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    VNOM
    Earnings call· Mar 2026(Q1 FY26)

    Viper Energy Q1 FY26 earnings call VNOM

    May 5, 2026 Source

    Executive summary

    Viper Energy Q1 FY26 — Production Exceeds Expectations, Riverbend Acquisition Announced

    Viper Energy delivered a strong first quarter, surpassing production expectations and raising its full-year oil production outlook. The company also announced a significant, complementary acquisition, Riverbend, which enhances its Permian footprint and third-party operator exposure. Management emphasized a disciplined yet flexible capital allocation strategy, prioritizing distributions while maintaining a strong balance sheet.

    Highlights

    4

    • Q1 production exceeded expectations, with over 650 gross horizontal wells turned to production.

    • Full-year oil production guidance midpoint increased by approximately 2.5%, representing over 5% organic growth relative to pro forma 2025 exit rate.

    • Announced Riverbend acquisition for $337 million cash and 3.7 million Class A shares, adding ~2,000 barrels of oil production per day and 3,000 net royalty acres.

    • Q1 return of capital was $0.94 per share, representing 90% of cash available for distribution, comprising $0.68 dividend and $0.28 share repurchases.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year oil production growth
    Increased by ~2.5% at midpoint
    high materiality
    High
    Cash available for distribution return
    At least 75%
    medium materiality
    High
    Cash available for distribution return
    100%
    medium materiality
    High
    Q2 FY26 Cash available for distribution return
    75%-90%
    medium materiality
    Medium
    Production growth cadence
    Steady build of ~$1,000 per quarter
    medium materiality
    Medium
    Riverbend production growth
    Slight growth for a couple of years, then flat
    medium materiality
    Medium

    Operational metrics

    4
    Return of capital
    $0.94
    Q1 FY26

    Represents 90% of cash available for distribution in Q1 FY26.

    Net debt target
    $1.5B
    Ongoing

    Threshold for returning 100% of cash available for distribution; not a static amount.

    Gross horizontal wells turned to production
    650+
    Q1 FY26

    Contributed to production exceeding expectations.

    Cash taxes rate
    27%-30%
    Ongoing

    Expected steady rate, higher in Q1 due to increased income.

    Industry KPIs

    2
    MetricValueDetails
    Basin level production volume650+wells
    FCF shareholder distributions$0.94USD/share

    Deals & partnerships

    1
    RiverbendAcquisition of mineral and royalty assets$337M cash and 3.7M Class A shares

    The assets are highly complementary to Viper's portfolio, further increasing exposure to high-quality third-party public operators. The deal was financed without going to the market, with quick paydown expected.

    What to watch in Q2 FY26

    4

    Third-party activity acceleration

    Next 6 months
    CurrentLeading indicators (permits, DUCs) observed
    TargetConversion of DUCs and permits into wells turning online

    Why it matters

    Increased third-party activity could provide additional upside to Viper's production beyond current guidance, especially if conversion rates accelerate.

    I think I think it's likely to come, but we haven't seen -- we've seen the leading indicators. We haven't seen them kind of convert into DUCs and wells turning online. But I think if I was a betting man, today at these oil prices, things are going to accelerate throughout the basin.

    Q&A highlights

    7

    What is the scale of remaining pure-play packages available for consolidation, and will Viper focus on smaller roll-ups or larger opportunities?

    Viper expects to pursue both medium-sized tuck-in acquisitions, like Riverbend, and larger opportunities. The company is positioned as the buyer of choice for private equity-backed mineral positions, emphasizing discipline in valuation.

    “I think we think we've positioned ourselves to be the buyer of choice for those midsized to larger deals.”

    asked by Margaret Drefke · answered by Kaes Van't Hof

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 Production and Increased Outlook

    Viper Energy reported a strong first quarter, with production exceeding expectations. Operators across its acreage turned more than 650 gross horizontal wells to production, significantly driven by Diamondback's 114 gross wells in the Midland Basin. This performance led to an increase in the midpoint of the full-year oil production guidance by approximately 2.5%, reflecting over 5% organic growth from the pro forma 2025 exit rate.

    02

    Strategic Riverbend Acquisition

    The company announced the acquisition of Riverbend for $337 million in cash and 3.7 million Class A shares. This acquisition adds over 3,000 net royalty acres and approximately 2,000 barrels of oil production per day. The assets are highly complementary, with about 75% overlap with existing acreage, increasing exposure to high-quality third-party public operators and adding new exposure in New Mexico.

    03

    Capital Allocation Framework

    Viper's capital allocation strategy remains disciplined and flexible. The Q1 return of capital was $0.94 per share, representing 90% of cash available for distribution, split between a $0.68 per share dividend and $0.28 per share in stock repurchases. The company is committed to returning at least 75% of cash available for distribution, with a prior commitment of 100% when net debt is at or below $1.5 billion, a figure that evolves with business growth.

    04

    M&A Strategy and Market Dynamics

    Management believes Viper is positioned as a buyer of choice for mid-sized to larger mineral deals, particularly for private equity-backed mineral companies seeking exits. The Riverbend deal serves as an example of successfully executing an acquisition without significant market overhang. The current backwardated strip allows for underwriting deals at moderate flat oil prices, aligning NAV with long-term mid-cycle prices.

    05

    Permian Resource Recovery and Productivity Trends

    Viper sees long-term potential in technical breakthroughs like surfactants and advanced chemicals to increase reserve recovery in the Permian. While currently immaterial, these could become a significant part of Diamondback's capital plan and Viper's production profile in 4-6 years. Viper's extensive acreage provides differential knowledge of various operator tests, which can be leveraged to improve returns.

    06

    Third-Party Activity and Development Plans

    While the current production guide doesn't bake in significant third-party acceleration, leading indicators suggest increased activity, especially at current oil prices. Diamondback's development plan considers Viper's higher net royalty interest (NRI) areas, potentially accelerating development in areas like Spanish Trail, where Viper owns 100% of the minerals, following successful 2-well and 4-well tests.

    AI-generated summary of the company’s earnings call. Not investment advice.