Good day, and thank you for standing by. Welcome to the Viper Energy Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw the question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chip Steele, Investor Relations Director. Chip, please go ahead.

Thank you, Felicia. Good morning and welcome to Viper Energy's second quarter 2025 conference, Results of We caution you that actual results are due to a variety of things with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I will now turn the call over to Case.

Thank you, Chip. Welcome, everyone, and thank you for listening to Viper Energy's second quarter 2025 conference call. Despite oil price volatility in the second quarter, Viper delivered strong oil production growth, both on an absolute and per-share basis. After closing the transformative drop-down transaction from Diamondback on May 1st, the transaction, August 18th, is still offering meaningful and immediate financial accretion. Year 2026, average production to increase by a mid-single-digit percentage. Before 2025, Viper Plus CTO consolidated. Outlook, we would expect our oil production per share for full year 2026 to be approximately 15% higher than full year 2025. ...of organic growth and accretive acquisition of our base plus variable dividend. The CTO acquisition, our pro forma net debt target is $1.5 billion, which represents approximately one turn of leverage at $50 WTI based on expected pro forma production levels. Balance sheet, but we see $1.5 billion as the right amount of permanent leverage for Viper as a royalty business and no capex. Cash for distribution, negative advantage for Viper. We believe Vipers' unique ability to deliver sustained per-share growth with zero capital and only limited operating costs will result in a differential ability to return increasing amounts of capital to our shareholders over the long term. CTO acquisition only enhances our position as we look to compete with mid- and large-cap E&Ps.

Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. The question comes from the line of Chris Baker of Evercore. Chris, please go ahead.

Yeah, thanks. Kaze, you know, great to see the commitment to returning 100% of cash flow once you get to that $1.5 billion target. Maybe just help frame up the flexibility in terms of the path toward that target, whether it be organically or with perhaps non-core asset sales. It's great. And then I guess just hitting on that last point, how are you thinking about the mix of buyback versus variable on top of the base dividend? Is it fair to think that we could see most of that variable cut in favor of buyback just given where the stock is today you know when there are these one moment for your next question question comes from the

line of betty diang of barclays betty please go ahead thank you um good morning again um i want to ask about the third third party operated activities it's quite impressive considering the broader industry slowdown that you're seeing more activities running on the third party assets and increased backlog. Just wanted to see any color on that dynamic, and do you think that level of activity is sustainable?

The third thing that I would flash showing up in one of the pie charts on SLAP 12 is we're starting to see some of the benefit in those numbers from the double-eagle development. They have that development and have some growth on what was a very concentrated activity.

Great color. Thanks. So a follow-up to that is, if I look at your 2026 production growth outlook of the mid-single-digit growth, I believe that's really underpinned by diamondback-operated activities. Based on what you currently see with a third-party activity, do you think, could there be upside to that growth trajectory in 2026?

It's actually relative to the baseline of being flat in the market, but we are really encouraged by the activity levels that we've seen.

That's great. Thank you. One moment for your next question. The question comes from the line of Neil Mehta of Goldman Sachs. Neil, please go ahead.

Yeah, good morning, team. I just want your perspective on some of the non-core, or I should say non-permian stuff in the CITIO portfolio. your perspective on, you know, how are you evaluating, how much of that ultimately stays versus gets monetized. And, you know, this has historically been a Permian pure play asset. How important is that for you as you think about the long term of the business? And on the flip side case, you've been very clear about using this asset to consolidate. You have an advantage cost the capital, even if it's undervalued, and you are the logical acquirer of a lot of royalty acreage, is the opportunity set available and interesting, and how do you weigh that against, you know, the intensity of integration around the CITEO asset that you'll need for the next couple of months?

Yeah, you know, I think it's very strategic.

All right. Thanks, Kate.

Thanks, Neil.

Sorry. One moment for your next question. The question comes from the line of Paul Diamond of Citi. Paul, please go ahead.

Thank you. Good morning. I'll thank you for taking the call. I just wanted to quickly touch base on the 1.5 net debt target. Once hit, even without any asset dispositions, does that shift your hedge strategy at all? Do you feel the need to maintain current levels, or could we see that moderate a little bit? or how do you think about that post hitting that target? Yeah, that makes sense. Okay, and then just shifting a little bit, I know you talked about this a touch, but just in the back half of the year post-City O'Close, I guess how should we think about that 75% of distributable cash to be split between the variable versus buybacks? I mean, there seems to be a pretty big dislocation in equity right now. Are you thinking about leaning in more in that direction? or I guess how do you think about that for between now and year-end?

Yeah, I mean, I think it's all going to be flexible, but...

Understood. Appreciate the clarity of the day.

One moment for your next question. The next question comes from the line of Derek Whitfield of Texas Capital. Derek, please go ahead.

Good morning, all, and thanks again for your time. Thanks, Derek.

For my first question, I wanted to focus on the CIDIO acquisition.

While it's hard to fully attribute SPAC performance to any specific development, VINM hasn't performed several of its peers since the announcement.

Are there any aspects of the acquisition that you feel are unappreciated by investors? In past calls, CIDIO Management has highlighted the substantial investment it has made in back office efforts to identify unarm payment of royalties.

I've been thinking about the levers that you guys have to pull for accretion. how much of that exists within venom one moment for your next question next question comes from

the line of aaron bilkoski of td cowan aaron please go ahead thanks good morning guys so your presentation outlines an expected 5.9 percent nri in diamondback operated wells through 2029 i guess my question is do you expect that nri to be fairly consistent across those years or do you anticipate a higher NRI in 2026 than see that taper off in the later years?

It's the net well count, you know, and as we think about that, on the Dynabek operative side, it's really a function of two Dynabek gross activity levels, and then secondly, your NRI within those wells. So we kind of laid this detail out with the drop-down, given we have such increased alignment with the Dynabek development plan over an extended period of time, given the overlap of that drop-down acreage. So you'll kind of see on slide 11, thinking about around 25 net wells per year over this time period. I would say that that certainly will be a touch-front weighted. So if you think about 26 and 27, that'll be biased a touch higher than that, and that's really going to drive the couple thousand barrels a day of growth that we're talking about on an absolute basis. But really over a five-year period, it's going to be pretty consistent exposure to whatever Dianvex development plan is going to be, and that really underscores the confidence we have in the long-term production growth outlook.

Perfect. Thank you very much.

One moment for our last question. The next question comes from the line of Leo Mariani of Roth. Leo, please go ahead.

Yeah, I wanted to touch base on the debt target here. Do you guys anticipate hitting that? It sounds like in the relatively near future. Do you think that's going to happen here in the first half of 26? And then could you also just talk about the strategy of sort of dividends, you know, versus buybacks? Obviously, it sounds like you want to step up the buyback here, given the weakness in the shares on a relative basis. But do you also see room for dividend increases in the back half of the year, given the accretion from the mergers?

You know, given the cash back.

On the M&A side, obviously, it sounds like, you know, you've got a lot to still digest here. You haven't closed CTO yet. but you kind of made a comment here that perhaps you take it a little bit slower as you want to get maybe the stock price up a bit to kind of fully reflect the benefits of the acquisition. So I understand maybe you don't have as much desire in the very near term, but can you talk about availability of deals out there? Are you seeing packages that are transacting? Obviously, all prices have settled down a little bit after a pretty tumultuous second quarter.

This concludes the question and answer session. I would now like to turn it back over to management for closing remarks.

Air conditioning, and I appreciate you making it shorter than the Diamondback call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.