DEFM14A: Viper Energy to Acquire Endeavor Subsidiaries for $4.45 Billion in Landmark Deal

Viper Energy, Inc. is set to acquire Endeavor Subsidiaries in a $4.45 billion deal, pending stockholder and regulatory approvals, to significantly expand its Permian Basin assets.

Summary

• Viper Energy, Inc. (Viper) and Viper Energy Partners LLC have entered into a definitive agreement to acquire Endeavor Subsidiaries from Endeavor Energy Resources, LP for $4.45 billion.
• The consideration includes $1.0 billion in cash and 69,626,640 OpCo Units and an equivalent number of shares of Viper's Class B Common Stock.
• The acquisition is subject to customary closing adjustments, including those for net title benefits.
• Diamondback Energy, Inc., Viper's parent, is expected to own approximately 52% of Viper's outstanding common stock post-acquisition, with unaffiliated stockholders owning the remaining 48%.
• A special meeting of Viper stockholders is scheduled for May 1, 2025, to vote on the Drop Down Proposal, the Equity Issuance Proposal, and the Adjournment Proposal.
• The audit committee of Viper's Board of Directors has unanimously determined the deal to be advisable, fair, and in the best interests of Viper and its unaffiliated stockholders.
• The Board unanimously recommends a vote FOR the Drop Down Proposal, FOR the Equity Issuance Proposal, and FOR the Adjournment Proposal.
• The transaction is expected to close in the second quarter of 2025, pending stockholder and regulatory approvals and satisfaction of other closing conditions.

Sentiment

Score: 7

Explanation: The document is largely factual and positive, outlining a significant acquisition. While risks are mentioned, the overall tone suggests confidence in the transaction's benefits.

Positives

• The audit committee believes the Drop Down will be a transformative acquisition that will allow Vipers stockholders to reap the benefits of being a part of a larger company led by Vipers management team.
• The Drop Down will significantly enhance the scale and magnitude of Vipers operations, its Midland Basin acreage position, and its drilling locations.
• The acquisition provides to Viper the potential to realize operational synergies and efficiencies resulting from the increased scale of operations.
• The post-acquisition Companys increased market capitalization should enhance its access to debt and equity capital markets.

Negatives

• Following the Closing, Diamondback will own approximately 52% of Vipers outstanding common stock, on a fully diluted basis.
• Substantial costs will be incurred by Viper in connection with the Drop Down, including financial arrangement fees, financial advisory fees and legal and other advisor fees.
• The possibility that the Drop Down might not be consummated despite the parties efforts or that the Closing may be unduly delayed, and that the announcement of the Drop Down, coupled with any failure to consummate the Drop Down, could have a negative effect on Vipers relationships with third parties, as well as a negative effect on Vipers operating results and trading price.
• Diamondback and some of the executive officers and directors of Diamondback have interests in the Drop Down that are different from, or in addition to, the interests of Unaffiliated Stockholders generally.

Risks

• Viper's ability to complete the Drop Down is subject to various closing conditions outside of its control, including approval by the majority of Unaffiliated Stockholders and regulatory clearance.
• Viper may be unable to realize anticipated cash flows or other benefits from the Drop Down.
• Actual operating results and activities and capital expenditures of our operators could differ materially from our forecasted results for Viper and the Endeavor Mineral and Royalty Interests.

Future Outlook

Viper anticipates completing the Drop Down in the second quarter of 2025, subject to the satisfaction of closing conditions.

Management Comments

• Kaes Vant Hof, Chief Executive Officer and Director: 'We look forward to the completion of the Drop Down.'

Industry Context

The acquisition reflects a trend of consolidation in the Permian Basin, with companies seeking to expand their acreage and production scale.

Comparison to Industry Standards

• The document includes a fairness opinion from Evercore Group L.L.C., which compared Viper's financial performance and valuation multiples with those of selected publicly traded companies in the oil and gas industry, including Black Stone Minerals, L.P., Freehold Royalties Ltd., Kimbell Royalty Partners, LP, PrairieSky Royalty Ltd., and Sitio Royalties Corp.
• Evercore also compared the financial performance of the Endeavor Mineral and Royalty Interests and the valuation multiples relating to the Drop Down with the financial terms of certain other transactions that Evercore deemed relevant.
• The document also includes a selected precedent transactions analysis, reviewing transactions involving oil and gas mineral and royalty assets or companies with operations focused in the Permian Basin with transaction values equal to or greater than $150 million announced since January 1, 2019.

Legal Proceedings

• As of March 21, 2025, Viper was not aware of the filing of any lawsuits challenging the Drop Down Purchase Agreement, the transactions contemplated thereby or this proxy statement; however, Viper may become subject to lawsuits in the future relating to such matters.

Related Party Transactions

• The Drop Down is a related party transaction as Endeavor Energy Resources, LP is a subsidiary of Diamondback Energy, Inc., Vipers parent.

Stakeholder Impact

• The Drop Down is expected to benefit Viper stockholders through increased scale and operational synergies.
• The transaction may impact employees of both Viper and Endeavor, although specific details are not provided.
• The acquisition could affect customers and suppliers of both companies, but the nature of the impact is not detailed.

Next Steps

• Viper stockholders will vote on the Drop Down Proposal, the Equity Issuance Proposal, and the Adjournment Proposal at a special meeting on May 1, 2025.
• Viper will work towards satisfying all closing conditions to complete the acquisition in the second quarter of 2025.

Key Dates

Keywords

Viper Energy, Endeavor Energy Resources, acquisition, mineral interests, royalty interests, Permian Basin, stockholder vote, regulatory approval, OpCo Units, Class B Common Stock