Viper Energy (VNOM) Q2 2025 Earnings Transcript

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Date

Tuesday, Aug. 5, 2025 astatine 11 a.m. ET

Call participants

• President — Matthew Kaes Van’t Hof

• Chief Operating Officer — Austen Gilfillian

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Full Conference Call Transcript

Matthew Kaes Van’t Hof: Thank you, Chip. Welcome, everyone, and convey you for listening to Viper Energy's Second Quarter 2025 Conference Call. Despite lipid terms volatility successful the 2nd quarter, Viper delivered beardown lipid accumulation growth, some connected an implicit and per stock basis. After closing the drop-down transaction from Diamondback connected May 1, we stay excited and highly assured astir the meaningful integrated maturation that Diamondback tin thrust connected our concentrated royalty assets implicit some the abbreviated and the agelong term. This symbiotic narration uniquely positions Viper arsenic 1 of the fewer companies successful North American vigor that is expected to present integrated maturation implicit the coming quarters and years.

As antecedently announced during the 2nd quarter, we besides announced a definitive statement for Viper to get Sitio Royalties successful an all-equity transaction. Sitio volition beryllium hosting their shareholder gathering to ballot connected a connection to o.k. the merger connected August 18, and if approved, we expect to adjacent the merger soon pursuing the meeting. As a reminder, this transaction adds important standard and inventory extent for Viper that volition enactment accumulation illustration implicit the adjacent decennary portion besides offering meaningful and contiguous fiscal accretion.

Following the expected adjacent of the Sitio acquisition aboriginal this month, we stay highly assured successful our integrated maturation trajectory that it volition proceed into 2026 astatine existent prices, led by implicit 15% expected year-over-year maturation successful our Diamondback-operated nett lipid production. We expect afloat twelvemonth 2026 mean accumulation to summation by a mid-single-digit percent from our expected pro forma Q4 2025 accumulation levels, which is the archetypal 4th of Viper positive Sitio consolidated. Importantly, based connected this accumulation outlook, we would expect our lipid accumulation per stock for afloat twelvemonth 2026 to beryllium astir 15% higher than afloat twelvemonth 2025, highlighting the unsocial operation of integrated maturation and accretive acquisitions. Moving to instrumentality of capital.

We are going to instrumentality $0.56 a stock to stockholders this quarter, chiefly successful the signifier of our basal positive adaptable dividend, which represents 75% of our currency disposable for distribution. As announced with the Sitio acquisition, our pro forma nett indebtedness people is $1.5 billion, which represents astir 1 crook of leverage astatine $50 WTI based connected expected pro forma accumulation levels. We're committed to maintaining a fortress equilibrium sheet, but we spot $1.5 cardinal arsenic the close magnitude of imperishable leverage for Viper arsenic a royalty business, fixed we person constricted operating costs and nary CapEx.