Diamondback Subsidiary Inks $1-Billion Deal for Permian Royalties

On a pro forma basis, the mineral and royalty arm of the Midland-based oil company owns interests covering more than 32,000 net acres in the Permian Basin.

Source: Getty Images.

Viper Energy Partners—a subsidiary of US independent oil and gas company Diamondback Energy—announced this week it is acquiring $1-billion worth of mineral and royalty interests covering thousands of acres in the liquids-rich Permian Basin.

London-based Warwick Capital Partners and Dallas-based GRP Energy Capital will receive a combined cash sum of $750 million in exchange for their combined holdings along with more than 9 million common shares of Viper.

The deal centers on the nonoperating interests of some 4,600 net acres in the Permian and to a lesser extent another 2,700 net acres in other US basins.

These locations account for about 4,000 B/D of crude output. However, Viper highlighted in a release that the Permian acreage represents 90% of the acquisition’s production and overall deal value.

Viper added that average production next year across the package is expected to rise to 4,750 B/D. The mineral and royalty subsidiary said the Permian portion of the deal includes almost 2,800 “largely undeveloped” net acres in the Midland Basin where an estimated 135 horizontal units await drilling. Another 1,800 net acres in the Delaware Basin are included in the deal.

Diamondback is the operator of almost 290 of the net acres in both the Midland and Delaware basins. The Midland-based tight-rock exploration company, which produces more than 236,000 B/D, created Viper in 2013 to focus mainly on acquiring mineral and royalty interests in the Permian and other oil-rich basins.

On a pro forma basis, Viper’s portfolio now includes about 32,000 net royalty acres in the Permian.

“As we look ahead, the mineral market remains highly fragmented and Viper plans to play a meaningful role in consolidating this market as high-value proposition opportunities present themselves,” said Travis Stice, CEO of Diamondback, in a statement.

In 2022, Diamondback announced a pair of megadeals which expanded its footprint in the Permian. In October of last year,the company acquired private oil company FireBird Energy for $1.6 billion in cash and stock. The following month Diamondback struck another cash-and-stock deal valued at $1.5 billion to acquire Lario Permian.