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MIDLAND, Texas - Viper Energy, Inc. (NASDAQ:VNOM), a subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG), disclosed its financial and operational results for the fourth quarter of 2024 on Thursday. The company reported an average daily production of 29,859 barrels of oil per day (bo/d), with average realized prices of $69.91 per barrel of oil. The total operating income for the quarter stood at $228.7 million. With a market capitalization of $4.77 billion, Viper Energy has demonstrated strong performance, achieving a remarkable 57.24% return over the past year. According to InvestingPro analysis, the company maintains excellent financial health with a robust gross profit margin of 100%.
Viper Energy also declared a combined base-plus-variable dividend of $0.65 per Class A common share, payable on March 13, 2025, to shareholders of record as of March 6, 2025. The company currently offers an attractive dividend yield of 5.25%, with InvestingPro data showing impressive dividend growth of 127.78% over the last twelve months. Subscribers to InvestingPro can access additional dividend analysis and 8 more exclusive ProTips about VNOM’s financial outlook.
In strategic developments, Viper Energy and its operating subsidiary Viper Energy Partners LLC have agreed to acquire equity interests of certain Diamondback subsidiaries in a transaction valued at $1.0 billion, plus approximately 69.6 million OpCo units. This deal, known as the Drop Down, is expected to close in the second quarter of 2025, subject to approval by a majority of Viper’s non-affiliated stockholders and other customary conditions.
Additionally, Viper has entered into a separate agreement to acquire mineral and royalty interests from Morita Ranches Minerals LLC for approximately $211 million and around 2.4 million OpCo units. This acquisition, referred to as the Quinn Ranch Acquisition, is anticipated to close in the first quarter of 2025.
These acquisitions are expected to significantly enhance Viper’s footprint in the Midland, Delaware, and Williston Basins, adding approximately 23,100 net royalty acres in the Midland Basin alone. The company forecasts an average daily oil production of around 18,000 bo/d for the full year of 2025, including contributions from Diamondback’s expected development plan.
Viper’s CEO, Travis Stice, commented on the acquisitions, stating that they would align with Diamondback’s development plan and drive organic growth. He emphasized that the transactions are immediately accretive to financial metrics and will lower Viper’s leverage to below 1.0x.
Evercore and Hunton Andrews Kurth LLP are advising Viper’s Audit Committee on the Drop Down transaction, while RBC Capital Markets and Kirkland & Ellis LLP are advising Diamondback. For the Quinn Ranch Acquisition, Viper’s legal advisor is Akin Gump Strauss Hauer & Feld LLP, and Vinson & Elkins LLP is advising Morita Ranches Minerals LLC.
The information presented in this article is based on a press release statement from Viper Energy, Inc. According to InvestingPro data, the company maintains a strong liquidity position with a current ratio of 7.24, while operating with moderate debt levels. Analysts maintain a bullish outlook on the stock, with 5 analysts recently revising their earnings estimates upward. For comprehensive analysis and detailed valuation metrics, investors can access the full Pro Research Report, available exclusively on InvestingPro.
In other recent news, Viper Energy saw an increase in stock price targets by several firms, including Truist Securities, Evercore ISI, and KeyBanc, which raised their targets to $78, $58, and $62 respectively. These upgrades are based on the company’s potential to enhance its mineral interests by over 25% through its strategic relationship with parent company Diamondback Energy. Diamondback too received a boost, with JPMorgan raising its price target to $195, following improvements in operational efficiency and capital expenditure forecasts.
In addition, Viper Energy’s acquisition of Tumbleweed and Diamondback’s acquisition of Endeavor are expected to contribute to increased production in 2025. These developments, along with the anticipated asset drop from Diamondback, position Viper Energy for higher than average production growth and enhanced market presence.
Analysts from Goldman Sachs and BofA Securities initiated coverage on Viper Energy, assigning a Buy rating based on the company’s impressive track record of converting approximately 80% of its adjusted EBITDA to free cash flow. JPMorgan anticipates Diamondback to generate $1,194 million in free cash flow for the fourth quarter, contributing to cash returns of a $0.90 per share quarterly dividend and $334 million in share buybacks. These are the recent developments in Viper Energy’s and Diamondback Energy’s strategies and operations.
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