Diamondback Energy’s subsidiary Viper Energy has agreed to acquire Sitio Royalties, a US-based oil and gas mineral and royalty company, in an all-equity transaction valued at approximately $4.1bn.
This valuation includes Sitio Royalties’ net debt of around $1.1bn as of 31 March 2025. Sitio Royalties is currently listed on the New York Stock Exchange (NYSE) while Viper Energy is listed on Nasdaq.
Sitio Royalties holds approximately 34,300 net royalty acres, with about 25,300 located in the Permian Basin and an additional 9,000 in other significant basins such as DJ, Eagle Ford, and Williston. Nearly half of these acres overlap with existing Viper wells in the Permian Basin.
In Q1 2025, Sitio Royalties reported an average production rate of 18.9 thousand barrels per day (mbo/d), with the Permian contributing 14.5mbo/d.
Post-acquisition, pro forma Viper will possess about 85,700 net royalty acres in the Permian Basin with around 43% operated by Diamondback.
The new entity will own a 1.8% net revenue interest in approximately 33,300 gross producing horizontal wells and have approximately 75.4 existing net drilled but uncompleted wells (DUCs) and permits. Diamondback operates the majority of these DUCs and permits.
The combined company’s estimated production for Q4 2025 is projected to be between 64 and 68mbo/d. For the full year 2026, production is expected to rise by a mid-single-digit percentage based on current commodity prices and industry activity levels.
Viper CEO Kaes Van’t Hof said: “This combination creates a leader in size, scale, float, liquidity and access to investment grade capital in the highly fragmented minerals industry. Pro forma Viper is now clearly a must-own public mineral and royalty company in North America, with attractive size and scale in the Permian Basin.
“This transaction positions Viper to compete for capital with mid and large cap North American E&Ps; except with higher margins, minimal operating costs, and the lowest dividend breakeven in the space.”
The deal stipulates that stockholders of the listed Sitio Royalties will receive 0.4855 shares of Class A common stock from the new holding company, referred to as “pro forma Viper,” for each Sitio Royalties Class A common share.
They will also receive 0.4855 units of Viper’s operating subsidiary for each unit of Sitio Royalties’ subsidiary, along with equivalent Class B common stock for Class C shares of Sitio Royalties. This structure values each Sitio Royalties’ share at $19.41 based on Viper’s common stock closing price on 2 June 2025.
The agreement received unanimous approval from the boards of both companies and the written consent of Diamondback, Viper’s majority shareholder. Additionally, stockholders representing roughly 48% of Sitio Royalties’ voting power, including its largest shareholder, Kimmeridge, have agreed to support the merger.
Sitio Royalties CEO Chris Conoscenti said: “This transaction provides Sitio’s shareholders with exposure to an entity with significantly greater size, future development visibility, and all of the benefits of the economies of scale unique to the minerals business – higher margins, lower cost of capital, strong positioning for future M&A opportunities, and the ability to return more capital to shareholders.”
The transaction is subject to standard regulatory approvals and is expected to finalise in Q3 2025.
