Company Overview - Viper Energy, Inc. is a subsidiary of Diamondback Energy, Inc. focused on owning, acquiring, and exploiting oil and natural gas properties in North America, particularly in the Permian Basin [3][4] - Diamondback Energy is an independent oil and natural gas company headquartered in Midland, Texas, specializing in the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin [4] Upcoming Financial Results - Viper Energy plans to release its third quarter 2025 financial results on November 3, 2025, after the market closes [1] - A conference call and webcast will be held on November 4, 2025, at 11:00 a.m. CT to discuss the third quarter results [2]

Group 1 - Viper Energy, Inc. (NASDAQ:VNOM) is considered one of the best safe stocks to buy, with an 'Outperform' rating and a revised price target of $51.00, indicating a potential upside of nearly 34.7% [1] - The research firm anticipates a rise in gas prices over the next 12 months, positioning Viper Energy for long-term growth, as gas stocks are currently trading at a 10% to 15% discount compared to implied commodity prices [2] - Viper Energy's $4.1 billion acquisition of Sitio Royalties is expected to provide synergies across the Permian region and enhance oil and gas production, making it an attractive investment for those seeking limited operational downside risks [3] Group 2 - Viper Energy, Inc. is a Texas-based company specializing in oil and natural gas properties in North America, founded in 2013, with a commitment to maximizing long-term returns [4]

Core Viewpoint - Viper Energy Partners reported a mixed performance in its latest earnings report, with a notable increase in production but a decline in earnings per share compared to the previous year [3][4]. Financial Performance - The company reported Q2 2025 adjusted earnings per share of 41 cents, exceeding the Zacks Consensus Estimate of 34 cents, but down from 61 cents in the same quarter last year [3]. - Operating income reached $297 million, surpassing the Zacks Consensus Estimate of $294 million, and increased from $217 million year-over-year [4]. - Net cash provided by operating activities was $172 million, up from $144 million in Q2 2024 [10]. Production Metrics - Viper Energy produced 7,215 thousand oil-equivalent barrels (MBoe) in Q2 2025, a significant increase from 4,320 MBoe a year ago, and above the estimate of 6,940 MBoe [5]. - Oil production rose to 3,787 thousand barrels (MBbls) from 2,398 MBbls year-over-year, exceeding the estimate of 3,748 MBbls [5]. - Natural gas production increased to 10,132 million cubic feet (MMcf) compared to 5,631 MMcf in the same period of 2024 [6]. Pricing Information - The average realized price per barrel of oil equivalent was $39.78, down from $49.88 in Q2 2024, and below the estimate of $41.75 [7]. - The average realized oil price was $63.64 per barrel, down from $81.04 year-over-year, and missed the estimate of $64.22 [7]. - The price of natural gas was $0.99 per thousand cubic feet, up from $0.20 in the prior year, but below the estimate of $2.12 [8]. Cost and Expenses - Total expenses for Q2 were $162 million, significantly higher than $68 million in the prior-year quarter and above the estimate of $151.8 million [9]. - On a per barrel of oil-equivalent basis, total operating expenses were $3.60, down from $4.36 year-over-year, and slightly below the estimate of $4.35 [9]. Guidance - The company projects production for Q3 2025 to be in the range of 86-92 Mboe/d, with full-year 2025 net production expected to be between 76.5-81.5 Mboe/d [12]. Market Position - Viper Energy has a Zacks Rank of 3 (Hold), indicating an expectation of an in-line return in the coming months [15]. - The stock has a poor Growth Score of F and a Momentum Score of C, with an overall VGM Score of F, placing it in the bottom 20% for value investors [14].

Group 1 - Viper Energy, Inc. (NASDAQ: VNOM) is a Delaware corporation that aggregates minerals and royalty interests from Diamondback Energy, Inc. and third parties [1] - In January 2025, Viper acquired royalty and interests from Diamondback Energy, including some associated with Endeavor Energy Resources [1] - Laura Starks is the founder and CEO of Starks Energy Economics, LLC, with a background in chemical engineering and an MBA in finance, focusing on various sectors of the energy industry [1]

Company Overview - Viper Energy (NASDAQ: VNOM) has recently completed the acquisition of Sitio Royalties, which significantly enhances its production capacity to approximately 126,000 BOEPD [2] Production Growth - Following the acquisition, Viper Energy anticipates mid-single-digit production growth from the new production level by 2026 [2]

Core Insights - Viper Energy, Inc. has completed the acquisition of Sitio Royalties Corp. in an all-equity transaction, marking a significant milestone for both companies and establishing a new leader in the minerals and royalties sector [1][10] Production Guidance - Following the merger, Viper revised its third-quarter 2025 oil production guidance to 54,500-57,500 barrels per day, an increase of approximately 8,500 barrels per day at the midpoint compared to previous standalone projections [2] - Average total production is now projected to be between 104,000-110,000 barrels of oil equivalent per day, reflecting an increase of about 18,000 barrels of oil equivalent per day from earlier guidance, accounting for 43 days of production from Sitio [3] Strategic Positioning - The CEO of Viper Energy emphasized that the merger is a pivotal step for the minerals and royalties industry, enhancing the company's size, scale, liquidity, and access to investment-grade capital in a traditionally fragmented market [4] - The combined entity is expected to be well-positioned within North American shale to drive long-term growth efficiently, requiring no direct capital expenditures and only limited operating costs [5] Operational Leverage - With the acquisition, Viper Energy strengthens its scale and operational leverage in a consolidating sector, allowing it to capture long-term growth opportunities and deliver efficiencies from greater scale while maintaining value for shareholders [6]

Core Viewpoint - Viper Energy, Inc. has successfully completed the acquisition of Sitio Royalties Corp. in an all-equity transaction, marking a significant milestone in the mineral and royalty industry, enhancing its position in the North American shale market [1][2]. Revised Third Quarter 2025 Guidance - The merger creates a leader in size, scale, float, liquidity, and access to investment-grade capital in the fragmented minerals market, while Viper maintains a unique relationship with its parent company, Diamondback Energy [2]. - Pro forma Viper is positioned for sustained growth with no capital expenditures and limited operating costs [2]. Production Estimates - Average oil production is projected to be between 54,500 and 57,500 barrels per day (bo/d), reflecting an increase of 8,500 bo/d at the midpoint compared to prior standalone guidance, due to 43 days of contribution from Sitio [7]. - Average total production is expected to range from 104,000 to 110,000 barrels of oil equivalent per day (boe/d), representing an increase of 18,000 boe/d at the midpoint compared to prior standalone guidance, also attributed to the contribution from Sitio [7].

Core Viewpoint - Diamondback Energy, Inc. has successfully completed the acquisition of Sitio Royalties Corp. through its subsidiary Viper Energy, Inc., leading to an increase in production guidance for Q3 2025 [1][2]. Group 1: Acquisition Details - The acquisition of Sitio Royalties Corp. was previously announced and has now been closed, enhancing Viper Energy's asset portfolio [1]. - The acquisition is expected to contribute to Diamondback's production figures starting from August 19, 2025 [2]. Group 2: Revised Production Guidance - Diamondback's Q3 2025 net production guidance has been revised to 908 - 938 MBOE/d, up from the previous range of 890 - 920 MBOE/d [2]. - Oil production guidance for Diamondback has been adjusted to 494 - 504 MBO/d, an increase from the earlier guidance of 485 - 495 MBO/d [2]. - Viper Energy's Q3 2025 production guidance is set at 104.0 - 110.0 MBOE/d, reflecting the impact of the Sitio acquisition [2]. Group 3: Company Background - Diamondback Energy is an independent oil and natural gas company based in Midland, Texas, focusing on the acquisition and development of unconventional oil and natural gas reserves, primarily in the Permian Basin [3]. - Viper Energy, Inc. is a subsidiary of Diamondback, established to own and acquire oil and natural gas properties, with a focus on mineral and royalty interests in oil-weighted basins [4].

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company presents its unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant increase in total assets to $9.79 billion, driven by acquisitions and equity offerings Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $443 | $238 | | **Property, net** | $9,294 | $4,638 | | **Total Assets** | **$9,788** | **$5,069** | | **Total Current Liabilities** | $72 | $49 | | **Long-term debt, net** | $1,098 | $1,083 | | **Total Liabilities** | **$1,177** | **$1,162** | | **Total Equity** | **$8,611** | **$3,907** | | **Total Liabilities and Stockholders' Equity** | **$9,788** | **$5,069** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported total operating income of $297 million and net income of $84 million for Q2 2025 Condensed Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total operating income** | $297 | $216 | | Depletion | $124 | $48 | | Income from operations | $135 | $148 | | **Net income** | **$84** | **$123** | | Net income attributable to Viper Energy, Inc | $37 | $57 | | **Diluted EPS** | **$0.28** | **$0.62** | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $373 million for the first half of 2025, with significant cash used for acquisitions Six Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $373 | $259 | | Net cash provided by (used in) investing activities | $(1,260) | $61 | | Net cash provided by (used in) financing activities | $888 | $(311) | | **Net increase (decrease) in cash** | **$1** | **$9** | [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant transactions including the pending $4.1 billion Sitio acquisition and a $1.2 billion equity offering - On June 2, 2025, the Company entered into an agreement to acquire Sitio Royalties Corp in an all-equity transaction valued at approximately **$4.1 billion**[55](index=55&type=chunk)[56](index=56&type=chunk)[62](index=62&type=chunk) - On May 1, 2025, the Company completed the '2025 Drop Down' acquisition from its parent, Diamondback, for **$1.0 billion in cash and 69.6 million OpCo Units** and Class B shares[65](index=65&type=chunk)[68](index=68&type=chunk) - In February 2025, the Company completed a public offering of 28.3 million shares of Class A Common Stock, raising net proceeds of approximately **$1.2 billion** to fund acquisitions[96](index=96&type=chunk)[97](index=97&type=chunk) - Subsequent to the quarter end, in July 2025, the company issued **$1.6 billion in new senior notes** and used proceeds to redeem or discharge $780 million of existing notes[139](index=139&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant production growth from acquisitions, the pending Sitio merger, and recent financing activities [Recent Developments and Acquisitions](index=31&type=section&id=Recent%20Developments%20and%20Acquisitions) The company details its pending ~$4.1 billion acquisition of Sitio Royalties and other completed transactions expanding its Permian Basin footprint - Announced the pending acquisition of Sitio Royalties in an all-equity deal valued at **~$4.1 billion**, expected to close in Q3 2025[152](index=152&type=chunk) - Completed the '2025 Drop Down' from Diamondback, acquiring **24,446 net royalty acres** in the Permian Basin for $1.0 billion cash and equity[159](index=159&type=chunk) - Completed the Morita Ranches Acquisition, adding **1,691 net royalty acres** in the Permian Basin for ~$207 million cash and equity[160](index=160&type=chunk) - As of June 30, 2025, the company's total mineral and royalty interests reached approximately **61,275 net royalty acres**[162](index=162&type=chunk) [Guidance and Production](index=33&type=section&id=Guidance%20and%20Production) The company provides updated 2025 production guidance and reports strong Q2 2025 well activity Full Year 2025 Guidance | Metric | Guidance | | :--- | :--- | | Net production (MBO/d) | 41.0 - 43.5 | | Net production (MBOE/d) | 76.5 - 81.5 | | Depletion ($/BOE) | $16.50 - $17.50 | | Cash G&A ($/BOE) | $0.80 - $1.00 | | Cash tax rate (% of pre-tax income) | 21% - 23% | - In Q2 2025, **302 gross horizontal wells** were turned to production on the company's acreage, with an average net royalty interest of 2.2%[169](index=169&type=chunk) - As of June 30, 2025, there are **69 gross rigs** operating on the company's mineral and royalty acreage, with 11 operated by Diamondback[168](index=168&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Royalty income increased sequentially due to a 40% production growth, though partially offset by lower commodity prices Production and Pricing Comparison (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Avg. daily combined volumes (BOE/d) | 79,286 | 57,378 | | Avg. oil sales price ($/Bbl) | $63.64 | $71.33 | | Avg. combined sales price ($/BOE) | $39.78 | $47.25 | - Royalty income increased by **$43 million sequentially** in Q2 2025, driven by a $90 million increase from **40% production growth**, partially offset by a $47 million decrease from lower commodity prices[176](index=176&type=chunk) - Depletion expense increased by **$57 million sequentially** in Q2 2025, with $30 million from a higher depletion rate ($17.19/BOE vs $12.97/BOE) and $27 million from higher production volumes[180](index=180&type=chunk) - For the first six months of 2025, royalty income increased by **$111 million year-over-year**, as a **45% production growth** more than offset a $63 million negative impact from lower oil prices[190](index=190&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained $1.2 billion in liquidity and executed significant debt refinancing subsequent to the quarter - As of June 30, 2025, the company had approximately **$1.2 billion of liquidity**, consisting of $28 million in cash and $1.2 billion available under its revolving credit facility[198](index=198&type=chunk) - In July 2025, the company issued **$1.6 billion in new senior notes** and entered into a new **$500 million term loan facility**, using part of the proceeds to redeem or discharge $780 million of existing notes[198](index=198&type=chunk) - The company's board authorized a **$750 million common stock repurchase program**, with approximately **$424 million remaining** available as of June 30, 2025[213](index=213&type=chunk) - The company received an **investment-grade credit rating** from Fitch in May 2025, its second such rating, which enhances liquidity and lowers borrowing costs[211](index=211&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are volatile commodity prices, managed with derivatives, and interest rate risk on its debt - The company's primary market risk is the **pricing of oil and natural gas**, which is volatile and influenced by factors beyond its control[226](index=226&type=chunk) - To reduce price volatility, the company uses **derivative contracts**, including fixed price swaps and costless collars[227](index=227&type=chunk) - The company is exposed to interest rate risk on its revolving credit facility, which had **$325 million in outstanding borrowings** at a weighted average interest rate of 6.33% for Q2 2025[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the quarter-end - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's **disclosure controls and procedures are effective**[232](index=232&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[233](index=233&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation that is not expected to have a material adverse effect on its financial condition - The company is involved in routine litigation from time to time, but management **does not expect any pending cases to have a material adverse effect** on its financial condition, cash flows, or operations[236](index=236&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on potential challenges related to the pending acquisition of Sitio Royalties Corp - The completion of the Pending Sitio Acquisition is subject to various closing conditions, including **Sitio stockholder approval**, and there is no assurance these conditions will be met[238](index=238&type=chunk)[239](index=239&type=chunk) - The merger agreement with Sitio contains **termination rights** for both parties, and if the deal is not consummated, it could negatively impact the company's business and stock price[240](index=240&type=chunk)[243](index=243&type=chunk) - **Integrating Sitio's business may be more difficult**, costly, or time-consuming than expected, and the company may fail to realize the anticipated benefits of the acquisition[245](index=245&type=chunk) - The company may be subject to **litigation challenging the acquisition**, which could prevent or delay its consummation and result in substantial costs[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 255,843 shares during Q2 2025, with $424.4 million remaining under its repurchase program Issuer Repurchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 239,374 | $37.85 | | May 2025 | 16,469 | $39.93 | | June 2025 | 0 | $0.00 | | **Total** | **255,843** | **$37.99** | - As of June 30, 2025, approximately **$424 million remained available** for share repurchases under the company's $750 million program[252](index=252&type=chunk)[253](index=253&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - **No directors or officers** adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[254](index=254&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists key agreements filed with the Form 10-Q, including those for the Sitio merger and recent debt facilities - Key exhibits filed include the Equity Purchase Agreement with Endeavor Energy (Exhibit 2.1), the Agreement and Plan of Merger with Sitio Royalties (Exhibit 2.2), and the new Credit Agreement dated June 12, 2025 (Exhibit 10.1)[255](index=255&type=chunk)

Financial Data and Key Metrics Changes - Viper Energy reported strong oil production growth in Q2 2025, both in absolute terms and per share, despite oil price volatility [5] - The company plans to return $0.56 per share to shareholders this quarter, representing 75% of cash available for distribution [7] - The pro forma net debt target is set at $1.5 billion, which represents approximately one turn of leverage at $50 WTI [7][8] Business Line Data and Key Metrics Changes - The acquisition of SITIO royalties is expected to add substantial scale and inventory depth, supporting the production profile over the next decade [6] - Viper anticipates a mid-single-digit percentage increase in average production for the full year 2026 compared to Q4 2025 production levels [7] Market Data and Key Metrics Changes - The company expects over 15% year-over-year growth in Diamondback operated net oil production [6] - Current activity levels from third-party operators are encouraging, with a potential for growth despite a generally flat gross activity [18][19] Company Strategy and Development Direction - Viper Energy aims to maintain a strong relationship with Diamondback, which is seen as a competitive advantage [8] - The company is focused on organic growth and accretive acquisitions, with plans to return excess cash to shareholders once the net debt target is achieved [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the organic growth trajectory continuing into 2026 at current prices [6] - The company is aware of its undervalued stock and plans to balance between non-core asset sales and free cash generation to reach the net debt target [11][12] Other Important Information - The integration of the SITIO acquisition is expected to be quick, with key employees likely joining Viper [24] - The company is exploring opportunities for further acquisitions but is prioritizing patience to ensure the benefits of recent deals are fully realized [51] Q&A Session Summary Question: Flexibility towards the $1.5 billion net debt target - Management indicated that the business can generate significant free cash flow, allowing for a mix of asset sales and cash generation to reach the target [11] Question: Sustainability of third-party operator activities - Management noted that large-cap operators are expected to maintain consistent development plans, benefiting Viper [18] Question: Evaluation of non-core assets in the CTO portfolio - Management plans to be patient with larger positions in non-core assets, given the strong buyer universe [23] Question: Strategy for dividends versus buybacks - Management expressed a preference for buybacks over variable dividends due to current stock undervaluation [32] Question: Anticipation of hitting the net debt target - Management believes it is reasonable to expect the board to consider increasing the base dividend in the near future [49]