General Partner were designated as unrestricted subsidiaries under Diamondback's credit agreement and indentures, releasing them from certain obligations and liens related to Diamondback's debt.

Key Highlights

1Rattler Midstream LP IPO closed on May 28, 2019, selling 38 million common units at $17.50 per unit.
2The offering generated approximately $626.5 million in net proceeds for Rattler Midstream LP.
3Net proceeds will be distributed to Diamondback Energy, Inc. to reimburse capital expenditures.
4Diamondback Energy may use these proceeds to repay amounts outstanding under its revolving credit facility.
5An Exchange Agreement was entered into, governing future exchanges of subsidiary interests in Rattler Midstream for common units or cash.
6Rattler Midstream Operating LLC, Rattler Midstream LP, and Rattler Midstream GP LLC were designated as unrestricted subsidiaries, releasing them from certain debt obligations and liens.
7Diamondback Energy retains a significant stake (approximately 71% voting and 71% economic interest) in Rattler Midstream post-IPO.

Diamondback Energy, Inc. 8-K Report, Material Agreement (May 29, 2019)

Summary

Key Highlights

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