Viper(VNOM) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION 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) 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 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 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 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 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][56] - 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][76] - 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] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - 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] - As of March 31, 2025, the company had approximately $1.9 billion of liquidity, consisting of $560 million in cash and $1.3 billion available under its revolving credit facility[166] Guidance 2025 guidance, post-'2025 Drop Down', projects full-year net production at 74.5 - 79.0 MBOE/d and Q2 at 72.5 - 78.0 MBOE/d 2025 Guidance | Metric | Q2 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net production (MBO/d) | 40.0 - 43.0 | 41.0 - 43.5 | | Net production (MBOE/d) | 72.5 - 78.0 | 74.5 - 79.0 | | Depletion ($/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 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 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] - Net cash from operating activities was $201 million for Q1 2025, up from $115 million in Q1 2024[170][171] - 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] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] - As of March 31, 2025, the company had a net asset derivative position of $36 million[188] - Interest rate risk applies to the Operating Company's revolving credit facility, which bears a floating rate[190] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other information, and exhibits Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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][198] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 5. Other Information 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] Item 6. Exhibits 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]