Viper Energy Partners to Acquire Mineral and Royalty Interests

Viper Energy Partners, a subsidiary of Diamondback Energy, has recently announced an agreement to purchase certain mineral and royalty interests. The transaction, valued at $750 million in cash and Viper units, involves affiliates of Warwick Capital Partners and GRP Energy Capital.

Funding and Financing

To finance the cash portion of the transaction, Viper plans to utilize a combination of sources. This includes cash on hand, borrowings under Viper's credit facility, and up to $200 million of committed equity from Diamondback. Additionally, proceeds from one or more capital markets transactions will be used.

Extensive Acreage Acquisition

The purchase encompasses significant acreage in various basins. In the Permian Basin alone, Viper will acquire 4,600 net royalty acres. Furthermore, an additional 2,700 net royalty acres in other major basins are included. In total, the transaction covers approximately 7,300 net royalty acres.

Financing Support from Diamondback

Viper has been granted an advantageous option by Diamondback. This option allows Viper to cause Diamondback to purchase up to 7.22 million common units for a total value of up to $200 million. The purpose of this option is to partially finance the acquisition. Viper has the right to exercise this option until the closing date.

Financing the Remaining Cash Portion

To fund the remaining cash portion of the purchase price, Viper plans to utilize a combination of financial resources. This includes cash reserves, existing borrowing capacity under its revolving credit facility, and/or proceeds from potential capital markets transactions. A potential bond offering may also be considered as part of this strategy. The expected timeline for the close is set for the middle of the fourth quarter of 2023.