Viper Energy Inc. VNOM and its operating subsidiary, Viper Energy Partners LLC (also referred to as OpCo), have completed the acquisition of certain subsidiaries of Tumbleweed Royalty IV LLC owning mineral and royalty interests. The acquisition was previously announced in a purchase agreement dated Sept. 11, 2024. The acquisition was financed through a combination of cash and OpCo units.

The transaction involved approximately $459 million in cash and nearly 10.1 million OpCo units issued to Tumbleweed Royalty IV. The cash consideration was funded through a mix of cash on hand, borrowings from Viper Energy Partners’ revolving credit facility and proceeds from a previously underwritten public offering of Viper Energy’s Class A common shares.

The terms of the deal also include an option for Tumbleweed Royalty to buy shares of Class B common stock of Viper Energy equal to the number of OpCo units issued. The purchase agreement also outlines an additional payment of up to $41 million to Tumbleweed Royalty in the first quarter of 2026. However, the payment is contingent on the average West Texas Intermediate price in 2025. This implies that Viper Energy may have to make this payment to Tumbleweed Royalty IV LLC if the commodity price environment is favorable.

Viper Energy Inc. is a subsidiary of Diamondback Energy, Inc. FANG, an independent oil and gas company based in the United States. While announcing the acquisition, Viper Energy’s CEO stated that the assets align with its overall strategy to acquire valuable mineral and royalty assets. These are not only immediately financially accretive but also offer significant untapped inventory that bolsters Viper Energy’s long-term production growth.

Zacks Rank and Key Picks

Currently, VNOM and FANG carry a Zacks Rank #3 (Hold) each.

Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED and Archrock Inc. AROC, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost the company's production and overall profitability.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

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