Viper Energy, along with its operating subsidiary Viper Energy Partners (OpCo), has agreed to acquire subsidiaries of Tumbleweed Royalty IV, which hold certain mineral and royalty interests.
The transaction comprises US$461 million in cash and around 10.1 million OpCo units, with the equity portion, based on OpCo's closing price of US$45.13 on 11 September, valued at roughly US$456 million.
Additionally, the agreement includes a possible extra payment of up to US$41 million in 1Q26, contingent on the average 2025 West Texas Intermediate (WTI) price.
Projected to be finalised early in 4Q24, the deal is expected to increase Viper's oil production to an estimated 33 000 bpd of oil, up from the current 30 000 bpd.
Tumbleweed IV, the seller, is supported by private equity entities such as EnCap and Apollo Natural Resources and is known for its royalty and mineral investments across the Permian Basin.
Viper Energy, a subsidiary of Diamondback Energy, also disclosed the completion of two earlier related acquisitions.
On 3 September 2024, OpCo finalised the purchase of certain mineral and royalty interest-owning entities from Tumbleweed-Q Royalty Partners and MC Tumbleweed Royalty for a total cash consideration of US$189 million, with the potential for additional contingent cash payments of up to US$9 million in 1Q26, dependent on the average 2025 WTI price.
The combined acquisitions add approximately 3727 net royalty acres in the Permian Basin to Viper's portfolio, with 3237 acres in the Midland Basin and 490 acres in the Delaware Basin.
Viper Energy CEO Travis Stice said: “The set of acquisitions announced today is a continuation of Viper’s strategy to consolidate high-quality mineral and royalty assets that not only provide meaningful and immediate financial accretion, but also provide significant undeveloped inventory that supports our long-term production profile.
“With roughly 50% of the total Midland Basin acreage representing concentrated interests in potential long-lateral units that currently have zero existing producing wells or permits, we expect these assets to deliver significant production growth over the coming years.”
This move follows closely on the heels of Diamondback Energy's recent US$26 billion merger with Endeavor Energy Resources, positioning it as a key operator in the Permian Basin.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/16092024/viper-energy-to-acquire-mineral-and-royalty-interests-in-permian-basin/
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