Diamondback's Viper Energy finalizes $459 million acquisition of Tumbleweed royalty assets

(WO) — Viper Energy Partners has agreed to acquire mineral and royalty interests in the Permian Basin from affiliates of Warwick Capital Partners and GRP Energy Capital for $1 billion in cash and stock. The deal, which is expected to close in the fourth quarter of 2023, will increase Viper's exposure to one of the most productive oil regions in the U.S.

The acquisition includes approximately 4,600 net royalty acres in the Midland and Delaware basins, with nearly 70% of the acreage already developed or under development. Viper, a subsidiary of Diamondback Energy, expects the purchase to immediately boost its cash flow and help drive long-term growth.

The deal will be funded with $750 million in cash and $250 million in Viper common stock. Viper plans to finance the cash portion of the deal through a combination of cash on hand, borrowings under its revolving credit facility, and potentially accessing the capital markets.

“With this acquisition, Viper will enhance its scale and royalty interest exposure in core areas of the Permian Basin,” said Travis Stice, CEO of Viper and Diamondback Energy. “The transaction will immediately add cash flow and provide significant growth opportunities in the future.”

The company also reported that it will increase its base quarterly distribution by 7% to $0.34 per common unit, starting with the fourth quarter payout. This move reflects the expected cash flow impact from the acquisition and Viper's commitment to returning capital to its shareholders.

The Permian Basin is a key area for oil production in the U.S., and this acquisition will further solidify Viper's presence in the region. Viper said it expects the acquired assets to produce approximately 2,300 barrels of oil equivalent per day (BOE/d) in the fourth quarter, with significant potential for future production growth.