425: Sitio Stockholders Approve Viper Merger

Sitio Royalties Corp. stockholders overwhelmingly approved the all-equity merger with Viper Energy, Inc., paving the way for an anticipated closing on August 19, 2025.

Summary

• Sitio Royalties Corp. held a special meeting of stockholders on August 18, 2025, where two key proposals related to the merger with Viper Energy, Inc. were voted upon.
• The Merger Proposal, which sought approval and adoption of the Merger Agreement and its contemplated transactions, was approved with 130,700,871 votes For, 366,763 Against, and 148,537 Abstentions.
• The Compensation Proposal, a non-binding advisory vote on executive compensation related to the mergers, was also approved with 113,188,417 votes For, 17,420,368 Against, and 607,386 Abstentions.
• As of the July 7, 2025 record date, there were 77,579,174 shares of Sitio Class A common stock and 73,367,602 shares of Sitio Class C common stock issued and outstanding.
• A quorum was present at the meeting, with 131,216,171 shares of Sitio Common Stock eligible to vote being present virtually or represented by proxy.
• Sitio Class A common stockholders will receive 0.4855 shares of New Cobra Pubco, Inc. (New Viper) Class A common stock for each Sitio Class A share owned.
• Sitio Royalties Operating Partnership, LP (Sitio Opco) unitholders will receive 0.4855 common units of Viper Energy Partners LLC and 0.4855 shares of New Viper Class B common stock for each Sitio Opco unit owned.
• Sitio Class C common stock will be canceled for no consideration upon merger completion.
• The merger is anticipated to close on August 19, 2025, with Sitio Class A common stock to be suspended from trading on the NYSE prior to market open on that date.

Sentiment

Score: 8

Explanation: The sentiment is highly positive as the critical stockholder vote for the merger was successfully passed, clearing a major hurdle for the transaction to close as anticipated. This indicates strong investor confidence in the strategic combination.

Positives

• Stockholders approved the Merger Proposal by a significant majority, indicating strong support for the strategic combination.
• The Compensation Proposal also received affirmative approval, aligning executive incentives with the merger's success.
• The merger is an all-equity transaction, which typically avoids immediate dilution from new debt issuance.
• The anticipated closing date of August 19, 2025, indicates a swift progression towards completing the transaction following stockholder approval.

Negatives

• Sitio Class C common stock will be canceled for no consideration, resulting in a complete loss of value for holders of this class of stock.

Risks

• Risks related to the timing of the closing of the Mergers, including conditions not being satisfied on a timely basis or at all, or failure to close for any other reason or on anticipated terms (including tax treatment).
• The risk that any required regulatory approval, consent, or authorization for the Mergers is not obtained or is obtained subject to unanticipated conditions.
• The post-combination company's ability to successfully integrate Sitio's and Viper's businesses and technologies.
• The risk that the expected benefits and synergies of the Mergers may not be fully achieved in a timely manner, or at all.
• The risk that Sitio or Viper will not, or that following the Mergers, the post-combination company will not, be able to retain and hire key personnel.
• Unanticipated difficulties or expenditures relating to the Mergers.
• The response of business partners and retention issues as a result of the announcement and pendency of the Mergers.
• Viper's ability to finance the combined company on acceptable terms or at all.
• Uncertainty as to the long-term value of the post-combination company's common stock.
• The diversion of Sitio's and Viper's management time on transaction-related matters.
• Operating in a very competitive and rapidly changing environment where new risks emerge over time.

Future Outlook

The merger is anticipated to close on August 19, 2025. Following the merger, the combined entity will focus on integrating the businesses and technologies of Sitio and Viper, aiming to achieve expected benefits and synergies. The post-combination company's future financial performance, strategy, operations, financial position, estimated revenues, losses, projected costs, prospects, plans, and objectives are forward-looking statements subject to various risks and uncertainties.

Management Comments

• Sitio Royalties Corp. announced that, at a special meeting of Sitio stockholders held today, the stockholders of the Company approved the previously announced merger between Sitio and Viper Energy, Inc.

Industry Context

This merger represents a significant consolidation within the oil and gas mineral and royalty interest sector, aligning with Sitio's stated strategy of large-scale consolidation across premium basins. Such transactions are common in the industry as companies seek to achieve economies of scale, enhance cash flow generation, and optimize asset portfolios amidst evolving market conditions and commodity prices.

Stakeholder Impact

• Shareholders of Sitio Class A common stock will exchange their shares for New Viper Class A common stock.
• Sitio Opco unitholders will exchange their units for Viper Energy Partners LLC common units and New Viper Class B common stock.
• Holders of Sitio Class C common stock will have their shares canceled for no consideration.
• Employees of both companies may face retention challenges or integration difficulties post-merger, as noted in the risk factors.
• Business partners may react to the merger, potentially impacting retention, as highlighted in the risk factors.

Next Steps

• The merger is anticipated to close on August 19, 2025.
• Sitio Class A common stock will be suspended from trading on the New York Stock Exchange prior to market open on August 19, 2025.

Key Dates

Recommendation

The merger has received stockholder approval and is set to close imminently. For existing Sitio shareholders, the decision point for the merger has passed, and the focus now shifts to the performance and integration of the combined entity. Holding the stock through the closing allows for the conversion into New Viper shares as per the announced exchange ratio. Any new investment decision would be on the combined entity, not Sitio as a standalone company.

Keywords

Merger, Acquisition, Oil & Gas, Royalties, Mineral Interests, Stockholder Vote, SEC Filing, Corporate Action, Energy Sector, STR, Viper Energy