Viper Energy Announces Pricing of Upsized Class A Common Stock Offering

Rhea-AI Summary

Viper Energy (NASDAQ: VNOM) has announced the pricing of an upsized public offering of 10,000,000 shares of its Class A common stock at $42.50 per share. This represents a 1,500,000 share increase from the originally proposed 8,500,000 share offering. The underwriters have a 30-day option to purchase an additional 1,500,000 shares. Net proceeds are expected to be approximately $413.7 million, or $475.9 million if the underwriters' option is fully exercised.

Viper plans to use the proceeds, along with cash on hand and credit facility borrowings, to fund part of the cash consideration for its pending acquisition of mineral and royalty-interest owning subsidiaries of Tumbleweed Royalty IV, The offering is expected to close on September 13, 2024, subject to customary conditions.

Positive

• Upsized offering from 8,500,000 to 10,000,000 shares indicates strong investor demand
• Potential to raise up to $475.9 million if underwriters exercise their full option
• Proceeds will fund a strategic acquisition, potentially expanding Viper's mineral and royalty interests

Negative

• Potential dilution for existing shareholders due to the issuance of new shares
• Increased debt if borrowings from the revolving credit facility are used to fund the acquisition

Insights

Financial Analyst

Viper Energy's upsized offering of 10 million shares at $42.50 per share is a significant move, potentially raising $413.7 million in net proceeds. This 17.6% increase from the original 8.5 million shares indicates strong investor demand. The additional capital will help fund the Tumbleweed Royalty acquisition, expanding Viper's mineral and royalty interests in the Permian Basin.

The pricing at $42.50 suggests market confidence in Viper's growth strategy. However, investors should note potential dilution effects on existing shareholders. The successful upsizing and involvement of major underwriters like Goldman Sachs and BofA Securities lend credibility to the offering, potentially strengthening Viper's market position in the competitive oil and gas sector.

Oil Industry Expert

Viper Energy's strategic move to acquire Tumbleweed Royalty's assets underscores the ongoing consolidation in the Permian Basin. This region remains a hotspot for U.S. oil production and Viper's expansion here could significantly boost its royalty income. The successful upsizing of the offering suggests strong investor appetite for Permian Basin exposure.

However, the oil industry faces challenges with price volatility and increasing focus on renewable energy. Viper's royalty model provides some insulation from direct operational costs, but it's still exposed to commodity price risks. Investors should monitor how effectively Viper integrates these new assets and whether they enhance the company's production and revenue profiles in the long term.

Market Strategist

The timing of Viper's offering is intriguing, coming amidst a period of rising oil prices and increased energy sector interest. The upsized offering and its swift execution indicate a favorable market window that Viper is capitalizing on. This could set a positive precedent for other energy companies looking to raise capital.

Investors should watch for potential market reactions, as successful offerings in the energy sector could signal renewed confidence. However, it's important to balance this against broader economic factors and the ongoing energy transition. The offering's success may also prompt competitors to accelerate their acquisition strategies, potentially leading to increased M&A activity in the Permian Basin.

MIDLAND, Texas, Sept. 11, 2024 (GLOBE NEWSWIRE) -- Viper Energy, Inc. (NASDAQ: VNOM) (“Viper”) announced today the pricing of an underwritten public offering of 10,000,000 shares of its Class A common stock at a price to the public of $42.50 per share (the “Primary Offering”). Viper’s offering of 10,000,000 shares of Class A common stock represents a 1,500,000 share upsize to the originally proposed 8,500,000 share offering. The underwriters have a 30-day option to purchase up to an additional 1,500,000 shares of Class A common stock from Viper at the public offering price (less the underwriting discount).

Net proceeds to Viper from the sale of the 10,000,000 shares of its Class A common stock, after the underwriting discount and estimated offering expenses, will be approximately $413.7 million (or $475.9 million, if the underwriters exercise their option in full).

Viper intends to use the net proceeds from the Primary Offering, together with cash on hand and borrowings under its revolving credit facility, to fund a portion of the cash consideration for its previously announced pending acquisition of certain mineral and royalty-interest owning subsidiaries of Tumbleweed Royalty IV, LLC (the “Pending Acquisition”).

The Primary Offering is expected to close on September 13, 2024, subject to customary closing conditions.

Goldman Sachs & Co. LLC, BofA Securities and Truist Securities are acting as joint book-running managers for the Primary Offering. Copies of the written base prospectus and prospectus supplement for the Primary Offering may be obtained on the website of the Securities and Exchange Commission, www.sec.gov or, when available, may be obtained from Goldman Sachs & Co. LLC, 200 West Street, New York, NY 10282, Attention: Prospectus Department, by telephone at (866) 471-2526 or by emailing prospectus-ny@ny.email.gs.com, BofA Securities, NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attn: Prospectus Department, or by emailing dg.prospectus_requests@bofa.com; and Truist Securities, Inc., Attention: Equity Capital Markets, 3333 Peachtree Road NE, 9th Floor, Atlanta, GA 30326, by telephone at (800) 685-4786, or by emailing truistsecurities.prospectus@truist.com.

The Class A common stock will be issued and sold pursuant to an effective automatic shelf registration statement on Form S-3ASR previously filed with the Securities and Exchange Commission (the “Registration Statement”).

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The Primary Offering may only be made by means of a prospectus supplement and related base prospectus.

About Viper Energy, Inc.

Viper is a publicly traded Delaware corporation that owns and acquires mineral and royalty interests in oil and natural gas properties primarily in the Permian Basin.

Cautionary Note Regarding Forward-Looking Statements

The information in this press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this press release, regarding the completion of the Primary Offering, Viper’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “goal,” “plan,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Be cautioned that these forward-looking statements are subject to all of the risk and uncertainties, most of which are difficult to predict and many of which are beyond Viper’s control, incident to the development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, risks relating to the Pending Acquisition, including its consummation or the realization of the anticipated benefits and synergies therefrom. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth in Viper’s filings with the SEC, including the prospectus and prospectus supplement relating to the Primary Offering, the Registration Statement, its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under the caption “Risk Factors,” as may be updated from time to time in Viper’s periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. Viper undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

Investor Contacts:
Adam Lawlis
+1 432.221.7467
alawlis@diamondbackenergy.com

Austen Gilfillian
+1 432.221.7420
agilfillian@viperenergy.com

FAQ

What is the price per share for Viper Energy's (VNOM) upsized public offering?

Viper Energy (VNOM) has priced its upsized public offering at $42.50 per share of Class A common stock.

How many shares is Viper Energy (VNOM) offering in its upsized public offering?

Viper Energy (VNOM) is offering 10,000,000 shares of Class A common stock, which is an increase of 1,500,000 shares from the originally proposed 8,500,000 share offering.

What are the expected net proceeds from Viper Energy's (VNOM) public offering?

The expected net proceeds from Viper Energy's (VNOM) public offering are approximately $413.7 million, or $475.9 million if the underwriters exercise their option in full.

When is the expected closing date for Viper Energy's (VNOM) public offering?

The public offering by Viper Energy (VNOM) is expected to close on September 13, 2024, subject to customary closing conditions.

What will Viper Energy (VNOM) use the proceeds from the public offering for?

Viper Energy (VNOM) intends to use the net proceeds, along with cash on hand and borrowings, to fund part of the cash consideration for its pending acquisition of certain mineral and royalty-interest owning subsidiaries of Tumbleweed Royalty IV,