Q4 2023 Viper Energy Inc Earnings Call

Okay.

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Viper Energy fourth quarter 2023 earnings call. At this time, all participants are in listen-only mode.

Good day, and thank you for standing by walking to the Viper energy fourth quarter 2023 earnings call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During the session you will need to press star one on your telephone you didn't hear.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised.

Automated message advising him as race to a draw. Your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand the.

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like to hand the conference over to our first speaker today, Adam Lawlis, Vice President of Investor Relations. Please go ahead.

The conference over to your first speaker today, Adam Lawlis, Vice President of Investor Relations. Please go ahead.

Adam T. Lawlis: Thank you, Victor. Good morning, and welcome to Viper Energy's fourth quarter 2023 conference. During our call today, we will reference an updated investor presentation which can be found on Viper. Representing Viper today is Travis Stice, CEO.

Thank you Victor good morning, and welcome to Viper Energy fourth quarter 2023 conference call.

During our call today, we will reference an updated investor presentation, which can be found in bankers website.

Representing Viper today are Travis Stice CEO case.

Adam T. Lawlis: Kay Stantoff, President, and Austin Gilson, Vice President, During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, and future activities. Plans, objectives, and future performance. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors; information concerning these factors can be found in the company's filing. In addition, we will make reference to certain non-GAAP measures.

<unk> President.

I think Youll Vice president.

During this conference call the participants.

We may make certain forward looking statements relating to the company's financial condition results of that.

Operator.

Objective future performance and businesses.

We caution you that actual results could differ materially from those that are indicated in the forward looking statements due to variety of factors.

Considering these factors can be found on the company.

Sir.

In addition, we will make reference to certain non-GAAP measures the reconciliations with the appropriate GAAP measures can be found in the earnings release issued yesterday afternoon.

Adam T. Lawlis: The reconciliations with the appropriate GAAP measures can be found in our earnings release issue yesterday afternoon. I will now turn the call over to Travis. Thank you, Adam.

Any color there to try to say.

Thank you Adam welcome everyone and thank you for listening to Viper Energy's fourth quarter 2023 conference call.

Travis D. Stice: Welcome, everyone, and thank you for listening to Viper Energy's fourth quarter 2023 conference. The fourth quarter wrapped up a milestone year for Viper. For the full year, average oil production increased 13%.

Okay.

Fourth quarter wrapped up a milestone year for <unk> for the full year average oil production increased 13% compared to previous year, while our average share count was reduced by 1% over the same period as a result of continued strong organic production growth accretive acquisitions.

Travis D. Stice: Well, our average share count was reduced by one as a result of continued strong organic production growth created by and an opportunistic share repurchase program. The fourth quarter represented the eighth consecutive quarter of increased production per share for Viper Energy, and our return of capital for the fourth quarter. We have declared a $0.29 variable dividend to Class A shareholders to go along with our $0.27-based dividend. Importantly, this variable dividend did it. We would have paid out with a 75% payout ratio assuming we did not repurchase any shares during the quarter.

And an opportunistic share repurchase program the fourth quarter represented the eighth consecutive quarter of increased production per share provider.

For our return of capital for the fourth quarter, we declared a <unk> 29 said variable dividend to class a shareholders along with our 27% based dividend.

Importantly, this variable dividend is the same that we would have paid with a 75% payout ratio, assuming we did not repurchase any shares during the quarter.

However, inclusive of the $28 7 million shares that we repurchased during the quarter, our effective payout ratio for Q4 and a 97%.

Travis D. Stice: However, inclusive of the $28.7 million in shares that we repurchased during the quarter, our effective payout ratio for Q4 is 95%. A rationale for excluding the share repurchases done during the quarter and calculating our variable dividends is that we view this by the, was done during the secondary offering related to our GRPF, as an extension of the financing. Additionally, we've already received $10 million in post-effective cash flow that is applied as a reduction to the purchase and does not show up in our reported financials.

Chanel for excluding the share repurchases during the quarter and calculated our variable dividend is that we view this buyback which was done during the secondary offering related to our <unk> acquisition as an extension of the financing of the deal.

Additionally, we have already received $10 million and post affected cash flow that is applied as a reduction to the purchase price and does not show up in our reported financials for the quarter.

Travis D. Stice: Looking back on the year as a whole, there were several strategic initiatives completed during 2020. Mark Important Steps. Growth and Evolution of Black, RGRP, Aquazone.

Looking back on the year as a whole.

There were several strategic initiatives completed during 2023 that market important steps in the growth and evolution of Wacker.

<unk> ERP acquisition, which closed in the fourth quarter.

Travis D. Stice: Closing report. Clearly laid out the framework that we look for in large-scale M&A. First, it must be accretive on all relevant financial... Second, there must be high-quality, undeveloped inventory that supports our long-term growth program and provides clear visibility to future development. 3rd

Clearly laid out the frame work that we look for in large scale M&A first must be accretive on all relevant financial measures.

Second there must be high quality undeveloped inventory that supports our long term growth profile and provides clear visibility to future development and third.

Travis D. Stice: The acquisition must provide scale that results in a pro-forma... So it's bigger and better. Shepard.

The acquisition must provide significant scale that results in a pro forma business that is both bigger and better.

Separately.

Travis D. Stice: Viper also converted into a Delaware Corporation. We believe this conversion has delivered increased governance rights for our shareholders. Physicians Viper to grow our...

<unk> also completed its conversion into a Delaware Corporation during the fourth quarter.

We believe this conversion has delivered increased governance rights for our shareholders and positions <unk> to grow our business and fully highlight the advantage nature of mineral and royalty ownership.

Travis D. Stice: Fully highlight the advantaged nature of mineral and raw materials. Looking ahead. Introduced Production Guidance for both Q1 and the full year.

Looking ahead to 2020, we've initiated production guidance for both Q1 and the full year.

While Q1 is expected to be the weakest quarter of the year, primarily as a result of the timing of large pads, we continued to see strong activity levels across our acreage position.

Operator: While Q1 is expected to be the weakest quarter of the year, primarily as a result of the timing of large... We continue to see strong activity levels across our... We expect significant growth to occur throughout the year, 20 with Q4 2024 production expected to be at or above the high end of our guide. This continued production, along with our best-in-class cost, should enable Viper to continue to provide a substantial amount of capital to its shareholders, primarily through our base plus variable... Operator, please open the line.

And we expect significant growth to occur throughout the year with 20 with Q4 2024 production expected to be at or above the high end of our guidance range.

This continued production growth.

Along with our best in class cost structure should enable Blackberry to continue to return a substantial amount of capital to our shareholders.

Primarily through our base plus variable dividend.

Operator, please open the line for questions.

Operator: Thank you. And as a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for a name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. One moment for our first question. The first question will come from the line of Neil Dingman from Truist. Your line is open. Morning, team, and hi, supporter.

Thank you.

And as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby we compile the Q&A roster one moment for your first question.

Our first question comes from the line of Neal Dingmann from <unk>. Your line is open.

Hey, good morning team a nice quarter.

Kay Stantoff: My first question is on valuation. Just maybe broadly, it seems to me the market's still not appropriately valuing Venom's growth and, you know, the continued associated distribution. So, you know, Kay, for you and the team, I'm just wondering, do you all believe this is still a broader issue with the minerals group in general? Or is it more, you know, the market not appreciating Venom's future value creation?

My first quarter. My first question is on valuation.

Just maybe broadly it seems to me that the market is still not appropriately value and <unk> growth and the continued associated in distribution. So.

Okay for you and the team I'm just wondering you. All believe this is still a more of a broader issue with the minerals group in general or is it more the market not appreciated denims future value creation.

Yes.

Kay Stantoff: Yeah, Neil, I mean, listen, I think the market's starting to wake up to the Venom story, you know, as well as the mineral story. You know, I think generally, you know, the conversion that we did to a C Corp has opened up a broader investor universe has allowed us to, you know, take meetings with shareholders that are prospective shareholders that hadn't been able to buy the stock in the past, I think it's good to see some index ownership, it's good to see the float pickup, you know, and I think as you think about as we think about the vision for this, business, you know, as you continue to see consolidation in the E&P space, you know, we think Viper will offer a unique opportunity and a unique, you know, investment case in the pure play Permian E&P or minerals business, however you want to look at it.

I think the market starting to wake up the venom story as well as the minerals story.

I think generally the <unk>.

Version that we did to a C Corp that has opened up a broader investor universe has allowed us to take.

Take meetings with shareholders or prospective shareholders that.

Been able to buy the stock in the past I think it's good to see some index ownership, it's good to see.

Pick up and I think as you think about as we think about the vision for this.

Business as you continue to see consolidation in the E&P space.

Viper.

I'll offer a unique opportunity and a unique.

Investment case in the pure play Permian E&P or minerals business. However, you want to look at it I mean, I think generally as we continue to grow this business and it grows production you can do that at Viper without.

Kay Stantoff: I mean, I think generally, as we continue to grow this business and it grows production, you can do that at Viper without, you know, even if the parent company is not growing. So, you know, generally, I think the market is waking up to the story. I mean, this business is going to grow 14%, you know, grow oil 14%, quarter over quarter, Q4 24 to Q4 23. That's a pretty impressive growth

Even if the parent company.

So yes.

Generally I think the market is waking up to the story I mean, this business is going to grow 14%.

Global oil, 14% quarter over quarter Q4, 24% Q4, 'twenty three that's a pretty impressive growth rate and.

Kay Stantoff: And it's not, you know, impacting, you know, overall macro as much as it was upstream. Yeah, I would agree. And then just a second quick one on capital allocation. Given your low leverage, I assume you'll continue, or will you continue to pay out the 90% plus cash available for distribution?

And it's not.

Impacting overall macro as much as it was upstream.

Yes, I would agree and then just second quick one on capital allocation.

Given your low leverage relative I assume youll continue or will you continue to pay out 90% plus cash available for distribution and would you consider leaning more into the buybacks.

Kay Stantoff: And you know, would you consider leaning more into the buyback? We did a unique deal in Q4 to buy back a million units from what, you know, what was given to GRP as seller financing. I think that's a unique opportunity to buy back a lot of shares at one time. Viper shareholders have been rewarded for that, you know, from a returns perspective. But I think generally, you know, we still believe minerals should be distribution vehicles. You know, we have a fixed distribution that's grown in the last couple of years. We have a variable distribution that's probably our second call on, you know, payout. And then behind that is probably repurchases. I think there will be opportunities to repurchase shares in the future. But right now, the priority feels to be shifted more towards the base plus variable unless there is a unique event like a large shareholder sees it. Great. Thanks for your time.

Yes.

A unique deal in Q4 to buyback 1 million units from what.

What was given the ERP.

Seller financing I think thats, a unique opportunity to buyback a lot of shares at one time.

Viper shareholders have been rewarded for that.

From a returns perspective, I think generally we still believe minerals should be distribution vehicles.

A fixed distribution that's grown in the last couple of years, we are a variable distribution, that's our probably our second call on on.

Payout and then behind that is probably repurchases.

I think there will be opportunities to repurchase shares in the future, but right now the priority feels to be.

Shifted more towards the base plus variable unless there was.

Unique event like a large shareholder.

Great. Thanks for the time.

Thanks Neil.

Thank you one moment our next question.

Our next question comes from the line of Derrick Whitfield from Stifel. Your line is open.

Operator: Thank you. Thank you. One moment for our next question. Our next question comes flying out of Derek Whitfield from Stifel; the line is open. All right. Good morning, all. Woodyard.

Alright, good morning all.

Hi, Derik.

I wanted to circle back on the topic that came up earlier on your Diamondback call today regarding the increased inclusion of Wolfcamp.

Kay Stantoff: I wanted to circle back on a topic that came up earlier on your Diamondback call today regarding the increased inclusion of Wolf Camp D in 2024. Is that development focused on your Spanish Trail area or more broadly integrated across your stack development? You know, it's more broadly integrated across the portfolio, but there is a lot of undeveloped opportunity in Spanish Trail. We signed a big lease last year for Deep Rights, which included a little bit of Wolf Camp D, but mainly Barnett and Woodford across that Spanish Trail position. You know, I think there's a couple of wells coming on this year in Wolf Camp D, which just opens up the next leg of the stool when it comes to, you know, mineral ownership.

In 2024 is that development focused in your Spanish trail area or more broadly integrated across your stack development.

It's more broadly integrated across the portfolio, but there is a lot of.

Undeveloped opportunity in Spanish trail.

We signed a big lease last year for deep rights, which included a little bit of a wolfcamp D, but mainly.

Barnett and Woodford across that Spanish trail position I think Theres, a couple of wells coming on this year in Wolfcamp D.

Which just opens up the next <unk>.

<unk>.

So when it comes to mineral ownership.

We first bought Spanish trail.

10 years ago. It was focused on single bench Wolfcamp B development and maybe some more vertical wells and now here we are developing <unk>.

Five to six benches.

And upside in the deeper zones. So.

At the end of the day, it's always going to be the mineral owner in Texas.

Kay Stantoff: I mean, when we first bought Spinach Trail, you know, 10 years ago, it was focused on single benches, well, can't be developed, maybe some more vertical wells. And now here we are developing, you know, five or six benches and upside, you know, in the deeper zone. So, you know, at the end of the day, it's always good to be a mineral owner in Texas. And, you know, Viper, being a large mineral owner with a well-funded parent operator, is in a very good position. And you'll often lay it out in slides, part 12 of the deck, what that looks like, and what the benefit has been to the Viper shareholders in Spanish Trail from a deal that started with a $400 million purchase ten years ago. I agree, it is quite amazing.

Viper being a large mineral owner with a well funded parent operator is in a very good position.

Often laid out in slide.

Okay.

Slide 12 of the deck, what that looks like and what the benefit has been to the Viper shareholders in Spanish trail from a deal that started with the <unk>.

$400 million purchased 10 years ago.

I agree quite amazing.

Maybe kind of bridging from that topic like with potential inclusion of endeavor are you guys aware of any leases or ranch's with materially higher than our eyes like Spanish trail or is it just uniformly higher from your perspective.

Yes, there's certainly some opportunities there.

The Quinn ranch, which we had.

A little discussion about with endeavor, a few years ago and they got titles to the ranch, but we know the mineral owner, there who owns a significant amount of minerals and so on we should be talking to you but.

Kay Stantoff: Um, maybe kind of bridging from that topic, like with the potential inclusion of Endeavor, are you guys aware of any leases or ranches with materially higher NRIs like Spanish Trail, or is it just uniformly higher from your perspective? Yeah, there's certainly some opportunities. You know, there's the Quinn Ranch, which we had a little discussion about with Endeavor a few years ago, and they got titled for

I think those are all kind of opportunities that will open up is as we get to work with the endeavor team on and what they have and what we have and I'm, putting together what will truly be a kind of a world class resource at the upstream angle and a downstream angle or the sorry, the mineral angle.

That's terrific. Thanks for your time.

Thanks Derek.

Thank you our enrolment for our next question.

Our next question comes from the line of Paul Diamond from Citi. Your line is open.

Kay Stantoff: But, you know, we know the mineral owner there who owns a significant amount of minerals and someone we should be talking to. But I think those are all kinds of opportunities that will open up as we get to work with the Endeavor team on what they have and what we have. And putting together what will truly be a kind of world-class resource at the upstream angle and at the downstream angle, or sorry, the mineral angle. Terrific. Thanks for your time. Thanks, Derek.

Hi, Good morning, Opex for taking my call just a quick one on kind of run rate cadence. If we take those 13 four net wells in active development and kind of run that out on our numbers we get to.

Pretty close to the high end of guidance pretty quickly for 'twenty for sure.

We kind of view that.

Building a bit of conservatism into it or is it more just accounting for ongoing volatility and pricing in this operational cadence across the market.

Operator: Thank you. One moment for our next question. The next question will come from the line of Paul Diamond from Citi. Your line is open. Good morning, I hope I've taken my call.

Yes, Paul a lot of it is timing related.

If you think about Q1, right, it's kind of into lower into the range, mainly as a result of the lower well count that we saw turn of production in Q4 carrying into the year.

Paul Diamond: Just a quick one on kind of the run rate cadence. If we take those 13.4 net wells in active development and kind of run that out, on our numbers, we get pretty close to the high end of guidance. Do we view that as, you know, this building a bit of conservatism into it? Or is it more just, you know, accounting for, you know, ongoing volatility?

So when you think about the full year. We've obviously had this range of 25 to 27 five on oil out there since September of last year, when we announced the ERP deal.

As we kind of roll forward, a couple of months and you look at our net well count with current activity.

That ticked up a little bit I think that high price as things, maybe a little bit higher than we previously thought in the back half of the year.

Particularly typically pretty conservative when it comes to converting permits us to production.

Paul Diamond: Yeah, Paul, a lot of this is timing-related. So if you think about Q1, right, it's kind of in the lower end of the range, mainly as a result of the lower well count that we saw turn to production in Q4 carrying into the year. So when you think about the full year, we've obviously had this range of 25.5% to 27.5% on oil out there since September of last year when we announced the GRP deal. As we've kind of rolled forward a couple of months, and you look at our net well count with current activity, things have ticked up a little bit. So I think that's probably bias, that things may be a little bit higher than we previously thought in the back half of the year.

Pushed some of that activity that you see there into 2025 timeline, but if things stay current with current export with with operators pace of development potentially there could be a little bit of upside to our guidance, but we just got to what we can see them be very confident in place.

At the beginning of the year is the toughest part for us on getting our portfolio, particularly on the non op side, and we know the things side very very well that moves around slightly but I think generally we're a little more conservative in what we think it gets popped in the second half of the year on the non op piece.

Got it understood and then just a quick follow up given the kind of proliferation.

M&A across both the mineral side as well as non op and just the operators more broadly.

Paul Diamond: But we're typically pretty conservative when it comes to converting permits to production and kind of pushing some of that activity that you see there into the 2025 timeline. But if things stay current with operators' pace of development, then potentially there could be a little bit of upside to our guidance, but we just guide to what we can see and be very confident in. Yeah, the beginning of the year is the toughest part for us in getting a full year guide, particularly on the non-off side.

Really shifted you guys mind, that's where you see like the most attractive deal size post ERP has it gotten a little bit bigger because you guys are a bit bigger or is it still kind of run the gamut of different scale into European geographies.

I think I think generally.

<unk> showed our advantaged position because we could do a deal of that size with a significant amount of cash.

It's still a nice side in the basin for smaller deals and probably the south let's call. It sub 20 sub $10 million deal market.

I think we still look at that market, but it's just not a huge piece of our business anymore. I think generally minerals have consolidated into funds that are sizable.

Paul Diamond: I mean, we know the paying side very, very well, and that moves around slightly. But I think, generally, we're a little more conservative in what we think gets popped in the second half of the year on the non-off piece. Got it understood. And just a quick follow up on given the kind of proliferation of M&A across both the mineral side as well as the non-op and just the operators more broadly. Has that really shifted your guys' minds as to what you see is the most attractive deal size? And post-GRP, has it gotten a little bit bigger? Because you guys are a bit bigger.

We will need to monetize at some point in Viper should be the buyer of those those larger positions rather than the.

The blocking and tackling.

Making a big difference in the story.

I think so I think also Paul minerals or.

In our mind, well behind E&ps in terms of consolidating theres going to be.

Probably more mineral consolidation in the next few years and more names.

That said all of that upstream upstream and consolidated very rapidly, but theres going to be a solid wave of of mineral positions that monetize big or small and we want to be positioned to buy the best rock with the best visibility.

Paul Diamond: Is it still kind of running the gamut? a different scale to your... I think, you know, I think, generally, a deal like GRP showed our advantageous position because we could do a deal of that size with a significant amount of cash. You know, it's still a knife fight in the basin for smaller deals and, you know, probably the sub, what's called the sub 20, sub $10 million deal market. And really, you know, I think we still look at that market, but it's just not a huge piece of our business anymore. I think, generally, minerals have consolidated into funds that are sizable that we'll need to monetize at some point, and Viper should be, you know, the buyer of those larger positions rather than, you know, the blocking and tackling, you know, making a big difference in the story. I think also, Paul, minerals are, in our mind, well behind E&Ps in terms of consolidation. There's probably going to be more mineral consolidation in the next few years and more names that sell than upstream. I mean, upstream has been consolidating very rapidly.

That in our mind is mainly Permian, if not mainly Midland basin.

Got it appreciate the time.

I'll leave it there.

Thanks, Paul.

One moment our next question.

And our next question comes from the line of Leo Mariani from Ross Your line is open.

Okay I appreciate some of the commentary there on your expectations for the minerals market to consolidate.

Obviously, I think you guys laid out on the Endeavour acquisition call that endeavor has roughly a portfolio thats two thirds the size.

Currently, which obviously is very very significant.

Would you guys be able to kind of just give us a little bit of a high level plan in terms of how you see that maybe playing out over time to the benefit.

So it seems like there is significant dropdown potential is that something you think you could evaluate and kind of do multiple deals over kind of a handful of years I mean, what do you think kind of a high level of implants.

Yes.

Yes.

We gave some some high level information on the potential opportunity in the in the merger deck.

Paul Diamond: But there's going to be a solid wave of mineral positions that monetize, big or small, and we want to be positioned to buy the best rock with the best visibility. And that, in our mind, is mainly the Permian, if not mainly minimum base.

I'll say that we can't really say much today on timing or sizing, but very clearly, it's a meaningful position that.

Paul Diamond: You got it. I appreciate your time. Thanks, Paul.

Differentiate Viper, if we could get a deal done.

At the right time, but.

Operator: Thank you. One moment for our next question. The next question comes from Leo Mariani from Ross.

We don't have to leave it up to the pro forma board to decide and get the deal closed and as you know we don't we don't move slowly. So we will get working on it quickly, but I can't really give you much until that time comes.

Leo Mariani: I appreciate some of the commentary there on your expectations for the minerals market to consolidate. Obviously, I think you guys laid out on the Endeavor acquisition call that Endeavor has roughly a portfolio that's two-thirds the size of Venom's, you know, currently, which is obviously very, very significant. Would you guys be able to kind of just give us a little bit of a high-level plan in terms of how you see that maybe playing out over time, you know, to the benefit of Venom? Certainly seems like there's significant drop-down potential. Is that something you think you could evaluate and kind of do multiple deals over kind of a handful of years? I mean, what do you think kind of the high-level game plan is?

Okay.

And then just in terms of some of the numbers here are certainly noticed that.

Your G&A is going up.

For barrel by a fair amount I'm, assuming that's really just the conversion of the C Corp, and the additional cost that sort of come on that end.

Yes, I think that's fairly on we're not we're not adding a ton of people or anything you know we run this business pretty lean, but there are some added costs as we now allocate.

Between the two the parent in the sub.

Okay. Thanks.

Thank you.

Thank you for a moment our next question.

Our next question comes from the line of Tim <unk> from Keybanc capital markets. Your line is open.

Good morning folks and thanks for taking my question I have two questions that are sort of related following up on what's been discussed here.

Leo Mariani: Yeah, Leo, I mean, we got some high-level information on the potential opportunity in the merger deck. But I'll say that we can't really say much today on timing or sizing. But you know, very clearly, it's a meaningful position that would differentiate Viper if we could get a deal done at the right time, but, you know, I think we're going to have to leave it up to the pro forma board to decide and get the deal closed, and as you know, we don't move slowly, so we'll get working on it quickly, but can't really give you much until that time comes. Okay, I'm assuming that it's really just the conversion of the C-Corp and the additional costs that sort of come on that end. Yeah, I think that's fair.

Is it fair to say that despite the endeavor opportunity.

Coming around the end of 2024 that you are open and willing to transact in third party minerals. This year I know in the past the Diamondback history, you haven't been afraid to stack deals when we see opportunities. So are you sort of continuing to be on the crowd.

Now and through 2024.

Yes.

I think we want to be selective, but certainly something that looks like ERP like we did last year would be very interesting to us I mean, I think although that deal didn't have all diamondback operations. There was actually a lot of endeavour permits and units under it but.

That visibility and that quality of remaining units in the Midland Basin cost has a lot of value and if there are deals with a lot of.

Undeveloped value not just near term free cash flow accretion that's something we're going to we're going to look at I, just don't have direct visibility into what that is today.

Okay. Okay. That's helpful and then related to that and as you think longer term on endeavor.

Leo Mariani: You know, we're not, you know, we're not adding a ton of people or anything, you know, we run this business pretty lean, but there are some added costs as we now allocate fully between the two, the parent and the sub. Okay, thanks. Thank you. Thank you. One moment for our next question. Our next question will come from Tim Rezvan from KeyBank Capital Markets. Your line is open. Good morning, folks, and thanks for taking my question. I have two questions that are sort of related, following up on what's been discussed here.

If you bake in the legacy the acquired EBITDA.

Leverage looks like a little bit over one times and hard to see a lot of organic deleveraging and a low $70 oil world. So what are your thoughts on the balance sheet, and where you are today, and maybe where you'd want to be over the medium term to sort of be able to.

Take down bigger opportunities as they come up.

Yeah, I think I think our path towards one times no matter what the deal looks like is the right way to look at it.

We are we are distributing 75% of free cash flow of more limited amount of free cash to go to the balance sheet on a quarterly basis, but generally mineral we've proven that the mineral business can delever very quickly. It doesn't mean, we're going to lever it up by.

Tim Rezvan: Is it fair to say that, despite the Endeavor opportunity coming around the end of 2024, you are open and willing to transact in third-party minerals this year? I know in the past, Diamondback history, you haven't been afraid to stack deals when you see opportunity. So are you sort of continuing to be on the prowl, you know, now and through 2024?

By any means but.

The security of a pure free cash flow almost regardless of commodity prices.

Is it pretty unique way to think about leveraging an NOL or commodity based business.

Thank you.

Thank you I'm not showing any further question and accumulate to now turn it back to Travis Stice for CEO for any closing remarks.

Tim Rezvan: Yeah, well, listen, Tim, I think we want to be selective, but certainly something that looks like GRP, like we did last year, would be very interesting to us. I mean, I think, you know, although that deal didn't have all Diamondback operations, there's actually a lot of Endeavor permits and units under it, but that visibility and that quality of remaining units in the Midland Basin cost, you know, has a lot of And if there are deals with a lot of, you know, undeveloped value, not just near-term free cash flow accretion, that's something we're going to look at. I just don't have direct visibility into what that is today.

Thank you. Thank you again for everyone participating in today's call. If you've got any questions. Just please reach out using the information we provided.

Okay.

Thank you for participating in today's conference. This does conclude the program you may now disconnect everyone have a great day.

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Okay.

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Tim Rezvan: Okay, okay, that's helpful. And then related to that, and if you think longer term on Endeavor, you know, if you bake in the legacy, the acquired method on GRP, leverage looks like a little bit over one times, and hard to see a lot of organic leveraging in a low 70s oil world. So, what are your thoughts on the balance sheet and where you are today and maybe where you'd want to be over the medium term, to sort of be able to, you know, take advantage of bigger opportunities as they come up? Thank you. Yeah, I think a path towards one times is the right way to look at it. You know, we are distributing 75% of free cash.

Okay.

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Tim Rezvan: So there's a more limited amount of free cash to go to the balance sheet on a quarterly basis. But, you know, generally speaking, we've proven that the mineral business can be levered very quickly. It doesn't mean we're going to lever it up by any means, but, you know, the security of a peer-free cash flow almost regardless of commodity prices is a pretty unique way to think about leveraging in an oil or commodity based business.

Tim Rezvan: Thank you. Thank you. And we're not showing any further questions in the queue. I'd like to now turn it back to Travis Stice for CEO for any closing remarks. Thank you. Thank you again for everyone participating in today's call. If you've got any questions, just please reach out using the information we provided. Thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day, www.thevenusproject.com, ? ? ? ? ? ? ? ?