Viper Energy, Inc.

Good day and thank you for standing by. Welcome to the VIPER Energy Partners fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone keypad. You will then hear an automated message advising you your hand is raised. To withdraw your question, press star 11 again. Please be advised that today's conference is being recorded. I would like to now hand the conference call over to one of your speakers today. That would be Mr. Adam Wallace, Vice President of Investor Relations. Adam, please go ahead.

Thank you, Chairman. Good morning, and welcome to Viper Energy Partners' fourth quarter 2022 conference call. During our call today, we will reference an updated investor presentation, which can be found on Viper's website. Representing Viper today are Travis Spice, CEO, and Kate Vantoff, President. During this conference call, the participants may make certain forward-looking statements relating to the company's financial conditions, results of operations, plans, objectives, future performance, and businesses. We caution you that actual results can differ materially from those that are indicated in these four different statements due to a variety of factors. Information concerning these factors can be found in the company's files with SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

I'll now turn the call over to Travis Suss. Thank you, Adam. Welcome, everyone, and thank you for listening to Viper Energy Partners' fourth quarter 2022 conference call. The fourth quarter topped off a record year for Viper, with quarterly oil production setting a company record on both an absolute and per unit basis for the third consecutive quarter. Additionally, as a result of our strong production and continued best-in-class margins, further supported by our disciplined capital allocation approach, we were able to deliver on multiple return of capital and financial initiatives during the quarter. During the fourth quarter, we reduced net debt by $100 million quarter-over-quarter, repurchased roughly 1 million units, and are scheduled to pay a distribution that provides a greater than 6% annualized yield. Looking ahead to 2023, we have initiated average production guidance for the full year that implies 8% year-over-year growth. Importantly, VIPER can deliver this growth without spending a single dollar of capital and with most operators in the Permian maintaining roughly flat activity levels. Additionally, this production growth, even as we generated over $100 million in proceeds from non-core asset sales during 2022, including the sale of our Eagleford asset, which was producing roughly 250 barrels of wool per day, or just over 1% of our current volumes. On the capital return front, Viper continued to execute on our opportunistic unit repurchase program during the fourth quarter, but at a slower place than during the third quarter. As a result, we are set to pay 49 cents per unit distribution, which is flat quarter over quarter, despite oil prices being down 10% over the same period. Our combined base plus variable distribution represents a greater than 6% yield at today's unit price. In conclusion, The fourth quarter was an outstanding quarter for Viper, and the forward outlook continues to improve as our high-quality asset base continues to attract outsized activity levels. Viper remains differentially positioned to grow production without having to spend a single dollar of development, of acquisition capital, and with only limited operating costs, we will be mostly insulated from continued inflationary cost pressures. Given the midpoint of our 2023 production guidance and assuming $75 WTI, we are expected to deliver almost 10% annualized free cash flow yield. Operator, please open the line for questions.