Financial Data and Key Metrics Changes - Viper Energy reported strong oil production growth in Q2 2025 despite oil price volatility, with a focus on organic growth from Diamondback [5][6] - The company plans to return $0.56 per share to stockholders this quarter, representing 75% of cash available for distribution [7] - The pro forma net debt target is set at $1.5 billion, which represents approximately one turn of leverage at $50 WTI [7][8] Business Line Data and Key Metrics Changes - The expected year-over-year growth in Diamondback operated net oil production is over 15% [6] - Full year 2026 average production is anticipated to increase by a mid-single digit percentage from Q4 2025 production levels [7] Market Data and Key Metrics Changes - The company is experiencing increased activity from third-party operators, primarily large-cap companies like Exxon, Oxy, EOG, and Conoco, which is expected to remain consistent [18][19] - Current activity levels suggest potential upside to the mid-single digit growth outlook for 2026, driven by Diamondback operations [20] Company Strategy and Development Direction - Viper Energy is focused on maintaining a strong relationship with Diamondback, which is seen as a competitive advantage [9] - The company is pursuing organic growth while also considering accretive acquisitions, such as the SITIO royalties acquisition [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the organic growth trajectory continuing into 2026 at current prices [6] - The company aims to balance free cash generation with potential non-core asset sales to reach the net debt target [13][14] Other Important Information - The SITIO acquisition is expected to close shortly after the shareholder meeting on August 18, which will enhance Viper's production profile over the next decade [6] - The company emphasizes a commitment to returning excess cash to shareholders once the net debt target is achieved [8] Q&A Session Summary Question: Flexibility towards the $1.5 billion net debt target - Management indicated that the business can generate significant free cash flow, allowing for a mix of non-core asset sales and free cash generation to reach the target [12][13] Question: Mix of buybacks versus variable dividends - Management noted that they prefer to be a distribution vehicle but may lean towards buybacks given the current stock valuation [15] Question: Sustainability of third-party operator activities - Management highlighted that large-cap operators are expected to maintain their development plans, benefiting Viper's production [18][19] Question: Evaluation of non-core assets in the CTO portfolio - Management stated they will be patient with larger positions and may consider selling non-core assets when market conditions are favorable [24] Question: Strategy regarding dividends and buybacks post-acquisition - Management suggested that the board may consider increasing the base dividend in the next quarter, depending on free cash flow growth [49] Question: Availability of M&A opportunities - Management indicated a cautious approach to M&A, focusing on ensuring the success of recent acquisitions before pursuing new deals [52]

Viper Energy Investment Highlights - Viper's Q2 2025 cash available for distribution was $0.74 per share, with a total return of capital to Class A shareholders of $0.56 per share[14] - The company turned 302 total gross (6.5 net 100% royalty interest) horizontal wells to production during Q2 2025, with an average lateral length of 12,846 feet[14] - Viper closed a drop-down acquisition of Diamondback's mineral and royalty interests on May 1, 2025, for approximately $1 billion in cash and 69.6 million OpCo units[14] - Q3 2025 average production guidance is 46,000 - 49,000 bo/d (86,000 - 92,000 boe/d)[14] - Viper entered into a definitive agreement to acquire Sitio Royalties Corp in an all-equity transaction on June 3, 2025[14] - Post-Sitio Acquisition, estimated production for the balance of 2025 is 64,000 - 68,000 bo/d (122,000 - 130,000 boe/d)[14] Return of Capital - The base dividend of $0.33 per share implies a 3.6% annualized yield, representing approximately 45% of estimated cash available for distribution assuming $50 WTI[14] - A variable dividend for Q2 2025 of $0.20 per share was declared, bringing the total base-plus-variable dividend to $0.53 per share, implying a 5.8% annualized yield[14] - The board authorized a $750 million share repurchase program, with 13.7 million shares repurchased through August 1, 2025, for an aggregate of $326 million at an average price of $23.76 per share[14] Financial Position - Viper has a market capitalization of $10.9 billion, net debt of $1.1 billion, and liquidity of $1.2 billion[21] - The company has approximately 61,275 net royalty acres in the Permian Basin, with 69 rigs currently operating on its acreage[14, 21]

Core Insights - PrairieSky Royalty Ltd. reported record oil royalty production volumes of 14,376 barrels per day in Q2 2025, an 8% increase compared to Q2 2024, contributing to year-to-date oil royalty production of 13,941 barrels per day [3][6] - The company generated funds from operations totaling $96.7 million ($0.41 per share) in Q2 2025, a 9% decrease from Q2 2024, primarily due to lower US$ WTI benchmark pricing despite record production volumes [4][6] - PrairieSky declared a dividend of $0.26 per share, totaling $61.2 million, with a payout ratio of 63% [5][13] Financial Performance - Total revenues for Q2 2025 amounted to $123.6 million, consisting of $111.2 million in royalty production revenue and $12.4 million in other revenue, including $8.5 million from new leasing arrangements [4][6] - Oil royalty production revenue decreased by 14% from Q2 2024, totaling $95.7 million, attributed to lower benchmark pricing and a weaker Canadian dollar [4][6] - Natural gas royalty production volumes averaged 58.4 MMcf per day, generating $7.9 million in revenue, an 80% increase from Q2 2024, driven by improved benchmark pricing [4][6] Operational Highlights - Third-party operators spud 117 wells on PrairieSky's royalty acreage in Q2 2025, with 97% being oil wells, compared to 115 wells in Q2 2024 [7] - The company expects initial royalty production from multiple Duvernay wells in the West Shale Basin in Q3 2025, indicating continued growth in annual oil royalty production [3][4] - PrairieSky's net debt as of June 30, 2025, was $242.0 million, a decrease of $16.8 million from March 31, 2025 [5][13] Strategic Initiatives - The company allocated excess funds from operations to acquire $6.5 million in incremental royalty interests and repurchased 84,020 common shares for $2.0 million [5][6] - PrairieSky expanded its credit facility by $250 million, increasing the total available credit limit to $600 million, enhancing liquidity and financial flexibility [5][7] - The normal course issuer bid (NCIB) remains a key part of PrairieSky's long-term capital allocation strategy to create shareholder value [5][6]

Financial Data and Key Metrics Changes - Kimbell Royalty Partners reported oil, natural gas, and NGL revenues of $69.1 million for Q4 2024, excluding acquired production, with record run-rate production of 25,946 BOE per day [14][15] - Consolidated adjusted EBITDA for Q4 2024 was $59.8 million, excluding acquired production [15] - The company announced a cash distribution of $0.40 per common unit for Q4 2024, equating to 75% of cash available for distribution [16] Business Line Data and Key Metrics Changes - The company maintained a strong drilling activity with 91 rigs actively drilling on its acreage, representing approximately 16% market share of all land rigs in the continental U.S. [10][14] - The five-year annual average PDP decline rate is 14%, requiring only an estimated 6.5% net wells annually to maintain flat production [11] Market Data and Key Metrics Changes - Kimbell Royalty Partners has a conservative balance sheet with net debt to trailing twelve-month consolidated adjusted EBITDA of approximately 0.8 times [17] - The company had approximately $310.8 million in undrawn capacity under its secured revolving credit facility as of December 31, 2024 [17] Company Strategy and Development Direction - Kimbell aims to continue as a major consolidator in the U.S. oil and gas royalty sector, which is estimated to be over $700 billion in size [20] - The company is focused on larger acquisitions, targeting $100 million-plus deals, to avoid increasing leverage from smaller transactions [73][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the prospects for continued robust development in 2025, supported by the number of rigs actively drilling on their acreage, especially in the Permian Basin [19] - The new administration's support for increased domestic energy output is seen as beneficial for the company as a mineral owner [30] Other Important Information - Kimbell has grown production from 3,116 BOE per day to 25,946 BOE per day since its IPO eight years ago, an increase of 733% [20] - The company plans to redeem about half of its preferred shares in May 2025, while continuing to use 25% of cash flow to pay down debt [44][50] Q&A Session Summary Question: Are there any particular basins where you're seeing an abundance of opportunity to add acreage? - Management noted that while the Permian continues to see the most consolidation, opportunities are being explored across the U.S. without targeting a specific basin [25][26] Question: Has the new administration's regulatory changes affected opportunities? - Management indicated that the administration has been supportive of increased domestic energy output, which benefits the company [30] Question: Can you discuss the 2025 guidance and the quality of acquired assets? - Management stated that the guidance reflects flat growth, with a strong line of sight inventory and confidence in the quality of acquired assets [38][41] Question: What are the plans for redeeming preferred shares? - Management confirmed plans to redeem about half of the preferred shares in May and will consider financing options for future acquisitions [44][50] Question: How does the competitive landscape for M&A look? - Management emphasized a focus on high-quality properties regardless of commodity price movements, and noted that consolidation tends to be a net positive for mineral owners [62][67]