Viper Energy Partners is acquiring certain mineral and royalty interests out in the Midland and Delaware Basins. Story By Melba McEwen|Midland Reporter Telegram| Diamondback Energy has made headlines in the last year with its acquisition of FireBird Energy and Lario Permian for a combined $3 billion.
The headlines this week belong to its subsidiary, Viper Energy Partners, which is acquiring certain mineral and royalty interests from affiliates of Warwick Capital Partners and GRP Energy Capital for $1 billion.
The deal includes approximately 4,600 net royalty acres in the Permian Basin plus an additional 2,700 net royalty acres in other major basins.
“While the Permian acreage represents just over 60% of the total acreage, those assets represent over 90% of the current production and total deal value. Viper remains focused on acquiring high-quality Permian assets that can contribute both meaningful existing production as well as a long runway for potential future development,” Travis Stice, chief executive officer of Viper’s general partners, told the Reporter-Telegram by email.
Approximately 2,800 net royalty acres are in the Midland Basin, with roughly 60% located in Midland and Martin counties. Approximately 1,800 net acres are in the Delaware Basin, with two-thirds in Reeves and Loving counties. There are a combined 21 rigs in operation on both the Midland and Delaware Basin acreage.
Post-acquisition, Viper will integrate the new assets into its portfolio and use the enhanced cash flow profile resulting from the acquisition to return increasing amounts of capital to unitholders, Stice wrote.
He is enthusiastic about the deal, telling the Reporter-Telegram it “moves Viper forward in providing an unparalleled runway for future production growth as it contributes a significant amount of undeveloped acreage, primarily in the Northern Midland Basin, and under active operators such as Pioneer Natural Resources, Endeavor Energy Resources, and Diamondback.”
The assets include the current production of approximately 4,000 barrels of oil – 7,000 barrels of oil equivalent – per day, which is expected to increase to about 4,750 barrels of oil or 8,500 BOE per day for the full year 2024.
Viper was formed by Diamondback to own, acquire, and exploit oil and natural gas properties in North America with a focus on owning and acquiring mineral and royalty interests.
Stice described the mineral and royalties market as “highly competitive in terms of acquisitions, but also still highly fragmented. Another way this deal moves Viper forward is that it further positions Viper as a key player in the future consolidation of the private minerals market.”
