Form 4: Diamondback Energy Adjusts Stake in Viper Energy Through Unit Conversions and Stock Sales

Diamondback Energy, a major shareholder in Viper Energy, executed multiple transactions involving the conversion of Class B Units and Operating Company Units into Class A Common Stock, along with the sale of a significant block of Class A Common Stock.

Summary

• Diamondback Energy, Inc. (the 'Reporting Person') has filed a Form 4 detailing changes in its beneficial ownership of Viper Energy, Inc. [VNOM].
• On May 10, 2018, Diamondback Energy delivered 73,150,000 common units to Viper Energy Partners LP in exchange for Class B units and Operating Company Units.
• Also on May 10, 2018, Diamondback Energy converted 731,500 Class B Units and Operating Company Units for an equal number of Common Units.
• On October 1, 2019, Viper Energy Partners LP acquired mineral and royalty interests from Diamondback subsidiaries, issuing 10,244,918 OpCo Units and Class B Units to Diamondback and 8,066,528 OpCo Units and Class B Units to a Diamondback subsidiary, along with $190.2 million in cash.
• On September 4, 2023, Diamondback granted Viper Energy a right to sell up to 7,215,007 Common Units to Diamondback at $27.72, which Viper exercised on October 31, 2023.
• On March 8, 2024, Diamondback converted 5,278,493 Class B Shares and OpCo Units in connection with a registered offering of Class A Common Stock.
• This offering included 11,500,000 shares sold by Diamondback and an additional 1,725,000 shares through the underwriters' option, both closing on March 8, 2024.
• Diamondback Energy sold 13,225,000 shares of Class A Common Stock at $34.125 on March 8, 2024.
• Following these transactions, Diamondback Energy directly owns 13,225,000 shares of Class A Common Stock and indirectly owns 8,066,528 shares through Diamondback E&P LLC.

Sentiment

Score: 6

Explanation: The document primarily reflects transactional activity. The sentiment is neutral as it reports changes in ownership without expressing positive or negative outlooks.

Future Outlook

The document does not contain explicit forward-looking statements, but the transactions suggest Diamondback Energy is actively managing its investment in Viper Energy.

Industry Context

This filing reflects ongoing adjustments in the relationship between Diamondback Energy and Viper Energy, a common dynamic in the oil and gas industry where parent companies manage their holdings in subsidiaries.

Comparison to Industry Standards

• It is common for energy companies to manage their stakes in subsidiaries through unit conversions and stock sales, similar to transactions seen with other major players like ConocoPhillips and its dealings with Phillips 66.
• The acquisition of mineral and royalty interests by Viper Energy from Diamondback subsidiaries mirrors similar transactions in the industry, such as those between Antero Resources and Antero Midstream.
• The size and structure of the share offering are comparable to other offerings in the energy sector, aligning with industry standards for capital market activities.

Related Party Transactions

• The acquisition of mineral and royalty interests from Diamondback subsidiaries by Viper Energy Partners LP constitutes a related party transaction.
• The sale of Common Units to Diamondback Energy by Viper Energy is a related party transaction.

Stakeholder Impact

• Shareholders of Viper Energy may experience changes in stock value due to the sale of shares by Diamondback Energy.
• The transactions could impact the liquidity and trading volume of Viper Energy's stock.

Key Dates