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Operator: Hello, and welcome to the Viper Energy First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. It is now my pleasure to introduce Director of Investor Relations, Chip Seale.

Chip Seale: Thank you, Andrew. Good morning, and welcome to Viper Energy’s First Quarter 2026 Conference Call. During our call today, we may reference an updated investor presentation, which can be found on Viper’s website. Representing Viper today are Kaes Van’t Hof, CEO; and Austen Gilfillian, President. During this conference call, the participants may make certain forward-looking statements relating to the company’s financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company’s filings with the SEC.

In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I will now turn the call over to Kaes.

Kaes Van’t Hof: Thank you, Chip. Welcome, everyone, and thank you for listening to Viper Energy’s First Quarter 2026 Conference Call. The first quarter marked a strong start to the year as production exceeded our expectations and that momentum is carrying into an increased growth outlook for the remainder of 2026. During the quarter, operators in our acreage turned more than 650 gross horizontal wells to production, led by Diamondback’s 114 gross wells in the Midland Basin, with meaningful contributions from leading third-party operators across both the Midland and Delaware Basins. Based on first quarter results and continued strong activity across our acreage, we are increasing the midpoint of our full year oil production guidance by roughly 2.5%.

We expect growth to be driven primarily by Diamondback’s acceleration of near-term activity and continued development of Viper’s high concentration royalty interest throughout the basin. Importantly, this increased production outlook represents over 5% organic growth relative to our pro forma 2025 exit rate. In addition to this organic growth, Viper also continues to execute on our differentiated inorganic growth strategy. Yesterday, we announced the Riverbend acquisition in which Viper will acquire over 3,000 net royalty acres and approximately 2,000 barrels of oil production per day for $337 million in cash and 3.7 million Class A shares. These assets are highly complementary to our portfolio with roughly 75% overlap on our existing acreage and further increase our exposure to high-quality third-party public operators.

Turning to capital allocation. Our first quarter return of capital of $0.94 represents 90% of our cash available for distribution, and this is comprised of a $0.68 per share dividend and $0.28 per share of stock repurchases executed in the quarter. As we’ve outlined, we are committed to returning at least 75% of cash available for distribution and our return of capital framework is designed to be both disciplined and flexible to fit the needs of our business. Prior to the Riverbend acquisition, we had a further commitment to return 100% of cash available for distribution if we were at or below $1.5 billion of net debt. On that point, it’s important to note that $1.5 billion net debt is not a static amount, but instead represents a capitalization mix designed to evolve with the continued growth of the business.

Within our broader capital allocation strategy, we continue — we will continue to invest in growing our business when the right opportunities present themselves. However, in periods where we are closer to our minimum debt mix, we will provide all that cash back to our stockholders. In closing, Viper offers a differentiated investment opportunity within the energy sector. Our mineral and royalty model, deep inventory position and alignment with Diamondback support durable organic growth and strong free cash flow generation. Combined with disciplined capital allocation, we are well positioned to deliver sustainable per share growth and attractive long-term stockholder returns. Operator, please open the line for questions.

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Operator: [Operator Instructions] Our first question comes from the line of Gretta Drefke with Goldman Sachs.

Margaret Drefke: First off, I was just wondering if you could speak to the number of and scale of remaining Permian pure-play packages available that Viper could potentially consolidate over time. Do you expect Viper’s consolidation strategy to be the roll-up of smaller positions? Or are there positions with meaningful scale that Viper could evaluate over time?

Kaes Van’t Hof: Gretta, thanks for the question. I think it’s going to be both. This deal with Riverbend is kind of the first deal in this size range that we’ve executed in Viper’s new pro forma size and scale, meaning post- Sitio and post drop-down. I think it’s a nice tuck-in acquisition, and we can execute on these very seamlessly. When you think about the opportunity size or opportunity set of deals in this size range, it’s quite sizable actually. And then in addition to that, there’s a handful of larger opportunities. So we’ll see how things play out. It’s still tough to get deals done in this market, I would say. But as we showed yesterday, there are ways for buyers and sellers to come together with the volatility to still get deals done. So I would say I’m cautiously optimistic, but the opportunity set, both medium-sized and larger is really quite massive for Viper.

Austen Gilfillian: Yes. I’d say we think we’ve positioned ourselves to be the buyer of choice for those midsized to larger deals. I mean a deal like Riverbend would have been a very large deal for Viper 3 or 4 years ago, and now we’re able to do it — able to finance it without going to the market, able to pay down that financing very, very quickly and not have a huge overhang on our stock. So very excited with the position that we’re in. I think it’s pretty clear that any large private equity-backed mineral position that had been built over the last kind of 5-plus years is now considering an exit with oil prices where they are. I think we’re clearly the buyer of choice, but need to be disciplined in terms of our valuation framework and getting this deal done with Riverbend is a good example of that and hopefully, more to come.

Margaret Drefke: Great. That’s very helpful. And then for my second question, I just wanted to follow up a bit more on Riverbend specifically. You outlined that about 75% of the asset base overlaps with Viper’s existing assets. But I was wondering if you could provide any more detail on the quality and/or geological differences of the other 25% relative to Viper’s position.

Kaes Van’t Hof: Yes. So the Midland Basin there’s going to be a lot of overlap. It’s — the Midland Basin is almost 3/4, call it, 70% operated by Exxon and Diamondback, really kind of in the Midland, Glasscock, Upton, Reagan area and a lot of undeveloped acreage, particularly under Exxon. So I would say that looks a lot like Viper does today. The Delaware — the Texas Delaware looks pretty similar with some of the Reeves County assets under Permian Resources. For example, I would say what’s different is probably some of the New Mexico assets, and that’s the exposure that we outlined under Conoco, Oxy and EOG. So it’s really a balanced mix. It gets a lot of what we like in the Midland Basin and gets kind of some new exciting exposure in New Mexico that Viper historically hasn’t had a huge presence in.

Operator: Our next question comes from the line of Betty Jiang with Barclays.

Wei Jiang: So I want to ask about capital allocation given Diamondback is taking a more opportunistic approach on buyback. So can you speak to the capital allocation process decision-making for Viper in terms of both percentage of free cash flow being returned and the allocation of that cash return in the form of buyback versus variable dividend?

Kaes Van’t Hof: Yes, Betty, good question. I would say the difference between Viper and Diamondback still remains that because of the low or 0 CapEx at Viper and the fact that this was taken public as a distribution vehicle, we still want it to be primarily a distribution vehicle where share repurchases are brought into the equation when we have a unique situation with an unorthodox seller or a non-long-term holder of the stock or the stock is significantly depressed in terms of valuation versus Diamondback where you have an E&P business with CapEx and the different priorities in terms of free cash generation. So we kind of went to this number where we’re going to distribute at least 75% of our free cash every quarter. This quarter, we went with 90% because the balance sheet is in really, really good shape.

And we’ll see what happens in Q2. If we have a significantly higher prices throughout the quarter, I think we have flexibility to kind of return anywhere between 75% and 90% of free cash because we know that the excess free cash flow is going to pay down the Riverbend deal very, very quickly. So leverage is in a really good spot, but I would say, overall, focused on more cash going out the door than repurchases and less need for debt reduction given the position of the business.

Wei Jiang: Great. That makes sense. My follow-up is actually something that you mentioned on the Diamondback call on sort of this resource recovery that we are on the cusp of a technical breakthrough that we could see resource recovery increasing in the Permian. Clearly, that’s beneficial for Viper — yes, beneficial for Viper. Maybe just speak to are you seeing any — where are you seeing the productivity trends across Midland and Delaware and whether — how that potentially higher reserve recovery could help to drive Viper production growth in the future down the road as well?

Kaes Van’t Hof: Yes. listen, this is, I think, a long-term mega theme, right? I don’t have a ton of concrete examples today. Obviously, we’ve done some tests at the Diamondback level of surfactants and advanced chemicals and those have been done on areas where we do have Viper interest. So Viper does get that benefit. It’s immaterial today. But just using the crystal ball, 4, 5, 6 years down the road here, could that be a material part of Diamondback’s capital plan and therefore, Viper’s production profile? I think that’s entirely possible. The other thing that is the key advantage that Viper has is being in 50% of the wells in this basin, we have a differential knowledge as to what everybody is trying across both sides of the basin. So as these tests continue, we will have differential information at Viper and hopefully leverage that to improve returns across both stated companies.

Operator: And our next question comes from the line of Neal Dingmann with William Blair.

Neal Dingmann: My first question just on production guide. Besides the boost in Diamondback, could you just talk about what other sort of upside in third-party activity you’re assuming?

Kaes Van’t Hof: Yes. I mean I’ll give you my high level. We haven’t booked a ton of third-party acceleration or faster development yet in our guide. I think it’s likely to come, but we haven’t seen — we’ve seen the leading indicators, but we haven’t seen them kind of convert into DUCs and wells turning online. But I think if I was a betting man today at these oil prices, things are going to accelerate throughout the basin.

Austen Gilfillian: Yes. No, I’d say it’s 2 parts to the equation. One is the absolute amount of DUCs and permits that we have. And then the second part is how quickly those get converted to production. So it’s easy to see in real time any increase that happens in the DUC and permit count. It’s harder to get a feel for the quicker conversion rates. So right now, I would say we’re getting the benefit of any increased permitting activity, but we haven’t modeled increased rates of conversion. And really, that’s going to be the biggest driver as you think how it impacts the next 6 months. So we’re watching and monitoring things as they evolve, and we expect some things to come our way, but probably haven’t fully baked in the acceleration benefit from third-party operators across the basin.

Neal Dingmann: And then just secondly, just on the M&A side, Kaes, I’m wondering, is — after the — what was it, I forget earlier this year, the prior sale, are you holding much that you [indiscernible] now would consider noncore at this time?

Kaes Van’t Hof: No. We cleaned up all the non-Permian assets and use that to put the balance sheet in perfect shape. And I think we kind of see a wave of private equity-backed mineral companies at least try to test the market here over the next couple of quarters to a year. And I think we’re pretty primed from a positioning perspective to take advantage of that.

Operator: And our next question comes from the line of Paul Diamond with Citi.

Paul Diamond: Just a quick touch on post Riverbend and the M&A outlook. I think you guys talked about the availability of deals. But I guess, how has recent volatility really impacted the bid ask of the deals of different sizes? Are you seeing a bit more convergence of those large deals, which Riverbend is an example of? Or what are you seeing on the volatility of the bid ask there?

Kaes Van’t Hof: Yes. We only have really one good data point with the Riverbend deal. And I think what’s interesting about that deal is the strip is so backwardated that we can actually underwrite a relatively moderate flat oil price scenario for the NAV of that deal, call it, $65, $70 a barrel. And that actually isn’t too far off from where the strip is. So you have the front end that’s so high. So yes, we’re paying a lower front year cash flow multiple, but we’re not breaking our pick on NAV because the NAV is pretty tied to that long-term mid-cycle price that we’re underwriting. So that’s kind of a unique situation. I think Riverbend had owned this position for a while, and they were looking for an exit and the stars aligned and they were the first to make the move.

And credit to them, right? They’ve now got 3 million shares of stock that’s up 8% to 10% from where we did the deal. And that’s called a win-win. But the rest, I haven’t seen anything else hit the market yet. I just know that it seems like the bankers’ phones are ringing off the hook to try to learn about what the market looks like versus hitting the market actively.

Paul Diamond: Got it. Makes perfect sense. Just one quick piece on cleanup for housekeeping, I guess. Cash taxes, a bit of run-up with recent pricing. I guess at what point do you guys see? Is it still like a 27%, 28% where things kind of settle down like run rate out? Or is there — I guess, how much should this current volatility pull that state forward?

Kaes Van’t Hof: Yes. So the rate is not changing that much in itself. We still have the 27% to 30% of pretax income. And that’s really your kind of 21% statutory rate and you’re just getting dinged higher on an income basis given you have a higher depletion rate from an income perspective than you do from a tax perspective. So first quarter taxes were higher as an absolute dollar amount than we guided to just because income was up. But we kind of expect that 27% to 30% to be a pretty steady rate going forward.

Operator: And our next question comes from the line of Derrick Whitfield with Texas Capital.

Derrick Whitfield: Kaes, perhaps for you, just, I guess, more broadly, as you think about the greenlight environment for Diamondback, what degree of flexibility do you have in the development plan at Diamondback to lean more into the areas where VNOM has higher NRIs for both ’26 and ’27?

Kaes Van’t Hof: Yes. I mean, listen, I think the way we look at it remains the same. We do look at all of our inventory on a consolidated basis for the portion of Viper that Diamondback owns. And that moves the high interest area to the front of the development plan. I think if anything, over the next couple of years, given the quality of what we’ve seen in the Barnett near Spanish Trail, I’d probably bet that, that area gets accelerated versus expectations over the next kind of 18 to 24 months as one of our best Barnett wells is right offset Spanish Trail and it’s very unique to have an area where you own 100% of the minerals. So I think we have a 2-well test coming on — a 4-well test coming on in Spanish Trail later this year. But if I was a betting man, I would say that that’s going to result in accelerated development of the rest of that ranch.

Derrick Whitfield: Great. That makes sense. And then maybe just more specific on 2026 guidance. Is it fair to think about the cadence of growth beyond 2Q as a steady build of maybe 1,000 per quarter to get to the average of 65,500?

Austen Gilfillian: Yes, I think that’s directionally right. I mean we’ll see how things trend. And if activity gets brought forward, that can move things a little bit. But I mean, as we see things today, that seems directionally right.

Operator: And our next question comes from the line of Leo Mariani with ROTH.

Leo Mariani: I just wanted to revisit the question of sort of variable dividend versus buyback. On the FANG call, you guys were pretty clear that you wanted to take more of a countercyclical approach. And when we’re well above mid-cycle oil prices, which we certainly probably likely are here today that you would certainly lean more on paying down debt. Obviously, you don’t really need to do that here at VNOM. Should we be thinking about that similarly where at a higher mid-cycle oil price, you’re much more likely to just push money to the variable dividend and the buyback could be a little bit more muted in the near term? Just any color on that would be great.

Kaes Van’t Hof: Yes. Leo, I think generally, you’re correct. that we’re going to lean more towards cash returns at Viper. It’s kind of how the business was set up. We haven’t used a ton of leverage in deals, particularly the drop-down then Sitio, we paid off most of that Sitio debt with the noncore asset sale. So — and kind of the uses of free cash flow, Viper, obviously, base dividend, that’s going to continue to grow. I put the variable dividend probably a little bit above repurchases just because that’s how the business was set up. And I don’t think we’re going to sit on a bunch of cash at Viper given the strength of the balance sheet. So the decision tree becomes easier when you’re a distribution vehicle versus kind of an overall NAV growth vehicle at Diamondback, where we’re going to keep distributing cash. We’re going to grow these per share metrics, and that should result in a higher stock price, but also higher distributions.

Austen Gilfillian: Yes, I think it really shines the advantage of the business model, too, when you have 90% free cash flow margins, it really allows you to do all of the above, right? You can pay a big dividend with a base plus variable. You can opportunistically invest in the business, whether that’s buybacks or acquisitions and then you can have targeted debt reductions, especially in times of higher commodity prices. And you don’t have to sit around as much and wonder which of those options you choose, you can do all of them because when you look at your investment as a percentage of your operating cash flow, it’s pretty low just given your margins.

Leo Mariani: Yes, certainly makes sense. I wanted to jump back over to the Riverbend deal here. So you kind of did a good job kind of talking about where the acreage was in terms of the key operators remaining there. You kind of made a bit of a high-level comment that some of the stuff under Exxon is a little bit more underdeveloped. I just wanted to get maybe a little sense of just kind of the overall flavor of the inventory there. Is it going to be a little bit more geared towards the emerging zones? Or is there still substantial, let’s call it, core kind of legacy zones, Wolfcamp A, Wolfcamp B and whatever on the acreage? So just any color there would be great.

Austen Gilfillian: Yes. Most of the value will come from your core zones being undeveloped, especially in New Mexico and in the Midland piece. If you kind of look at a map and you look at the Midland Glasscock line kind of in that what we call the Four Corners area there, there’s a big chunk of legacy Pioneer now Exxon completely undeveloped acreage that I think will be the primary acreage that supports the production profile over the coming years. But as you dig in and you think about some of the unquantified zones that we didn’t have to pay for, certainly, you’re getting the emergence of the Barnett in the Midland and also the Woodford in the Delaware kind of on the eastern edge of the Delaware Basin, getting pretty excited about that now. So I think it’s a good mix of existing production and also core undeveloped zones that you get the kind of unquantified upside to go along with it. And that’s kind of the beauty of the mineral business model.

Leo Mariani: Yes. No, that makes sense. And then just a follow-up there. So I know you gave some production numbers over the next 12 months. But just based on what you’re describing, would you expect that if we kind of hang out at these oil prices that perhaps that production grows a bit over time? It sounds like there’s enough inventory there to probably grow that individual piece. Is that fair?

Austen Gilfillian: Yes. I think ’27 probably grows, and it’s got a couple of years of slight growth. And then generally, if you zoom out and look over a 5- to 10-year period, it looks pretty flat, but ’27 certainly looks probably higher than what the NTM production number that we put out.

Operator: And our next question comes from the line of Tim Rezvan with KeyBanc Capital Markets.

Timothy Rezvan: Some of mine have been answered. So I just had one for you. We were a little surprised that the Viper sale earlier this year was mostly Diamondback selling and not as many unnaturals. So that overhang is still out there a bit. I’m just curious, is there a price at which you potentially wouldn’t participate if some of these unnatural holders come to market? Or how do you think about kind of dampening volatility should they look to sell because shares are back up to about $50?

Kaes Van’t Hof: Yes, Tim, it’s a good question. I mean I think it kind of depends on the size of the deal and the nature of the trade. I think if it’s a sizable deal and we need to participate to make sure it goes smoothly with public shareholders, then we want the long-term holders of the stock to win long term. So we know that, that’s probably a good use of capital. If it’s smaller one-offs, we probably don’t need to support it given the higher float and liquidity of the business. So I think flexibility is key. Size of the prize is also key. And we’re well on our way to Viper to continuing towards that goal, the S&P 500, as the business gets bigger, that’s going to only help float liquidity, ability to exit and ability to get deals done.

Timothy Rezvan: Okay. I appreciate the comment. If I could just ask a quick follow-up. You gave some comments often on sort of the M&A outlook. We’ve heard from some minerals peers that all else equal, a higher strip is bringing sellers to market. So are you seeing that dynamic as well? Or are you facing a different dynamic because you’re sort of elephant hunting with a couple of the very large packages out there?

Austen Gilfillian: No. I mean we’ve seen it on both levels. So we’re still actively engaged in our ground game. And I think calls have picked up on that front. You would think surely as a result of where oil prices have moved. So we’ve seen it there on the smaller deals. And then we’ve also seen it — Kaes was mentioning before, the phones are definitely ringing on some of these mid- to larger packages. I just can’t predict yet today what the higher strip or what the volatility means in terms of ability to get deals done. But I think the supply is going to be there. So it’s just key for us to stay disciplined and underwrite deals where we can generate good returns. And I think if we do that, things will come our way over time.

Operator: Thank you. I’ll now hand the call back over to CEO, Kaes Van’t Hof for closing remarks.

Kaes Van’t Hof: Well, thanks, everybody, for your time. A busy week, and thanks for your support of Viper Energy and the future is bright.

Operator: Ladies and gentlemen, thank you for participating. This does conclude today’s program, and you may now disconnect.

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