Summary of Viper Energy Partners (VNOM) Merger Conference Call Company and Industry - **Company**: Viper Energy Partners (VNOM) - **Industry**: Minerals and Energy, specifically focused on oil and gas royalties Key Points and Arguments Merger Announcement - Viper Energy is merging with Sidio Royalties Corporation in an all-equity transaction valued at approximately **$4.1 billion**, including Sidio's net debt of **$1.1 billion** as of Q1 2025 [4][5] - The merger was unanimously approved by the Board of Directors of both companies and has received support from stockholders holding approximately **48%** of Sidio's voting power [5] Financial Implications - The transaction is expected to be **8% to 10% accretive** to cash available for distribution per share immediately upon closing, with further growth expected as synergies are realized [7] - A **10% increase** to Viper's base dividend was approved in conjunction with the merger, effective immediately [7] - The merger reduces Viper's base dividend breakeven by approximately **$2 per barrel** to below **$20 WTI** [8] - Total estimated synergies from the merger are projected to exceed **$50 million** annually, primarily from G&A and cost of capital savings [8] Production and Acreage - Post-merger, Viper will own approximately **85,700 net royalty acres** in the Permian Basin, producing about **66,000 barrels of oil per day** and over **125,000 BOEs** daily by Q4 2025 [6] - Viper's focus will remain on the Permian Basin, while also benefiting from additional acreage in the DJ, Eagle Ford, and Williston Basins [6] Debt Management and Financial Strategy - Viper aims to achieve a net debt target of **$1.5 billion** through free cash flow generation and potential non-core asset sales [9][33] - The company plans to execute a significant liability management exercise to reprice its debt stack, enhancing its investment-grade status [9][50] Market Position and Growth Potential - The merger positions Viper as a top **10 E&P** company in North America, enhancing its competitive edge in the minerals market [45] - The combined asset base increases Viper's growth potential, with a focus on per-share metrics to enhance shareholder value [41] Customer Base and Operator Relationships - Viper has a strong understanding of Sitio's operations, particularly in the Delaware Basin, which includes major operators like Conoco, Oxy, and EOG [14][15] - The merger is expected to strengthen Viper's relationships with key operators and enhance its operational efficiency [19] Return of Capital Strategy - Viper maintains a commitment to return **75%** of free cash flow to equity holders, with flexibility for buybacks if needed [21][43] - The company emphasizes a balanced approach to capital allocation, prioritizing debt reduction while also returning capital to shareholders [43] Additional Important Content - The merger is seen as a strategic move to enhance scale and inventory depth, supporting Viper's production profile and cash flow growth over the next decade [6][10] - The management team expressed confidence in the long-term growth trajectory of the combined entity, highlighting the importance of size and scale in the minerals business [56]

Transaction Overview - Viper and Sitio are undergoing a merger, with a purchase price of approximately $4.1 billion[16] - The pro forma equity ownership will be approximately 80% Viper and 20% Sitio[24] - The transaction is expected to close in the 3rd quarter of 2025[24] Pro Forma Metrics - The pro forma enterprise value is $17.1 billion[21] - Net production is estimated at 66 Mboe/d (oil) and 126 Mboe/d (total)[21] - Net royalty acres are approximately 95,000[21] Financial Highlights - The merger is expected to be approximately 8-10% accretive to cash available for distribution per Class A share immediately upon closing[24] - Synergies are estimated to be greater than $50 million annually[24] - Pro forma leverage is expected to be approximately 1.2x at closing[24] Balance Sheet and Capital Returns - Pro forma net debt as of March 31, 2025, is approximately $2.25 billion[44] - The company maintains a return of capital commitment of at least 75% of cash available for distribution to equity holders[49]

Core Viewpoint - Viper Energy, Inc. has announced a definitive agreement to acquire Sitio Royalties Corp. in an all-equity transaction valued at approximately $4.1 billion, which includes Sitio's net debt of about $1.1 billion as of March 31, 2025 [1] Transaction Details - The acquisition will involve the exchange of 0.4855 shares of Class A common stock of a new holding company for each share of Sitio Class A common stock, and 0.4855 units of Viper's operating subsidiary for each unit of Sitio's operating subsidiary, implying a value of $19.41 per Sitio share based on Viper's stock price on June 2, 2025 [1] - The transaction has received unanimous approval from the Boards of Directors of both companies and has the consent of Diamondback Energy, Viper's majority stockholder [1] - Approximately 48% of Sitio's voting power has agreed to support the transaction [1] - The deal is subject to customary regulatory approvals and is expected to close in Q3 2025 [1] Financial Highlights - Viper has approved a 10% increase in its base dividend to $1.32 per share annually, which represents approximately 45% of cash available for distribution at $50 WTI [2][6] - The acquisition is expected to be approximately 8-10% accretive to cash available for distribution per Class A share immediately upon closing [6] - The pro forma Viper's base dividend breakeven is expected to decrease by approximately $2 per barrel to below $20 WTI [6] - Estimated annual synergies from the merger are projected to exceed $50 million, primarily from administrative and capital cost savings [6] Strategic Rationale - The merger is expected to create a leader in the minerals industry with enhanced size, scale, liquidity, and access to investment-grade capital [7] - The combined company will have approximately 34,300 net royalty acres in the Permian Basin and an additional ~9,000 net royalty acres in other major basins [6][7] - The merger will position the combined entity to compete effectively for capital with mid and large-cap North American exploration and production companies, benefiting from higher margins and lower operating costs [7] Production and Operational Highlights - The average production for Q1 2025 was reported at 18.9 mbo/d (42.1 mboe/d), with Permian production at 14.5 mbo/d (31.9 mboe/d) [6] - The pro forma Viper is expected to have an average production of 64-68 mbo/d (122-130 mboe/d) by Q4 2025, with a mid-single-digit percentage increase expected for the full year 2026 [6]

Group 1 - The article promotes a free two-week trial for the investment group Distressed Value Investing, which offers exclusive research on various companies and investment opportunities [1] - The investment group focuses on value opportunities and distressed plays, particularly in the energy sector [2] - The author, Aaron Chow, has over 15 years of analytical experience and previously co-founded a mobile gaming company that was acquired by PENN Entertainment [2] Group 2 - The article emphasizes that past performance is not indicative of future results and does not provide specific investment recommendations [3] - It clarifies that the analysts contributing to the platform may not be licensed or certified by any regulatory body [3]

[PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of Viper Energy, Inc [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Item%201%2E%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Viper Energy's unaudited Q1 2025 condensed consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes, are presented [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$6.24 billion** by March 31, 2025, driven by cash and oil interests, while liabilities decreased, boosting equity Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $560 | $27 | | Property, net | $4,955 | $4,638 | | Total assets | $6,238 | $5,069 | | **Liabilities & Equity** | | | | Total current liabilities | $91 | $49 | | Long-term debt, net | $822 | $1,083 | | Total liabilities | $915 | $1,162 | | Total equity | $5,323 | $3,907 | | Total liabilities and stockholders' equity | $6,238 | $5,069 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net income increased to **$153 million** from **$99 million** in Q1 2024, driven by higher royalty income and derivative gains Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Royalty income | $244 | $205 | | Total operating income | $245 | $205 | | Income from operations | $155 | $139 | | Gain (loss) on derivative instruments, net | $32 | $(7) | | Net income (loss) | $153 | $99 | | Net income (loss) attributable to Viper Energy, Inc. | $75 | $43 | | Diluted EPS | $0.62 | $0.49 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 operating cash flow increased to **$201 million**, with **$1.23 billion** from equity offering offsetting acquisition-related investing cash use Q1 2025 vs Q1 2024 Cash Flow Summary (in millions) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $201 | $115 | | Net cash used in investing activities | $(486) | $(20) | | Net cash provided by (used in) financing activities | $818 | $(101) | | **Net increase (decrease) in cash** | **$533** | **$(6)** | | Cash at end of period | $560 | $20 | [Notes to the Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the **$211 million** Morita Ranches acquisition, a **$1.2 billion** equity offering, and the **$1 billion** '2025 Drop Down' - On February 14, 2025, the Company completed the Morita Ranches Acquisition for approximately **$211 million** in cash and 2,400,297 OpCo Units plus an equal number of Class B shares[55](index=55&type=chunk)[56](index=56&type=chunk) - On February 3, 2025, the Company completed a public offering of 28,336,000 Class A shares, raising net proceeds of approximately **$1.2 billion**[75](index=75&type=chunk)[76](index=76&type=chunk) - Subsequent to quarter-end, on May 1, 2025, the Company completed the '2025 Drop Down' acquisition from a Diamondback subsidiary for **$1.0 billion** in cash and the issuance of 69,626,640 OpCo Units and Class B shares[117](index=117&type=chunk) - On May 1, 2025, the board approved a Q1 2025 dividend of **$0.57 per Class A share**, consisting of a **$0.30 base** and **$0.27 variable dividend**[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, highlighting increased royalty income, key acquisitions, **$1.9 billion** liquidity, and 2025 production guidance - Royalty income increased by **$19 million** in Q1 2025 compared to Q4 2024, primarily due to higher average prices for oil, natural gas, and NGLs[147](index=147&type=chunk) - Compared to Q1 2024, royalty income increased by **$39 million**, driven by a **23% growth** in production volumes, partially offset by lower average oil prices[158](index=158&type=chunk) - As of March 31, 2025, the company had approximately **$1.9 billion** of liquidity, consisting of **$560 million** in cash and **$1.3 billion** available under its revolving credit facility[166](index=166&type=chunk) [Guidance](index=35&type=section&id=Guidance) 2025 guidance, post-'2025 Drop Down', projects full-year net production at **74.5 - 79.0 MBOE/d** and Q2 at **72.5 - 78.0 MBOE/d** 2025 Guidance | Metric | Q2 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net production (MBO/d) | 40.0 - 43.0 | 41.0 - 43.5 | | Net production (MBOE/d) | 72.5 - 78.0 | 74.5 - 79.0 | | Depletion ($/BOE) | - | $15.50 - $16.50 | | Cash G&A ($/BOE) | - | $0.80 - $1.00 | | Production & ad valorem taxes | - | ~7% of revenue | | Q2 2025 cash taxes (in millions) | $10 - $15 | - | [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q1 2025 royalty income increased to **$244 million** from Q4 2024 due to higher prices, while net income decreased due to a prior-period tax benefit Q1 2025 vs Q4 2024 Production and Pricing | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Average daily volumes (BOE/d) | 57,378 | 56,109 | | Oil Price ($/Bbl) | $71.33 | $69.91 | | Natural Gas Price ($/Mcf) | $2.08 | $0.84 | | Combined Price ($/BOE) | $47.25 | $43.56 | Q1 2025 vs Q1 2024 Production and Pricing | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average daily volumes (BOE/d) | 57,378 | 46,132 | | Oil Price ($/Bbl) | $71.33 | $76.61 | | Natural Gas Price ($/Mcf) | $2.08 | $1.22 | | Combined Price ($/BOE) | $47.25 | $48.85 | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity reached **$1.9 billion** as of March 31, 2025, supported by **$201 million** in operating cash flow and a **$1.2 billion** equity offering - At March 31, 2025, the company had **$1.9 billion** of liquidity, including **$560 million** in cash and **$1.3 billion** available on its revolving credit facility[166](index=166&type=chunk) - Net cash from operating activities was **$201 million** for Q1 2025, up from **$115 million** in Q1 2024[170](index=170&type=chunk)[171](index=171&type=chunk) - Financing activities in Q1 2025 provided **$818 million**, mainly from a **$1.2 billion** equity offering, offset by **$261 million** in net debt repayments and **$153 million** in dividends[173](index=173&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risks include commodity price volatility, credit, and interest rate risk, with derivative positions valued at **$36 million** as of March 31, 2025 - The company's main market risk is commodity price volatility for oil and natural gas[186](index=186&type=chunk) - As of March 31, 2025, the company had a net asset derivative position of **$36 million**[188](index=188&type=chunk) - Interest rate risk applies to the Operating Company's revolving credit facility, which bears a floating rate[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[192](index=192&type=chunk) - No changes occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls over financial reporting[193](index=193&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits [Item 1. Legal Proceedings](index=48&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is involved in routine litigation, with management expecting no material adverse effects on financial condition or results - The company is subject to routine litigation, but management does not expect any pending cases to have a material adverse effect on its financial condition or results[195](index=195&type=chunk) [Item 1A. Risk Factors](index=48&type=page&id=Item%201A%2E%20Risk%20Factors) Risk factors are largely unchanged from the 2024 Annual Report, with an added focus on potential impacts from U.S. trade policy and tariffs - Risk factors are largely unchanged from the 2024 Annual Report on Form 10-K[196](index=196&type=chunk) - A risk factor was highlighted regarding the potential adverse effects of changes in U.S. trade policy and tariffs, which could cause market volatility, reduced demand for oil and gas, and impact access to capital[197](index=197&type=chunk)[198](index=198&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred in Q1 2025, with **$434 million** remaining under the **$750 million** share repurchase authorization Issuer Repurchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining in Plan (millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | $434.161 | | Feb 2025 | — | $— | $434.161 | | Mar 2025 | 6,527 | $46.57 | $434.161 | - The 6,527 shares repurchased were from employees to satisfy tax withholding requirements and were not part of the publicly announced plan's open market purchases[202](index=202&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205%2E%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during Q1 2025[204](index=204&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the 2025 Drop Down Equity Purchase Agreement and required certifications - Key exhibits filed include the Equity Purchase Agreement for the 2025 Drop Down, Registration Rights Agreements, and CEO/CFO certifications[206](index=206&type=chunk)

Viper Energy Partners (VNOM) Q1 2025 Earnings Call May 06, 2025 11:00 AM ET Company Participants Chip Seale - Director of Investor RelationsKaes Van’t Hof - CEO & DirectorAusten Gilfillian - PresidentDerrick Whitfield - Managing DirectorZach Parham - Executive Director Conference Call Participants Greta Drefke - Equity Research AnalystPaul Diamond - AnalystLeo Mariani - Managing Director, Senior Research AnalystTim Rezvan - Managing Director & Equity Research Analyst Operator and thank you for standing by. ...

Financial Data and Key Metrics Changes - Viper Energy reported a strong first quarter with both oil and total production exceeding guidance ranges [5] - The Q1 dividend was $0.57, which was approximately $0.07 lower than it would have been due to share issuance [6] - The company expects leverage to remain below one times even in a sustained $50 per barrel WTI environment [6] Business Line Data and Key Metrics Changes - The dropdown transaction with Diamondback closed on May 1, which is expected to enhance Viper's financial position [6] - Approximately 45% of Viper's current production is operated by third parties, primarily by well-capitalized operators like ExxonMobil [8] Market Data and Key Metrics Changes - The company has entered a period of lower commodity prices and significant market volatility since the end of Q1 [5] - Viper's production is expected to remain durable despite potential sustained weakness in commodity prices [7] Company Strategy and Development Direction - Viper aims to leverage its strong balance sheet during periods of market volatility, including opportunistic share repurchases [6] - The company is positioned as a consolidator in the fragmented minerals and royalty space, with a focus on high-quality assets [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Viper's ability to navigate the current market volatility and maintain production levels [7] - The company held its production guidance for the second half of 2025, indicating resilience in its operations [7] Other Important Information - Viper was upgraded to investment grade by Fitch, enhancing its access to capital [41] - The company plans to retain approximately $25 million of incremental capital for future allocation decisions [7] Q&A Session Summary Question: Does the macro environment influence Viper's willingness to engage in M&A? - Management stated that macro conditions do not impact their desire to consolidate the minerals market, although deal availability may be affected [12] Question: Have activity assumptions in Reagan County changed following the dropdown? - Management indicated that they are still modeling completions in that area starting in 2026 and do not expect changes at this time [13] Question: Where do future M&A opportunities lie? - Management expressed agnosticism between Midland and Delaware for M&A opportunities, emphasizing the importance of price and opportunity set [19] Question: Will recent volatility affect hedging strategies? - Management confirmed that they remain comfortable with their current hedging strategy, focusing on protecting downside while maintaining upside potential [21] Question: How does Viper view its exposure to industry concerns with development at current prices? - Management noted minimal impact on Viper's projects currently, but acknowledged potential future challenges if low prices persist [28] Question: Will the dividend increase in the coming quarters? - Management indicated that distributions are expected to grow at a flat commodity price, supported by the accretion from the dropdown [41] Question: What is Viper's target debt number post-dropdown? - Management stated that while they do not have a specific target, they are open to using cash for deals if opportunities arise [52]

Core Viewpoint - Viper Energy Inc. reported strong first-quarter 2025 earnings, with adjusted earnings per share of 54 cents, exceeding estimates and showing improvement from the previous year [1] Production - The company produced 5,164 thousand oil-equivalent barrels (MBoe), an increase from 4,198 MBoe a year ago, surpassing estimates [3] - Oil accounted for 54.6% of total production, with oil production rising to 2,818 thousand barrels (MBbls) from 2,312 MBbls year-over-year [3] Realized Prices - The average realized price per barrel of oil equivalent was $47.25, down from $48.85 in Q1 2024, but above the estimate of $46.37 [4] - The average realized oil price was $71.33 per barrel, down from $76.61 year-over-year, exceeding the estimate of $69.76 [4] - Natural gas prices increased to $2.08 per thousand cubic feet from $1.22 a year ago, below the estimate of $2.79 [4] - The price for natural gas liquids was $24.52 per barrel, higher than $22.17 recorded a year ago, exceeding the estimate of $19.91 [5] Costs & Expenses - Total expenses for the first quarter were $90 million, up from $66 million in the prior-year quarter, exceeding the estimate of $88 million [6] - On a per barrel of oil-equivalent (Boe) basis, total operating expenses were $4.26, down from $4.51 year-over-year, and below the estimate of $4.33 [6] Cash Flow - Net cash provided by operating activities was $201 million, an increase from $115 million in Q1 2024 [7] Balance Sheet - As of March 31, 2025, Viper Energy had cash and cash equivalents of $560 million and net long-term debt of $830 million [8] Guidance - The company projects production for Q2 2025 to be in the range of 72.5-78 Mboe/d [9] - Full-year 2025 net production is projected to be in the 74.5-79 Mboe/d range [10]

Viper Energy Partners (VNOM) reported $245 million in revenue for the quarter ended March 2025, representing a year-over-year increase of 19.3%. EPS of $0.54 for the same period compares to $0.52 a year ago.The reported revenue represents a surprise of -1.72% over the Zacks Consensus Estimate of $249.29 million. With the consensus EPS estimate being $0.45, the EPS surprise was +20.00%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to ...

Investment Highlights - Q1 2025 cash available for distribution was $0.76/share, and total return of capital to Class A shareholders was $0.57/share[9] - Q1 2025 average production reached 31,311 Bo/d (57,378 Boe/d)[9] - The company closed the Drop Down acquisition on May 1, 2025, for approximately $1 billion cash and 69.6 million OpCo units[9] - The board authorized a $750 million share repurchase program, with 13.7 million shares repurchased through May 2, 2025, for $325 million at an average of $23.74/share[9] - The company holds approximately 60,420 net royalty acres in the Permian Basin[9] 2025 Outlook - Q2 2025 average production is guided to be between 40,000 - 43,000 Bo/d (72,500 - 78,000 Boe/d)[9] - Expected average daily production for 2025 is projected to be 41,000 - 43,500 Bo/d (74,500 - 79,000 Boe/d)[9] - Net debt of $1.0 billion is expected after the Drop Down, with a leverage ratio of less than 1.0x at $50 WTI by year-end 2025[9] - A base dividend of $0.30/share implies a 2.9% annualized yield, representing approximately 40% of estimated cash available for distribution assuming $50 WTI[9] Financial Position - Market Cap is $12.6 billion, Net Debt is $1.0 billion, and Enterprise Value is $13.6 billion[16] - The company has current liquidity of $1.0 billion[13] - The company is committed to returning at least 75% of cash available for distribution to Class A shareholders[36]