Viper Energy, Inc. Fiscal Year 2024 Performance and Strategic Developments Summary

Summary for Retail Investors

This summary outlines Viper Energy, Inc.'s performance and strategic developments for the fiscal year ended December 31, 2024, including significant events that followed. Written for retail investors, it clarifies the company's business model, financial health, and future outlook.

---

1. Business Overview

Viper Energy, Inc. specializes in owning mineral and royalty interests in oil and natural gas properties. This means Viper holds rights to a percentage of revenue from oil, natural gas, and natural gas liquids produced on specific land, without bearing the drilling or operating costs. Income comes from properties operated by both its parent company, Diamondback Energy, and various third-party operators. This passive ownership model exposes Viper to commodity price changes and production growth, but without the direct operational costs or upfront capital spending.

2. Management Discussion and Analysis (MD&A) Highlights

Viper Energy experienced a highly dynamic period marked by strategic expansion and portfolio optimization during fiscal year 2024.

• Consistent Acquisition Strategy (Fiscal Year 2024): Viper continued its growth strategy through acquisitions, completing several in the Permian Basin throughout 2024. These included the TWR, Q, and M acquisitions in late 2024. This followed the GRP Acquisition in November 2023, which also expanded its Permian and other basin holdings.
• Strategic Divestiture (April-June 2024): To streamline its portfolio and enhance focus, Viper divested certain non-core assets located outside the Permian Basin. This decision aimed to concentrate resources on its most productive and high-growth Permian holdings.
• Equity Offerings (Fiscal Year 2024): To fund its growth initiatives and maintain financial flexibility, Viper successfully raised capital through a September 2024 equity offering.
• Share Repurchase Program (Fiscal Year 2024): Viper managed its capital structure through a share repurchase program. It bought back Class A common stock shares and operating company units during 2024. This program aimed to return value to shareholders and mitigate share dilution.
• Consistent Cash Distributions: Viper consistently distributed cash to holders of its operating company units and Class A common stock throughout 2024.

Subsequent Events (After December 31, 2024):

• Transformative Merger with Sitio Royalties (Announced August 2025): Viper Energy announced a definitive agreement to merge with Sitio Royalties Corp., which will create a significantly larger and more diversified mineral and royalty company. This all-stock transaction expands Viper's footprint beyond the Permian Basin into key regions like the Denver-Julesburg, Eagle Ford, and Williston Basins, enhancing both scale and geographic diversification.
• Continued Acquisitions (2025): Post-year-end, Viper continued its acquisition momentum, including interests from Endeavor subsidiaries (May 2025) and Morita Ranches (February 2025), alongside additional Permian Basin properties from various sellers, including Diamondback Energy.
• Additional Equity Offering (February 2025): Further supporting its growth and the Sitio merger, Viper completed another equity offering in February 2025.

3. Risk Factors

Investors should be aware of several key risks:

• Commodity Price Volatility: Viper's revenue is directly tied to oil, natural gas, and NGL prices. Significant declines in these prices, driven by global supply/demand imbalances, geopolitical events, or economic downturns, would directly and negatively impact its royalty income.
• Customer Concentration: Historically, a substantial portion of Viper's revenue comes from properties operated by its parent company, Diamondback Energy. While Diamondback is a strong operator, any operational issues, production cuts, or financial difficulties at Diamondback could materially affect Viper's income. In 2025, ExxonMobil Corporation also represents a significant source of revenue, highlighting continued reliance on major operators.
• Operational Risks of Third-Party Operators: Viper relies on the drilling and production activities of third-party operators. Factors such as operators' financial health, drilling success rates, operational efficiency, and adherence to production schedules directly influence Viper's royalty volumes.
• Integration Risk of Mergers and Acquisitions: The successful integration of Sitio Royalties and other acquired assets is crucial. If Viper fails to realize anticipated synergies, incurs higher-than-expected integration costs, or faces challenges managing a larger, more diversified portfolio, its financial performance could suffer.
• Regulatory and Environmental Risks: Changes in environmental regulations, permitting processes, or government policies related to oil and gas production could impact drilling activity and, consequently, Viper's royalty income.
• Interest Rate Risk: With significant debt and new financing tied to variable rates (like SOFR), rising interest rates could increase Viper's borrowing costs, impacting profitability and cash flow.

4. Competitive Position

Viper Energy is enhancing its competitive position through aggressive growth and diversification. The transformative merger with Sitio Royalties creates one of the largest publicly traded mineral and royalty companies. This significantly increases its scale, diversifies its asset base across multiple prolific basins (Permian, DJ, Eagle Ford, Williston), and should create a more liquid, attractive investment vehicle. By focusing on core, high-return regions like the Permian Basin (evidenced by the 2024 divestiture of non-Permian assets), Viper aims to become a more efficient, focused, and dominant player in the sector. The combined entity expects to benefit from increased operational efficiencies and a stronger negotiating position.

5. Future Outlook

Viper Energy aggressively positions itself for significant future growth, driven primarily by its expanded asset base and the anticipated integration of Sitio Royalties. The announced merger with Sitio Royalties Corp. represents a monumental strategic shift, refining Viper's long-term strategy to maximize value from its expanded and diversified asset base. Its strategy focuses on:

• Increased Production Potential: The larger, more diversified portfolio across multiple basins should provide greater exposure to active drilling programs and higher potential for increased royalty production volumes.
• Enhanced Financial Scale: The Combined Entity is projected to have a larger market capitalization and increased liquidity, potentially attracting a broader investor base.
• Synergy Realization: The merger is expected to generate operational and cost synergies, leading to improved profitability and cash flow efficiency.
• Continued Shareholder Returns: Viper aims to maintain its commitment to returning capital to shareholders through distributions, supported by its growing cash flow.

The success of integrating the new assets, the ongoing performance of operators on their land, and the stability of commodity prices will be crucial factors in realizing this growth potential. Investors should consider these factors when evaluating Viper Energy's future prospects.