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]

Financial Data and Key Metrics Changes - Viper Energy reported strong oil production growth in Q2 2025 despite oil price volatility, with a focus on organic growth from Diamondback [5][6] - The company plans to return $0.56 per share to stockholders 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 expected year-over-year growth in Diamondback operated net oil production is over 15% [6] - Full year 2026 average production is anticipated to increase by a mid-single digit percentage from Q4 2025 production levels [7] Market Data and Key Metrics Changes - The company is experiencing increased activity from third-party operators, primarily large-cap companies like Exxon, Oxy, EOG, and Conoco, which is expected to remain consistent [18][19] - Current activity levels suggest potential upside to the mid-single digit growth outlook for 2026, driven by Diamondback operations [20] Company Strategy and Development Direction - Viper Energy is focused on maintaining a strong relationship with Diamondback, which is seen as a competitive advantage [9] - The company is pursuing organic growth while also considering accretive acquisitions, such as the SITIO royalties acquisition [6][9] 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 aims to balance free cash generation with potential non-core asset sales to reach the net debt target [13][14] Other Important Information - The SITIO acquisition is expected to close shortly after the shareholder meeting on August 18, which will enhance Viper's production profile over the next decade [6] - The company emphasizes a commitment to returning excess cash to shareholders once the net debt target is achieved [8] 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 non-core asset sales and free cash generation to reach the target [12][13] Question: Mix of buybacks versus variable dividends - Management noted that they prefer to be a distribution vehicle but may lean towards buybacks given the current stock valuation [15] Question: Sustainability of third-party operator activities - Management highlighted that large-cap operators are expected to maintain their development plans, benefiting Viper's production [18][19] Question: Evaluation of non-core assets in the CTO portfolio - Management stated they will be patient with larger positions and may consider selling non-core assets when market conditions are favorable [24] Question: Strategy regarding dividends and buybacks post-acquisition - Management suggested that the board may consider increasing the base dividend in the next quarter, depending on free cash flow growth [49] Question: Availability of M&A opportunities - Management indicated a cautious approach to M&A, focusing on ensuring the success of recent acquisitions before pursuing new deals [52]

Viper Energy Investment Highlights - Viper's Q2 2025 cash available for distribution was $0.74 per share, with a total return of capital to Class A shareholders of $0.56 per share[14] - The company turned 302 total gross (6.5 net 100% royalty interest) horizontal wells to production during Q2 2025, with an average lateral length of 12,846 feet[14] - Viper closed a drop-down acquisition of Diamondback's mineral and royalty interests on May 1, 2025, for approximately $1 billion in cash and 69.6 million OpCo units[14] - Q3 2025 average production guidance is 46,000 - 49,000 bo/d (86,000 - 92,000 boe/d)[14] - Viper entered into a definitive agreement to acquire Sitio Royalties Corp in an all-equity transaction on June 3, 2025[14] - Post-Sitio Acquisition, estimated production for the balance of 2025 is 64,000 - 68,000 bo/d (122,000 - 130,000 boe/d)[14] Return of Capital - The base dividend of $0.33 per share implies a 3.6% annualized yield, representing approximately 45% of estimated cash available for distribution assuming $50 WTI[14] - A variable dividend for Q2 2025 of $0.20 per share was declared, bringing the total base-plus-variable dividend to $0.53 per share, implying a 5.8% annualized yield[14] - The board authorized a $750 million share repurchase program, with 13.7 million shares repurchased through August 1, 2025, for an aggregate of $326 million at an average price of $23.76 per share[14] Financial Position - Viper has a market capitalization of $10.9 billion, net debt of $1.1 billion, and liquidity of $1.2 billion[21] - The company has approximately 61,275 net royalty acres in the Permian Basin, with 69 rigs currently operating on its acreage[14, 21]

Core Insights - Viper Energy Inc. (VNOM) reported second-quarter 2025 adjusted earnings per share of 41 cents, exceeding the Zacks Consensus Estimate of 34 cents, but down from 61 cents a year ago [1][9] - The company generated operating income of $297 million, surpassing the Zacks Consensus Estimate of $294 million, and increased from $217 million in the same quarter last year [1][9] Production - The company produced 7,215 thousand oil-equivalent barrels (MBoe), up from 4,320 MBoe a year ago, exceeding the estimate of 6,940 MBoe [3] - Oil accounted for approximately 52.5% of total production, with oil production rising to 3,787 thousand barrels (MBbls) from 2,398 MBbls a year ago, surpassing the estimate of 3,748 MBbls [3][9] - Natural gas production increased to 10,132 million cubic feet (MMcf) in Q2 2025, compared to 5,631 MMcf in Q2 2024 [4] Realized Prices - 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 [5] - The average realized oil price was $63.64 per barrel, down from $81.04 a year ago, and missed the estimate of $64.22 [5] - 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 [6] Costs and Expenses - Total expenses in Q2 were $162 million, significantly higher than $68 million in the prior-year quarter and above the estimate of $151.8 million [7] - On a per barrel of oil-equivalent (Boe) basis, total operating expenses were $3.60, down from $4.36 in the year-ago quarter, and below the estimate of $4.35 [7] Cash Flow - Net cash provided by operating activities was $172 million, an increase from $144 million in Q2 2024 [8] Balance Sheet - As of June 30, 2025, Viper Energy's cash and cash equivalents were $28 million, with net long-term debt reported at $1,098 million [10] Guidance - The company projects production for Q3 2025 to be in the range of 86-92 Mboe/d, with full-year 2025 net production projected to be in the 76.5-81.5 Mboe/d range [11]

Core Insights - Viper Energy Partners reported $297 million in revenue for Q2 2025, a 37.1% year-over-year increase, with an EPS of $0.41 compared to $0.61 a year ago, indicating a positive revenue surprise of +0.94% over estimates and a +20.59% EPS surprise [1] Financial Performance - Average daily combined volumes were 79,286.00 BOE/D, exceeding the average estimate of 76,642.98 BOE/D [4] - Average sales prices for Natural Gas Liquids were $20.70, above the estimate of $20.04, while Natural Gas prices were $0.99, below the estimate of $1.88 [4] - Crude Oil production was reported at 3,787.00 MBBL, slightly below the estimate of 3,823.16 MBBL, with average sales prices at $63.64, close to the estimate of $63.83 [4] - Total production reached 7,215.00 MBOE, surpassing the estimate of 6,980.37 MBOE [4] Income Breakdown - Natural Gas Income was reported at $10 million, significantly lower than the estimate of $20.61 million, but showed a year-over-year increase of +774.9% [4] - Natural Gas Liquids Income was $36 million, exceeding the estimate of $29.34 million, with a year-over-year increase of +79.9% [4] - Oil income was $241 million, slightly below the estimate of $242.18 million, reflecting a +24% year-over-year change [4] - Lease bonus income was reported at $10 million, significantly higher than the estimate of $1.2 million [4] - Royalty income was $287 million, slightly below the estimate of $292.64 million, with a year-over-year increase of +33.2% [4] Stock Performance - Viper Energy's shares have returned -3.8% over the past month, while the Zacks S&P 500 composite increased by +0.6%, indicating underperformance relative to the broader market [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3]

[Q2 2025 Financial and Operating Results](index=1&type=section&id=Q2%202025%20Financial%20and%20Operating%20Results) [Second Quarter Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) Viper Energy reported strong Q2 2025 results with average production of 79,286 boe/d, consolidated net income of $84 million, and a total declared dividend of $0.53 per share. The company returned $73 million to shareholders through dividends and a $10 million share repurchase, representing 75% of cash available for distribution Q2 2025 Key Financial and Operating Metrics | Metric | Value | | :--- | :--- | | Average Production | 41,615 bo/d (79,286 boe/d) | | Consolidated Net Income | $84 million | | Net Income Attributable to Viper | $37 million, or $0.28/share | | Cash Available for Distribution | $97 million, or $0.74/share | | Base Dividend per Share | $0.33 | | Variable Dividend per Share | $0.20 | | Total Dividend per Share | $0.53 | | Shares Repurchased | 255,843 shares for ~$10 million | | Total Return of Capital | $73 million (75% of cash available for distribution) | - During Q2 2025, **302 total gross horizontal wells (6.5 net)** were turned to production on Viper's acreage, with an average lateral length of **12,846 feet**[4](index=4&type=chunk) [Recent Events and Forward Outlook](index=1&type=section&id=Recent%20Events%20and%20Forward%20Outlook) Viper is advancing its all-equity acquisition of Sitio Royalties, valued at approximately $4.1 billion, with a shareholder vote scheduled for August 18, 2025. The company completed a $1.0 billion drop-down transaction with Diamondback and issued new senior notes. Management expressed confidence in continued organic growth into 2026 and established a long-term net debt target of $1.5 billion, signaling a potential increase in cash returns to shareholders once this target is met - Entered a definitive agreement on June 3, 2025, to acquire Sitio Royalties Corp. in an all-equity transaction valued at approximately **$4.1 billion**. The deal is subject to approval by Sitio's shareholders, with a vote scheduled for **August 18, 2025**[3](index=3&type=chunk)[5](index=5&type=chunk) - On May 1, 2025, Viper closed a drop-down transaction, acquiring mineral and royalty subsidiaries from its parent company, Diamondback, for **$1.0 billion** in cash and **69.6 million OpCo units**[4](index=4&type=chunk) - CEO Kaes Van't Hof highlighted strong oil production growth and expects the organic growth trajectory to continue into **2026**, supported by the company's relationship with Diamondback[6](index=6&type=chunk) - The company has set a pro forma long-term net debt target of **$1.5 billion**. Once net debt is at or below this level, Viper intends to return up to **100% of cash available for distribution** to stockholders[6](index=6&type=chunk) - On July 23, 2025, Viper closed an offering of **$500 million** in **4.900% senior notes due 2030** and **$1.1 billion** in **5.700% senior notes due 2035**[10](index=10&type=chunk)[12](index=12&type=chunk) [Financial Update](index=2&type=section&id=Financial%20Update) In Q2 2025, Viper's total equivalent realized price was $41.03/boe on a hedged basis. The company generated $297 million in total operating income. As of June 30, 2025, Viper had net debt of $1.1 billion with approximately $1.2 billion of available liquidity Q2 2025 Average Realized Prices | Price Type | Oil ($/bbl) | Natural Gas ($/Mcf) | NGLs ($/bbl) | Total ($/boe) | | :--- | :--- | :--- | :--- | :--- | | Unhedged | $63.64 | $0.99 | $20.70 | $39.78 | | Hedged | $62.85 | $1.58 | $20.70 | $41.03 | - For the second quarter of 2025, the company recorded total operating income of **$297 million** and consolidated net income of **$84 million**[8](index=8&type=chunk) - As of June 30, 2025, the company had a cash balance of **$28 million** and total long-term debt of **$1.1 billion**, resulting in net debt of **$1.1 billion**. Approximately **$1.2 billion** was available for borrowing under its revolving credit facility[9](index=9&type=chunk) [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) Viper's board declared a total cash dividend of $0.53 per Class A common share for Q2 2025, comprising a $0.33 base and a $0.20 variable dividend. Additionally, the company repurchased approximately $10 million of its Class A common stock during the quarter Q2 2025 Dividends per Class A Common Share | Dividend Type | Amount per Share | | :--- | :--- | | Base Cash Dividend | $0.33 | | Variable Cash Dividend | $0.20 | | **Total Dividend** | **$0.53** | - In Q2 2025, Viper repurchased **255,843 shares** of Class A common stock for approximately **$10 million**. Since November 2020, the company has repurchased a total of **13.7 million shares** for approximately **$326 million**[15](index=15&type=chunk) [Operations Update](index=3&type=section&id=Operations%20Update) During Q2 2025, 302 gross horizontal wells were turned to production on Viper's acreage, with 76 operated by Diamondback and 226 by third parties. As of June 30, 2025, the company held approximately 61,275 net royalty acres and had 1,101 gross wells in active development - In Q2 2025, **302 gross wells** were turned to production on Viper's acreage. Of these, **76** were operated by Diamondback (average **5.5% royalty interest**) and **226** by third parties (average **1.0% royalty interest**)[16](index=16&type=chunk) - As of June 30, 2025, Viper's mineral and royalty interests footprint was approximately **61,275 net royalty acres**[17](index=17&type=chunk) Well Count Summary as of June 30, 2025 | Well Category | Diamondback Operated | Third-Party Operated | Total | | :--- | :--- | :--- | :--- | | **Horizontal Producing Wells (Gross)** | 3,795 | 11,100 | 14,895 | | **Horizontal Active Development (Gross)** | 284 | 817 | 1,101 | | **Line of Sight Wells (Gross)** | 295 | 589 | 884 | [Guidance Update](index=5&type=section&id=Guidance%20Update) Viper has issued Q3 2025 production guidance of 86,000 to 92,000 boe/d and full-year 2025 guidance of 76,500 to 81,500 boe/d. The company also provided estimates for unit costs, including depletion at $16.50-$17.50 per boe. This guidance does not incorporate the pending Sitio acquisition - The provided guidance for Q3 and full-year 2025 does not take into account the pending Sitio Acquisition[20](index=20&type=chunk) Q3 and Full Year 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net Production (Mbo/d) | 46.0 - 49.0 | 41.0 - 43.5 | | Net Production (Mboe/d) | 86.0 - 92.0 | 76.5 - 81.5 | | Depletion ($/boe) | - | $16.50 - $17.50 | | Cash G&A ($/boe) | - | $0.80 - $1.00 | | Production & Ad Valorem Taxes | - | ~7% of Revenue | [Financial Statements](index=10&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Viper's total assets grew significantly to $9.79 billion as of June 30, 2025, from $5.07 billion at year-end 2024, primarily driven by an increase in oil and natural gas properties. Total liabilities remained relatively stable at $1.18 billion, leading to a substantial increase in total equity to $8.61 billion Balance Sheet Summary (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** | [Condensed Consolidated Statements of Operations](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, Viper reported total operating income of $297 million, up from $216 million in Q2 2024, driven by higher royalty income. However, due to increased costs, particularly depletion and transaction expenses, and a net loss on derivatives, net income attributable to Viper decreased to $37 million ($0.28/share) from $57 million ($0.62/share) in the prior-year quarter Statement of Operations Summary (in millions, except per share data) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Operating Income | $297 | $216 | | Total Costs and Expenses | $162 | $68 | | Income from Operations | $135 | $148 | | Net Income | $84 | $123 | | Net Income Attributable to Viper | $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) For the six months ended June 30, 2025, net cash from operating activities was $373 million. The company used $1.26 billion in investing activities, primarily for acquisitions of oil and gas interests. Financing activities provided $888 million, largely from a public offering and credit facility borrowings, which were used to fund acquisitions and shareholder returns Cash Flow Summary (in millions) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $373 | $259 | | Net Cash from Investing Activities | $(1,260) | $61 | | Net Cash from Financing Activities | $888 | $(311) | | **Net Change in Cash** | **$1** | **$9** | [Selected Operating Data](index=13&type=section&id=Selected%20Operating%20Data) Viper's average daily production increased significantly to 79,286 boe/d in Q2 2025, up from 57,378 boe/d in Q1 2025 and 47,473 boe/d in Q2 2024. The average realized price per boe was $39.78, a decrease from both the prior quarter and the year-ago period, reflecting lower commodity prices Quarterly Production Data | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Avg. Daily Oil (bo/d) | 41,615 | 31,311 | 26,352 | | Avg. Daily Combined (boe/d) | 79,286 | 57,378 | 47,473 | Quarterly Average Sales Prices | Price ($/unit) | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Oil ($/Bbl) | $63.64 | $71.33 | $81.04 | | Combined ($/boe) | $39.78 | $47.25 | $49.88 | [Non-GAAP Financial Measures and Reconciliations](index=14&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution](index=14&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Cash%20Available%20for%20Distribution) For Q2 2025, Viper reported a consolidated Adjusted EBITDA of $274 million. After accounting for non-controlling interests and other adjustments, the Adjusted EBITDA attributable to Viper was $120 million, which resulted in $97 million of cash available for distribution to shareholders Q2 2025 Reconciliation (in millions) | Metric | Amount | | :--- | :--- | | Net Income (Consolidated) | $84 | | Adjustments (Depletion, Interest, etc.) | +$190 | | **Consolidated Adjusted EBITDA** | **$274** | | Less: Attributable to Non-controlling Interest | $(154) | | **Adjusted EBITDA Attributable to Viper** | **$120** | | Adjustments (Taxes, Debt Service, etc.) | $(23) | | **Cash Available for Distribution** | **$97** | [Reconciliation of Net Income to Adjusted Net Income](index=16&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) After adjusting for non-cash derivative losses and transaction expenses, Viper's adjusted net income attributable to the company for Q2 2025 was $54 million, or $0.41 per diluted share. This compares to a GAAP net income of $37 million, or $0.28 per diluted share Q2 2025 Adjusted Net Income Reconciliation (in millions, except per share) | Metric | Amount | Per Diluted Share | | :--- | :--- | :--- | | Net Income Attributable to Viper (GAAP) | $37 | $0.28 | | Adjustments (Derivatives, Transaction Costs, etc.) | +$17 | +$0.13 | | **Adjusted Net Income Attributable to Viper** | **$54** | **$0.41** | [Reconciliation of Long-Term Debt to Net Debt](index=17&type=section&id=Reconciliation%20of%20Long-Term%20Debt%20to%20Net%20Debt) As of June 30, 2025, Viper's total long-term debt was $1.105 billion. After subtracting cash and cash equivalents of $28 million, the company's net debt stood at $1.077 billion Net Debt Calculation as of June 30, 2025 (in millions) | Component | Amount | | :--- | :--- | | Total long-term debt | $1,105 | | Less: Cash and cash equivalents | $(28) | | **Net debt** | **$1,077** | [Other Information](index=6&type=section&id=Other%20Information) [Derivatives](index=18&type=section&id=Derivatives) Viper maintains a portfolio of derivative contracts to manage commodity price risk. As of the release date, this includes deferred premium puts for crude oil through Q1 2026 and costless collars and basis swaps for natural gas extending into 2027 Outstanding Derivative Contracts Summary | Commodity | Contract Type | Period | Volume | Price/Strike Range | | :--- | :--- | :--- | :--- | :--- | | Crude Oil | Deferred Premium Puts | Q3 2025 - Q1 2026 | 18,000 - 40,000 Bbls/day | $55.00 Strike | | Natural Gas | Costless Collars | Q3 2025 - Q4 2026 | 60,000 Mmbtu/day | $2.50 - $6.64 | | Natural Gas | Basis Swaps | Q3 2025 - FY 2027 | 40,000 - 80,000 Mmbtu/day | $(1.00) - $(1.61) | [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section provides a standard safe harbor statement, cautioning investors that the report contains forward-looking statements involving risks and uncertainties. It lists various factors that could cause actual results to differ materially from projections, such as the Sitio acquisition risks, commodity price volatility, and regulatory changes - The earnings release contains forward-looking statements concerning future performance, business strategy, the Sitio Acquisition, dividend policy, and share repurchase programs[25](index=25&type=chunk) - Key risks that could cause actual results to differ include the ability to close and integrate the Sitio Acquisition, commodity price volatility, actions by OPEC and Russia, interest rate changes, and legislative or regulatory initiatives[26](index=26&type=chunk)