Viper Energy Closes Sitio Deal, Raises Q3 Production Outlook

Viper Energy, Inc. VNOM, a subsidiary of Diamondback Energy, Inc. FANG, announced that it has completed the acquisition of Sitio Royalties Corp. in an all-equity transaction. The closing marks a milestone for both companies, creating a new leader in the minerals and royalties space.

In connection with the merger, Viper revised its third-quarter 2025 production guidance to reflect Sitio’s contribution. The company now expects average oil production to be in the range of 54,500-57,500 barrels per day, representing an increase of approximately 8,500 barrels per day at the midpoint compared to its previous standalone projections.

Average total production is projected to be in the band of 104,000-110,000 barrels of oil equivalent per day, which represents an increase of about 18,000 barrels of oil equivalent per day from the earlier guidance. These updated figures account for 43 days of production from Sitio following the closing.

Kaes Van’t Hof, chief executive officer of Viper Energy, highlighted the merger as a pivotal step for the minerals and royalties industry. He noted that the combination of Viper and Sitio establishes a company with greater size, scale, liquidity, and access to investment-grade capital in what has traditionally been a fragmented market. Van’t Hof also underscored that Viper will continue to benefit from its unique and synergistic relationship with Diamondback as its parent company.

Looking ahead, the combined entity is expected to be well-positioned within North American shale to drive long-term growth efficiently, requiring no direct capital expenditures and only limited operating costs.

With this transaction, Viper Energy strengthens its scale and operational leverage in a consolidating sector. The company believes that this enhanced position will allow it to capture long-term growth opportunities, deliver efficiencies from greater scale, and continue providing value to shareholders while maintaining its close alignment with Diamondback.

Zacks Rank and Key Picks

VNOM and FANG currently carry a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at a couple of better-ranked stocks like Antero Midstream Corporation AM and Enbridge Inc. ENB, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Antero Midstream generates stable cash flow by providing midstream services under long-term contracts with Antero Resources. The company prioritizes debt reduction by effectively utilizing free cash flow after dividends. Antero Midstream’s higher dividend yield compared to its sub-industry peers reflects its commitment to generating shareholder returns.

AM’s earnings beat estimates in two of the trailing four quarters, met once and missed in the other, delivering an average surprise of 1.13%.

Enbridge is a major energy company that owns the longest and most complex oil and gas pipeline system in North America, transporting about 20% of the natural gas used in the United States. The business earns steady fees through long-term contracts that act as a protection against big oil price swings or changes in shipment. 

ENB’s earnings beat estimates in three of the trailing four quarters and met once, delivering an average surprise of 5.61%.

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This article originally published on Zacks Investment Research (zacks.com).

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