Viper(US:VNOM)2025-11-04 18:00Financial Data and Key Metrics Changes - Viper Energy reported a 20% increase in oil production per share for Q4 2025 compared to the same quarter last year [3] - The combined base plus variable dividend represents a greater than 6% annualized yield, with a nearly 10% increase relative to the previous quarter [4] - Return of capital per Class A share increased by 48% compared to Q2 [4] Business Line Data and Key Metrics Changes - The company anticipates mid-single-digit organic oil production growth in 2026, implying double-digit year-over-year growth in oil production per share relative to 2025 [3] - Viper's asset base captured almost half of all third-party activity in the Permian Basin over the past three years [29] Market Data and Key Metrics Changes - The company has seen strong activity levels across its asset base despite commodity price volatility [6] - The non-Permian asset sale is expected to provide approximately $610 million in net proceeds, which will be used to pay down debt and enhance the balance sheet [21] Company Strategy and Development Direction - Viper Energy is focused on returning nearly 100% of cash available for distribution to stockholders, with a commitment to buy back shares in the current market environment [5][11] - The company aims to leverage its strong balance sheet and high operating margins to enhance shareholder returns through dividends and share repurchases [4][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustained per share growth with limited operating costs, even during market volatility [8] - The relationship with Diamondback is expected to drive growth for at least the next few years, with a projected interest of 5% to 7% in all of Diamondback's wells [30] Other Important Information - The integration of AI and automation is expected to enhance operational efficiency and data utilization within the company [18][36] - The company is positioned to capitalize on potential acquisition opportunities in the future, despite current market conditions [24] Q&A Session Summary Question: Near-term and 2026 capital allocation following the asset sale - Management indicated that they plan to return nearly 100% of free cash to shareholders and will be aggressive with buybacks due to market dislocation [11] Question: Activity outside of Diamondback - Management confirmed strong activity levels outside of Diamondback, with Viper capturing almost half of all activity in the Permian Basin [13] Question: Contribution of CTO to backlog increase - Management stated that the increase in backlog is evenly mixed between CTO contributions and legacy Viper's performance [17] Question: Tax considerations on asset sale proceeds - Management highlighted a tax hit, estimating net proceeds from the asset sale to be about $610 million, which will be used to pay down debt [21] Question: A&D market outlook - Management noted that while larger strategic acquisitions may be challenging, smaller ground game acquisitions are still viable [24] Question: Growth sustainability in the Permian - Management believes the relationship with Diamondback will support growth for the next few years, despite overall market conditions [30] Question: Valuation of Viper and potential share purchases - Management is open to using free cash to purchase more interest in Viper shares, emphasizing the importance of reducing share count [31] Question: Guidance for 2026 and price sensitivity - Management indicated that guidance for 2026 is based on maintaining current activity levels, with flexibility to adjust based on market conditions [35] Question: Synergies from CTO team and AI integration - Management discussed the benefits of cost savings and automation from the CTO integration, which will enhance operational efficiency [36] Question: Future of variable dividend growth - Management stated that the growth of the variable dividend will depend on market conditions, but they aim to balance buybacks and cash distributions [44]