Viper Energy (VNOM) Update - June 14

[dan_s]

VNOM closed at $42.52 on June 13.
Of the four minerals companies in our High Yield Income Portfolio it is my Top Pick for growth. < Viper's production will be going from 57,378 Boepd in Q1 2025 to over 130,000 by year end 2025.

Viper is a C-Corp., so a good choice for an IRA account.

Since Viper announced the merger with Sitio Royalties (STR) 8 analysts have submitted updated price targets to TipRanks.
> All eight of them rate it a BUY with an average price target of $54.12
> The eight new price targets range from $48 to $60, which was on 6/5/2025 from John Freeman at Raymond James. John is rated 5-Star by TipRanks.

My updated "proforma forecast" for Viper has been posted to the EPG website.

The merger with STR is expected to close on August 1

STR's Q3 2025 production forecast is 47,750 Boepd.

Viper's stand alone production guidance for 2H 2025 is 85,000 to 88,000 Boepd (~42,250 bpd of crude oil). I do expect Viper to sell some non-core assets outside of the Permian Basin, so my Q4 production forecast is 129,500 Boepd. For 2026, my forecast is based on 135,000 Boepd (probably too conservative since Diamondback will be running a lot of rigs on Viper's mineral acreage).

My current valuation is $55.00 for VNOM

Viper's Capital Return Framework
♦ Return of capital commitment of at least 75% of cash
available for distribution, inclusive of base dividend,
variable dividends and opportunistic share repurchases
♦ Base annual dividend of $1.20/share; declared 1Q ’25
total base-plus-variable dividend of $0.57/share,
representing a 5.4% annualized yield
♦ Board authorized share repurchase program of $750
million; repurchased $325 million through May 2, 2025
♦ Expect to continue to use a portion of cash available
for distribution to reduce debt and help fund small
acquisitions