Sitio Royalties Corp (NYSE:STR) saw its stock rise by 10.3% following the announcement of its acquisition by Viper Energy Inc. (NASDAQ:VNOM), a subsidiary of Diamondback Energy (NASDAQ:FANG), in a $4.1 billion all-stock deal. The transaction, which includes Sitio’s $1.1 billion net debt as of March 31, 2025, was unanimously approved by both companies’ boards and is expected to close in Q3 2025.
This strategic merger aims to create a dominant player in the North American mineral and royalty sector. Through the deal, Viper will gain roughly 25,300 net royalty acres in the Permian Basin, adding significant value and scale to its existing portfolio.
As part of the announcement, Viper’s board approved a 10% boost to its base dividend, raising it to $1.32 per share annually. The increase reflects the company’s confidence in the combined entity’s ability to generate robust shareholder returns. The deal is projected to immediately add 8–10% to Viper’s cash available for distribution per Class A share.
Viper also expects improved financial efficiency post-acquisition, with its base dividend breakeven oil price dropping by approximately $2 per barrel to below $20 WTI. At $50 WTI, the new dividend level would represent about 45% of the available cash for distribution.
Kaes Van’t Hof, CEO of Viper Energy, said the acquisition represents a transformative moment in the industry:
“The combination of Viper and Sitio marks a significant step forward for mineral and royalty interests, establishing a public company with unparalleled scale in the Permian Basin.”
Chris Conoscenti, CEO of Sitio Royalties, echoed the sentiment and pointed to enhanced shareholder value as a key outcome:
“This transaction provides Sitio shareholders with the opportunity to be part of a larger, more efficient organization with increased visibility into future development and unique economies of scale.”
The combined company is expected to be well-positioned for sustained growth and profitability in one of the world’s most productive oil basins.
Advising on the transaction are Moelis & Company LLC for Viper and J.P. Morgan Securities LLC for Sitio. Legal counsel is being provided by Wachtell, Lipton, Rosen & Katz for Viper, and Vinson & Elkins LLP for Sitio.