Viper(VNOM) - 2025 Q2 - Quarterly Results

Q2 2025 Financial and Operating Results Second Quarter Highlights 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] Recent Events and Forward Outlook 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][5] - 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] - 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] - 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] - 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][12] Financial Update 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] - 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] Shareholder Returns 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] Operations Update 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] - As of June 30, 2025, Viper's mineral and royalty interests footprint was approximately 61,275 net royalty acres[17] 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 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-$17.50 per boe. This guidance does not incorporate the pending Sitio acquisition - The provided guidance for Q3 and full-year 2025 does not take into account the pending Sitio Acquisition[20] Q3 and Full Year 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Net Production (Mbo/d) | 46.0 - 49.0 | 41.0 - 43.5 | | Net Production (Mboe/d) | 86.0 - 92.0 | 76.5 - 81.5 | | Depletion ($/boe) | - | $16.50 - $17.50 | | Cash G&A ($/boe) | - | $0.80 - $1.00 | | Production & Ad Valorem Taxes | - | ~7% of Revenue | Financial Statements Condensed Consolidated Balance Sheets 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 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 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 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 Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Distribution 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 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 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 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 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] - 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]