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    VNOM
    Earnings call· Dec 2025(Q4 FY25)

    Viper Energy Q4 FY25 earnings call VNOM

    Feb 24, 2026 Source

    Executive summary

    Viper Energy Q4 FY25 — Strong Production Growth, Increased Shareholder Returns, and Strategic Acquisitions

    Viper Energy capped a transformational Q4 FY25 with significant Permian acreage expansion and robust oil production per share growth. The company strengthened its balance sheet, reducing net debt to approximately $1.6 billion, and substantially increased shareholder returns through a 15% higher base dividend and a $1 billion boost to its share repurchase authorization. Management anticipates continued mid-single-digit organic production growth in FY26, leveraging its high-quality asset base and strategic relationship with Diamondback.

    Highlights

    6

    • Permian Basin acreage grew by nearly 2.5x year-over-year.

    • Oil production per share increased by 7% year-over-year.

    • Base dividend increased by 15%.

    • Share repurchase authorization increased by $1 billion.

    • Net debt reduced to approximately $1.6 billion, just over one turn of leverage.

    • Returned 90% of available cash during Q4 FY25.

    Concerns

    3

    • Challenging M&A environment for large deals

    • Less attractive share repurchase valuation

    • Uncertainty in H2 FY26 production outlook due to permit conversion timelines

    Guidance & targets

    1
    CategoryTargetConfidence
    Average daily production growth
    mid-single-digit organic growth
    high materiality
    Medium

    Operational metrics

    17
    Mineral acquisitions
    $8B+
    2025

    highlighted by more than $8 billion of mineral acquisitions

    Permian Basin acreage growth
    2.5x
    YoY

    Year-over-year, we grew our Permian Basin acreage by nearly 2.5x

    Oil production per share growth
    7%
    YoY

    and our oil production per share by 7%.

    Term loan repayment
    $500M
    Q4 FY25

    Following our non-Permian divestiture, we fully repaid our $500 million term loan

    Pro forma net debt
    $1.6B
    Q4 FY25

    resulting in pro forma net debt of roughly $1.6 billion

    Leverage (net debt/EBITDA)
    1x
    Q4 FY25

    just over one turn of leverage

    Base dividend increase
    15%
    Q4 FY25

    Our Board approved a 15% increase to our base dividend

    Share repurchase authorization increase
    $1B
    Q4 FY25

    and a $1 billion increase to our share repurchase authorization

    Base dividend as % of FCF
    50%
    FY26

    This base dividend represents approximately 50% of estimated 2026 free cash flow at $50 WTI

    Base dividend WTI breakeven
    $30
    FY26

    and is fully covered below $30 WTI.

    Cash available for distribution returned
    90%
    Q4 FY25

    Given the strength of our balance sheet, we returned 90% of available cash during the fourth quarter.

    Target cash available for distribution return
    100%
    future

    we are well positioned to increase our return of capital upwards of 100% of cash available for distribution.

    Deep rights leased in Midland Basin
    10%-15%
    current

    we still only lease about 10% to 15% of the acreage that would potentially be open in the Midland Basin.

    Shares repurchased from private equity
    1M
    Q4 FY25

    we bought back 1 million shares directly from one of the private equity holders.

    DUC/Permit conversion timeline to production
    5-6 months
    current

    those typically get converted to production within about 5 to 6 months.

    Cash available for distribution to base dividend
    41%
    last quarter

    last quarter, that 41% the cash available for distribution went to base dividend

    Share price performance
    17%
    YTD

    shares are up 17% year-to-date.

    Industry KPIs

    2
    MetricValueDetails
    Basin level production volumemid-single-digit organic production growth%
    FCF shareholder distributions90%%

    Orderbook & backlog

    1
    Share repurchase authorization$1BQ4 FY25

    increased by $1B

    Reflects confidence in long-term cash-generating ability and disciplined capital allocation.

    Deals & partnerships

    2
    Multiple (unnamed)Mineral rights acquisitions$8B+

    highlighted by more than $8 billion of mineral acquisitions

    UnnamedNon-Permian asset sale

    Following our non-Permian divestiture

    Risks & headwinds

    3
    Challenging M&A environment for large dealslast six months or so

    Unquantified

    Mitigation: Maintaining strong balance sheet, leveraging OpCo units for tax deferral, waiting for commodity price recovery.

    Less attractive share repurchase valuationCurrent

    Share price above $37

    Mitigation: Flexibility in capital allocation, opportunistic buybacks from non-traditional holders.

    Uncertainty in H2 FY26 production outlook due to permit conversion timelinesH2 FY26

    Unquantified (implied by wide guidance range)

    Mitigation: Guidance based on visible DUCs and permits; potential upside if activity accelerates.

    What to watch in Q1 FY26

    4

    Organic production growth

    H1 FY26 / next quarter
    Currentmid-single-digit organic production growth from our Q4 2025 exit rate
    TargetHigher end of mid-single-digit or above

    Why it matters

    Verifying if third-party activity resilience translates to actual production outperformance, especially given the wide guidance range.

    If activity holds like it can today, that might help a bit on the production outlook.

    Q&A highlights

    6

    How does Viper's ownership translate to Diamondback's Barnett update, specifically regarding deeper zones?

    Viper benefits from mineral ownership as operators explore new zones without capital risk. Diamondback has been active in leasing deeper zones in the Midland Basin, particularly Spanish Trail. Only 10-15% of potential deeper zone acreage is currently leased, indicating future tailwinds for lease bonuses and inventory.

    “we still only lease about 10% to 15% of the acreage that would potentially be open in the Midland Basin. So that should be a tailwind to come both from a lease bonus perspective, but also new inventory locations that are going to come into play and kind of support the production profile over the years to come.”

    asked by Neal Dingmann · answered by Austen Gilfillian

    2 min read6 chapters

    Detailed Narrative

    01

    Transformational Year & Asset Growth

    Viper Energy concluded a significant year in 2025, marked by over $8 billion in mineral acquisitions. This led to a nearly 2.5x expansion of its Permian Basin acreage and a 7% increase in oil production per share year-over-year, underscoring the company's enhanced scale and asset quality.

    02

    Balance Sheet Strength & Capital Allocation

    Following a non-Permian divestiture, Viper fully repaid its $500 million term loan and revolver balance, achieving a pro forma net debt of approximately $1.6 billion, equating to just over one turn of leverage. This financial strength supports a commitment to return up to 100% of cash available for distribution.

    03

    Shareholder Returns

    The Board approved a 15% increase in the base dividend, which is estimated to represent 50% of 2026 free cash flow at $50 WTI and is fully covered below $30 WTI. Additionally, the share repurchase authorization was increased by $1 billion, providing flexibility for opportunistic buybacks, particularly from non-traditional holders.

    04

    Permian Activity & Third-Party Resilience

    Activity across Viper's Permian acreage remains robust, driven by Diamondback and other major operators. Despite overall rig count declines in the Permian, third-party activity on Viper's acreage has shown resilience, with new disclosures highlighting key operators in both the Midland and Delaware Basins.

    05

    Deeper Zone Development & Lease Bonus

    The company is seeing benefits from deeper zone development in the Midland Basin, with Diamondback actively leasing new rights. While only 10% to 15% of potential acreage for deeper zones has been leased, this presents a future tailwind for lease bonus income and new inventory locations. Viper's proactive lease management program contributes to consistent lease bonus income.

    06

    M&A Environment & Strategic Flexibility

    The current M&A environment for royalty assets is characterized by a cautious bid-ask spread, with fewer large deals in recent months. Viper remains open to larger, accretive Permian consolidation opportunities, leveraging its strong balance sheet and unique OpCo unit structure for tax-deferred transactions, while also pursuing smaller, value-add deals.

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