Viper Energy Launches Offering of Class A Common Stock

Rhea-AI Summary

Viper Energy (NASDAQ: VNOM) has launched an underwritten public offering of 8,500,000 shares of its Class A common stock, with an option for underwriters to purchase an additional 1,275,000 shares. The company plans to use the net 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,

Goldman Sachs & Co. , BofA Securities, and Truist Securities are acting as joint book-running managers for the offering. The shares will be issued and sold under an effective automatic shelf registration statement on Form S-3ASR previously filed with the SEC.

Positive

• Potential expansion of mineral and royalty interests through pending acquisition
• Ability to raise capital through public offering indicates market confidence
• Underwriter option for additional shares could increase capital raised

Negative

• Potential dilution of existing shareholders due to new share issuance
• Increased debt if borrowings from credit facility are used for acquisition
• Dependency on successful completion of the offering to fund acquisition

Financial Analyst

Viper Energy's public offering of 8.5 million shares, with an option for 1.275 million more, is a significant capital-raising move. This offering, aimed at funding the Tumbleweed Royalty IV acquisition, indicates Viper's aggressive growth strategy in the Permian Basin's mineral and royalty interests sector.

The use of multiple financing sources - stock offering, cash reserves and credit facility - suggests a balanced approach to capital structure. However, investors should note the potential dilution effect on existing shareholders. The involvement of major underwriters like Goldman Sachs and BofA Securities lends credibility to the offering but also implies substantial fees.

While this move could enhance Viper's market position, the success hinges on the Tumbleweed acquisition's value creation. Investors should closely monitor the acquisition's integration and its impact on Viper's future cash flows and dividends.

Market Research Analyst

Viper Energy's stock offering comes at a time when the energy sector is experiencing volatility. The Permian Basin, where Viper focuses, remains a key area for U.S. oil production, but faces challenges from price fluctuations and environmental concerns.

This capital raise suggests Viper sees long-term value in expanding its mineral and royalty interests, betting on the basin's continued productivity. The market's reception to this offering will be a litmus test for investor sentiment towards the oil and gas sector, particularly in a climate of increasing focus on renewable energy.

Investors should consider how this expansion aligns with broader energy transition trends and potential regulatory changes that could impact the Permian Basin's long-term viability. The success of this offering could also influence other players in the sector to pursue similar strategies.

MIDLAND, TEXAS, Sept. 11, 2024 (GLOBE NEWSWIRE) -- Viper Energy, Inc. (NASDAQ: VNOM) (“Viper”) announced today the launch of an underwritten public offering of 8,500,000 shares of its Class A common stock, subject to market and other conditions (the “Primary Offering”). The underwriters will have an option to purchase up to an additional 1,275,000 shares of Class A common stock from Viper in the Primary Offering.

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”).

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@diamondbackenergy.com

FAQ

How many shares of Class A common stock is Viper Energy (VNOM) offering in its public offering?

Viper Energy (VNOM) is offering 8,500,000 shares of Class A common stock, with an option for underwriters to purchase an additional 1,275,000 shares.

What is the purpose of Viper Energy's (VNOM) public offering of Class A common stock?

The purpose is to fund a portion of the cash consideration for Viper Energy's pending acquisition of certain mineral and royalty-interest owning subsidiaries of Tumbleweed Royalty IV,

Who are the joint book-running managers for Viper Energy's (VNOM) public offering?

Goldman Sachs & Co. , BofA Securities, and Truist Securities are acting as joint book-running managers for Viper Energy's (VNOM) public offering.

How will Viper Energy (VNOM) use the proceeds from its Class A common stock offering?

Viper Energy (VNOM) intends to use the net proceeds from the offering, along with cash on hand and borrowings under its revolving credit facility, to fund part of the cash consideration for its pending acquisition.