Viper Energy Launches Secondary Common Stock Offering By Diamondback Energy, Inc.
- None.
- The secondary offering may dilute existing shareholders' ownership due to the increased number of shares in the market, potentially impacting the stock price negatively.
Insights
The launch of a substantial secondary offering, as seen with Viper Energy, Inc., typically indicates a strategic move by the parent company to divest or redistribute assets. In this case, Diamondback Energy, Inc.'s decision to sell 11,500,000 shares of Viper's Class A common stock could be motivated by several factors, including the desire to raise capital for other investments, pay down debt, or reallocate resources within its portfolio.
The market's response to such an offering can vary. If investors perceive this move as a lack of confidence by Diamondback in Viper's future prospects, it might negatively affect Viper's stock price. Conversely, if the market views this as a positive step towards Diamondback's financial health or strategic repositioning, it could have a neutral or even positive impact. Moreover, the granting of a 30-day option for underwriters to purchase additional shares provides a buffer against potential market fluctuations and can help stabilize the stock price post-offering.
Secondary offerings are common in the energy sector, where capital-intensive projects and fluctuating commodity prices often require companies to seek additional funding. The involvement of notable financial institutions such as J.P. Morgan and Goldman Sachs as joint book-running managers can be seen as a vote of confidence in the process, potentially attracting institutional investors and lending credibility to the offering.
It's important to analyze the timing of the Secondary Offering within the context of the current energy market and broader economic conditions. Factors such as oil prices, regulatory changes, or shifts in energy demand could significantly influence investor interest. The market's reception of this offering could serve as a bellwether for the energy sector's access to capital markets, especially in a time when the industry is facing transitions towards renewable energy sources and sustainability goals.
The legal framework surrounding a secondary offering is crucial in ensuring compliance with securities regulations. The use of an effective automatic shelf registration statement on Form S-3 indicates that Viper Energy has previously met the regulatory criteria to qualify for this expedited process, which is reserved for well-established issuers. This can streamline the offering process and reduce the time frame for accessing public markets, thereby potentially minimizing market disruption and the impact on Viper's stock price.
However, the legal stipulation that the offering is subject to market and other conditions underscores the inherent uncertainties associated with such financial maneuvers. This conditionality serves as a legal safeguard, allowing for the offering to be adjusted or withdrawn in response to unfavorable market conditions or other unforeseen events, mitigating legal and financial risks for both Viper and its parent company, Diamondback Energy.
MIDLAND, Texas, March 05, 2024 (GLOBE NEWSWIRE) -- Viper Energy, Inc. (NASDAQ: VNOM) (“Viper”) announced today the launch of an underwritten public offering of 11,500,000 shares of its Class A common stock by Viper’s parent, Diamondback Energy, Inc. (the “Selling Stockholder”), subject to market and other conditions (the “Secondary Offering”). Viper will not receive any proceeds from the sale of the shares by the Selling Stockholder. The Selling Stockholder has also granted the underwriters a 30-day option to purchase up to an additional 1,725,000 shares of Viper’s Class A common stock.
J.P. Morgan, Barclays, Evercore ISI and Goldman Sachs & Co. LLC are acting as joint book-running managers for the Secondary Offering. Copies of the written base prospectus and prospectus supplement for the Secondary Offering, when available, may be obtained from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by telephone at (866) 803-9204, prospectus-eq_fi@jpmchase.com; Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717; Barclaysprospectus@broadridge.com; (888) 603-5847; Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, 35th Floor, New York, New York 10055, by telephone at (888) 474-0200, or by email at ecm.prospectus@evercore.com; and 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.
The Class A common stock will be sold pursuant to an effective automatic shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission.
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 Secondary 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 Secondary 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 acquisitions, 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 offering, the Registration Statement (as defined below), 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 ticker symbol of Viper Energy, Inc.?
How many shares are included in the secondary offering?
Will Viper Energy, Inc. receive any proceeds from the sale of shares in the secondary offering?
Which underwriters are involved in the secondary offering?
Where can one obtain the prospectus for the secondary offering?
Is the secondary offering being made through an automatic shelf registration statement?
