Company Overview - Viper Energy (NASDAQ: VNOM) has recently completed the acquisition of Sitio Royalties, which significantly enhances its production capacity to approximately 126,000 BOEPD [2] Production Growth - Following the acquisition, Viper Energy anticipates mid-single-digit production growth from the new production level by 2026 [2]

Group 1 - Sitio Royalties reported $145.66 million in revenue for Q2 2025, a year-over-year decline of 13.6% [1] - The EPS for the same period was $0.08, down from $0.15 a year ago, but exceeded the consensus estimate of $0.04 by 100% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $136.5 million, resulting in a surprise of +6.71% [1] Group 2 - Sitio Royalties' average daily combined production volume was 41,879.00 BOE/D, slightly above the average estimate of 40,916.75 BOE/D [4] - Average realized prices for natural gas were $1.43, significantly lower than the $2.09 average estimate [4] - Average realized prices for crude oil were $63.03, closely aligning with the estimated $62.98 [4] - Average realized prices for NGLs were $22.57, exceeding the $16.91 average estimate [4] - Revenue from NGLs was $19.98 million, surpassing the two-analyst average estimate of $14.7 million [4] Group 3 - Over the past month, shares of Sitio Royalties returned -4.2%, while the Zacks S&P 500 composite increased by +0.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Group 1 - The core appeal of SBR lies in providing monthly cash flow to investors seeking regular income [1] - SBR owns a diversified portfolio of perpetual royalties from both producing and proved undeveloped oil wells [1]

Group 1 - The law firm Wohl & Fruchter LLP is investigating the fairness of the proposed merger between Sitio Royalties Corp. and Viper Energy, Inc. in an all-stock transaction valuing Sitio at approximately $19.41 per share [1][3] - The implied deal price of $19.41 per Sitio share is below the price targets set by at least four Wall Street analysts, raising concerns about the fairness of the merger [4][6] - Sitio shareholders will receive 0.4855 shares of Class A common stock of a new holding company for each share of Sitio, resulting in them owning only 20% of the combined company post-merger [3][4] Group 2 - Wohl & Fruchter LLP is examining whether the Sitio Board of Directors acted in the best interests of Sitio shareholders in approving the merger and if all material information regarding the transaction has been fully disclosed [4] - The firm has a history of representing investors in litigation related to corporate misconduct and has recovered hundreds of millions of dollars for investors [5]

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]

Core Viewpoint - Freehold Royalties Ltd. has announced the commencement of a normal course issuer bid (NCIB) to repurchase up to 13,699,733 common shares, representing approximately 10% of its issued and outstanding shares, to enhance shareholder value [1][2][4]. Group 1: NCIB Details - The NCIB is set to begin on May 27, 2025, and will end on the earlier of the completion of the share repurchase or May 26, 2026 [3]. - Freehold may purchase shares at a daily limit of 185,656 shares, which is 25% of the average daily trading volume of 742,626 shares over the past six months [2]. - The shares repurchased under the NCIB will be cancelled upon purchase [2]. Group 2: Rationale for Share Repurchase - The company believes that the current share price does not reflect its underlying value, and repurchasing shares will enhance per share metrics and increase overall shareholder value [4]. - An automatic securities purchase plan has been established to facilitate share repurchases during regulatory restrictions or blackout periods [5]. Group 3: Purchase Execution - Purchases will be executed by a registered broker through the TSX and other Canadian trading platforms at prevailing market prices [3]. - The actual number of shares purchased and the timing will be determined by the company [4].

Financial Data and Key Metrics Changes - The first quarter of 2025 marked a record production quarter for the company, with total production up 3% quarter over quarter, averaging over 42,000 BOE per day [6] - Adjusted EBITDA was $142 million, reflecting a 1% increase from the prior quarter, while net income rose 36% to $26 million [7] - The company declared a cash dividend of $0.35 per share and repurchased 1,100,000 shares for $22 million during the first quarter, representing a return of capital of $0.50 per share [7][8] Business Line Data and Key Metrics Changes - Net wells turned in line increased by 34% from Q4 2024, primarily driven by activity in the Delaware Basin [6] - The company closed over $20 million in acquisitions, adding 1,350 net royalty acres [6] Market Data and Key Metrics Changes - The company updated its full-year 2025 estimated cash taxes guidance to $23 million, reflecting a $5 million decrease from the original estimate due to lower anticipated commodity prices [9] Company Strategy and Development Direction - The company emphasizes the advantages of minerals and royalties as a high-margin investment opportunity, with no direct operating costs or obligatory capital spending [10][11] - The focus remains on asset quality, operator quality, and asset/operator diversity to maximize returns [19] - The company is actively evaluating consolidation opportunities in the fragmented minerals and royalties market [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the production trajectory for the next two quarters, underpinned by existing producing wells [26] - The company remains optimistic about the long-term outlook for oil and natural gas, despite short-term price fluctuations [60] - Management noted that operators are curtailing capital expenditures while maintaining production guidance, indicating a cautious approach to capital discipline [58] Other Important Information - The company has a remaining buyback capacity of approximately $350 million following the Board's authorization for an additional $300 million in share repurchases [8][22] - The company has increased its inventory estimate by 40 additional net normalized locations, a 10% quarter-over-quarter increase [16] Q&A Session Summary Question: Outlook on production trajectory for the next two quarters - Management feels relatively good about production trajectory, underpinned by existing producing wells and wells that have been spud [26][27] Question: Comparison of share repurchase value versus M&A opportunities - Management sees a balance between the value of buying back stock and pursuing M&A opportunities, noting the unique value proposition of their stock [28][30] Question: Changes in productivity of wells relative to underwritten assumptions - Management conducts look backs on past acquisitions and feels confident about future projections based on current geologic facts [32][36] Question: Clarification on 1Q production and full-year guidance - Management is pleased with 1Q production but expects to revisit guidance later in the year based on more data [40][41] Question: Trend of share repurchases in relation to commodity price volatility - Management's buyback program is designed to take advantage of price dislocations, with an expectation of increased repurchases at lower prices [44] Question: Context on the increase of 40 net locations - The increase was split between the Delaware and Midland Basins, based on positive well results and operator activity [50][52] Question: Observations on operators' strategies for managing base decline - Management noted that operators are being cautious with capital discipline, which may lead to a self-correcting nature in the industry [58][60]

Financial Data and Key Metrics Changes - The first quarter of 2025 marked a record production quarter for the company, with total production up 3% quarter over quarter, averaging over 42,000 BOE per day [5] - Adjusted EBITDA was $142 million, reflecting a 1% increase from the prior quarter, while net income rose 36% to $26 million [6] - The company declared a cash dividend of $0.35 per share and repurchased 1,100,000 shares for $22 million, representing a return of capital of $0.50 per share for the first quarter [6][7] Business Line Data and Key Metrics Changes - Net wells turned in line increased by 34% from Q4 2024, primarily driven by the Delaware Basin [5] - The company closed over $20 million in acquisitions, adding 1,350 net royalty acres [5] Market Data and Key Metrics Changes - The company updated its full-year 2025 estimated cash taxes guidance to $23 million, reflecting a decrease of $5 million from the original estimate due to lower anticipated commodity prices [8] Company Strategy and Development Direction - The company emphasizes the unique advantages of minerals and royalties as an asset class, highlighting their non-cost-bearing nature and high-margin investment opportunities [10][11] - The focus is on asset quality, operator quality, and asset/operator diversity to maximize returns [18] - The company is actively evaluating consolidation opportunities in a fragmented market, aiming to enhance its portfolio [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the quality of assets and their ability to compete for operator capital in various commodity price environments [20] - The company remains cautious about the current market dynamics but believes in the long-term value of its assets [60] Other Important Information - The company has maintained a disciplined approach to acquisitions, focusing on high-quality assets and operators [18] - The company has repurchased over 4% of its stock in the last fourteen months, with an additional $300 million authorized for share repurchases [21] Q&A Session Summary Question: Production trajectory outlook for the next two quarters - Management indicated confidence in production trajectory, supported by existing producing wells and wells that have been spud [26] Question: Comparison of share repurchase value versus M&A opportunities - Management highlighted a balance between share repurchases and M&A opportunities, noting the unique value proposition of their stock [27][29] Question: Insights on production guidance and operator strategies - Management acknowledged the strong first-quarter production but indicated that guidance may be revisited based on future data [40] Question: Context on inventory increase of 40 net locations - Management explained that the increase was due to successful well results in the Delaware and Midland Basins, reflecting ongoing operator activity [50] Question: Observations on operators' strategies for managing base decline - Management noted that operators are curtailing CapEx while maintaining production guidance, indicating a cautious approach to capital discipline [58]

Core Insights - Sitio Royalties reported revenue of $163.52 million for Q1 2025, an 8% year-over-year increase, with an EPS of $0.13 compared to $0.10 a year ago, indicating strong financial performance [1] - The revenue exceeded the Zacks Consensus Estimate of $151.5 million by 7.93%, while the EPS surpassed the consensus estimate of $0.10 by 30% [1] Financial Performance Metrics - The average daily combined production volume was 42,136 BOE/D, slightly above the estimated 42,055.56 BOE/D [4] - Average realized prices for natural gas were $2.30, exceeding the estimate of $2.09, while crude oil prices were $70.39, close to the estimate of $70.56 [4] - Average realized prices for NGLs were $24.57, significantly higher than the estimated $18.93, contributing to revenue of $22.46 million, which also surpassed the estimate of $17.68 million [4] Stock Performance - Sitio Royalties shares have returned +12.5% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change, indicating positive market sentiment [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance & Returns - Sitio reported solid financial performance, exceeding consensus estimates for 1Q25 production at approximately 42 MBoe/d and Adjusted EBITDA at approximately $142 million[10] - The company boasts high Adjusted EBITDA Margins, exceeding 87%[10] - Sitio's cumulative return of capital since becoming public in 2022 is greater than $915 million, representing over 35% of the company's market capitalization[10, 34, 35] - The company returned $0.50 per share to shareholders in 1Q25, comprised of a $0.35 per share cash dividend and $0.15 per share of stock repurchases[11] Capital Allocation & Debt - Sitio is committed to returning at least 65% of Discretionary Cash Flow (DCF) to shareholders through dividends and share repurchases[37] - The board authorized an additional $300 million for share repurchases, bringing the total remaining buyback capacity to approximately $350 million[10, 37] - Sitio's Adjusted Net Debt to 2024 Free Cash Flow (FCF) ratio is approximately 0.3x, which is about half the peer group average of 4.7x[42] Acquisitions & Asset Management - The company closed 3 transactions in 1Q25 for approximately $21 million, adding approximately 1,350 NRAs[10, 11] - Missing payments captured in the last twelve months (LTM) ending March 31, 2025, amounted to $15 million, offsetting approximately 40% of the midpoint of the 2025 Cash G&A guidance[10, 74] Production & Outlook - Average daily production for 1Q25 was 42.1 MBoe/d, including 18.9 MBbls/d of oil production, representing a 19% year-over-year increase in total production[8, 11] - The company's 2025 full-year guidance projects average daily production between 38,250 and 41,250 Boe/d, and average daily oil production between 17,750 and 19,250 Bbls/d[45] Market Positioning - Sitio's Free Cash Flow (FCF) margin is greater than 3.5x higher than the E&P average[13] - The company has a large, diverse asset base with active operators and over 10 years of remaining development[56]