Viper Energy, Inc. Q3 FY2024 earnings call

• Third quarter marked continuation of Viper delivering on its differentiated strategy, with continued organic production growth on legacy asset base and closing of Tumbleweed acquisition.
• Strong current operations with substantial work-in-progress and line-of-sight wells, and benefit from Diamondback's large-scale development of royalty acreage. Diamondback's merger with Endeavor enhanced alignment as Endeavor was a significant third-party operator on Viper's royalty assets.
• Viper presents a differentiated investment opportunity with zero capital or operating costs, aligned with a parent operating company for consistent organic growth, and positioned as a strategic consolidator in the fragmented minerals and royalty space.
• Added to S&P MidCap 400 in September and Russell 1000 in second quarter, demonstrating execution of strategy and unique value proposition.

No specific product segment financial performance details provided in the transcript.

• Sticking with a 75% distribution target, which is a good number for the business, with the base dividend protected down to $30 a barrel, the lowest in the space.
• Breakeven at Viper is expected to decrease as the business builds size and scale.
• Leverage target of around 1.5 turns on a pro forma basis, which can be paid down quickly.

No specific risks discussed in detail in the provided transcript.

Q: Morning Travis. Thanks for the time. Travis, my question for you and the team, is on your future well activity. Specifically, last quarter, you guys talked about, I think, 81 gross paying wells in the 5.1% royalty interest and then 249 remaining with the 1.1%. So my question is, when you look at your fourth quarter guide of the 29.5 BO per day, and then you think about '25 production. I'm just wondering, is this based on sort of a similar thing versus other operators split? And would you anticipate the royalty interest of either of these changing much next year?

A: Austen Gilfillian responded about work in progress and line of sight wells, mentioning material step-up in work in progress on Diamondback operated side driving growth, and added wells from Tumbleweed acquisition. Also talked about activity continuing and growth in 2026.

Q: Hello. Good morning again. I wanted to talk - ask about the Endeavour mineral drop-down just given such a significant event for Viper. Can we just talk through the timing and how you're thinking about the funding of that drop? How much debt could you take on at the Viper level? And how does that - how should we be thinking about Diamondback's share exposure on that mineral activity side and the implication of growth from there?

A: Travis Stice responded about work on the drop-down, cash stock mix, modest leverage increase that gets paid down quickly, Viper's ability to raise equity capital, and mix of cash, stock, and taking back equity by Diamondback.

Q: Hi guys. Totally appreciate that it's going to take some time for you guys to figure out the consideration in terms of cash stock mix, for the Endeavor drop-down. But I guess I just wanted to talk about sort of leverage parameters. I mean you did mention you will increase leverage at VNOM somewhat and then attempt to kind of quickly pay that down over time, to kind of get back in line. Is there kind of like a max leverage number you think about for VNOM as you're kind of working through some of that math and calculation?

A: Travis Stice responded about 1.5 turns on a pro forma basis being reasonable, Viper's increased size and scale leading to better attention from rating agencies, and Viper being a big business with a lot of free cash looking to be a comp to mid-cap E&Ps as the E&P universe shrinks