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]

Core Viewpoint - The company sees potential acquisition opportunities if international oil prices continue to decline, and it plans to adjust and optimize its oil and gas asset portfolio based on market conditions and its management capabilities [1][4]. Financial Performance - In Q1, the company reported revenue of 1068.54 billion yuan, a year-on-year decrease of 4.1%, and a net profit attributable to shareholders of 365.63 billion yuan, down 7.9% year-on-year [1]. - The average selling price of oil liquids fell by 7.7% to 72.65 USD/barrel, negatively impacting profit margins due to lower oil prices [1]. - The average Brent crude oil futures price decreased by 8.3% year-on-year to 74.98 USD/barrel, leading to a 1.9% decline in oil and gas sales revenue to 882.7 billion yuan, with oil sales revenue down 4.6% to 746.3 billion yuan [1]. Production and Cost Management - The company's total net production increased by 4.8% year-on-year to 188.8 million barrels of oil equivalent in Q1, supported by contributions from various oil and gas fields [2]. - The average cost per barrel of oil decreased by 2% year-on-year to 27.03 USD, helping to mitigate the impact of falling oil prices [2]. Strategic Outlook - The company maintains a positive long-term outlook for the oil industry, asserting that low oil prices will not affect its long-term development strategy or its investment plans and production targets for 2025 [4]. - The company emphasizes a low-cost strategy and aims to maintain a cost advantage among major global oil companies, regardless of oil price fluctuations [4]. - The company is committed to global oil and gas asset allocation and views potential declines in international oil prices as favorable for acquisitions, leveraging its strong cash flow and low cost structure [4].