UNITHOLDERS’ EQUITY AND DISTRIBUTIONS

3 Months Ended

Mar. 31, 2023

The Partnership has General Partner and limited partner units. At March 31, 2023, the Partnership had a total of 72,118,622 common units issued and outstanding and 90,709,946 Class B units issued and outstanding, of which 731,500 common units and 90,709,946 Class B units were beneficially owned by Diamondback, representing approximately 56% of the Partnership’s total units outstanding. At March 31, 2023, Diamondback also beneficially owns 90,709,946 Operating Company units, representing a 56% non-controlling ownership interest in the Operating Company. The Operating Company units and the Partnership’s Class B units beneficially owned by Diamondback are exchangeable from time to time for the Partnership’s common units (that is, one Operating Company unit and one Partnership Class B unit, together, will be exchangeable for one Partnership common unit).

Common Unit Repurchase Program

The board of directors of the Partnership’s General Partner has approved a common unit repurchase program to acquire up to $750.0 million of the Partnership’s outstanding common units, excluding excise tax, over an indefinite period of time. The Partnership intends to purchase common units under the repurchase program opportunistically with funds from cash on hand, free cash flow from operations and potential liquidity events such as the sale of assets. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors of the Partnership’s General Partner at any time. During the three months ended March 31, 2023 and 2022, the Partnership repurchased approximately $32.7 million, excluding excise tax, and $39.3 million of common units under the repurchase program, respectively. Repurchases for the three months ended March 31, 2022 include approximately $37.3 million for the repurchase of 1.5 million common units from a significant unitholder in a privately negotiated transaction in the first quarter of 2022. As of March 31, 2023, $496.7 million remains available under the repurchase program, excluding excise tax.

Cash Distributions on Common Units

Effective with the Partnership’s distribution payable for the third quarter of 2022, the board of directors of the General Partner approved a distribution policy consisting of a base and variable distribution, that takes into account capital returned to unitholders via our common unit repurchase program. For a detailed description of the Partnership’s and the Operating Company’s distribution policy, see Note 7—Unitholders’ Equity and Distributions—Cash Distributions in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2022.

The percentage of cash available for distribution pursuant to the distribution policy may change quarterly to enable the Operating Company to retain cash flow to help strengthen the Partnership’s balance sheet while also expanding the return of capital program through the Partnership’s common unit repurchase program. The Partnership is not required to pay distributions to its common unitholders on a quarterly or other basis.

The following table presents information regarding cash distributions approved by the board of directors of the General Partner for the periods presented (in thousands, except for per share amounts):




Period	Amount per Operating Company Unit		Operating Company Distributions to Diamondback		Amount per Common Unit		Distributions to Common Unitholders(1)		Declaration Date	Unitholder Record Date	Payment Date
Q4 2022	$	0.54	$	48,983	$	0.49	$	35,683	February 15, 2023	March 3, 2023	March 10, 2023

(1)Includes amounts paid to Diamondback for the 731,500 common units beneficially owned by Diamondback and distribution equivalent rights payments.

Cash distributions will be made to the common unitholders of record on the applicable record date, generally within 60 days after the end of each quarter.

Change in Ownership of Consolidated Subsidiaries

Non-controlling interest in the accompanying condensed consolidated financial statements represents Diamondback’s ownership in the net assets of the Operating Company. Diamondback’s relative ownership interest in the Operating Company can change due to the Partnership’s public offerings, issuance of units for acquisitions, issuance of unit-based compensation, repurchases of common units and distribution equivalent rights paid on the Partnership’s units. These changes in ownership percentage and the disproportionate allocation of net income (loss) to Diamondback discussed below result in adjustments to non-controlling interest and common unitholder equity, tax effected, but do not impact earnings. The following table summarizes the changes in common unitholder equity due to changes in ownership interest during the period:


	Three Months Ended March 31,
	2023		2022
	(In thousands)
Net income (loss) attributable to the Partnership	$	33,967	$	16,605

Change in ownership of consolidated subsidiaries	11,449		14,195




Change from net income (loss) attributable to the Partnership's unitholders and transfers to non-controlling interest	$	45,416	$	30,800