Good day, and thank you for standing by. Welcome to the Viper Energy 3rd 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 that you're advising your hand is raised. To withdraw your question, please press star 11 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 Seal, Investor Relations Director. Please go ahead.

Thank you, Amber. Good morning and welcome. It's due to a variety of factors.

We continue to execute on our growth strategy and continued organic growth. We provide a roughly single-digit organic growth in 2026.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from Neil Dingman of William & Blair. Your line is now open.

Hey, morning, so it's a great free cash flow story, obviously. My first question, it just turned into, given the nearly $700 million asset sale and what should be probably even over $1.5 billion of free cash flow next year, could you speak to sort of near-term and 26 capital allocation? I mean, as I see it, it seems like you'll not only quickly repay that debt, but you could bump distributions up materially and potentially do some buybacks. We'd love to hear how you're thinking of it. And that kind of leads to my second question. since that predicated, I guess, or maybe ask another way, could you just speak to how activity, you know, outside of Diamondback is trending? And it seems like, judging by the last four, things still appear very active, even more active than, you know, what we're seeing from some of these operators out there.

But really just want to confirm that's still the case. ...cross the basin over this time period with a pretty consistent average NRI right around 1.5%. So, you know, it'll trend up and down kind of with activity a bit. But, you know, I really think it speaks to the quality of the acreage. and the operators that we have outside of Dining Bank deploying consistent capital to this position, that gives a lot of confidence to the forecast of 2026 and really even beyond that.

Makes sense. Thanks, boys.

Thank you. Our next question comes from Betty Jing of Barclays. Your line is now open.

Thanks for taking my question. I wanted to ask about the third-party activity. also just on the the backlog has continued to increase even I want to understand how much of that increase is driven by the CTO contribution and how much is seeing a broader constructive uplift that you're seeing across from the legacy assets from other operators across the Permian?

Yeah, I would say it's pretty evenly mixed. You know, I think being the underwriting assumption position has continued to outperform as well, mainly as a result of some of the higher-end rise, and you can kind of see that showing up on slide 11, as I mentioned. So, you know, as we look at it today, right, we don't have full visibility into what will happen for the full year 2026, especially in the back half of the year. We'll continue to monitor new activity as it shows up in the conversion of those permits and those wells that have been spudged. But I would say generally we're extremely pleased with the third-party exposure and especially the complement that that provides to the concentrated exposure through the diamondback Yeah, those are really encouraging signs to see.

My second question is on AI. It strikes me that the royalty model is ideally positioned to benefit from AI integration and thinking about the impact on predictive nature of future activity, maybe deal valuation. Can you just speak to how you see the tools that are available today could potentially impact your operations and F&A?

Yeah, Betty, I mean, I would say generally you're correct, right? There's a lot of data flowing through the mineral business. There's a lot of data on 35,000 wells throughout the Permian. Use that data to…

Very interesting. Thank you. Our next question comes from Neil Mehta of Goldman Sachs & Company. Your line is open.

Yeah, thanks so much. Josh, you just congrats on some of these non-Permian divestitures, and it's good to see the business kind of core up around the Permian again. You know, as we think about the cash that's coming in case, are there any considerations we should be mindful of in terms of the number that's coming in? Are there any offsets, whether it's taxes or anything else, around these inflows?

Yeah, we got proceeds.

And, Keith, can you talk about the A&D market? You know, that's been kind of a hallmark of the broader Diamondback complex is finding those bolt-on opportunities. You think, especially given the softer commodity price environment, does that make it easier or harder to get deals done here over the next 6 to 12 months?

We position ourselves to be the consolidator of choice on the, you know, the billion-dollar-plus type opportunities exactly with where commodity prices are today. I would say it's a little bit different on kind of the smaller ground game type acquisitions. We've had some success, and some of those owners, you know, might see their royalty checks go down and see that as an opportunity to liquidate it. But, you know, that's tougher to scale today relative to the size of the enterprise value So, you know, part of our thinking additionally is with the buyback, that's in effect a way to buy really high-quality assets that we know and that are growthy assets today. So it's kind of a combined, you know, strategy of how to deploy capital for us today.

Thanks, Austin.

Thank you. Our next question comes from Kaylee Akamain of Bank of America. Your line is now open.

Hey, good morning, guys. Case, in your opening remarks, you called out that Viper has been exposed to about half of all third-party activity in the Permian Basin over the last three years. In the basin this year, there's been a reduction in activity because of oil price uncertainty. The market expects maybe zero oil growth from the Permian Basin next year, yet your Permian volumes continue to grow. That's a favorable dynamic. How long do you expect that it can continue? Yeah, I mean, I think I appreciate that. For my next question, one question that we get from investors concerns the valuation of Viper. it's the best risk-adjusted return in the Permian, in our view. Another way to look at it is that Venom shares are trading with great value today. So my question is, would you ever consider using free cash at BANG to purchase more interest in Venom shares?

Yeah, it certainly is.

I appreciate the comments. Thanks, Case.

Thank you. Our next question comes from Derek Whitfield of Texas Capital. Your line is now open.

Thanks. Good morning, all, and thanks for taking my question. For my first question, I wanted to start with your guidance regarding the soft guide for 2026.

How are you thinking about the price sensitivity associated with that guidance from a Diamondback-operative perspective? ...down, you know, Diamondback will really be prioritizing the highest-returning projects in the lower commodity price environment, so Viper tends to be insulated at least in gross exposure and a higher...

Got it, that makes sense. And then maybe just to build on an earlier question, With the benefit of more time with the CIDIO team and their approach, could you guys elaborate on the synergy opportunity you see from a cash savings perspective on just implementing some of the AI processes, and then the opportunity it could generate from a ground game perspective?

The deal and those synergies have been processes that there's going to be today, but we're going to be moving towards.

Great, Keller. I'll turn it back to the operator.

Thank you. So our next question comes from Leo Mariani of Roth. Your line is now open.

I just wanted to clarify on the guidance here. I know it's soft guide for 26 when you guys talk about mid-single-digit, you know, growth, you know, next year versus 4Q. I assume that's, you know, kind of unadjusted, you know, for the pending asset sale. So clearly, as we strip those volumes out, then, you know, you kind of wouldn't quite hit that mid-single-digit growth would be a little bit lower. That's kind of a pre-asset sale guide here.

Q4 guidance of $66,000 a day of oil at the midpoint. That includes about $5,000 a day of contributions to the non-permian assets. Starting point for 2026, and then you'll grow a couple thousand on a digit level.

Okay, appreciate that clarification. And obviously, you've got the asset sale done, and you certainly spoke to returning a greater percentage of capital to shareholders. You clearly leaned into the buyback pretty heavily, but just trying to get a sense as that debt is paid off, as you kind of spoke to, it sounds like, in the next handful of months. Are your eyes also looking to maybe kind of accelerate the growth in the variable dividend component as well over the next few quarters? Is that something that investors should also be looking forward to?

Yeah, I mean, I think it's all price-related.

All right, thank you. Thank you. Our next question comes from Tim Resvin from Key Bank Capital Markets. Your line is now open.

Thanks for taking my questions, folks. I don't mean to beat the dead horse here, but the repurchase news was really notable. know it was equal to your prior two biggest quarters combined so is it safe to say this was more of kind of an extreme quarter um given you know shares at the 37 38 level or would you potentially look to go you know even bigger at the expense of the variable dividend if you thought the dislocation warranted that generation or that response and then on the topic of repurchases There's, you know, there's been some market consternation, you know, perhaps overdue about these new holders that you have following the CIDIO closing. And I believe there's four, you know, what people would call unnatural holders at about 13% of shares. Can you talk, Kay, about any dialogue you've had with any of them and how high that is on your sort of, you know, kind of maybe removing that overhang or sort of addressing that as they look to sell? Thank you. That's all I had.

Thank you. I am showing no further questions at this time. I would now like to turn it back to the CEO, Case Vanhoef, for closing remarks.

Participating today, and please reach out if you have any questions.

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