Viper Energy, Inc. VNOM

The business

Viper owns mineral and royalty interests under Permian acreage, predominantly operated by parent Diamondback Energy. As a royalty owner it takes a fixed cut of the revenue from production on its acreage with no obligation to fund drilling, completion, or operating costs. That model is the whole story: with essentially no capex and only light overhead, roughly 85% of revenue converts to cash, the highest-margin structure in energy. The engine is the royalty stream on Diamondback-developed Midland and Delaware acreage, and the 2025 Sitio merger plus Diamondback dropdowns roughly doubled the share count again and made Viper the largest public minerals-and-royalty company by a wide margin. Q1 2026 royalty revenue ran $496 million, an annualized pace near $2.0 billion against $1.35 billion for all of 2024 plus the back half of Sitio.

The fact the financials do not show is total exposure to two variables Viper does not control: Permian production volumes, set mostly by Diamondback's drilling pace, and the realized oil price. Diamondback's raised 2026 oil guide underpins volumes with a visibility most minerals owners lack, since the operator and the royalty owner share management and a roof. But realized prices track WTI with no hedge buffer, so the variable dividend rises and falls with crude. What changed in the last two quarters: the Sitio acreage closed and lifted revenue and volumes step-wise, the share count jumped to about 181 million diluted, and oil rolled over again today on Middle-East de-escalation, which feeds straight into the next payout.