Good day, and thank you for standing by. Welcome to the Viper Energy 4th Quarter 2025 Earnings Conference Call. At this time, our participants are in the 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 evising your hand is raised. So withdraw your 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 Seal, Investor Relations Director. Please go ahead.

Thank you, Brittany. Good morning, and welcome to Viper Energy's fourth quarter 2025 conference, an updated investor results of operations. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors, information concerning these factors with the SEC. In addition, we will make reconciliations with the appropriate gap measures can be found in our earnings release issued yesterday afternoon. I will now turn the call.

Listening to VIPER's fourth quarter 2025 conference call. The fourth quarter caps the transformational year for VIPER, highlighted by more than $8 billion of mineral acquisitions and meaningful growth in both absolute and per-share metrics, even after two significant acquisitions in 2025 and greater exposure in the Permian Basin. Longevity and work we did on our balance sheet. capital allocation through additional returns. We are positioned to increase our return of capital 100% of capital. Comprehensive return of capital strategy, while also continuing to deliver on differentiated growth. Looking ahead, Viper's well positioned to generate strong free cash flow, deliver attractive shareholder returns, and continue to pursue accretive Permian consolidation opportunity.

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 one one 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. Our first question comes from the line of Neil Dingman with William Blair. Your line is now open.

Morning, guys. Thanks for the time. My first question for you, Austin, is just on the Barnett specifically. You know, last night and this morning, Fang's Barnett update really seemed to be positive and certainly, I think, positive for Venom. I'm just wondering, could you give any color on how Venom's ownership translates across Fang's Barnett position?

Yeah, Neil, I'll give you some of the high level. I mean, I think that's, you know, what we've continued to try to preach at Viper is, you know, the benefits of mineral ownership and, you know, you own from the surface of the earth to the center of the earth in perpetuity and new things or try new zones or try new techniques.

So Diamondback, some of the JVs that they've done have been very active in taking new leases from Viper to give them the right to develop those deeper zones in the Midland Basin. Spanish Trail was a big chunk of that, but average 10 to 15 percent of the acres that would potentially be open in the Midland Basin. So that should be a tailwind to come both from a lease bonus perspective but also, you know, new inventory over the years to come.

Great point, Austin. Thanks. And then second question just on return of capital. Specifically, now you've mentioned your position to return upwards to 100% of cash available from distribution in addition to the share growth. And I'm just wondering, it looks like last quarter about 41% of the cash available for distribution went to base dividend and then followed by what with a 27 buyback, 23 variable, and 9% debt repayment. I mean, how, you know, will this stay in this range? Or, you know, Austin case, is this just largely share price dependent? Or, you know, I mean, I'm just thinking more on sort of broad terms in rankings. Should we, you know, will we see the base dividend still probably be the highest? Or, you know, how should we think about it?

Yeah, I mean, listen, as the board decided to increase the base dividend by 15%, I think that's, you know, a meaningful number. I think it shows that we've done, you know, a good amount of creative deals, balance sheets strong. You know, that's always going to be the first call on capital. You know, we've also said, hey, you know, we're going to –

That makes sense. Thanks, Keshe.

Thank you so much. One moment for our next question. Our next question comes from the line of Betty John with Barclays. Your line is now open. Thank you. Good morning.

My question is on the third-party activity outlook that you're seeing there. I think given the recount declines in the Permian, it's notable how resilient Diamondbacks or Vipers third-party activity has been holding up fairly well in the last few quarters. Where are you seeing today in terms of your activity backlog? Are you seeing any slowdown at all, or could this be another area that perhaps it's enhancing the production growth that you might see this year?

We've put some new disclosures in this quarter, break down kind of some of the key third-party operators by both the Midland and Delaware Basin, and kind of as you look through that with the larger players in the industry. So I think that's really helped. The view that we've had of trying to acquire high-quality royalty interest, and as you look at the amount of activity that our acreage position has captured over the years, it's really been consistent in capturing pretty much 50% of everything that happens by third parties across the entire basin. And then you get the kicker of the concentrated development by Diamondback as well. So, you know, we'll see what happens over the course of the year. Right now, the guidance only takes into account what we can see, meaning existing doves and permits. So if activity holds like it can today, that might help a bit on the production outlook but you know overall i would say that the key takeaway is that third party activity continues to be very strong yeah and betty you know we always put our uh operator hat on when we're buying combining minerals so we always buy under you know well-capitalized operators yeah no that makes sense and um and can't really see how resilient the activity

uh broadly is despite the basin um overall levels um a follow-up on the lease bonus um And it's related to the Barnett or for the deeper zones as well. Lease bonus have been coming in fairly strong in 2025 and got another decent quarter in 4Q. As the basin continues to chase deeper zones, how does that benefit you guys from the lease bonus income perspective?

Leasing program, I think you're seeing that benefit play out with the lease bonus that

we achieved um and you know i think that's going to be continually seen both from a deep rights perspective no that makes sense thank you thank you so much one moment for our next question our next question comes from the line of neil meta with goldman sachs and company your line is now open thanks case uh what's the environment out there right now in terms of the bid ask for for

other royalty assets. Is there another CIDEO waiting out there or has a lot of the big prizes already been taken?

A need to suffer big deals in particular and prove the deals done, but

I have a team dedicated to that and I think we have the relationships in the basement to get some good value adds that help on the margin. I think to case this point, there are bigger strategic deals to be done when the time is right. I haven't seen those over the last couple quarters, more so because of the commodity.

That's great, guys. And then the follow-up is just geography. I mean, it seems like the position is certainly more concentrated on the Midland side, and that's where you have the asset overlap with the parent. How does Delaware fit into the portfolio? Where specifically could you see yourselves leaning in from an activity perspective? And then I think I know the answer to this, but this is a permanent pure play story, right?

We wouldn't be surprised if you tried to diversify outside of that. the unique attributes of the Permian, emerging zones, benefits you more as a mineral owner, even more so than some of the odds, given the, on the royalty side, you know, I think we still see a lot of value in the Delaware Basin. It's a little bit of a different story, given that you're not going to be able to rely on the Dimebeck drill bit to drive that visible growth. But as we dig in, you know, there's still some really high quality and built locations there and that exists under well capitalized operators. And that's kind of how we view it, right? It's just like, what is the likelihood of that next inventory location getting developed? And for us, you know, we get that confidence either via knowing dynamic development plan or by just looking at what the operator economics are. And I think a lot of that exists today, especially in the northern Delaware. So we'll focus there where we can. But for us, rock is rock and value is value. So it will just kind of be depending on the assets that are available.

Very clear, guys.

Thank you so much. Our next question comes from the line of Kolei Akamai with Bank of America. Your line is now open.

Hey, good morning, guys. My first question is on the 2026 oil guide. It's quite wide. Wondering what that reflects. Is it visibility that you have on the activity, or is it performance-related as players in the basin are trying out new stuff? If it's visibility related, is it fair to say that visibility is better near term and less so in the second half of the year?

If you look at it currently, those typically get converted to production within about five to six months. So, we feel very good about the first half of the year and what that growth outlook looks As you move to the second half of the year, it becomes a little bit more tricky task list than having conversion rates and timelines on permits. So, we've modeled the permits that we can draw forward or new wells get permitted that that are already included in the guide, that could, you know, help move you up to the higher end of the range. And really the wide guide right now is just reflected to that we can only guide to what we see today. And a lot will happen that we don't know about today.

Thank you, Chip. My second question is on the gas contracts that were announced at Diamondback that are starting up later this year. To the extent that secures higher gas realizations, wondering if that also benefits viper on the revenue side yeah we you know we do every i hope you guys don't mind me trying the third question but i imagine that there's a portfolio of lower zoned rights at viper maybe not all that is viewed as being competitive today given where the activity on the midland side of basin has been but the proportion that is competitive should we assume that's already been transferred to diamondback you know a deeper zone i appreciate that guys thank you

Thank you so much. One moment for our next question. Our next question comes from the line of Derek Whitfield with Texas Capital. Your line is now open.

Thanks, guys. Good morning. I wanted to start on the Barnett. Regarding the interval and the 200,000 net acres you referenced for Diamondback earlier today, how much coverage do you specifically have with Viper? And does Diamondback have any activity planned at Spanish Trail, the area you were just mentioning, which you guys have a very high NRI for?

We had a big chunk, kind of in that 10,000 to 15,000 acre block in Spanish Trail, which is going to provide a great alignment between Diamondback and Viper. I think Diamondbacks had a little bit more flexibility to handle the leases with Viper as they come up and a bit more term on the development plan, whereas a lot of what they've done has kind of been more bigger strategic options. So I think you'll see the alignment continue to improve as we progress through the year. And then on Spanish Trail, I think if you've listened to the Dynabec call, there's been some references to some offset tests, but the first two wells that are going to be tested on Spanish Trail proper, those wells have been permitted and should have production kind of in the mid part of this year.

So very excited to see those results and see what that might mean for, you know, Dynabec to apply more of a full-scale development approach where Viper owns 100% of the minerals. yeah no question great development for uh viper and maybe uh just going back to some of your ma comments earlier on the ground game with the inclusion of the studio guys who had really focused on the ground game i guess how would you characterize the growth you're seeing in organic additions throughout 2025 and kind of what you see ahead for you in 2026 well something

of the scale that we did last year so moving the needle from a size scale and very helpful thanks your time thank you so much our next question comes from the line of paul diamond with city your line is now open uh thank you good morning authors for taking the call so people in sticking

on m a you guys have been kind of progressing towards that you know billion and a half net debt number you know one turn one turn leverage i guess in the presence of a potentially or potentially larger deals is how much are you with increased scale how much you will reflect that out You got it.

And then just a housekeeping question on the hedge plan, 2026 looks pretty well locked Is there any volatility level that would really move you off these marks, or are you guys comfortable with the current levels?

We've had this approach for a while now where we just try to protect against the extreme downsides through deferred premium puts. So we've been able to take advantage of some of the volatility over the last couple quarters and have a good position built through Q3, which especially given where the debt level lift. Don't feel like we need to do much more there. As we continue to progress through time, and if you see debt levels stay low like they are now, you probably just need less protection, meaning either a lower percentage of our volumes heads or potentially a lower strike price on a puts, and you can get them for a little bit cheaper. But in general, we just want to protect against the extreme downsides, ensure that we can continue to pay out a lot of our capital, and, you know, not have to panic if things go south quickly again and try to start hoarding cash. So I think it's just a prudent approach that we've had that's worked well for us the last couple of years.

Understood.

Appreciate the question. I'll leave it there.

Thank you so much. One moment for our next question. Our next question comes from the line of Leo Mariani with Roth. Your line is now open.

Hey, guys, wanted to follow up on lease bonus income. Obviously, that popped a bit in 2025. I know it's difficult to kind of have any precision guide, but would it be fair to assume that maybe 26 is not dramatically different in terms of lease bonus income? Are we kind of in a bit of an upcycle versus kind of a handful of years ago? Obviously, there's some new zones that are coming to bear, as you guys have described on both this and the fan call.

We'll see. I've seen the deep rights for Viper in terms of the ground leasing that's happening. I think something also that's going to be interesting to happen, especially Posidio, is as you move into 2027 and gas takeaway gets better, you know, we'll be able to explore what new development areas might look a little bit better with higher gas realizations, and that could help as well. So, you know, maybe it's being optimistic, but I think we can have 2026 look similar to 2025, and really it's just going to be the benefit of having a much larger asset base today and a team fully dedicated to proactively managing the position.

Yeah, I mean, that's the key. We're getting a lot better at proactively managing our position despite its size, and that's where, you know, some of the CTO team members that are, you know, focused on automation, you know, reviewing title, reviewing leases, you know, this is where I think, you know, I think AI is going to be important for Viper. You know, we don't have a ton of manpower to study, you know, 50,000 wellbores and a machine can do it, and I think that's going to make, you know, our shareholders more money.

All right, that's a good color there. And I just wanted to ask on kind of oil cut. Your oil cut here was kind of mid-50s several quarters ago. It's kind of trending a little bit more towards low 50s. What do you attribute this to? Is it just more secondary zone development and, of course, just, you know, wells get older and GOR sort of increases?

Yeah, I mean, I think the NGL beats.

Okay, thanks.

One moment for our next question. Our next question comes from a line of Tim Resvin with Key Bank Capital Market. Your line is now open.

Okay, thanks, folks. I appreciate you letting me on here. I want to kind of circle back on the repurchase comments. You know, it sounds like, Kate, from your comments, that $1 billion authorization may be as much focused on liquidity for the unnatural holders as it is to open market repurchases today. So I'm just trying to kind of – I know you can't show your cards too much, but, you know, shares are up 17% year-to-date. You're still well below where shares traded in 24 and 25 at a higher oil price. So just trying to kind of get your arms around the attractiveness of open market repurchases today.

Yeah, I mean, it's a bit more obvious in Q4 than they are today. A lot of return capital to shareholders.

That's good context. I appreciate that. But, and in case, if I could quickly ask a macro question, we saw pretty strong third party turn in lines in the fourth quarter relative to the full year run rate. I know some of that is probably due to the CIDIO acquisitions. But, you know, it seems like industry wide concerns on Permian oil, you know, rolling over, those concerns seem to be fading. So, you know, given the lens into aggregate activity that you have through Viper, do you expect Permian oil to grow this year. Appreciate the context. Thank you.

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

Please reach out.

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