SCHEDULE 13D/A: Diamondback Energy Updates Stake in Viper Energy, Details Major Permian Basin Acquisition and Equity Offering

Diamondback Energy, Inc. has filed an amended Schedule 13D, disclosing its updated beneficial ownership in Viper Energy, Inc. and providing details on Viper's acquisition of Permian Basin royalty assets from Diamondback subsidiaries, funded by a recent equity offering.

Summary

• Diamondback Energy, Inc. and its subsidiary Diamondback E&P LLC have updated their beneficial ownership in Viper Energy, Inc.
• As of February 3, 2025, Diamondback beneficially owned 85,431,453 shares, representing 39.4% of Viper Energy's Class A Common Stock.
• Diamondback E&P beneficially owned 8,066,528 shares, representing 5.8% of Viper Energy's Class A Common Stock.
• Viper Energy, Inc. and its subsidiary Viper Energy Partners LLC entered into a definitive equity purchase agreement on January 30, 2025, to acquire Endeavor Subsidiaries from Diamondback's subsidiary, Endeavor Energy Resources, LP.
• The acquisition consideration is $1.0 billion in cash and the issuance of 69,626,640 OpCo Units and an equivalent number of Class B Common Stock.
• The acquired assets include approximately 22,847 net royalty acres in the Permian Basin, with an average net royalty interest of approximately 2.8% and current oil production of approximately 17,097 BO/d.
• To fund the cash portion of the acquisition, Viper Energy launched an underwritten public offering of 24,640,000 shares of Class A Common Stock at $44.50 per share, which closed on February 3, 2025, increasing total outstanding Class A shares by 28,336,000.
• Diamondback entered into a 45-day lock-up agreement, restricting the sale of Viper Energy shares from January 30, 2025.

Sentiment

Score: 7

Explanation: The document outlines a significant strategic acquisition for Viper Energy, funded by an equity offering. While there is dilution from the offering, the acquisition of high-quality, Diamondback-operated Permian assets is generally positive for long-term growth and scale. The transaction is proceeding as planned, indicating execution confidence.

Positives

• Viper Energy is acquiring significant, high-quality Permian Basin royalty assets (22,847 net royalty acres, 17,097 BO/d oil production) from a related party, potentially streamlining operations and increasing scale.
• The acquisition is largely funded by an equity offering, reducing immediate debt burden for the cash portion.
• A substantial portion (69%) of the acquired royalty acres are operated by Diamondback, suggesting operational synergy and alignment.

Negatives

• The equity offering resulted in an increase of 28,336,000 Class A Common Stock shares, leading to dilution for existing shareholders.
• The acquisition involves a significant cash component ($1.0 billion), which, while funded by equity, still represents a large outlay.

Risks

• Completion of the Pending Drop Down (acquisition) is subject to approval by a majority of Viper Energy's common stock holders (excluding Diamondback and its subsidiaries) and a majority of outstanding common stock, as required by Delaware law.
• Regulatory clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 is required for the acquisition to close.
• The Equity Issuance (69,626,640 OpCo Units and Class B Common Stock) is subject to approval by a majority of total votes cast at a special meeting, as required by Nasdaq Stock Market LLC rules.
• The acquisition is subject to the satisfaction or waiver of other customary closing conditions.

Future Outlook

Viper Energy expects to hold a special meeting of its stockholders and, subject to the satisfaction or waiver of closing conditions, close the acquisition of Endeavor Subsidiaries during the second quarter of 2025.

Industry Context

This acquisition by Viper Energy, Inc. of significant Permian Basin royalty assets from Diamondback Energy, Inc. subsidiaries highlights the ongoing consolidation and strategic asset optimization within the U.S. oil and natural gas sector, particularly in the highly productive Permian Basin. The transaction reinforces Viper's position as a leading mineral and royalty interest holder in the region, leveraging its relationship with Diamondback, a major Permian operator. The use of an equity offering to fund the cash portion of the acquisition reflects a common strategy in the energy sector to manage balance sheets while pursuing growth opportunities.

Related Party Transactions

• Viper Energy, Inc. and its subsidiary Viper Energy Partners LLC are acquiring Endeavor Subsidiaries from Endeavor Energy Resources, LP, which is a subsidiary of Diamondback Energy, Inc. Diamondback is the parent company of Viper Energy, Inc., making this an intra-group transaction.
• The consideration for the acquisition includes $1.0 billion in cash and the issuance of 69,626,640 OpCo Units and an equivalent number of Class B Common Stock to Diamondback's subsidiaries.

Stakeholder Impact

• Shareholders (Viper Energy): Experience dilution due to the significant equity offering (28,336,000 new Class A shares). However, they gain exposure to additional Permian Basin royalty assets and potential long-term growth from the acquisition.
• Shareholders (Diamondback Energy): Their beneficial ownership percentage in Viper Energy is updated, and they are the seller in the related-party acquisition, receiving cash and equity from Viper. They also entered a 45-day lock-up agreement.
• Employees: No direct impact mentioned, but the acquisition of assets could imply future integration or operational adjustments.
• Customers/Suppliers: No direct impact mentioned, as this is primarily an asset and ownership transaction.

Next Steps

• Hold a special meeting of Viper Energy stockholders to approve the Pending Drop Down acquisition.
• Obtain regulatory clearance under the Hart-Scott-Rodino Antitrust Improvement Act of 1976.
• Obtain approval for the Equity Issuance by a majority of total votes cast at the special meeting, as required by Nasdaq rules.
• Satisfy or waive other customary closing conditions for the acquisition.
• Close the Pending Drop Down acquisition, expected during the second quarter of 2025.

Key Dates

Keywords

Viper Energy, Diamondback Energy, SEC Filing, Schedule 13D, Beneficial Ownership, Permian Basin, Royalty Assets, Oil and Gas, Acquisition, Equity Offering, Class A Common Stock, OpCo Units, Class B Common Stock, Hart-Scott-Rodino, Lock-Up Agreement, Energy Sector, Mineral Rights