VNOM Sub (VNOM)·Q4 2025 Earnings Summary

Viper Energy Beats on EPS, Boosts Dividend 15% and Adds $1B Buyback

February 23, 2026 · by Fintool AI Agent

Viper Energy delivered a strong Q4 2025, with adjusted EPS of $0.72 crushing consensus of $0.39 by 85% as production surged 123% year-over-year to 66,413 bo/d . The Diamondback Energy subsidiary announced a 15% increase to its base dividend and added $1 billion to its share repurchase authorization, signaling confidence in its ability to return capital at levels exceeding 100% of cash available for distribution .

The stock closed down 1.5% at $44.96 following the release, as investors digested the mixed revenue result alongside the aggressive capital return announcements.

Did Viper Energy Beat Earnings?

Viper delivered a strong beat on profitability metrics while revenue came in slightly below expectations:

The GAAP net loss of $(103) million, or $(0.61) per share, was driven by a $408 million non-cash impairment charge related to recording properties acquired from Diamondback at historical carrying value . Excluding this charge, the underlying business performed exceptionally well.

What's Driving the Production Surge?

Q4 2025 production of 66,413 bo/d (134,000 boe/d) represented a 123% increase from Q4 2024's 29,859 bo/d . This dramatic growth was fueled by:

1. Sitio Acquisition Integration: Completed in August 2025, adding substantial Permian Basin mineral acreage
2. 2025 Drop Down: Properties acquired from Diamondback in May 2025
3. Active Development: 739 gross wells (13.0 net 100% royalty interest) turned to production in Q4 with an average lateral length of 11,283 feet

Full year 2025 production averaged 48,973 bo/d (95,126 boe/d), with 2,085 gross wells (42.0 net) turned to production at an average lateral length of 11,618 feet .

What Did Management Say About Capital Returns?

CEO Kaes Van't Hof emphasized Viper's commitment to comprehensive shareholder returns:

"We also remained disciplined in our capital allocation, opportunistically repurchasing shares amid market dislocation while continuing to pay an above market dividend. The announcement today to increase our base dividend by 15% and our share repurchase authorization by $1 billion further highlights our commitment to a comprehensive return of capital strategy."

The Q4 2025 capital return breakdown:

This represents 90% of cash available for distribution returned to shareholders .

What Changed From Last Quarter?

Several material developments distinguished Q4 2025:

Base Dividend Increase

The board increased the annual base dividend by 15% to $1.52 per share, representing approximately 50% of cash available for distribution at $50 WTI .

Buyback Authorization Expansion

Share repurchase authorization increased by $1.0 billion, bringing total remaining authorization to approximately $1.2 billion .

Non-Permian Divestiture Closed

On February 9, 2026, Viper closed the sale of its non-Permian assets to GRP Energy Capital and Warwick Capital Partners for net proceeds of approximately $617 million . Proceeds were used to fully repay the $500 million term loan and outstanding revolver balance.

Balance Sheet Strengthening

Following the divestiture, Viper enters 2026 with a fortress balance sheet very near its long-term net debt target of $1.5 billion :

The debt structure consists of $500M 4.900% Senior Notes due 2030 and $1.1B 5.700% Senior Notes due 2035, with no near-term maturities .

What Did Viper Guide For 2026?

Viper initiated production guidance for 2026, accounting for the Non-Permian Divestiture:

Key 2026 guidance assumptions:

What's the Oil Price Sensitivity for 2026?

Viper provided illustrative cash available for distribution scenarios at various oil prices, demonstrating the durability of its cash flow profile :

Key assumptions: 61-67 Mbo/d oil production, $35M cash G&A, ~$100M interest expense, 7% production taxes, 28.5% effective cash tax rate .

The base dividend of $1.52/share annually represents approximately 50% of cash available for distribution at $50 WTI, providing substantial coverage even in a severe downturn .

What's Viper's Hedge Position?

Viper maintains a strategic hedging program focused on downside protection while preserving upside exposure :

The Waha basis swaps provide protection against Permian Basin gas basis blowouts, a key risk for Permian producers given pipeline constraints .

How Strong Are Viper's Reserves?

Proved reserves as of December 31, 2025 reached 406,035 Mboe, up 107% year-over-year :

Reserve replacement ratio reached 705%, driven by acquisitions and organic drilling. The organic reserve replacement ratio (excluding acquisitions) was 126% .

Development Pipeline

Viper maintains strong visibility into future production growth:

There are currently 98 gross rigs operating on Viper's acreage, including 8 operated by Diamondback .

Operator Diversification

Viper's acreage is operated by a mix of Diamondback and third-party operators across the Permian Basin :

Key third-party operators include ExxonMobil (7,999 NRA in Midland), ConocoPhillips (3,303 NRA in Delaware), Permian Resources (2,557 NRA), and OXY across both basins .

How Did the Stock React?

VNOM shares closed at $44.96, down 1.5% on the day of the earnings release. The stock trades at:

• 4.6% dividend yield (base + variable annualized)
• 3.3% base-only yield
• 12% above 50-day moving average ($40.04)
• 16% above 200-day moving average ($38.90)

The muted reaction likely reflects the slight revenue miss and the GAAP net loss headline, offset by the strong adjusted results and capital return announcements.

Key Takeaways

1. Production Machine: 123% YoY production growth demonstrates successful integration of Sitio and Drop Down acquisitions

2. Capital Return Ramp: 15% base dividend increase and $1B buyback addition position Viper for 100%+ returns of cash available for distribution

3. Portfolio Optimization: Non-Permian divestiture simplifies the story and strengthens the balance sheet toward $1.5B net debt target

4. Permian Pure-Play: With 86,599 net royalty acres in the Permian Basin and strong development visibility, Viper is positioned for continued growth

5. Management Execution: Successful integration of multiple acquisitions while maintaining capital discipline

Q&A Highlights: What Did Management Say?

The Q4 2025 earnings call provided substantial color on Viper's strategic positioning and growth outlook:

Barnett/Deep Rights Upside

Management highlighted the emerging opportunity in deeper zones across the Midland Basin:

"We've still only leased about 10%-15% of the acreage that would potentially be open in the Midland Basin. That should be a tailwind to come, both from a lease bonus perspective, but also new inventory locations that are going to come into play."

Key development: First 2 test wells at Spanish Trail (where Viper owns 100% of minerals on a 10,000-15,000 acre block) have been permitted with production expected mid-2026 .

Third-Party Activity Remains Resilient

Despite Permian rig count declines, Viper hasn't seen a slowdown in third-party development:

"We really haven't seen much of a slowdown at all across the third-party activity... As you look at the amount of activity that our acreage position has captured over the years, it's really been consistent in capturing pretty much 50% of everything that happens by third parties across the entire basin."

CEO Kaes Van't Hof attributed this to their strategy of buying under well-capitalized operators in coveted acreage — "that acreage that we covet gets developed first" .

M&A Environment

Larger deals have been scarce, but management is positioned to act:

"Minerals are interesting. When commodity prices are lower, there's not really a need to sell... There hasn't been a ton of large deals for us to look at over the last 6 months or so... As prices recover, the psyche for sellers changes, and we might be able to get some deals done."

On leverage flexibility: Viper could stretch to ~1.5x leverage for the right acquisition, but maintaining investment grade rating remains a priority .

Gas Takeaway Catalyst in 2027

Looking ahead, improved Permian gas infrastructure could unlock additional development:

"As you move into 2027 and gas takeaway gets better, we'll be able to explore what new development areas might look a little bit better with higher gas realization, and that could help as well."

Oil Cut Trending Lower

The oil/BOE mix has shifted from mid-50s% to low 50s%:

"I think if you think about Viper as a bond for the Permian Basin, it actually kind of gives you a good look into where GORs are headed throughout the basin... we've seen these gas systems and gas plants operate a lot more efficiently in both basins."

Buyback Philosophy

On share repurchases at higher prices:

"Obviously, open market repurchases were more obvious in Q4 than they are today... At these prices, with commodity improving and the stock price improving, we probably lean more towards cash return outside of unique situations."

Management confirmed readiness to help "unnatural holders" (private equity) exit when needed — as they did in Q4 with a 1 million share direct repurchase .

Permian Production Outlook

On whether the Permian will grow in 2026:

"The Permian's always kind of been an outlier. At these oil prices, I haven't heard about operators dropping a rig since the first week of the year... I think overall, Permian probably grows here... the conversations about reductions in activity have gone very quiet."

Forward Catalysts to Watch

Based on the earnings call, key catalysts for VNOM over the next 12 months:

1. Spanish Trail Deep Rights Test (Mid-2026): First production from Barnett zone wells where Viper owns 100% NRI
2. Continued Deep Rights Leasing: Only 10-15% of open acreage leased so far — ongoing revenue opportunity
3. Gas Takeaway Improvement (2027): New pipeline capacity could improve realizations and unlock development
4. M&A Optionality: Strong balance sheet positions Viper for opportunistic deals if commodity prices recover
5. Return of Capital Ramp: Positioned to return 100%+ of cash available for distribution

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Data sourced from Viper Energy 8-K filed February 23, 2026, Q4 2025 Investor Presentation, and Q4 2025 Earnings Conference Call held February 24, 2026. Consensus estimates from S&P Global.