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Hello, and welcome to the Viper Energy first quarter 2026 earnings conference call. At this time all participants are on listen-only mode. After the speaker presentation, there will be question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question please press star one one again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Director of Investor Relations, Chip Seale.

Thank you, Andrew. Good morning, and welcome to Viper Energy's first quarter 2026 conference call. During our call today, we may reference an updated investor presentation which can be found on Viper's website. Representing Viper today are Kaes Van't Hof, CEO, and Austen Gilfillian, President. During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and businesses. 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 can be found in the company's filings 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 Kaes.

Thank you, Chip. Welcome, everyone, and thank you for listening to Viper Energy's first quarter 2026 conference call. The first quarter marked a strong start to the year as production exceeded our expectations, and that momentum is carrying into an increased growth outlook for the remainder of 2026. During the quarter, operators in our acreage turned more than 650 gross horizontal wells to production, led by Diamondback's 114 gross wells in the Midland Basin, with meaningful contributions from leading third-party operators across both the Midland and Delaware Basins. Based on first quarter results and continued strong activity across our acreage, we are increasing the midpoint of our full year oil production guidance by roughly 2.5%.

We expect growth to be driven primarily by Diamondback's acceleration of near-term activity and continued development of Viper's high concentration royalty interest throughout the basin. Importantly, this increased production outlook represents over 5% organic growth relative to our pro forma 2025 exit rate. In addition to this organic growth, Viper also continues to execute on our differentiated inorganic growth strategy. Yesterday, we announced the Riverbend acquisition, in which Viper will acquire over 3,000 net royalty acres and approximately 2,000 barrels of oil production per day for $337 million in cash and 3.7 million Class A shares. These assets are highly complementary to our portfolio, with roughly 75% overlap on our existing acreage and further increase our exposure to high-quality third-party public operators.

Turning to capital allocation, our first quarter return of capital of $0.94 represents 90% of our cash available for distribution. This is comprised of a $0.68 per share dividend and $0.28 per share of stock repurchases executed in the quarter. As we've outlined, we are committed to returning at least 75% of cash available for distribution, our return of capital framework is designed to be both disciplined and flexible to fit the needs of our business. Prior to the Riverbend acquisition, we had a further commitment to return 100% of cash available for distribution if we were at or below $1.5 billion of net debt.

On that point, it's important to note that $1.5 billion net debt is not a static amount but instead represents a capitalization mix designed to evolve with the continued growth of the business. Within our broader capital allocation strategy, we'll continue to invest in growing our business when the right opportunities present themselves. In periods where we are closer to our minimum debt mix, we will provide all that cash back to our stockholders. In closing, Viper offers a differentiated investment opportunity within the energy sector. Our mineral and royalty model, deep inventory position, and alignment with Diamondback support durable organic growth and strong free cash flow generation. Combined with disciplined capital allocation, we are well-positioned to deliver sustainable per share growth and attractive long-term stockholder returns. Operator, please open the line for questions.

Certainly. As a reminder, to ask a question, please 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. One moment, please. Our first question comes from the line of Greta Drefke with Goldman Sachs.

Good morning, team. Thank you for taking my questions. First off, I was just wondering if you could speak to the number of and scale of remaining Permian pure play packages available that Viper could potentially consolidate over time. Do you expect Viper's consolidation strategy to be the roll-up of smaller positions or are there positions with meaningful scale that Viper could evaluate over time?

Hey, Greta, thanks for the question. I think it's gonna be both. You know, this deal with Riverbend is kind of the first deal in this size range that we've executed in Viper's new pro forma size and scale, meaning post-Sitio and post-drop-down. You know, I think it's a nice tuck-in acquisition and, you know, we can execute on these very seamlessly. When you think about the opportunity size or opportunity set of deals in this size range, it's, you know, it's quite sizable actually. In addition to that, there's a handful of larger opportunities. You know, we'll see how things play out. It's still tough to get deals done in this market, I would say.

As we showed yesterday, there are ways for buyers and sellers to come together with the volatility to still get deals done. I would say I'm cautiously optimistic, but the opportunity set both medium size and larger is really quite massive for Viper.

Yeah. I'd say we think we've positioned ourselves to be, you know, the buyer of choice, you know, for those, you know, mid-sized to larger deals. I mean, a, you know, a deal like Riverbend would've been a very large deal for Viper three or four years ago, now we're able to do it, able to finance it without going to the market, you know, able to pay down that financing very, very quickly and, you know, not have a huge overhang on our, on our stock. You know, very excited with the position that we're in. You know, I think it's pretty clear that, you know, any large private equity backed mineral position that had been built over the last kind of five plus years is now, you know, considering an exit with oil prices where they are.

I think we're clearly the buyer of choice, but need to be disciplined in terms of our valuation framework. You know, getting this deal done with Riverbend is a good example of that, hopefully more to come.

Great. Thank you. That's very helpful. For my second question, I just wanted to follow up a bit more on Riverbend specifically. You outlined that about 75% of the asset base overlaps with Viper's existing assets, but I was wondering if you could provide any more detail on the quality and/or geological differences of the other 25% relative to Viper's position.

Yeah. The Midland Basin is gonna be a lot of overlap. It's Midland Basin's almost three-quarters, close to 70% operated by Exxon and Diamondback, really kind of in the Midland, Glasscock, Upton, Reagan area, and a lot of undeveloped acreage, particularly under Exxon. I would say that looks a lot like Viper does today. The Delaware, the Texas Delaware looks pretty similar with some of the Reeves County assets under Permian Resources, for example. I would say what's different is probably some of the New Mexico assets and that's the exposure that we outlined under Conoco, Oxy, and EOG. It's really a balanced mix.

It gets a lot of what we like in the Midland Basin and gets kind of some new exciting exposure in New Mexico that Viper historically hasn't had a huge presence in.

Great. Thank you.

Thank you. Our next question comes from the line of Betty Jiang with Barclays.

Hello, good morning again. Wanna ask about capital allocation, given Diamondback is taking a more opportunistic approach on buyback. Can you speak to the capital allocation process, decision-making for Viper in terms of both percentage of free cash flow being returned and the allocation of that cash return in the form of buyback versus variable dividend?

Yeah, Betty. Good question. You know, I would say the difference between Viper and Diamondback still remains that, you know, because of the low CapEx or zero CapEx at Viper and the fact that this was taken public as a distribution vehicle, you know, we still want it to be primarily a distribution vehicle where, you know, share repurchases are brought into the equation when, you know, we have a unique situation with an unorthodox seller or a non-long-term holder of the stock or the stock's, you know, significantly depressed in terms of valuation versus, you know, Diamondback where you have an E&P business with CapEx and, you know, the different priorities in terms of free cash generation.

You know, we kind of went to this number where we're gonna distribute at least 75% of our free cash every quarter. You know, this quarter we went with 90% because the balance sheet's in really good shape. You know, we'll see what happens in Q2. If we have as, you know, significantly higher prices throughout the quarter, you know, I think we have flexibility to kind of return anywhere between 75% and 90% of free cash because we know that the excess free cash flow is gonna pay down the Riverbend deal very quickly. Viper's in a really good spot, but I would say overall focused on more cash going out the door than repurchases and less need for debt reduction given the position of the business.

Great. That makes sense. My follow-up is actually something that you mentioned on the Diamondback call on sort of this resource recovery that we are on the cusp of a technical breakthrough that we could see resource recovery increasing in the Permian. Clearly that's beneficial for Viper. Maybe just speak to where are you seeing the productivity trends across Midland and Delaware, and whether how that potentially higher resource recovery could help to drive Viper production growth in the future down the road as well?

Yeah, well, listen, this is a, I think a long-term mega theme, right? I don't have a ton of concrete examples today. Obviously, we've done some tests at the Diamondback level of surfactants and advanced chemicals, you know, and those have been done on areas where we do have Viper interest. You know, Viper does get that benefit. It's immaterial today, but, you know, just using the crystal ball four, five, six years down the road here, could that be a material part of Diamondback's capital plan or therefore Viper's production profile? I think that's entirely possible.

You know, the other thing that is the, is the key advantage that Viper has is, you know, being in 50% of the wells in this basin, you know, we have a differential knowledge as to what everybody's trying, you know, across both sides of the basin. As these tests continue, you know, we will have differential information at Viper and hopefully leverage that to improve returns across both snake companies.

Great. Helpful. Thank you.

Thanks, Betty.

Thank you. Our next question comes from the line of Neal Dingmann with William Blair.

Hey, Kaes. My first question just on production guide. Besides the boost in Diamondback, could you just talk about what other sort of upside and third-party activity you're assuming?

Yeah, I mean, I'll give you my high level. You know, we haven't booked a ton of third-party acceleration or, you know, faster development yet in our guide. I think, you know, I think it's likely to come. You know, we haven't seen, we've seen the leading indicators, but we haven't seen them kind of convert into, you know, DUCs and wells turning online. I think if I was a betting man today at these oil prices, you know, things are gonna accelerate throughout the basin.

I would say it's two parts to the equation. One is the absolute amount of DUCs and permits that we have, the second part is how quickly those get converted to production. It's easy to see in real time any increase that happens in the DUC and permit count. It's harder to get a feel for the quicker conversion rates. You know, right now, I would say we're getting the benefit of any increased permitting activity, but we haven't modeled increased rates of conversion. Really, that's gonna be the biggest driver as you think how it impacts the next six months.

We're watching and monitoring things as they evolve, and we expect some things to come our way, but probably haven't fully baked in, you know, the acceleration benefit from third-party operators across the basin.

Thanks, Austen. Secondly, just on the M&A side, Kaes, I'm wondering is, you know, after the What was it? I forget. Earlier this year, the prior sale, are you holding much that you or Austin now would consider non-core at this time?

No. We cleaned up all the non-Permian assets, you know, used that to put the balance sheet in perfect shape. I think, you know, I think we kind of see a wave of private equity-backed mineral companies gonna at least try to test the market here over the next, you know, couple quarters to a year. I think we're pretty primed from a positioning perspective to take advantage of that.

Perfect. Thank y'all.

Thanks, Neal.

Thank you. Our next question comes from the line of Paul Diamond with Citi.

Thank you all. Good morning. Thanks for taking the call. Just a quick touch on plus Riverbend and the M&A outlook. I know you guys talked about the availability of deals, but I guess how has recent volatility really impacted the bid-asks of the deals of different sizes? Are you seeing a bit more convergence of those large deals, which Riverbend is an example of, or as what are you seeing on the volatility of the bid-asks there?

Yeah, you know, we only have really one good data point with the Riverbend deal. You know, I think, you know, what's interesting about that deal is, you know, the strip is so backwardated that we can actually underwrite a relatively, you know, moderate, you know, flat oil price scenario for the NAV of that deal, call it $65-$70 a barrel. That actually, you know, isn't too far off from where the strip is. You have the front end that's so high, yeah, we're paying a lower front year cash flow multiple, we're not, you know, breaking our pick on NAV because the NAV is pretty tied to that long-term mid-cycle price that we're underwriting. That's kind of a unique situation.

I think, you know, Riverbend had owned this position for a while, and they were looking for an exit, and, you know, the stars aligned, and they were the first to make the move. Credit to them, right? They've now got, you know, 3 million shares of a stock that's up, you know, 8%-10% from where we did the deal. That's called a win-win. You know, the rest, I haven't seen anything else hit the market yet. I just know that, you know, it seems like the bankers' phones are ringing off the hook to try to learn about, you know, what the market looks like versus hitting the market, you know, actively.

Got it. Makes perfect sense.

Yeah.

Just one quick piece on cleanup or housekeeping, I guess. Cash taxes. Bit of a run up with recent pricing. I guess at what point do you guys see is it still like a 27, 28, where things kind of settle down, like run rate out? Is there, I guess, how much should this current volatility pull that forward?

Yeah. The, the rate's not changing that much in itself. We, we still have the 27%-30% of pre-tax income. You know, that's really your kind of 21% statutory rate, and you're just getting dinged higher on an income basis given you have a higher depletion rate, from an income perspective than you do from a tax perspective.

For first quarter taxes were higher as an absolute dollar amount than we guided to just because income was up. We kind of expect that 27%-30% to be a pretty steady rate going forward.

Understood. Appreciate the clarity. I'll leave it there.

Thank you. Our next question comes from the line of Derrick Whitfield with Texas Capital.

Good morning, guys, and thanks for your time again.

Hey, Derrick.

Kaes, perhaps for you, just I guess more broadly, as you think about the green line environment for Diamondback, what degree of flexibility do you have in the development plan at Diamondback to lean more into the areas where Viper has higher NRIs for both 2026 and 2027?

Yeah, I mean, listen, I think the way we look at it remains the same. You know, we do look at all of our inventory on a consolidated basis for the portion of Viper that Diamondback owns. You know, that moves the high interest area to the front of the development plan. You know, I think if anything, over the next two years, given the quality of what we've seen in the Barnett near Spanish Trail, I'd probably bet that area gets accelerated, you know, versus expectations over the next kind of 18-24 months.

As you know, one of our best Barnett wells is right offset Spanish Trail, and, you know, it's very unique to have an area where you own 100% of the minerals. I think, I think we have a two-well test coming on in a four-well test coming on in Spanish Trail later this year. If I was a betting man, I would say that's gonna result in accelerated development of the rest of that ranch.

Great. That makes sense. Maybe just more specific on 2026 guidance. Is it fair to think about the cadence of growth beyond 2Q as a steady build of maybe 1,000 per quarter to get to the average of 65.5?

Yeah, I think that's directionally right. I mean, we'll see how things trend and if activity gets brought forward, that could move things a little bit. I mean, as we see things today, that seems directionally right.

Great update, guys. Thanks for your time.

Thanks, Derrick.

Thank you. Our next question comes from the line of Leo Mariani with ROTH.

I just wanted to, you know, revisit the question of sort of variable dividend versus buyback. On the FANG call, you guys were pretty clear that you wanted to take, you know, more of a countercyclical approach. When we're well above mid-cycle oil prices, which we certainly probably likely are here today, that you would certainly lean more on paying down debt. Obviously, you don't really need to do that here at Viper. Should we be thinking about that similarly, where at a higher mid-cycle oil price, you're much more likely to just push money to the variable dividends, and the buyback could be a little bit more muted in the near term? Just any color on that'd be great.

Yeah. Leo, you know, I think generally you're correct, you know, that we're gonna lean more towards cash returns at Viper. It's, you know, kind of how the business was set up. You know, we haven't used a ton of leverage in deals, particularly at the drop-down than Sitio. You know, we paid off most of that Sitio debt with the non-core asset sale. You know, and kind of the uses of free cash flow, you know, Viper obviously base dividend, that's gonna continue to grow. I put the variable dividend probably a little bit above repurchases just because that's, you know, how the business was set up. You know, I don't think we're gonna sit on a bunch of cash at Viper given the strength of the balance sheet.

The decision tree becomes easier, when you're a distribution vehicle versus kind of a, you know, overall NAV growth vehicle at Diamondback, where, you know, we're gonna keep distributing cash, we're gonna grow these per share metrics, and that should result in a higher, you know, stock price, but also higher distributions.

Yeah. Leo, I think it really shines the advantage of the business model too. When you have 90% free cash flow margins, it really allows you to do all of the above, right? You, you can pay a big dividend with a base plus variable. You can opportunistically invest in the business, whether that's buybacks or acquisitions, then you can have targeted debt reductions, especially when in times of higher commodity prices. You, you don't have to sit around as much and wonder which of those options you choose.

You can do all of them because when you look at your investment as a percentage of your operating cash flow, it's pretty low just given your margins.

Yeah, certainly makes sense. Wanted to jump back over to the Riverbend, you know, deal here. You kind of did a good job kind of talking about, you know, where the acres was in terms of the key operators remaining there. You kind of made a bit of a high level comment that, you know, some of the stuff under Exxon was a little bit more underdeveloped. I just wanted to get maybe a little sense of just kind of the overall flavor of the inventory there. Is it gonna be a little bit more geared towards the emerging zones, or is there still, you know, substantial, let's call it, you know, core kind of legacy zones, Wolfcamp A, Wolfcamp B, and whatever on the acreage? Just any color there would be great.

Yeah. Most of the value will come from your core zones being undeveloped, especially in New Mexico and in the Midland piece. If you kind of look at a map and you look at the Midland Glasscock line, kind of in the, what we call the Four Corners area there's a big chunk of legacy Pioneer now ExxonMobil completely undeveloped acreage that I think will be the primary acreage that supports the production profile over the coming years. You know, as you dig in and you think about some of the unquantified zones that we didn't have to pay for, certainly you're getting the emergence of the The Barnett and the Midland and also the Woodford and the Delaware, kind of on the eastern edge of the Delaware Basin, getting pretty excited about that now. I think it's a good mix of existing production and also core undeveloped zones that you get the kind of unquantified upside to go along with it. That's kind of the beauty of this mineral business model.

Yeah. No, that makes sense. Just a follow-up there. I know you gave some production numbers over the next 12 months, but just based on what you're describing, would you expect that if we kind of hang out at these oil prices that perhaps that production grows a bit over time? It sounds like there's enough inventory there to probably grow that individual piece. Is that fair?

Yeah. I think 27 probably grows and it's got a couple years of slight growth. You know, generally, if you zoom out and look over a 5-10-year period, it looks pretty flat. 27 certainly looks probably higher than what the NTM production number that we put out.

Okay, thanks.

Thank you. Our next question comes from the line of Tim Rezvan with KeyBanc Capital Markets.

Good morning, folks. Some of mine have been answered, so I just had one for you. We were a little surprised that, you know, the Viper's sale earlier this year was mostly Diamondback selling and not as many unnaturals. You know, that overhang is still out there a bit. I'm just curious, is there a price at which you potentially wouldn't participate if some of these unnatural holders come to market? Or how do you think about, you know, kind of dampening volatility should they look to sell because shares are, you know, back up to about $50? Thanks.

Yeah, Tim, I mean, that's a good question. I mean, I think it kind of depends on the size of the deal and the nature of the trade. You know, I think, you know, if it's a sizable deal and we need to participate to make sure it goes smoothly with public shareholders, you know, we want the long-term holders of the stock to win long term. We know that that's probably a good use of capital. If it's smaller one-offs, you know, we probably don't need to support it given the, you know, the higher float and liquidity of the business. I think, you know, flexibility is key. Size of the prize is also key.

You know, we're well on our way to, at Viper, to continuing towards that goal, the S&P 500. You know, as the business gets bigger, that's gonna only help flow liquidity, you know, ability to exit and ability to get deals done.

Appreciate the comment. I could just ask a quick follow-up. You gave some comments, Austen, on sort of the M&A outlook. We've heard from some minerals peers that, you know, all else equal, a higher strip is bringing sellers to market. Are you seeing that dynamic as well, or are you facing a different dynamic because you're sort of elephant hunting with a couple of the very large packages out there? Thanks.

No, I mean, we've seen it on both levels. We're still actively engaged in our ground game. You know, I think calls have picked up on that front. You would think surely as a result of where oil prices have moved. We've seen it there on the smaller deals. We've also seen it, you know, Kaes was mentioning before, the phones are definitely ringing on some of these mid to larger packages. I just can't predict yet today what the higher strip or what the volatility means in terms of ability to get deals done. I think the supply is gonna be there. It's just key for us to stay disciplined and, you know, look under the right deals where we can generate good returns.

You know, I think if we do that, things will come our way over time.

Okay. Thank you.

Thank you. I'll now hand the call back over to CEO, Kaes Van't Hof, for closing remarks.

Well, thanks everybody for your time on a busy week, and thanks for your support of Viper Energy, and the future is bright.

Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.