(Bloomberg) – Viper Energy Inc., the mineral and royalty unit of Diamondback Energy Inc., agreed to buy Sitio Royalties Corp. for about $4.1 billion, including debt, in the latest deal focused on the Permian basin.
The deal marks a rare consolidation move among two of the biggest publicly traded owners of mineral rights and royalties in the U.S. shale patch. It’s also the second major transaction for Viper this year, after its $4.5 billion acquisition of certain minerals and royalties from Diamondback announced in January.
“This is just another step toward being, kind of, the big mineral champion in the public markets,” Viper Chief Executive Officer Kaes Van’t Hof said on a conference call Tuesday with analysts and investors. “While we are excited about the acreage outside the Permian, we intend to continue to be a Permian-focused company and see the other basins as upside to our base case projections.”
Acquiring Denver-based Sitio gives Viper access to another 34,300 net royalty acres across all of the major US shale basins, including a roughly 50% overlap with existing assets in the Permian basin.
Shares of Sitio rose as much as 13% in trading Tuesday, the biggest intraday jump since 2020. Viper’s shares were little changed.
The all-stock deal consists of 0.4855 shares of Class A common stock of a new holding company for each share of Sitio’s Class A common stock, and 0.4855 units of Viper’s operating subsidiary, Viper Energy Partners, for each unit of Sitio’s operating subsidiary, according to a statement Tuesday. The deal includes about $1.1 billion in Sitio net debt.
Diamondback is expected to own approximately 41% of Viper after the closing. Viper also announced it will boost its base dividend by 10% to 33 cents a quarter.
Viper was formed by Diamondback to focus on owning and acquiring mineral and royalty interests in oil-weighted basins, primarily the Permian basin.
“We expect this deal to be well received largely on the increased scale, all-equity consideration, dividend bump and optionality on the non-Permian acreage,” Citigroup Inc. analysts including Paul Diamond wrote in a note to investors.
