Viper Energy in $1bn expansion deal

Bengaluru — Viper Energy Partners, a subsidiary of Diamondback Energy, said on Tuesday it will acquire certain mineral and royalty interests from affiliates of Warwick Capital Partners and GRP Energy Capital in an about $1bn cash-and-stock deal.

The acquisition bolsters Viper’s presence in the Permian Basin, the biggest US shale oil basin, where it holds most of its assets.

Diamondback formed Viper in 2013 to focus on owning and acquiring mineral and royalty interests in oil regions, primarily in the Permian Basin.

“Pro forma for this transaction, Viper will own about 12,950 royalty hectares in Permian Basin, and we believe the high quality nature of our assets will position us to capture an increasing amount of activity, particularly within the Northern Midland Basin, going forward,” Viper CEO Travis Stice said in a statement.

The company said that the acquisition will increase its full-year production to 8,500 barrels of oil equivalent per day (boepd) from 7,000 boepd in 2024.

Viper will pay $750m in cash and about 9.02-million in common units, valuing the deal at about $1.05bn as per Viper’s last close.

The deal, expected to close in the fourth quarter, is to be funded through cash on hand, borrowings, $200m committed equity from Diamondback and proceeds from more capital markets transactions, Viper said.

By December 31 2020, Viper’s assets comprised mineral interests underlying 318,594 gross hectares and 9,854 net royalty hectares in the Permian Basin and the Eagle Ford Shale.

Reuters