Viper(US:VNOM)2025-05-06 15:00Financial Data and Key Metrics Changes - Viper Energy reported a strong first quarter with both oil and total production exceeding guidance ranges [5] - The Q1 dividend was $0.57, which was approximately $0.07 lower than it would have been due to share issuance [6] - The company expects leverage to remain below one times even in a sustained $50 per barrel WTI environment [6] Business Line Data and Key Metrics Changes - The dropdown transaction with Diamondback closed on May 1, which is expected to enhance Viper's financial position [6] - Approximately 45% of Viper's current production is operated by third parties, primarily by well-capitalized operators like ExxonMobil [8] Market Data and Key Metrics Changes - The company has entered a period of lower commodity prices and significant market volatility since the end of Q1 [5] - Viper's production is expected to remain durable despite potential sustained weakness in commodity prices [7] Company Strategy and Development Direction - Viper aims to leverage its strong balance sheet during periods of market volatility, including opportunistic share repurchases [6] - The company is positioned as a consolidator in the fragmented minerals and royalty space, with a focus on high-quality assets [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Viper's ability to navigate the current market volatility and maintain production levels [7] - The company held its production guidance for the second half of 2025, indicating resilience in its operations [7] Other Important Information - Viper was upgraded to investment grade by Fitch, enhancing its access to capital [41] - The company plans to retain approximately $25 million of incremental capital for future allocation decisions [7] Q&A Session Summary Question: Does the macro environment influence Viper's willingness to engage in M&A? - Management stated that macro conditions do not impact their desire to consolidate the minerals market, although deal availability may be affected [12] Question: Have activity assumptions in Reagan County changed following the dropdown? - Management indicated that they are still modeling completions in that area starting in 2026 and do not expect changes at this time [13] Question: Where do future M&A opportunities lie? - Management expressed agnosticism between Midland and Delaware for M&A opportunities, emphasizing the importance of price and opportunity set [19] Question: Will recent volatility affect hedging strategies? - Management confirmed that they remain comfortable with their current hedging strategy, focusing on protecting downside while maintaining upside potential [21] Question: How does Viper view its exposure to industry concerns with development at current prices? - Management noted minimal impact on Viper's projects currently, but acknowledged potential future challenges if low prices persist [28] Question: Will the dividend increase in the coming quarters? - Management indicated that distributions are expected to grow at a flat commodity price, supported by the accretion from the dropdown [41] Question: What is Viper's target debt number post-dropdown? - Management stated that while they do not have a specific target, they are open to using cash for deals if opportunities arise [52]