So far this summer, Viper Energy Partners LP’s (NASDAQ: VNOM) A&D team has run riot through the Permian Basin, closing 50 deals since the first quarter.
Viper purchased mineral interests in the Permian and said in July 17 regulatory filings that more deals are pending after a three-month tear that totaled $276.6 million.
With the deals, Viper, a subsidiary of Diamondback Energy Inc. (NASDAQ: FANG), stands to increase its net royalty acreage by 37%. After closing its additional deals, the 3-year-old company will own mineral interests on 8,905 net acres.
Recent deals with third-party sellers also helped diversify its holdings. After closing its remaining deals, Diamondback will operate about 38% of Viper’s net acreage compared with 41% at the end of March. When the company was founded in 2014, about half of its assets were operated by Diamondback.
Viper made the disclosures as part of a prospectus for a public offering. The company plans to sell 14 million common units (upsized from 11 million earlier on July 17) for gross proceeds of $206.5 million. The sale represents nearly 18% of the company’s outstanding units.
Viper acquired the net royalty interests at about $115,000 per acre, excluding any production—a price that suggests the transactions are accretive, Gordon Douthat, a senior analyst for Wells Fargo Securities LLC, said in a July 18 report.
That price “compares favorably to implied-by-trading levels of $210,000/acre backing out production at $35,000 barrels of oil equivalent per day (boe/d),” Douthat said.
Douthat noted that management and board members plan to purchase 114,000 common units at the offer price, which should send a positive signal to investors.
In addition to the public offering, the company will pay for the acquisitions and reduce debt as well as other purposes, including additional deals. As of July 14, the company had used $152.5 million of its $315 million revolving credit. The debt matures in July 2019, according to regulatory filings.
Douthat said that Viper’s second-quarter production was 10,500 boe/d, 18% ahead of Wall Street expectations of 9,000 boe/d.
Viper said that the pending acquisitions are expected to close by the end of July.
Credit Suisse is acting as a sole book-running manager for the offering. Barclays, Citigroup, UBS Investment Bank and Wells Fargo Securities served as senior co-managers for the offering.
Darren Barbee can be reached at dbarbee@hartenergy.com.
Recommended Reading
Wayangankar: Golden Era for US Natural Gas Storage – Version 2.0
2024-04-19 - While the current resurgence in gas storage is reminiscent of the 2000s —an era that saw ~400 Bcf of storage capacity additions — the market drivers providing the tailwinds today are drastically different from that cycle.
Biden Administration Criticized for Limits to Arctic Oil, Gas Drilling
2024-04-19 - The Bureau of Land Management is limiting new oil and gas leasing in the Arctic and also shut down a road proposal for industrial mining purposes.
SLB’s ChampionX Acquisition Key to Production Recovery Market
2024-04-19 - During a quarterly earnings call, SLB CEO Olivier Le Peuch highlighted the production recovery market as a key part of the company’s growth strategy.
PHX Minerals’ Borrowing Base Reaffirmed
2024-04-19 - PHX Minerals said the company’s credit facility was extended through Sept. 1, 2028.
Exclusive: The Politics, Realities and Benefits of Natural Gas
2024-04-19 - Replacing just 5% of coal-fired power plants with U.S. LNG — even at average methane and greenhouse-gas emissions intensity — could reduce energy sector emissions by 30% globally, says Chris Treanor, PAGE Coalition executive director.