SCHEDULE 13D/A: Kimmeridge Energy Backs Sitio Royalties' All-Equity Merger with Viper Energy

Kimmeridge Energy Management Company, LLC, a significant shareholder, has entered into a voting and support agreement to back Sitio Royalties Corp.'s all-equity merger with Viper Energy, Inc.

Summary

• Kimmeridge Energy Management Company, LLC filed an Amendment No. 1 to its Schedule 13D regarding Sitio Royalties Corp. (the "Issuer").
• The filing details a Merger Agreement entered into on June 2, 2025, where Viper Energy, Inc. ("Viper") will acquire the Issuer in an all-equity transaction.
• The transaction involves three mergers: the Viper Pubco Merger, the Sitio Pubco Merger, and the Opco Merger, leading to the Issuer becoming a wholly owned subsidiary of New Cobra Pubco, Inc., a subsidiary of Viper.
• Kimmeridge Companies, as a significant shareholder, entered into a Voting and Support Agreement on June 2, 2025, with the Issuer and Viper.
• Under this agreement, Kimmeridge has committed to vote its shares of Class C Common Stock and Partnership Units in favor of the mergers.
• Kimmeridge has also agreed not to transfer these shares during a specified Lock-Up Period, subject to certain customary exceptions.
• Kimmeridge beneficially owns 36,495,520 shares of Class A Common Stock equivalent, representing 32.0% of the total Class A Common Stock outstanding.
• This percentage is calculated based on 77,445,764 shares of Class A Common Stock outstanding as of June 2, 2025, plus the 36,495,520 shares issuable upon redemption of Kimmeridge's holdings, totaling 113,941,284 shares.
• Kimmeridge's Class C Common Stock represents 24.2% of the voting power of Sitio Royalties Corp.'s Common Stock.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment regarding the merger's progression, highlighted by a major shareholder's explicit support. There are no negative financial or operational disclosures, focusing solely on the strategic transaction.

Positives

• Kimmeridge's strong support for the merger, as a significant shareholder, indicates alignment with the strategic direction and increases the likelihood of the transaction's successful completion.
• The all-equity transaction structure suggests a focus on long-term value creation and integration for shareholders rather than immediate cash payouts.

Risks

• The completion of the merger is subject to various conditions and approvals, and there is a risk that the transaction may not close as planned.
• The Voting and Support Agreement can terminate under specific conditions, including if the Merger Agreement is validly terminated or if it is amended without Kimmeridge's consent in a way that reduces consideration, changes the form of consideration, or extends the outside date.

Future Outlook

The document primarily outlines the terms of a definitive merger agreement, indicating a future where Sitio Royalties Corp. will be acquired by and integrated into Viper Energy, Inc. through an all-equity transaction.

Industry Context

This all-equity merger represents a significant consolidation within the U.S. oil and gas royalties and mineral rights sector, a trend often observed in mature energy markets as companies seek to achieve greater scale, operational efficiencies, and enhanced market positioning through strategic acquisitions.

Stakeholder Impact

• Shareholders of Sitio Royalties Corp. will be impacted as the company is acquired in an all-equity transaction by Viper Energy, Inc., with Kimmeridge Energy, a major shareholder, having committed to support this merger.

Next Steps

• Completion of the Viper Pubco Merger and the Sitio Pubco Merger.
• Completion of the Opco Merger.
• Obtaining the Company Stockholder Approval and the Scorpion Opco Written Consent as defined in the Merger Agreement.

Key Dates

Recommendation

Keywords

Sitio Royalties Corp., Viper Energy Inc., Merger Agreement, All-equity transaction, Kimmeridge Energy Management Company, Schedule 13D, Voting and Support Agreement, Oil and Gas Royalties, Energy Sector M&A, Corporate Governance