Viper Energy (NASDAQ:VNOM) executives used the company’s fourth-quarter 2025 earnings call to highlight a “transformational year” marked by large-scale mineral acquisitions, a strengthened balance sheet, and an expanded shareholder return framework, while also pointing to continued strong activity across its Permian Basin footprint.
2025 acquisitions and operating backdrop
CEO Kaes Van’t Hof said 2025 was highlighted by more than $8 billion of mineral acquisitions, which helped Viper expand its Permian Basin acreage by “nearly two and a half times” year over year. He also said the company grew oil production per share by 7% year over year.
2026 outlook and visibility on activity
Viper initiated average daily production guidance for full-year 2026 that, according to Van’t Hof, implies mid-single-digit organic production growth from the company’s fourth-quarter 2025 exit rate.
In response to questions about why 2026 oil guidance is wide, management said visibility is strongest in the near term and becomes less certain in the back half of the year, particularly on third-party operated volumes. The company said its guidance is based on what it can “see” today—namely existing drilled-but-uncompleted wells (DUCs) and permits—while acknowledging that additional permitting or changes in activity could shift results toward the higher end of the range.
Balance sheet actions and capital returns
Van’t Hof said Viper made significant progress on the balance sheet in 2025. Following a non-Permian divestiture, the company fully repaid its $500 million term loan and its revolver balance, resulting in pro forma net debt of roughly $1.6 billion, which he described as “just over one turn of leverage.”
On shareholder returns, management said the board approved:
- A 15% increase to the base dividend
- A $1 billion increase to the share repurchase authorization
Van’t Hof said the base dividend represents about 50% of estimated 2026 free cash flow at $50 WTI and is “fully covered below $30 WTI,” framing the payout as both attractive and flexible. He added that Viper returned 90% of available cash during the fourth quarter and, after the non-Permian divestiture closed, expects it can increase returns to upwards of 100% of cash available for distribution.
Asked how to think about the mix of base dividends, variable dividends, and buybacks, Van’t Hof said the base dividend is the “first call on capital,” while the decision to buy back shares depends on the market and stock price. He noted buybacks were “less obvious today” than when shares were at $37, but said the company wants flexibility—particularly to facilitate exits by “non-traditional holders” such as private equity owners. He cited an example from the fourth quarter when Viper repurchased 1 million shares directly from a private equity holder.
Leasing, deep rights, and Barnett discussion
A portion of the Q&A focused on leasing and emerging development zones, including the Barnett and deeper rights in the Midland Basin. Management reiterated its view that mineral ownership benefits from new zones and new techniques without requiring Viper to deploy capital.
President Austen Gilfillian said the company is still in the early stages of its leasing program for deeper zones, and estimated Viper has leased only about 10% to 15% of acreage that could potentially be open in the Midland Basin. He said this could become a tailwind both from lease bonus income and from incremental inventory that could support production in coming years.
On Spanish Trail—an area management described as a roughly 10,000–15,000 acre block where Viper owns 100% of the minerals—management said Diamondback has referenced offset tests, and that the first two wells to be tested on Spanish Trail “have been permitted” with production expected in the mid part of this year. Executives said they are watching those results closely for indications of broader development potential.
Executives also discussed lease bonus dynamics, noting that lease bonus income can arise when leases terminate and rights revert back to the mineral owner, or when deep rights become available. Gilfillian said the company has invested in teams, systems, and processes to manage tens of thousands of leases and associated production data, enabling a more proactive leasing program. When asked about the outlook for 2026 lease bonuses, management said it is partly outside the company’s control, but suggested 2026 could look similar to 2025 due to a larger asset base and continued focus on proactive management.
Third-party activity, M&A conditions, and risk management
Asked about third-party activity despite broader Permian rig count declines, management said it has not seen much of a slowdown. Gilfillian pointed to new disclosures in the investor deck that break down key third-party operators by basin and said activity is dominated by larger, well-capitalized players. He added that Viper’s acreage has historically captured about “50% of everything that happens” by third parties across the basin, in addition to Diamondback’s concentrated development.
On the acquisition market, Van’t Hof said fewer large deals have been available for review in the past six months, and that it has been “hard to get really big deals done” at current prices. He also said investors wanted Viper to demonstrate it could integrate the Sitio transaction and a dropdown, which management believes it has done. He said the company is ready to evaluate larger opportunities as conditions change.
Regarding leverage in a larger acquisition scenario, management said it could consider moving to “a little bit of a turn and a half” as a stretch, but emphasized maintaining and improving its ratings profile, noting that achieving investment-grade status was “a big deal” and provides unique access to capital relative to peers.
On hedging, management said it is comfortable with its current approach, which it described as protecting against “the extreme downside” using deferred premium puts. The company said it has built a position through the third quarter and suggested that as debt remains low, it may need less protection over time, either via lower hedged volumes or lower put strike prices.
About Viper Energy (NASDAQ:VNOM)
Viper Energy Partners LP is a publicly traded master limited partnership that owns and intends to acquire mineral and royalty interests in oil and natural gas properties. As a pass-through entity, Viper Energy Partners does not engage in drilling or production operations directly; instead, it generates revenues by holding overriding royalty interests, mineral fee interests and royalty fee interests. These interests entitle the partnership to receive a percentage of the proceeds from hydrocarbons produced and sold by third-party operators.
The partnership’s assets are concentrated in the Permian Basin, with a primary focus on the Delaware Basin region of West Texas and southeastern New Mexico.
