Core Viewpoint - Viper Energy, Inc. reported strong financial and operational results for Q2 2025, highlighting significant oil production growth and a positive outlook driven by the anticipated merger with Sitio Royalties Corp. [1][4][5] Financial Highlights - Q2 2025 average production reached 41,615 barrels of oil per day (bo/d) and 79,286 barrels of oil equivalent per day (boe/d) [6] - Consolidated net income for Q2 2025 was $84 million, with net income attributable to Viper at $37 million, equating to $0.28 per Class A common share [6][8] - Cash available for distribution to Class A common shares was $97 million, or $0.74 per share, with a declared base cash dividend of $0.33 per share, implying a 3.6% annualized yield [6][12][13] - The company repurchased 255,843 shares of Class A common stock for approximately $10 million during Q2 2025 [6][14] Operational Updates - A total of 302 gross horizontal wells were turned to production during Q2 2025, with an average lateral length of 12,846 feet [6][16] - The company maintains a footprint of approximately 61,275 net royalty acres as of June 30, 2025 [17] Recent Events and Future Outlook - The merger with Sitio is set for a shareholder vote on August 18, 2025, with expectations to close shortly after if approved [4] - Viper anticipates a year-over-year growth of over 15% in Diamondback-operated net oil production, projecting average daily production guidance for Q3 2025 between 46,000 to 49,000 bo/d [5][19] Debt and Capital Management - As of June 30, 2025, Viper had total long-term debt of $1.1 billion, with a target of maintaining net debt at or below $1.5 billion [9][11] - The company completed a public offering of $500 million in senior notes maturing in 2030 and $1.1 billion in senior notes maturing in 2035, with net proceeds used for debt redemption and general corporate purposes [11][10] Production and Pricing - Average unhedged realized prices for Q2 2025 were $63.64 per barrel of oil, $0.99 per Mcf of natural gas, and $20.70 per barrel of natural gas liquids, resulting in a total equivalent realized price of $39.78 per boe [7][8] - The company reported a total operating income of $297 million for Q2 2025 [8]

Group 1 - Viper Energy (NYSE: VNOM) is presented as a low-risk investment option in the U.S. oil and gas sector, contrasting with traditional integrated majors and exploration and production (E&P) companies [1] - The analysis provided by Energess Resources focuses on company-level insights, emphasizing valuation, capital and operational efficiency, asset quality, and shareholder alignment [1] - The initial coverage will concentrate on E&P companies in the U.S. and Canada, with plans to expand to midstream and royalty companies for a comprehensive view of the energy value chain [1] Group 2 - Investments in the energy sector are highlighted as capable of delivering strong total returns and providing diversification for long-term portfolios when approached with discipline and a value-oriented strategy [1] - The cyclical nature of commodity prices is acknowledged, but it is noted that quality companies with experienced management can still create shareholder value during challenging pricing periods [1]

Core Viewpoint - Viper Energy, Inc. has announced a significant Notes Offering totaling $1.6 billion, which includes two series of senior notes with different maturities and interest rates, aimed at refinancing existing debt and supporting potential acquisitions [1][3]. Group 1: Notes Offering Details - The offering consists of $500 million in 4.900% senior notes maturing on August 1, 2030, and $1.1 billion in 5.700% senior notes maturing on August 1, 2035 [1]. - The public pricing for the 2030 Notes is set at 99.902% of the principal amount, while the 2035 Notes are priced at 99.636% [1]. - The expected closing date for the Notes Offering is July 23, 2025, pending customary closing conditions [2]. Group 2: Use of Proceeds - The net proceeds from the Notes Offering will be utilized for general corporate purposes, including redeeming existing senior notes and potentially repaying borrowings related to the acquisition of Sitio Royalties Corp. [3]. - Specifically, the proceeds will be used to redeem Viper Energy's 7.375% senior notes due 2031 and 5.375% senior notes due 2027, as well as Sitio's 7.875% senior notes due 2028 if the acquisition closes [3]. Group 3: Company Overview - Viper Energy, Inc. is focused on owning and acquiring mineral and royalty interests in oil and natural gas properties, primarily in the Permian Basin [7].

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 in West Texas [3] - Diamondback Energy, Inc. 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 second quarter 2025 financial results on August 4, 2025, after the market closes [1] - A conference call and webcast will be held on August 5, 2025, at 10:00 a.m. CT to discuss the second quarter results [2]

Core Insights - Viper Energy, Inc. (VNOM) is acquiring Sitio Royalties for $4.1 billion, highlighting the ongoing profitability of operations in the Permian Basin despite declining crude prices [3][5][6] - The acquisition will increase VNOM's net royalty acres in the Permian to 85,700, with expected production of 122,000-130,000 barrels of oil equivalent per day by Q4 2025 [3][4][9] - The deal reflects the enduring attractiveness of the Permian Basin, where break-even costs are significantly low, making operations profitable even with current WTI prices below $65 per barrel [6][10] Company and Industry Analysis - The acquisition by VNOM indicates a positive outlook for midstream players like Enterprise Products Partners LP (EPD) and producers like Occidental Petroleum (OXY), as increased activity in the Permian is anticipated [2][9] - Occidental holds 2.9 million net acres in the Permian, with break-even costs below $50 per barrel, ensuring profitability in the current pricing environment [10] - EPD has a strong presence in the Permian and has connected over 1,000 new oil and gas wells to its infrastructure, with expectations for similar growth in the second half of 2025 [12][13]

Core Insights - Viper Energy, Inc. (VNOM) has announced an agreement to acquire Sitio Royalties (STR) in an all-stock transaction valued at $4.1 billion, which includes Sitio's net debt of $1.1 billion as of Q1 2025 [1][9] - The acquisition is expected to enhance Viper's scale and inventory, supporting sustainable production growth for the next decade and improving free cash flow generation [4] - Viper Energy plans to increase its base dividend by 10% to $1.32 per share annually, or 33 cents quarterly [1] Acquisition Details - Sitio shareholders will receive 0.4855 shares of Viper for each share of Sitio Class A common stock, implying a share price of $19.41 for Sitio's stockholders based on Viper's share price as of June 2, 2025 [2] - The deal is anticipated to close in Q3 2025, with Viper's shares rising nearly 1% and Sitio's shares gaining approximately 12% following the announcement [3] Financial and Operational Synergies - The transaction is expected to generate over $50 million in annual synergies, primarily from reduced general and administrative costs and cost of capital savings [5] - Post-acquisition, Viper Energy aims to maintain an Investment Grade rating and keep its net debt target at $1.5 billion in the near term [5] - The acquisition will lower Viper's pro forma base dividend breakeven to below $20 WTI, approximately $2 per barrel lower than previous estimates [5] Portfolio Expansion - Sitio Royalties has approximately 34,300 net royalty acres, with nearly 25,300 acres in the Permian Basin, which will increase Viper's footprint in the Permian by 42% [6][9] - The combined entity will own around 85,700 net royalty acres in the Permian Basin, with 43% operated by Diamondback [6] Production Expectations - Following the acquisition, Viper Energy's pro forma average production in Q4 is expected to be between 122,000 and 130,000 barrels of oil equivalent per day (mboe/d) [7] - Diamondback Energy will own approximately 41% of the pro forma Viper's outstanding common stock post-transaction [7]

Core Viewpoint - Viper Energy Partners has seen a 3.7% increase in shares over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Estimates Movement - Estimates for Viper Energy have remained flat over the past month, with a consensus estimate shift of -10.25% [2] VGM Scores - Viper Energy has an average Growth Score of C, a Momentum Score of B, and a Value Score of F, resulting in an aggregate VGM Score of D, indicating a poor performance in the value investment strategy [3] Outlook - Viper Energy holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the upcoming months [4] Industry Performance - Viper Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry, where EOG Resources has gained 3.8% over the past month, reporting revenues of $5.67 billion with a year-over-year change of -7.4% [5] - EOG Resources is expected to post earnings of $2.12 per share for the current quarter, reflecting a year-over-year change of -32.9%, with a Zacks Consensus Estimate change of -8.7% over the last 30 days [6]

Group 1 - Viper Energy has agreed to acquire Sitio Royalties in an all-stock transaction valued at approximately $4.1 billion, including net debt, significantly enhancing its oil and gas asset scale and inventory depth for stable production and cash flow growth over the next decade [1][2] - The transaction structure involves exchanging 0.4855 shares of the new holding company for each share of Sitio Class A common stock, implying a purchase value of $19.41 per share for Sitio shareholders based on Viper's closing price [1][2] - Following the merger, Viper's major shareholder, Diamondback Energy, will hold about 41% of the new company [1] Group 2 - The merger is expected to immediately increase the per-share distributable cash by 8% to 10% [2] - Viper's board has approved a 10% increase in the annual base dividend to $1.32 per share, with the dividend payout expected to represent about 45% of distributable cash at a WTI oil price scenario of around $50 [2] - The merger will enhance Viper's cash flow generation capacity and reduce the breakeven oil price for dividends, making the company's high-dividend, low-capital operating model more attractive [3]

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]