Viper Energy , a subsidiary of Diamondback Energy, has announced it and its operating subsidiary Viper Energy Partners have entered into a definitive purchase and sale agreement to acquire all of the equity interests of certain mineral and royalty-interest owning subsidiaries of Diamondback in exchange for $1.0 billion of cash and approximately 69.6 million OpCo units.
The transaction was negotiated for the company by the Audit Committee of its Board of Directors, which consists solely of independent directors and is appointed by the Board of Directors to oversee all related party transactions. The cash portion of this transaction is expected to be funded through a combination of cash on hand, borrowings under the company’s credit facility, and proceeds from one or more capital markets transactions, subject to market conditions and other factors. The company expects the transaction to close in the second quarter of 2025, subject to the satisfaction of customary closing conditions, including the approval of the transaction by a majority of the company’s stockholders not affiliated with Diamondback.
The company also announced it and OpCo have entered into a separate definitive purchase and sale agreement to acquire certain mineral and royalty interests from Morita Ranches Minerals LLC in exchange for approximately $211 million of cash and approximately 2.4 million OpCo units, subject to customary adjustments. The cash portion of this transaction is expected to be funded through a combination of cash on hand and borrowings under the company’s credit facility. The company expects the transaction to close during the first quarter of 2025, subject to customary closing conditions.
Pending acquisitions combined highlights
- Approximately 23,100 net royalty acres (“NRAs”) in the Midland Basin; additional acreage in the Delaware and Williston Basins (approximately 1,700 NRAs combined)
- Diamondback operates >70% of the Midland Basin NRAs with an approximately 5.0% average net revenue interest (“NRI”) across high-quality and largely undeveloped acreage
- Expected average daily oil production for full year 2025 of approximately 18,000 bo/d (32,000 boe/d); includes contribution from Diamondback’s expected development plan (11.0-12.0 net 100% royalty interest wells) and 6.7 net existing DUCs and permits operated by third party operators
- Viper currently expects Diamondback to complete roughly 300-325 gross locations on the acquired properties in 2026 with an estimated average ~6.0% NRI; expected to drive an increase in Diamondback-operated production from an average of approximately of 11,000 bo/d in 2025 to approximately 14,000 bo/d in 2026
- Third party operated acreage located primarily in Martin, Midland, and Reagan counties; ExxonMobil (~35% of third party operated acreage) is the largest operator with diversified exposure to other leading well-capitalized operators in the Midland Basin
- Substantial near and long-term financial accretion; expected to be >10% accretive to cash available for distribution per Class A share immediately upon closing
- Each of the Pending Acquisitions has an effective date of January 1, 2025
“We are excited to announce the highly anticipated, transformative Drop Down transaction between Viper and Diamondback. This transaction, combined with the Quinn Ranch Acquisition, furthers Viper’s alignment with Diamondback’s expected development plan and positions Viper to continue to deliver organic growth driven by the Diamondback drillbit for multiple years ahead. The pro forma size and scale provided to Viper, and the continued support of our parent company, meaningfully enhances the unmatched advantage Viper has in the minerals and royalty market,” stated Travis Stice, Chief Executive Officer of Viper.
Mr. Stice continued, “In addition to being immediately accretive to all relevant financial metrics, this conservatively financed transaction also reduces Viper’s pro forma leverage to below 1.0x. Looking ahead, Viper’s leading scale and fortress balance sheet will enable the company to continue to opportunistically consolidate the highly fragmented minerals market through a disciplined and focused approach.”
