Q1 2024 Viper Energy Inc Earnings Call

Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Viper Energy first quarter 2024 earnings conference call.

Good day, ladies and gentlemen, and thank you for standing by walking to the Viper Energy first quarter 2024 earnings conference call.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone keypad.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question I need to press star one one on your telephone keypad.

Operator: At this time, I would like to turn the conference over to Mr. Adam Lawlis, Vice President of Investor Relations. Sir, please begin. Thank you, Howard. Good morning.

At this time I would like to turn the conference over to Mr. Adam Lawlis, Vice President of Investor Relations. Sir Please begin.

Adam T. Lawlis: Thank you.

Adam T. Lawlis: Good morning, and welcome to Viper Energy first quarter 2024 conference call.

Adam T. Lawlis: During our call today, we will reference an updated investor presentation, which can be found on Viper's website. Representing Viper today are Travis Stice, CEO; Kase Vantoff, President; and Austen Gilfillian, Vice President.

Adam T. Lawlis: During our call today, we will reference an updated investor presentation, which can be found on vipers website.

Adam T. Lawlis: Representing Viper today are Travis Stice CEO.

Adam T. Lawlis: <unk>, President and Austin Gilfillan Vice President.

Adam T. Lawlis: During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and business. However, 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 filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. And I'll turn the call over to Travis Stice.

Adam T. Lawlis: During this conference call. The participants may make certain forward looking statements relating to the company's financial condition results of operations plans objectives future performance and businesses.

Adam T. Lawlis: 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.

Adam T. Lawlis: Information concerning these factors can be found in the company's filings with the SEC.

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

Adam T. Lawlis: I will now turn the call over to Travis Stice.

Travis D. Stice: Thank you, Adam. Welcome, everyone, and thank you for listening to Viper Energy's first quarter of 2024 conference call. The first quarter was a strong start to the year for Viper, which uniquely highlighted the benefits of Viper's business model and high-quality assets. Despite commodity prices declining during the quarter, Viper's continued production growth, along with our best-in-class cost structure, allowed us to increase our cash available for distribution per share quarter over quarter. Importantly, as a result of our strong financial and operational results, our board has declared a combined base plus variable dividend for the first quarter of 59 cents a share.

Travis D. Stice: Thank you Adam welcome everyone and thank you for listening to Viper Energy's first quarter 2024 conference call.

Travis D. Stice: The first quarter was a strong start to the year for Viper ended the period, which uniquely highlighted the benefits of vipers business on high quality assets.

Travis D. Stice: Despite commodity prices declining during the quarter.

Travis D. Stice: Vipers continued production growth along with our best in class cost structure.

Travis D. Stice: Allow for us to increase our cash available for distribution per share quarter over quarter.

Adam T. Lawlis: Importantly, as a result of our strong financial and operational results. Our board has declared a combined base plus variable dividend for the first quarter of 15 arms into this year.

Travis D. Stice: Looking specifically at operations, both activity and well productivity trends across our acreage position continue to be encouraging. As a result, we have initiated production guidance for the second quarter that implies over 3% growth relative to the first quarter. It is important to note that this guidance takes into account the divestiture of our non-permian assets, which lost their production contribution for two months of the quarter. On a pro-forma basis, so including the loss of roughly 450 barrels of oil per day from the divestiture... Our true organic growth quarter-over-quarter is expected to be almost five percent. Additionally... We have also provided updated production guidance for the full year 2024, although the midpoint of this guidance range has been reduced by 250 barrels of wool per day versus our previous guidance range.

Adam T. Lawlis: Looking specifically at operations, both activity and well productivity trends across our acreage position continued to be encouraging.

Adam T. Lawlis: As a result, we have initiated production guidance for the second quarter that implies over 3% growth relative to the first quarter.

Adam T. Lawlis: It is important to note that this guidance takes into account the divestiture of our non Permian assets.

Adam T. Lawlis: Losing their production contribution for two months of the quarter.

Adam T. Lawlis: On a pro forma basis, so, including the loss of roughly 450 barrels of oil per day from the divestiture.

Adam T. Lawlis: Our true organic growth quarter over quarter is expected to be almost 5%.

Adam T. Lawlis: Additionally.

Adam T. Lawlis: We have also provided updated production guidance for the full year 2024.

Adam T. Lawlis: While the midpoint of this guidance range has been reduced by 250 barrels of oil per day versus our previous guidance range.

Travis D. Stice: That loss is entirely attributable to the loss of production contribution from the non-Permian assets for the remaining seven months of 2020. As a further point on the continued strong activity levels across our acreage position, the implied average production for the second half of 2024 represents a roughly 2% increase relative to the midpoint of our second quarter production guidance. Looking more long term at potential inventory expansion, during the first quarter, Diamondback completed its first test of the Wolf Camp D and Spanish Trail, with two wells being turned to production.

Adam T. Lawlis: Net loss is entirely attributable to the loss of the production contribution from the non Permian assets for the remaining seven months of 2024.

Adam T. Lawlis: As a further point on the continued strong activity levels across our acreage position.

Adam T. Lawlis: Applied average production for the second half of 2024 represents a roughly 2% increase relative to the midpoint of our second quarter production guidance range.

Adam T. Lawlis: Looking more long term at potential inventory expansion during the first quarter Diamondback completed its first test of the Wolfcamp D in Spanish trail.

Adam T. Lawlis: With two wells being turned to production.

Travis D. Stice: Of these two wells, only one was developed under an existing Wolf Camp B well to test the vertical communication between the two zones. To date, we have seen similar performance between the two wells and therefore believe that there is enough vertical separation between the two zones to limit the parent-child effect. The initial takeaway is that the Wolf Camp D and Spanish Trail can be effectively developed below the existing Wolf Camp B wells.

Adam T. Lawlis: Of these two wells only one was developed under an existing Wolfcamp b well.

Adam T. Lawlis: As to test the vertical communication between the two zones.

Adam T. Lawlis: To date, we have seen similar performance between the two wells and therefore believe that there is enough vertical separation between the two zones to limit the parent and child effect.

Adam T. Lawlis: The initial takeaway is that the Wolfcamp D. In Spanish trail can be effectively developed below existing wolfcamp b wells.

Travis D. Stice: And while they are not the highest-returning projects in Diamondback's portfolio, they can compete for capital over the next several years, especially considering Viper's high NRI and the existing infrastructure that's in place. This test de-risks a substantial amount of net inventory for Viper and, as a result..., gives confidence to an extended outlook for potential organic production growth. Separately, we have increased our guidance for cash DNA slightly as a result of increased costs.

Adam T. Lawlis: And while they are not the highest returning projects and Diamondback 's portfolio.

Adam T. Lawlis: Can't compete for capital over the next several years, especially inclusive of Vipers high NRI in the existing infrastructure that's in place.

Adam T. Lawlis: This test de risks a substantial amount of net inventory for Viper and as a result.

Adam T. Lawlis: Gives confidence to an extended outlook for potential organic production growth.

Adam T. Lawlis: Separately, we have increased our guidance for cash G&A slightly as a result of increased costs associated with our conversion to a corporation.

Travis D. Stice: Associated with our conversion to a corporation, but we continue to run our business extremely efficiently and with peer-leading per unit cost. Our continued best-in-class cash margins and free cash flow generation, along with the previously detailed organic production growth, should enable Viper to continue to return a substantial amount of capital to our shareholders, primarily through our base plus variable dividends. Operator, please open the line for questions.

Adam T. Lawlis: But we continue to run our business extremely efficiently and with peer leading per unit costs.

Adam T. Lawlis: Our continued best in class cash margins and free cash flow generation.

Adam T. Lawlis: Along with the previously detailed organic production growth.

Adam T. Lawlis: Shoot enabled Viper to continue to return a substantial amount of capital to our shareholders, primarily through our base plus variable dividend.

Speaker Change: Operator, please open the line for questions.

Operator: Ladies and gentlemen, if you have a question or comment at this time, please press star 1 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 1 1 again. Once again, if you have a question or comment at this time, please press star one, one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Neal Dingmann from Trust Securities. Your line is open.

Adam T. Lawlis: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press star one again.

Adam T. Lawlis: Once again, if you have a question or comment at this time. Please press star one one on your telephone keypad.

Adam T. Lawlis: Please standby, while we compile the Q&A roster.

Adam T. Lawlis: Our first question or comment comes from the line of Neal Dingmann from Trust Securities. Your line is open.

Neal David Dingmann: Morning, Travis and team, and congrats on another nice quarter. Travis, my first question is on capital allocation in your case. Specifically, your thoughts on potentially lowering the payout ratio until the leverage declines as you did on it over at FANG. And I'm just wondering, maybe secondly, how in the future you all would view buybacks versus dividends in this vehicle, as you know, I know some mineral investors continue to prefer more exclusively dividends.

Neal David Dingmann: Morning, John Stephens.

Neal David Dingmann: Nice quarter. My first question is on capital allocation for your case.

Neal David Dingmann: Typically your thoughts on potentially lowering the payout ratio until the leverage declines as you did on Elbrick thing and I'm just wondering maybe secondly, there how in the future you all would view buybacks versus does and this vehicle is I know some mineral investors continue to prefer more exclusively dividends.

Travis D. Stice: Yeah, good. A good question, Neal.

Speaker Change: Yes good.

Neal David Dingmann: Good question Neal.

Speaker Change: Welcome to the call.

Travis D. Stice: Welcome to the call. I think, you know, for us, the capital allocation philosophy at Viper remains, you know, a focus on cash distribution over a buyback. You know, I think there have been times of stress over the past few years where we've allocated much more capital on a semi-annual basis, and you know that will continue as well. Going to your question about debt reduction and the percent of free cash returned, the business on the mineral side can generate, you know, generates pure free cash flow, so it's very easy to de-lever.

Speaker Change: I think.

Speaker Change: For us the capital allocation philosophy at Viper.

Speaker Change: <unk>.

Speaker Change: On cash distribution over.

Speaker Change: Buyback.

Speaker Change: I think there have been times of stress over the past few years, where we've allocated much more capital too.

Speaker Change: The buyback versus the cash distribution and that has been.

Speaker Change: Very value accretive deal for five for shareholders.

Speaker Change: The stock performed well, we still think there's a lot of value to be to be earned on the mineral business, but right now, we're probably leaning more towards cash versus.

Speaker Change: Versus buybacks as you can see in the first quarter.

Speaker Change: We're also continuing to try to grow that base distribution consistently on a kind of a semi annual basis and that will continue as well.

Speaker Change: Regarding your question on debt reduction in the percent of free cash returned.

Speaker Change: The business on the mineral side can generate generates pure free cash flow. So it's very easy to delever.

Travis D. Stice: And I think, you know, generally, the first quarter had some working capital headwinds, as well as, you know, we did a couple small deals in the Permian. The second quarter should see net debt go down pretty significantly with free cash generation, as well as, you know, the sales of non-Permian assets. So, you know, I think we comfortably see this business near eternal leverage at year end. I think eternal leverage for a mineral business is a very conservative funding structure.

Speaker Change: Generally the first quarter had some working capital headwinds as well as.

Speaker Change: We did a couple of small deals in the Permian.

Speaker Change: Second quarter should see.

Speaker Change: Net debt go down pretty significantly and with free cash generation as well as.

Speaker Change: The sale of the non Permian assets.

Speaker Change: We comfortably see this business near a turn of leverage at at year end I think a turn of leverage for our mineral business is a very conservative funding structure, I think but the part of the pie.

Travis D. Stice: I think, but the part of the job of our team over the course of this year and into next is, as this business gets bigger, we should try to earn a lower cost of capital with, you know, the public bond investors and the rating agencies as they start to understand the pure free cash flow nature of this business.

Speaker Change: The job of our team over the course of this year and into next is as this business gets bigger we should try to earn a lower cost of capital with.

Speaker Change: The public bond investors and the rating agencies as they start to understand the pure free cash flow nature of this business.

Neal David Dingmann: Great details. And then just a quick follow-up on your middle position. I was looking at the slides, and I continue to notice the dominant position you have in Martin County. So my question there is just, when you take over, once you take over the Endeavor Acreage, will activity there stay relatively the same? I mean, given what you'll have under the, you know, pro forma company, or do you anticipate potential for a little bit of change here? I'm just trying to figure out how much really you have just in Diamondback exclusively versus sort of what you'll have with the combination.

Speaker Change: Great details and then just a quick follow up on the mineral position.

Speaker Change: The slides continue to notice the dominant position you have in Martin County. So my question. There is just when you take over once you take away the endeavor acreage will activity there stay relatively the same I mean, given what youll have under.

Speaker Change: The pro forma company or do you anticipate potential a little bit of change there.

Speaker Change: Trying to figure out how much really you have just to diamondback is closely versus sort of what you will have with the combination.

Travis D. Stice: Yeah, I mean, I think for Viper, you know, that exposure in that area is going to be huge for, you know, the future growth profile of the business, you know, that area. Obviously, some of the best rock in the United States continues to get better, you know, continues to add more zones.

Speaker Change: Yes, I mean, I think I think for Viper that exposure to that area is going to be huge for the future future growth profile of the business that area. Obviously some of the best rock in the United States continues to get better continues to add more zones.

Speaker Change: Kind of where we've been seeing really good Wolfcamp D results I think pro forma with endeavor. The combination there is going to be one of the best places to drill for oil in the United States with some combination of longer laterals big pad high mineral interest.

Travis D. Stice: That's kind of where we've been seeing really good Wolf Camp D results. You know, I think Proforma with Endeavor, the combination there is going to be one of the best places to drill for oil in the United States, you know, with some combination of longer laterals, big pads, and high mineral interest. That's going to be kind of the focal point where we're going to have a majority of our rigs in that Martin County area.

Speaker Change: That's going to be kind of the focal point, where we're going to have a majority of our rigs in that Martin County area.

Speaker Change: Yes, that's always what it means I guess, there is potential to lease bonuses and all that just for something down the future right.

Neal David Dingmann: Yeah that's always one. I guess there are potential police bonuses and all that's just for something down the future, right? Yeah, well, I mean, listen. I think there's potential.

Travis D. Stice: Yeah, well, I mean, listen, I think there's potential for lease bonuses across Vipers positions. You know, we've seen that a bit with the Barnett and Woodford leasing taking off, you know, there's been some Wolf Camp D leasing taken off, you know, because that's not always been held from the old vertical Wolfberry days.

Speaker Change: Yes, well I mean listen I think there is potential for lease bonuses across diapers position, we've seen that a bit with the Barnett and Woodford.

Speaker Change: Leasing taking off Theres been some wolfcamp D leasing taken off.

Speaker Change: Because that's not always been held from the old vertical wolfberry days and just talks about the benefits of the mineral business of your own minerals you own every piece of every barrel of oil produced in that in that.

Travis D. Stice: And just, you know, talks about the benefits of the mineral business. If you own minerals, you own every piece of every barrel of oil produced in that section or unit forever, regardless of if it's primary development, secondary zones, who knows what happens, you know, down the road. That's just the beauty of being a mineral owner.

Speaker Change: Section or unit forever, regardless of if it's.

Speaker Change: Primary development secondary zones, who knows what happens down the road Thats, just the beauty of being a mineral owner.

Speaker Change: Great. Thank you all.

Speaker Change: Thanks Neil.

Operator: Thank you. Our next question or comment comes from the line of Chris Baker from Evercoa ISI. Mr. Baker, your line is now open.

Speaker Change: Thank you our next question or comment comes from the line of Chris Baker from Evercore.

Chris Baker: Mr. Baker Your line is now open.

Chris Baker: Good morning, guys. Just was hoping you could talk a little bit more about Wolf Camp D, just any additional color you can share on early results, plans for testing, and, you know, maybe just how that fits into sort of the broader organic inventory opportunity set that you guys see today.

Chris Baker: Good morning, guys.

Chris Baker: I was hoping you could talk a little bit more about the Wolfcamp D.

Chris Baker: Just any additional color you can share on early results plans for testing.

Chris Baker: Maybe just how that fits into the broader organic inventory.

Mr. Baker: Opportunity set that you guys see today, yes.

Travis D. Stice: Yeah, Chris. We're going to let Al Barkmann, Chief Engineer, respond to that question. Yeah, Chris.

Speaker Change: Yes, Chris we're going to have our bachman chief engineer respond to that question yes.

Al Barkmann: Yeah, Chris, you know, this was a test, our first test of the WD on Spanish Trail. Like we mentioned in the opening remarks, we kind of wanted to test the performance of the D under existing Wolf Camp B wells and then without that. You know, really, really pleased with the initial performance here. Both of those wells I peed above 1000 barrels a day, and they were really kind of tracking on top of each other.

Bachman: Yes, Chris.

Speaker Change: This was a test our first test of the WD in Spanish Trail.

Bachman: Like we mentioned in the opening remarks, we kind of wanted to test the performance of the day under it because that thing.

Bachman: Wolfcamp B wells and then without that.

Speaker Change: Really really pleased with the initial performance here both of those wells.

Speaker Change: Speed above 1000 barrels a day.

Bachman: It really kind of tracking on top of each other so we don't we don't think we're seeing any degradation from the Wolfcamp B wells.

Al Barkmann: So, you know, we don't we don't think we're seeing any degradation from the Wolf Camp B Wells. Being on top, and you know, I think that's something that the returns are obviously uplifted with the Viper ownership at the same level, and so I think that's something that will continue to delineate across that position.

Bachman: Being on top.

Bachman: I think thats something that the returns are obviously uplifted with the Viper ownership. It at the same level and so I think that's something that we'll continue to delineate.

Bachman: Cross that position.

Chris Baker: Great, thanks. And then just as a follow up, the other question I think we keep getting is just realizing it's early days, but maybe just frame up the opportunities on the M&A front realizing there's likely a big drop down coming a little bit more visibility in terms of when that deal will close, but just just remind us in terms of just Big picture sort of check the box type, you know, data points in terms of leverage and just how to think about that, at least, you know, from where we if possible.

Speaker Change: Great. Thanks, and then just as a follow up the other question I think we keep getting is just.

Speaker Change: Realizing it's early days, but.

Speaker Change: Maybe just frame up.

Speaker Change: The opportunity set on the M&A front realizing this.

Speaker Change: Likely a big dropdown timing.

Speaker Change: More visibility in terms of.

Speaker Change: When that deal will close but just can you just remind us in terms of just.

Speaker Change: Big picture sort of check the box type.

Speaker Change: No.

Speaker Change: Data points in terms of leverage and just how to think about that at least from where are we.

Speaker Change: As possible.

Speaker Change: Yes, Chris I mean listen I think we're obviously disappointed that the diamondback endeavor deal has been delayed a bit but we still have a lot of confidence is going to closing in Q4 that probably puts the discussions between Viper and diamondback Viper and pro forma diamondback into kind of our early.

Travis D. Stice: Chris, I mean, listen, you know, I think we're obviously disappointed that the Diamondback Endeavor deal has been delayed a bit, but we still have a lot of confidence it is going to close in Q4. That probably puts the discussions between Viper and Diamondback or Viper and Proforma Diamondbacks into kind of early 2025.

Travis D. Stice: But as you know, we like to move quickly and get things done. I think we're very excited about the opportunity set to put the mineral business from Endeavor together with Viper's business and create kind of a true category killer in the mineral space of a size and scale that really hasn't been seen to date. You know, I think on top of that, if we did do that deal, we're certainly not looking to lever up the mineral business at the expense of the upstream business. We've never, never done that.

Speaker Change: <unk> 2025, but as you know we like to move quickly and get things done I think we're very excited about the opportunity set to put the mineral business from endeavor with <unk>.

Speaker Change: Combined with <unk> business and created kind of a true category killer in the mineral space the.

Speaker Change: The size and scale that really hasnt been seen to date.

Speaker Change: On top of that if we did do that deal. We're certainly not looking to lever up the mineral business at the expense of the upstream business, we've never never done that.

Travis D. Stice: So we expect that trend to continue. And, you know, in the interim, we're still looking at deals at Viper. There's been a few packages out there of the size that have interested us. We've looked, you know, pretty closely. And, you know, I think we'll continue to be in the fight on those deals. But, you know, as you think about the next three to five years of the Viper business model, it's really to be competitive in the, you know, 10 figure plus deals that, you know, we tend to be in a league of our own on that size.

Speaker Change: So we expect that trend to continue in.

Speaker Change: In the interim we're still looking at deals of byproducts, there's been a few packages out there of size that have interested us we've looked.

Speaker Change: Pretty closely and I think we will continue to be in the fight on those deals, but as you think about the next three to five years of the Viper business model, it's really to be competitive in the 10 figure plus deals that.

Speaker Change: We tend to be in a league of our own on that on that size.

Chris Baker: Alright, thanks. I appreciate the color. Thanks, Chris.

Speaker Change: Alright, Thanks, I appreciate the color.

Speaker Change: Thanks, Chris.

Operator: Thank you. Our next question or comment comes from the line of Betty Jiang from Barclays. Ms. Jiang, your line is now open.

Speaker Change: Thank you. Our next question or comment comes from the line Betty Jang from Barclays. Mr. Yang Your line is now open.

Betty Jang: Morning Travis.

Wei Jiang: I followed-up on the ENDEAVOR drop-down opportunity. I guess given the materiality of the EBITDA on that asset you outlined at the time of the acquisition and just the variety types of mineral interest that's sitting within ENDEAVOR, how should we be thinking about the size of the drop? Would it be one drop or multiple tranches?

Betty Jang: Maybe a follow up on the endeavor.

Betty Jang: I guess, given the materiality of the EBITDA on that asset our line at the time of the acquisition and then just a variety types of mineral interest that citywide endeavor, how shall we be.

Betty Jang: The size of the drop would it be.

Betty Jang: Once one drop or multiple tranches.

Travis D. Stice: Yeah, well, first of all, welcome back, Betty. It's good to hear your voice and look forward to you continuing to cover Viper.

Speaker Change: Yes, well first of all welcome back it's good to hear your voice.

Speaker Change: Look forward to your continuing to cover Viper.

Travis D. Stice: You know, I think I can't make any promises, right? We've got two boards, we've got to have discussions and look at this deal, you know, close to close. I think our intention is probably, you know, given the amount and size, to do this all in one fell swoop. And I think that generally means, you know, more exposure to a consistent development plan for a longer period of time. But again, it's not completely my decision, so we'll see what everyone decides. But that kind of is our preference to tell the cleanest story possible.

Speaker Change: I think I can.

Speaker Change: Can't make any promises right. We've got two board they've got to have discussions.

Speaker Change: And look at this at this deal post close I think our intention is probably.

Speaker Change: Given the the amount and size is to do this all in one fell swoop in and I think that generally means more exposure to a consistent development plan for a longer period of time, but.

Speaker Change: Again, it's not completely my decision, so well see what everyone, everyone decides but kind of be our preference to tell the cleanest story possible.

Wei Jiang: And then one of the key advantages of the Endeavor merger is the increased visibility on Viper's activity. Can you remind us what Viper's current exposure to Endeavor's development program is and if you are able to make any headway to increase your exposure to their activity through just organic leasing and other smaller mineral pickups? Yeah, I think it'd be hard to get any materials to continue.

Speaker Change: Alright.

Speaker Change: And then one of the key advantages of that endeavor mergers.

Speaker Change: The visibility on Vipers activity.

Speaker Change: Can you remind us what's vipers current exposure to Endeavour's development program and if you are able to make any ways to increase.

Speaker Change: Exposure to their activity.

Speaker Change: Organic leasing and other smaller.

Speaker Change: Mineral pickups.

Travis D. Stice: Yeah, I think it would be hard to make any materials to continue to improve, you know, that exposure. You know, high level. Right now, about 55% of our production comes from Diamondback. I don't know, I would probably say less than 10, probably 7 or 8% of our production comes from Endeavor. You know, I do think deals like the GRP deal had a lot of exposure to both Endeavor and Pioneer units on top of Diamondback.

Speaker Change: Yes, I think it would be hard to do anything in materials to continue to improve.

Speaker Change: That exposure high level right now about 55% of our production comes from Diamondback.

Speaker Change: I would probably say less and less than 10, probably seven or 8% of our production comes from endeavor.

Speaker Change: Do think deals like the ERP deal had a lot of exposure to both endeavor and pioneer units on top of Diamondback. So yes.

Travis D. Stice: You know, I think just generally exposure to ourselves is what we prefer, but second to that would be exposure to, you know, good operators like Endeavor, like Pioneer, in areas with really good rock and really good line of sites of development.

Speaker Change: I think just generally.

Speaker Change: Exposure to ourselves is what we prefer the second to that would be exposure to good operators like endeavor like pioneer.

Speaker Change: In areas with really good rock and really good line of sight to development.

Speaker Change: Great makes sense. Thank you.

Speaker Change: Thanks Betty.

Operator: Thank you. Our next question or comment comes from the line of Paul Diamond from Citi. Mr. Diamond, your line is now open.

Speaker Change: Thank you. Our next question or comment comes from the line of Paul Diamond from Citi. Mr. Diamond. Your line is now open.

Paul Michael Diamond: Gears up a bit on the M&A dialogue to kind of the opportunities that you're seeing in third parties, kind of the smaller deals. I know with the volatility, we've seen some disparity in bit ask spreads. Just didn't know if you could comment on what you all are seeing.

Paul Michael Diamond: Gears a bit on the M&A dialogue to.

Paul Michael Diamond: <unk> said Youre seeing in third party is kind of the smaller deals and then with the volatility we've seen some.

Paul Michael Diamond: Disparity in the bid ask spreads just didn't know if you could comment on what you all were seeing.

Paul Michael Diamond: Paul, I missed the first part of the question. I think it's kind of talking about the overall M&A environment, and we'll let Austen kind of talk about what we've been seeing. Yeah, I think it's still pretty competitive.

Paul Michael Diamond: Yes, Paul I missed the first part of the question I think is kind of talking about the overall M&A environment and I'll, let Austin kind of talked about what we've been seeing.

Austen Gilfillian: Yeah, I think it's still pretty competitive on what we call the ground game with the smaller deals. You know, call it $50 million and below, really, especially in the kind of $5-$10 million range and below.

Austen Gilfillian: Yes, I think it's still pretty competitive on what we call the ground game with the smaller deals being a call it $50 million and below really, especially on the kind of $5 million to $10 million range and below.

Austen Gilfillian: I think what we've seen is an evolution in the minerals market, right? I mean, six or seven years ago, a lot of private equity money came into the space, and that's kind of where the knife fight was, and you organically put together a position. But as the industry's matured a little bit, you know, you have bigger funds involved now, and kind of all of that capital is rolling in. So, we're not seeing a ton of deals transact directly with the owner anymore, so it just brings more competition to what's available.

Austen Gilfillian: I think what we've seen an evolution in the minerals market right six or seven years ago, a lot of private equity money came into the space and that's kind of where the knife fight was in.

Paul Michael Diamond: Organically put together position.

Paul Michael Diamond: But as the industry matures a little bit.

Paul Michael Diamond: You have bigger funds involved now.

Paul Michael Diamond: Out of all of that capital is rolling up.

Paul Michael Diamond: So we're not seeing the kind of deals transact right directly to the owner anymore. So it just brings more competition on what's available.

Austen Gilfillian: You know, we were able to get a couple of smaller deals done in the first quarter, and that's kind of the benefit we have of our relationships out here. But like Keith mentioned before, I think where we see our strategic advantage going forward from an M&A standpoint is going to be on the bigger deals we can kind of leverage.

Paul Michael Diamond: If we get a couple of smaller deals done in the first quarter and that's kind of the benefit we have of the part of our relationship out here, but I'd like Keith mentioned before I think we see our strategic advantage to report them.

Paul Michael Diamond: M&A standpoint, it's going to be honest bigger deals, we can kind of leverage.

Paul Michael Diamond: Besides the cost of capital that we have.

Paul Michael Diamond: And just one quick follow-up. The 13.8 wells in active development, if we kind of run rate that out, we, you know, we were starting to push the higher end of the higher ends of production guidance, just to know if there's anything you guys are seeing in your timing or cadence that would shift that potentially up or down, just given basic run rate it out.

Speaker Change: Understood. Thanks for the clarity and just one quick follow up.

Speaker Change: The $13 eight wells in active development, if we kind of run rate that out.

Paul Michael Diamond: We're starting to push the higher end.

Paul Michael Diamond: Pirates production guidance just didn't know if there is anything you guys are seeing in timing or cadence that would shift that potentially up or down just given.

Paul Michael Diamond: Downgrading it up.

Austen Gilfillian: Yeah, I mean, we continue to be pretty conservative with the timing assumptions on the third-party side, right? I mean, we've got great visibility on the Dynavex side, and that's what kind drives a lot of growth into the second half of the year. The big bump that we're going to see from Q1 to Q2 here is really going to come from the third-party side and a lot of the high-concentration activity that we had underwritten in the JRP deal.

Speaker Change: Yeah, we continue to be pretty conservative with the timing assumption on the third party side right and we've got great visibility on the Diamondback side, and that's what kind of drives a lot of growth into the second half of the year.

Speaker Change: Big bump that we're going to see from Q1 and Q2 here really is going to come from the third party side and a lot of the high concentration of activity that we had underwritten.

Paul Michael Diamond: And the <unk> deal.

Austen Gilfillian: But look, I mean, what we have contemplated right now for the rest of the year is third-party wells only being turned to production that have currently been fuzzed, not making any assumptions on permits. So if activity continues to trend at, like, a normal pace, maybe there can be some upside there, but what we really want to guide is what we can see and what we can control.

Paul Michael Diamond: But look I mean, what we have contemplated right now for it for the rest of the year is third party wells being turned to production that are currently despite not making any assumptions on permit. So if activity continues to trend at like normal pace.

Paul Michael Diamond: There can be some upside there, but we're really going to guide to what we can see and what we can control.

Paul Michael Diamond: Yes.

Paul Michael Diamond: I understand. It makes perfect sense. Thanks for your time. Thanks, Paul.

Speaker Change: Understood. Thanks, perfect sense, Thanks for your time.

Speaker Change: Thanks, Paul.

Operator: Thank you. Our next question or comment comes from the line of Derrick Whitfield from Stiefel. Mr. Whitfield, your line is now open.

Speaker Change: Thank you our next question or comment comes from the line of.

Speaker Change: Derrick Whitfield from Stifel. Mr. Whitfield Your line is now open.

Derrick Lee Whitfield: Thank you good morning, all and thanks for your time.

Derrick Lee Whitfield: For my first question, I wanted to focus on your expected 2024 production profile. After adjusting for the GRP non-core divestiture, your second core guide suggests modest upside versus consensus. Is this the production profile you were expecting in your initial 2024 guidance, or is there possibly some upside now based on the efficiencies you're experiencing at Diamondback?

Derrick Lee Whitfield: Hey, Derik.

Derrick Lee Whitfield: First question I wanted to focus on your expected 2024 production profile after adjusting for the ERP not does that non core divestiture.

Derrick Lee Whitfield: Your second quarter guide suggests modest upside versus consensus is this the production profile you're expecting in your initial 2024 guidance or is there, possibly some upside now based on efficiencies experienced in at Diamondback.

Travis D. Stice: Yeah, I wanted to say there's the timing. I mean, the general profile still looks similar to what we expected coming into the year. You know, I think a little bit of activity was brought forward, and Q1 outperformed a bit and kind of normalized for the next year. Maybe Q2 looks a little bit better than expected. I mean, sitting here on May 1st, trying to, you know, make an assumption on what's going to happen in the back half of the year for the third party side, like, that that's just not somewhere we want to get super aggressive.

Derrick Lee Whitfield: Yes.

Derrick Lee Whitfield: There is the timing.

Derrick Lee Whitfield: The general profile that looks similar to what we expected coming into the year.

Derrick Lee Whitfield: A little bit of activity was brought forward in Q1 outperformed a day kind of normalizing for the divestiture, maybe <unk> looks a little bit better than expected.

Derrick Lee Whitfield: I mean sitting here at my first time.

Derrick Lee Whitfield: Make assumption on what's going to happen in the back half of the year for the third party side.

Travis D. Stice: But, I mean, in a general sense, I would say activity has been brought forward a little bit relative to where it was two months ago. And the current backlog of activity, well, it's really strong. So, I mean, it's going to support some healthy growth throughout the year. We'll just kind of see where the exact numbers shake out as the year plays out.

Derrick Lee Whitfield: That does not somewhere we want to get super aggressive, but in a general sense I would say activity has been brought forward a little bit relative to where it was two months ago.

Derrick Lee Whitfield: The current backlog of activity well is really strong so I mean, it's going to support some healthy growth throughout the year, we'll just kind of see where the exact number shake out as the year plays out.

Travis D. Stice: Yeah, I would just say, Derrick, you know, non-op, we always are pretty conservative at the beginning of the year. It seems like there's been some non-op brought forward in the model versus original expectations, and the paying piece is kind of right on line within, you know, within a month of our expectations.

Speaker Change: Ill just say Derek non op, we always are pretty conservative at the beginning of the year. It seems like there's been some non op brought forward in our model versus original expectations and in the <unk> pieces kind of brought online within within a month of our expectations.

Derrick Lee Whitfield: Terrific. And with the understanding that your revenues are dominated by oil, and we're operating in a depressed Waha gas price environment based on type one maintenance and type egress conditions in general. Do your leases protect you against negative gas realizations experienced with third parties? Yeah, so we won't have any negative surprises.

Speaker Change: Terrific.

Speaker Change: With the understanding that your revenues are dominated by oil and we are operating in an M&A depressed, while our gas price environment based on pipeline maintenance and tight egress conditions in general.

Speaker Change: Dear leases protect you against negative gas realizations experienced with third parties.

Travis D. Stice: Yeah, so we won't have negative realizations passed back to us, you know, and historically, if you just look at our realizations relative to Dynavex, for example, typically better across the three products, as a lot of our leases have cost-free royalties, they've been there. And there are some of those operating expenses that that kind of can't be passed back to the lease owner. So I mean, it's certainly not good on the gas side, but you know, I wouldn't expect negative realizations for Viper.

Speaker Change: Yeah. So we won't have negative realizations past pass back to us.

Speaker Change: Darkly if you just look at like our realizations relative to buying back for example.

Speaker Change: Better across the three products at one of our leases have coffee royalties.

Speaker Change: In there and there is some of those operating expenses.

Speaker Change: Feedback passed back to the <unk>.

Speaker Change: <unk>. So I mean, it's certainly not good on the gas side, but with what you expect negative realizations for Viper.

Speaker Change: Just to be the mineral owner Derrick.

Speaker Change: Sure.

Speaker Change: Great update guys.

Speaker Change: Thank you thanks Derek.

Operator: Thank you. Our next question or comment comes from the line of Leo Mariani from Roth MKM. Mr. Mariani, your line is now open.

Speaker Change: Thank you our next question or comment comes from the line of Leo Mariani from Roth.

Leo Paul Mariani: Mr. Mariani Your line is now open.

Leo Paul Mariani: I just wanted to follow up quickly on this cash G&A, you know, guidance here, you kind of bumped it up, versus where you guys were in kind of, you know, mid to late February, when you came out with it originally, were some of these just, you know, public, you know, sort of a new kind of organizational structure costs, just, they just come in a little higher than expected, as you guys kind of work through the accounting, just curious as to kind of why it was, you know, tweaked only kind of a handful of months later.

Leo Paul Mariani: I just wanted to follow up quickly on this cash G&A guide.

Leo Paul Mariani: Guidance here.

Leo Paul Mariani: He kind of bumped it up <unk>.

Leo Paul Mariani: Where do you guys were in kind of mid to late February when you came out with it originally.

Mariani: Some of these.

Mariani: Public sort of in a new kind of organizational structure costs. Just can you just comment a little higher than expected as you guys kind of worked through the accounting just curious as to kind of why it was tweaked only kind of a handful of months later.

Travis D. Stice: Yeah, I mean, we're just, you know, we're moving into this public C-Corp world, and there are more expenses that, you know, are going to Viper today. You know, at the end of the day, it's a real number on a percentage basis, but, you know, 20 cents on a business doing, you know, 200 million a quarter of a cash flow is minimal. We just don't want to get it right, the allocation between parent and sub, particularly as the sub continues to grow and get investor attention and likely, you know, continue to stand on its own two feet.

Leo Paul Mariani: Yes.

Leo Paul Mariani: We're moving into this public C Corp World and Theres been more expenses.

Leo Paul Mariani: Our go into Viper today.

Leo Paul Mariani: At the end of the day.

Leo Paul Mariani: It's a real number on a percentage basis, but 2010.

Leo Paul Mariani: Business doing 200 million a quarter of our cash flow as is.

Leo Paul Mariani: Is minimal and we just don't want to get it right. The allocation between parents, particularly as the sub continues to grow and get investor attention and likely continue to stand on its own two feet.

Leo Paul Mariani: Okay. I appreciate that.

Leo Paul Mariani: Okay.

Speaker Change: Appreciate that and then just obviously I know you guys have to get the endeavor deal closed and it sounds like obviously, a larger transaction could be coming here for Viper, maybe it's early next year I guess, we'll wait on the timing but.

Leo Paul Mariani: And then, obviously, I know you guys have to get the Endeavor deal closed, and it sounds like, obviously, a larger transaction could be coming here for Viper. Maybe it's early next year. I guess we'll wait on the timing.

Leo Paul Mariani: But how do you think about the kind of potential, you know, funding for that? You talked about kind of one-time leverage really being, you know, a sweet spot for Viper. Would you kind of go above that temporarily to do kind of a major drop-down, you know, from the Endeavor-FANG combination? And if so, would you kind of prioritize, you know, maybe more debt payments now? And just can you kind of talk us through kind of how level, how you're thinking about kind of the funding part and kind of the limits on leverage?

Leo Paul Mariani: How do you think about kind of potential funding for that.

Leo Paul Mariani: You talked about kind of one times leverage really being.

Leo Paul Mariani: <unk> spot.

Leo Paul Mariani: For Viper would you kind of go above that temporarily to do you kind of a major dropdown from.

Leo Paul Mariani: From the endeavor Fang combination and then if so would you kind of prioritize maybe more debt Paydown. Just can you kind of talk us through kind of high level, how you're thinking about kind of the funding part in kind of the limits on leverage.

Travis D. Stice: Yeah, I just think in a world where we see parent and sub-contracted, you know, levering up the sub at the expense of the parent doesn't make a ton of sense. You know, we look at leverage consolidated, and certainly there's going to be a lot of cash flow that comes with whatever asset, you know, does end up in, if it does end up in Viper's hands, you know, I just think we're going to be responsible stewards of capital in both our upstream business and our mineral business.

Travis D. Stice: Yeah, I just think in a world where we see parents all the time...

Leo Paul Mariani: Yes.

Leo Paul Mariani: World, where we see apparent in sub consolidated.

Leo Paul Mariani: Some of the expense of the parent doesn't make a ton of sense, we look at leverage consolidated.

Leo Paul Mariani: Certainly theres going to be a lot of cash flow that comes with whatever asset.

Leo Paul Mariani: Does end up and if it does end up in Vipers hands I, just think we're going to be responsible stewards of capital both our upstream business and our mineral business.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you Leah.

Operator: Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Viper CEO, Mr. Travis Stice. Thank you again.

Speaker Change: Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to <unk> CEO, Mr. Travis Stice.

Travis D. Stice: Thank you again to everyone participating in today's call. If you have any questions, please contact us using the information provided.

Travis D. Stice: Thank you again to everyone participating in today's call. If you have any questions. Please contact us using the information provided.

Speaker Change: Okay.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Viper Energy First Quarter 2024 Earnest Conference Call.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day!

Speaker Change: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

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Speaker Change: Okay.

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Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1 1 on your telephone key. At this time, I would like to turn the conference over to Mr. Adam Lawlis, Vice President of Investor Relations. Please, proceed. Thank you, Howard.

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Adam T. Lawlis: During our call today, we will reference an updated investor presentation, which can be found on Viper's website. Representing Viper today are Travis Stice, CEO; Casey Vantoff, President; and Austen Gilfillian, Vice President.

Speaker Change: Good day, ladies and gentlemen, and thank you for standing by welcome to the Viper Energy first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one on your telephone keypad at.

Speaker Change: At this time I would like to turn the conference over to Mr. Adam Lawlis, Vice President of Investor Relations. Sir Please begin.

Adam T. Lawlis: Thank you good morning, and welcome to Viper Energy first quarter 2024 conference call.

Adam T. Lawlis: During our call today, we will reference an updated investor presentation, which can be found on vipers website.

Adam T. Lawlis: Viper today are Travis Stice, CEO, <unk>, President and Austin Gilfillan Vice President.

Adam T. Lawlis: During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and business. However, 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 filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I'll now turn the call over to Travis Stice.

Adam T. Lawlis: This conference call. The participants may make certain forward looking statements relating to the company's financial condition results of operations plans objectives future performance and businesses.

Adam T. Lawlis: We caution you that actual results could differ materially from those that are indicating these forward looking statements due to a variety of factors.

Adam T. Lawlis: Information concerning these factors can be found in the company's filings with the SEC.

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

Adam T. Lawlis: I will now turn the call over to Travis Stice.

Travis D. Stice: Thank you, Adam. Welcome, everyone, and thank you for listening to Viper Energy's first quarter of 2024 conference call. The first quarter was a strong start to the year for Viper, which uniquely highlighted the benefits of Viper's business model and high-quality assets. Despite commodity prices declining during the quarter, Viper's continued production growth, along with our best-in-class cost structure, allowed us to increase our cash available for distribution per share quarter over quarter. Importantly, as a result of our strong financial and operational results, our board has declared a combined base plus variable dividend for the first quarter of 59 cents a share.

Travis D. Stice: Thank you Adam welcome everyone and thank you for listening to Viper Energy's first quarter 2024 conference call.

Travis D. Stice: The first quarter was a strong start to the year for Viper in the period, which uniquely highlighted the benefits of Vipers business model and high quality assets.

Adam T. Lawlis: Despite commodity prices declining during the quarter.

Adam T. Lawlis: Vipers continued production growth along with our best in class cost structure.

Adam T. Lawlis: Allow for us to increase our cash available for distribution per share quarter over quarter.

Adam T. Lawlis: Importantly, as a result of our strong financial and operational results. Our board has declared a combined base plus variable dividend for the first quarter of 59% this year.

Travis D. Stice: Looking specifically at operations, both activity and well productivity trends across our acreage position continue to be encouraging. As a result, we have initiated production guidance for the second quarter that implies over 3% growth relative to the first quarter. It is important to note that this guidance takes into account the divestiture of our non-permian assets and losing their production contribution for two months of the quarter. On a pro-forma basis, so including the loss of roughly 450 barrels of oil per day from the divestiture... Our true organic growth quarter-over-quarter is expected to be almost 5%.

Adam T. Lawlis: Looking specifically at operations, both activity and well productivity trends across our acreage position continued to be encouraging.

Adam T. Lawlis: As a result, we have initiated production guidance for the second quarter that implies over 3% growth relative to the first quarter.

Adam T. Lawlis: It is important to note that this guidance takes into account the divestiture of our non Permian assets and losing their production contribution for two months of the quarter.

Adam T. Lawlis: On a pro forma basis, so, including the loss of roughly 450 barrels of oil per day from the divestiture.

Adam T. Lawlis: Our true organic growth quarter over quarter is expected to be almost 5%.

Travis D. Stice: Additionally... We have also provided updated production guidance for the full year 2024. While the midpoint of this guidance range has been reduced by 250 barrels of oil per day versus our previous guidance range, that loss is entirely attributable to the loss of production contribution from the non-Permian assets for the remaining seven months of 2020.

Adam T. Lawlis: Additionally.

Adam T. Lawlis: We have also provided updated production guidance for the full year 2024.

Adam T. Lawlis: While the midpoint of this guidance range has been reduced by 250 barrels of oil per day versus our previous guidance range.

Adam T. Lawlis: Net loss is entirely attributable to the loss of the production contribution from the non Permian assets for the remaining seven months of 2024.

Travis D. Stice: As a further point on the continued strong activity levels across our acreage position, the implied average production for the second half of 2024 represents a roughly 2% increase relative to the midpoint of our second quarter production guidance. Looking more long term at potential inventory expansion, during the first quarter, Diamondback completed its first test of the Wolf Camp D in Spanish Trail, with two wells being turned to production. Of these two wells, only one was developed under an existing Wolf Camp B well to test the vertical communication between the two zones.

Adam T. Lawlis: As a further point on the continued strong activity levels across our acreage position.

Adam T. Lawlis: Implied average production for the second half of 2024 represents a roughly 2% increase relative to the midpoint of our second quarter production guidance range.

Adam T. Lawlis: Looking more long term at potential inventory expansion during the first quarter Diamondback completed its first test of the Wolfcamp D in Spanish trail.

Adam T. Lawlis: With two wells being turned to production.

Adam T. Lawlis: Of these two wells only one was developed under an existing Wolfcamp b well.

Adam T. Lawlis: As to test the vertical communication between the two zones.

Travis D. Stice: To date, we have seen similar performance between the two wells and therefore believe that there is enough vertical separation between the two zones to limit the parent-child effect. The initial takeaway is that Wolf Camp D and Spanish Trail can be effectively developed below existing Wolf Camp B wells.

Adam T. Lawlis: To date, we have seen similar performance between the two wells and therefore believe that theres enough vertical separation between the two zones to limit the current child effect.

Adam T. Lawlis: The initial takeaway is that the Wolfcamp D. In Spanish trail can be effectively developed below existing wolfcamp b wells.

Travis D. Stice: And while they are not the highest-returning projects in Diamondback's portfolio, they can compete for capital over the next several years, especially considering Viper's high NRI and the existing infrastructure that's in place. This test de-risks a substantial amount of net inventory for Viper and, as a result..., gives confidence to an extended outlook for potential organic production growth. Separately, we have increased our guidance for cash DNA slightly as a result of increased costs.

Adam T. Lawlis: And while they are not the highest returning projects and <unk> portfolio.

Adam T. Lawlis: Can't compete for capital over the next several years, especially inclusive of Vipers high NRI in the existing infrastructure that's in place.

Adam T. Lawlis: This test de risks a substantial amount of net inventory for Viper.

Adam T. Lawlis: And as a result Gibbs.

Adam T. Lawlis: It gives confidence to an extended outlook for potential organic production growth.

Adam T. Lawlis: Currently we have increased our guidance for cash G&A slightly as a result of increased costs associated with our conversion to a corporation.

Travis D. Stice: Associated with our conversion to a corporation, but we continue to run our business extremely efficiently and with peer-leading per unit cost. Our continued best-in-class cash margins and free cash flow generation, along with the previously detailed organic production growth, should enable Viper 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.

Adam T. Lawlis: But we continue to run our business extremely efficiently.

Adam T. Lawlis: And with peer leading per unit costs.

Adam T. Lawlis: Our continued best in class cash margins and free cash flow generation.

Adam T. Lawlis: Along with the previously detailed organic production growth.

Adam T. Lawlis: <unk> enabled Viper to continue to return a substantial amount of capital to our shareholders, primarily through our base plus variable dividend.

Speaker Change: Operator, please open the line for questions.

Operator: Ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 11 again. Once again, if you have a question or comment at this time, please press star 1 1 on your telephone keypad. Please stand by while we compile the Q&A list. Our first question or comment comes from the line of Neal Dingmann from Trust Securities. Your line is open.

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press star one again.

Speaker Change: Once again, if you have a question or comment at this time. Please press star one one on your telephone keypad.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question or comment comes from the line of Neal Dingmann from Trust Securities. Your line is open.

Neal David Dingmann: Morning, Travis and team, and congrats on another nice quarter. Travis, my first question is on capital allocation for your case. Specifically, your thoughts on potentially lowering the payout ratio until the leverage declines, as you did over at FANG. And I'm just wondering, maybe secondly there, how in the future you all would view buybacks versus dividends in this vehicle, as, you know, I know some mineral investors continue to prefer more exclusively

Neal David Dingmann: Morning, John Stephens, Linda Thats, another nice quarter. My first question is on capital allocation for your case, specifically your thoughts on potentially lowering the payout ratio until the leverage declines as you did on it over at thing and I'm just wondering.

Neal David Dingmann: Secondly, there how in the future you all would view buybacks versus does and this vehicle is I know some mineral investors continue to prefer more exclusively dividends.

Travis D. Stice: Yeah, good. A good question, Neal.

Travis: Yes, good good question Neal.

Speaker Change: Welcome to the call.

Travis D. Stice: Welcome to the call. I think, you know, for us, the capital allocation philosophy at Viper remains, you know, a focus on cash distribution over a buyback. You know, I think there have been times of stress over the past few years where we've allocated much more capital consistently, you know, on kind of a semi-annual basis, and you know that will continue as well. Going to your question about debt reduction and the percent of free cash returns, the business on the mineral side can generate, you know, generates pure free cash flow, so it's very easy to de-lever.

Speaker Change: I think.

Speaker Change: For us the capital allocation philosophy at Viper.

Speaker Change: <unk>, our focus on cash distribution over.

Speaker Change: Buyback.

Speaker Change: I think there have been times of stress over the past few years, where we've allocated much more capital too.

Speaker Change: The buyback versus the cash distribution and that has been.

Speaker Change: Very value accretive deal for Viper shareholders.

Speaker Change: The stock performed well, we still think there's a lot of value to be to be earned in on the minerals business, but right now, we're probably leaning more towards cash versus.

Speaker Change: Versus buybacks as you can see in the first quarter.

Travis D. Stice: We're also continuing to try to grow that base distribution consistently on a kind of a semi annual basis and that will continue as well.

Speaker Change: Going to your question on debt reduction in the percent of free cash returned.

Travis D. Stice: The business on the mineral side to generate generates pure free cash flow. So it's very easy to delever.

Travis D. Stice: And I think, you know, generally, the first quarter had some working capital headwinds as well as, you know, we did a couple small deals in the Permian. The second quarter should see net debt go down pretty significantly with free cash generation as well as, you know, the sales of non-Permian assets. So, you know, I think we comfortably see this business near eternal leverage at year end. I think eternal leverage for a mineral business is a very conservative funding structure.

Speaker Change: Generally the first quarter had some working capital headwinds as well as.

Speaker Change: We did a couple of small deals in the Permian.

Speaker Change: Second quarter should see.

Speaker Change: Net debt go down pretty significantly and with free cash generation as well as.

Speaker Change: The sale of the non Permian assets.

Speaker Change: We comfortably see this business near a turn of leverage at at year end I think a turn of leverage for our mineral business is.

Speaker Change: Very conservative funding structure.

Travis D. Stice: I think, but the part of the job of our team over the course of this year and into next is, as this business gets bigger, we should try to earn a lower cost of capital with, you know, the public bond investors and the rating agencies as they start to understand the pure free cash flow nature of this business.

Operator: But the part of the <unk>.

Travis D. Stice: Part of the job of our team over the course of this year and into next is as this business gets bigger we should try to earn a lower cost of capital with.

Travis D. Stice: The public bond investors on the rating agencies as they start to understand the pure free cash flow nature of this business.

Neal David Dingmann: Great details. And then just a quick follow-up on your middle position. I was looking at the slides, and I continue to notice the dominant position you have in Martin County. So my question there is just, when you take over, once you take over the Endeavor Acreage, will activity there stay relatively the same? I mean, given what you'll have under the, you know, pro forma company, or do you anticipate potential for a little bit of change there? I'm just trying to figure out how much really you have just in Diamondback exclusively versus sort of what you'll have with a combination.

Travis D. Stice: Great details and then just a quick follow up on the mineral position.

Neal David Dingmann: Looking at the slides continue to notice the dominant position you have in Martin County. So my question. There is just would you take over once you take away the endeavor acreage will activity there stay relatively the same I mean, given what youll have under.

Neal David Dingmann: The pro forma company or do you anticipate potential a little bit of change there I just.

Speaker Change: Trying to figure out how much really you have just a diamondback exclusively versus sort of what youll have with the combination.

Travis D. Stice: Yeah, I mean, I think I think for Viper, you know, that exposure, that area is going to be huge for, you know, the future, future growth profile of the business, you know, that area, obviously, some of the best rock in the United States continues to get better, you know, continues to add more zones, you know, it's kind of where we've been seeing really good Wolf Camp D results, you know, I think pro forma with Endeavor, you know, the combination there is going to be one of the best places to drill for oil in the United States, you know, with some combination of longer laterals, big pads, high mineral interest, that's going to be kind of the focal point, we're going to have a majority of our rigs in that Martin County area.

Speaker Change: Yes, I mean, I think I think for Viper that exposure to that area is going to be huge for the future future growth profile of the business that area.

Travis D. Stice: Obviously some of the best rock in the United States continues to get better continues to add more zones.

Speaker Change: Where we've been seeing really good Wolfcamp D results I think pro forma with endeavor.

Travis D. Stice: The combination there is going to be one of the best places to drill for oil in the United States with some combination of longer laterals big pad high mineral interest and thats going to be kind of the focal point and we're going to have a majority of our rigs in that Martin County area.

Speaker Change: Yes, that's always what it means I guess, there is potential to lease bonuses and all that just for something down the future right.

Neal David Dingmann: Yeah, that's always what I mean. I guess there are potential police bonuses and all that just for something down the future, right? Yeah, well, I mean, listen. I think there's potential.

Travis D. Stice: Yeah, well, I mean, listen, I think there's potential for lease bonuses across Piper's position. You know, we've seen that a bit with the Barnett and Woodford leasing taking off, you know, there's been some Wolf Camp D leasing taken off, you know, because that's not always been held from the old vertical wolfberry days.

Travis D. Stice: Yes, well I mean listen I think there is potential for lease bonuses across diapers position, we've seen that a bit with the Barnett and Woodford.

Travis D. Stice: Leasing taking off Theres been some wolfcamp D leasing taken off.

Travis D. Stice: Because that's not always been held from old vertical wolfberry days and just talks about the benefits of the mineral business of your own minerals you own.

Travis D. Stice: And just, you know, talks about the benefits of the mineral business. If you own minerals, you own every piece of every barrel of oil produced in that section or unit forever, regardless of if it's primary development, secondary zones, who knows what happens, you know, down the road. That's just the beauty of being a mineral owner.

Speaker Change: A piece of every barrel of oil produced in that in that.

Travis D. Stice: Section or unit forever, regardless of if it's.

Travis D. Stice: Primary development secondary zones, who knows what happens down the road Thats, just the beauty of being a mineral owner.

Speaker Change: Great. Thank you all.

Speaker Change: Thanks Neil.

Operator: Thank you. Our next question or comment comes from the line of Chris Baker from Evercoa ISI. Mr. Baker, your line is now open.

Travis D. Stice: Thank you our next question or comment comes from the line of Chris Baker from Evercore.

Speaker Change: Yes.

Chris Baker: Mr. Baker Your line is now open.

Chris Baker: Good morning, guys. Just was hoping you could talk a little bit more about Wolf Camp D, just any additional color you can share on early results, plans for testing, and, you know, maybe just how that fits into sort of the broader organic inventory opportunity set that you guys see today.

Chris Baker: Good morning, guys. Just was hoping you could talk a little bit more about the Wolfcamp D.

Chris Baker: Just any additional color you can share on early results plans for testing and maybe just how that fits into sort of the broader organic inventory.

Chris Baker: <unk> said that you guys see today.

Travis D. Stice: Yeah, Chris. We're going to let Al Barkmann, our chief engineer, respond to that question. Okay.

Speaker Change: Yes, Chris we're going a lot of our bachman chief engineer respond to that question.

Al Barkmann: Yeah, Chris, you know, this was a test, our first test of the WD on Spanish Trail. Like we mentioned in the opening remarks, we kind of wanted to test the performance of the D under existing Wolf Camp B wells and then without that. You know, really, really pleased with the initial performance here. Both of those wells I peed above 1000 barrels a day, and they were really kind of tracking on top of each other.

Chris Baker: Yes, Chris.

Al Barkmann: This was a test our first test of the WD and Spanish trail.

Chief Engineer: Like we mentioned in the opening remarks, we kind of wanted to test the performance of the D under if that thing.

Chris Baker: Wolfcamp B wells and then without that.

Al Barkmann: Really really pleased with the initial performance here both of those wells feat.

Al Barkmann: Feet above 1000 barrels a day.

Chris Baker: Really kind of tracking on top of each other so we don't we don't think we're seeing any degradation from the Wolfcamp B wells.

Al Barkmann: So, you know, we don't think we're seeing any degradation from the Wolf Camp B Wells being on top. And, you know, I think that's something that the returns are obviously uplifted with the Viper ownership at the same level. And so I think that's something that will continue to delineate across that position.

Al Barkmann: Being on top.

Al Barkmann: I think thats something.

Al Barkmann: The returns are obviously uplifted with the Viper ownership.

Adam Lawlis: At the same level.

Al Barkmann: So I think that's something that we'll continue to delineate.

Chris Baker: Across that position.

Chris Baker: Great, thanks. And then just as a follow up, the other question I think we keep getting is just realizing it's early days, but maybe just frame up the opportunities on the M&A front realizing there's, you know, likely a big drop down coming a little bit more visibility in terms of when that deal will close, but just just remind us in terms of just Big picture sort of check the box type, you know, data points in terms of leverage and just how to think about that, at least, you know, from where we if possible.

Speaker Change: Great. Thanks, and then just as a follow up the other question I think we keep getting is just.

Chris Baker: Realizing it's early days, but.

Chris Baker: Maybe just frame up.

Chris Baker: The opportunity set on the M&A front realizing those.

Chris Baker: Likely a big dropdown Tom a.

Chris Baker: A little bit more visibility in terms of.

Chris Baker: When that deal will close but just can you just remind us in terms of just.

Chris Baker: Big picture sort of check the box types.

Chris Baker: Data points in terms of leverage and just how to think about that at least from where we are.

Chris Baker: As possible.

Travis D. Stice: Chris, I mean, you know, listen, I think we're obviously disappointed that the Diamondback Endeavor deal has been delayed a bit, but we still have a lot of confidence it is going to close in Q4. That probably puts the discussions between Viper and Diamondback or Viper and Proforma Diamondbacks into kind of early 2025.

Speaker Change: Yes, Chris I mean listen I think we're obviously disappointed that the diamondback endeavor deal has been delayed a bit but we still have a lot of confidence is going to closing in Q4 that probably puts.

Travis D. Stice: The discussions between Viper, and Diamondback Viper and pro forma diamondback into kind of our early 2025, but as you know we'd like to move quickly and get things done I think we're very excited about the opportunity set to put the mineral business from endeavor with combined.

Travis D. Stice: But, as you know, we like to move quickly and get things done. I think we're very excited about the opportunity set to put the mineral business from Endeavor combined with Viper's business and create kind of a true category killer in the mineral space of a size and scale that really hasn't been seen to date. You know, I think on top of that, if we did do that deal, we're certainly not looking to lever up the mineral business at the expense of the upstream business. We've never, never done that.

Travis D. Stice: Combined with the <unk> business and create kind of a <unk>.

Travis D. Stice: True category killer in the mineral space with.

Travis D. Stice: The size and scale that really hasnt been seen to date.

Travis D. Stice: On top of that if we did do that deal. We're certainly not looking to lever up the mineral business at the expense of the upstream business, we've never never done that.

Travis D. Stice: So we expect that trend to continue in.

Travis D. Stice: So we expect that trend to continue. And, you know, in the interim, we're still looking at deals at Viper. There's been a few packages out there of the size that have interested us. We've looked pretty closely. And, you know, I think we'll continue to be in the fight on those deals. But, you know, as you think about the next three to five years of the Viper business model, it's really to be competitive in the, you know, 10 figure plus deals that, you know, we tend to be in a league of our own on that side.

Travis D. Stice: In the interim we're still looking at deals with <unk>, there's been a few packages out there of size that have interested us we've looked.

Travis D. Stice: Pretty closely and I think we will continue to be in the fight on those deals, but as you think about the next three to five years of the Viper business model, it's really to be competitive in the 10 figure plus deals that.

Travis D. Stice: We tend to be in a league of our own on that on that size.

Chris Baker: Alright, thanks. I appreciate the color. Thanks, Chris.

Speaker Change: Alright, Thanks, I appreciate the color.

Speaker Change: Thanks, Chris.

Operator: Thank you. Our next question or comment comes from the line of Betty Jiang from Barclays. Ms. Jiang, your line is now open.

Chris Baker: Yes.

Chris Baker: Thank you. Our next question or comment comes from the line of Betty Jang from Barclays. Mr. Yang Your line is now open.

Wei Jiang: Good morning Travis.

Wei Jiang: I followed-up on the ENDEAVOR drop-down opportunity. I guess given the materiality of the EBITDA on that asset you outlined at the time of the acquisition and just the variety types of mineral interest that's sitting within ENDEAVOR, how should we be thinking about the size of the drop? Would it be one drop or multiple tranches?

Wei Jiang: A follow up on the endeavor.

Speaker Change: Now Andy.

Wei Jiang: I guess, given the materiality of the EBITDA on that asset you outlined at the time of the acquisition and then just a variety types of mineral interest that sitting with that endeavor, how shall we be.

Wei Jiang: The size of the drop would it be.

Wei Jiang: It's one drop or multiple tranches.

Travis D. Stice: Well, first of all, welcome back, Betty. It's good to hear your voice and I look forward to you continuing to cover Viper.

Speaker Change: Yes, well first of all welcome back Betty it's good to hear your voice.

Speaker Change: Look forward to your continuing to cover Viper.

Travis D. Stice: You know, I think I can't make any promises, right? We've got two boards. We've got to have discussions and look at this deal, you know, close to close. I think our intention is probably, given the amount and size, to do this all in one fell swoop. And I think that generally means, you know, more exposure to a consistent development plan for a longer period of time. But again, it's not completely my decision, so we'll see what everyone decides. But that would kind of be our preference to tell the cleanest story possible.

Travis D. Stice: I think I can't make any promises right. We've got two board they got to have discussions.

Travis D. Stice: And look at this.

Travis D. Stice: This deal.

Travis D. Stice: To close I think our intention is probably given the the amount and size is to do this all in one fell swoop in and I think that generally means more exposure to a consistent development plan for a longer period of time, but.

Travis D. Stice: Again, it's not completely my decision. So we will see what everyone everyone decides.

Travis D. Stice: B, our preference to tell the cleanest story possible.

Wei Jiang: All right, and then one of the key advantages of the Endeavor merger is the increased visibility on Viper's activity. Can you remind us what Viper's current exposure to Endeavor's development program is and if you are able to make any headway to increase your exposure to their activity through just organic leasing and other smaller mineral pickup? Yeah, I think it'd be hard to do any materials to continue.

Travis D. Stice: Alright.

Wei Jiang: And then one of the key advantages of the mergers.

Wei Jiang: <unk> ability on Vipers activity.

Wei Jiang: Can you remind of Vipers current exposure to a diverse development program.

Wei Jiang: If you are able to make any ways to increase your exposure to euro activity, Sarah just organic leasing and other smaller.

Wei Jiang: Mineral pickups.

Travis D. Stice: Yeah, I think it would be hard to do any material to continue to improve, you know, that exposure. You know, high level. Right now, about 55% of our production comes from Diamondback. I don't know, I would probably say less than 10, probably 7 or 8% of our production comes from Endeavor. You know, I do think deals like the GRP deal had a lot of exposure to both Endeavor and Pioneer units on top of Diamondback. So, you know, I think, just generally, exposure to ourselves is what we prefer, but second to that would be exposure to, you know, good operators like Endeavor, like Pioneer.

Speaker Change: Yes, I think it'd be hard to do anything materials to continue to improve.

Travis D. Stice: That exposure high level right now about 55% of our production comes from Diamondback.

Travis D. Stice: I don't know I would probably say less and less than 10, probably seven or 8% of our production comes from endeavor I do think deals like the ERP deal had a lot of exposure to both endeavor and pioneer units on top of Diamondback. So.

Travis D. Stice: Just generally.

Travis D. Stice: Our exposure to ourselves is what we prefer but second to that would be exposure to good operators like endeavor like pioneer.

Travis D. Stice: In areas with really good rock and really good line of sight to development.

Speaker Change: Great makes sense. Thank you.

Speaker Change: Thanks Betty.

Operator: Thank you. Our next question or comment comes from the line of Paul Diamond from Citi. Mr. Diamond, your line is now open.

Travis D. Stice: Thank you. Our next question or comment comes from the line of Paul Diamond from Citi. Mr. Diamond. Your line is now open.

Paul Michael Diamond: Gears up a bit on the M&A dialogue to kind of the opportunity set you're seeing in third parties, kind of the smaller deals. I know with the volatility, we've seen some disparity in bit ask spreads. Just didn't know if you could comment on what you all are seeing.

Paul Michael Diamond: Gears a bit on the M&A dialogue.

Paul Michael Diamond: We're going to be opportunities that youre seeing in third party is kind of the smaller deals I know with the volatility we've seen some.

Paul Michael Diamond: Disparity in the bid ask spreads just didn't know if you could comment on what you all are seeing.

Paul Michael Diamond: Yeah, I mean, Paul, I missed the first part of the question. I think it's kind of talking about the overall M&A environment, and we'll let Austen kind of talk about what we've been seeing. Yeah, I think it's still pretty competitive in what we're seeing.

Speaker Change: Yes, Paul I missed the first part of the question I think it's kind of talking about the overall M&A environment and ill, let Austin kind of talked about what we've been seeing.

Austen Gilfillian: Yeah, I think it's still pretty competitive on what we call a ground game with the smaller bills, you know, call it $50 million and below, really, especially in the kind of $5 to $10 million range and below. I think what we've seen is an evolution in the minerals market, right? I mean, six or seven years ago, a lot of private equity money came into the space, and that's kind of where the knife fight was, and you just organically put together a position.

Austen Gilfillian: Yes, I think it's still pretty competitive on what we call a ground game with the smaller deals you know call it $50 million and below really, especially on the kind of $500 million range and below.

Austen Gilfillian: I think what we've seen an evolution in the minerals market right six or seven years ago, a lot of private equity money came into the space and thats kind of where the knife fight was.

Austen Gilfillian: Organically put together position.

Austen Gilfillian: But as the industry's matured a little bit, you know, you have bigger funds involved now, and kind of all of that capital is rolling in. So we're not seeing a ton of deals transact directly with the owner anymore, so it just brings more competition to what's available. You know, we were able to get a couple of smaller deals done in the first quarter, and that's kind of the benefit we have from our relationships out here.

Austen Gilfillian: But as the industry matured a little bit.

Austen Gilfillian: You have bigger clients involved now.

Austen Gilfillian: All of that capital is rolling up.

Austen Gilfillian: So we're not seeing the kind of deals transact right directly to the owner anymore. So it just brings more competition on what's available.

Austen Gilfillian: If we get a couple of smaller deals done in the first quarter and Thats kind of the benefit we had in the prior quarter.

Austen Gilfillian: But like Keith mentioned before, you know, I think where we see our strategic advantage going forward, from an M&A standpoint, it's going to be on the bigger deals where we can kind of leverage the size and cost of capital that we have.

Austen Gilfillian: Our relationships out here.

Austen Gilfillian: As mentioned before we see our strategic advantage to report on the M&A.

Austen Gilfillian: M&A standpoint, it's going to be honest bigger deals, where we can kind of leverage.

Austen Gilfillian: The size and cost of capital that we have.

Paul Michael Diamond: And just one quick follow-up. The 13.8 wells in active development, if we kind of run rate that out, we, you know, we were starting to push the higher end of higher-end production guidance, just to know if there's anything you guys are seeing in your timing or cadence that would shift that potentially up or down, just given basic run rate it out.

Speaker Change: Understood. Thanks for the clarity and just one quick follow up.

Paul Michael Diamond: Of the $13 eight wells in active development, if we kind of run rate that out.

Paul Michael Diamond: We're starting to push the higher end.

Paul Michael Diamond: Pirates production guidance, just Didnt know if theres anything you guys are seeing in timing or cadence that would shift that potentially up or down just given.

Paul Michael Diamond: Basic downgrading it up.

Austen Gilfillian: Yeah, I mean, we continue to be pretty conservative with the timing assumptions on the third-party side, right? I mean, we've got great visibility on the Dynavex side, and that's what kind drives a lot of growth into the second half of the year. The big bump that we're going to see from Q1 to Q2 here is really going to come from the third-party side and a lot of the high-concentration activity that we had underwritten in the JRP deal.

Speaker Change: Yes, we continue to be pretty conservative with the timing assumption on the third party side right and we've got great visibility on the Diamondback side.

Austen Gilfillian: And Thats, what kind of drives a lot of growth into the second half of the year.

Austen Gilfillian: The big bump that we're going to see from Q1 into Q2 here really is going to come from the third party side and a lot of the high concentration of activity that we had underwritten.

Austen Gilfillian: And the <unk> deal.

Austen Gilfillian: But look, I mean, what we have contemplated right now for the rest of the year is third-party wells only being turned to production that have currently been fuzzed, not making any assumptions on permits. So if activity continues to trend at, like, a normal pace, maybe there can be some upside there, but what we really want to guide is what we can see and what we can control.

Austen Gilfillian: Look I mean, we have concentrated right now for the rest of the year is third party wells being turned to production that are currently not making any assumptions on permit. So if activity continues to trend like normal pace.

Austen Gilfillian: Maybe there can be some upside there, but we're really going to guide to what we can see and what we can control.

Paul Michael Diamond: understood. That makes perfect sense.

Speaker Change: Understood. Thanks, perfect sense, Thanks for your time.

Paul Michael Diamond: Thanks for your time. Thanks, Paul.

Paul Michael Diamond: Paul.

Operator: Thank you. Our next question or comment comes from the line of Derrick Whitfield from Stiefel. Mr. Whitfield, your line is now open.

Speaker Change: Thank you.

Derrick Lee Whitfield: Next question or comment comes from the line of.

Operator: Derrick Whitfield from Stifel. Mr. Whitfield Your line is now open.

Derrick Lee Whitfield: Thank you good morning, all and thanks for your time.

Derrick Lee Whitfield: For my first question, I wanted to focus on your expected 2024 production profile after adjusting for the GRP non-core divestiture. Your second core guide suggests modest upside versus consensus. Is this the production profile you were expecting in your initial 2024 guidance, or is there possibly some upside now based on the efficiencies you're experiencing down and back? Yeah, I wouldn't have stayed.

Derrick Lee Whitfield: Hey, Darren.

Derrick Lee Whitfield: First question I wanted to focus on your expected 2024 production profile after adjusting for the ERP not does that non core divestiture.

Derrick Lee Whitfield: Your second quarter guide suggests modest upside versus consensus is this the production profile you're expecting in your initial 2024 guidance or is there, possibly some upside now based on efficiencies you're experiencing at diamondback.

Travis D. Stice: Yeah, I wanted to say there's the timing. I mean, the general profile still looks similar to what we expected coming into the year. You know, I think a little bit of activity was brought forward, and Q1 outperformed a bit, and it kind of normalized for the next year. Maybe Q2 looks a little bit better than expected. I mean, sitting here on May 1st, trying to, you know, make an assumption on what's going to happen in the back half of the year with the third-party side, like, that that's just not somewhere we want to get super aggressive.

Derrick Lee Whitfield: Yes.

Speaker Change: Thank you.

Travis D. Stice: The general profile that looks similar to what we expected coming into the year.

Travis D. Stice: I think a little bit of activity was brought forward in Q1 outperformed a bit kind of normalizing for the divestiture, maybe Q2 looks a little bit better than expected.

Travis D. Stice: And sitting here today first time.

Travis D. Stice: Make assumption on what's going to happen in the back half of the year for the third party side.

Travis D. Stice: But, I mean, in a general sense, I would say activity has been brought forward a little bit relative to where it was two months ago, and the current backlog of activity wells is really strong. So, I mean, it's going to support some healthy growth throughout the year. We'll just kind of see where the exact numbers shake out as the year plays out.

Travis D. Stice: Tomorrow, we want to get Super aggressive, but in a general.

Travis D. Stice: General Photonics the activities in the fourth quarter, a little bit relative to where it was two months ago.

Travis D. Stice: The current backlog of activity well is really strong so that's going to support some healthy growth throughout the year, we'll just kind of see where the exact number shake out as the year plays out I will just say Derek non op. We always are pretty conservative at the beginning of the year. It seems like there's been some non op brought forward in our model versus <unk>.

Travis D. Stice: Yeah, I would just say, Derrick, you know, non-op. We always are pretty conservative at the beginning of the year. It seems like there's been some non-op brought forward in the model versus original expectations, and the fame piece is kind of right on line within, you know, within a month of our expectations.

Travis D. Stice: <unk> expectations and in the <unk> pieces kind of right brought online within within a month of our expectations.

Derrick Lee Whitfield: Terrific. And with the understanding that your revenues are dominated by oil, and we're operating in a depressed, low gas price environment based on type one maintenance and type egress conditions in general. Do your leases protect you against negative...

Travis D. Stice: Terrific.

Derrick Lee Whitfield: With the understanding that your revenues are dominated by oil and we are operating in an M&A depressed, while our gas price environment based on pipeline maintenance and tight egress conditions in general.

Derrick Lee Whitfield: Dear leases protect you against negative gas utilization experience with third parties.

Travis D. Stice: Yeah, so we won't have negative realizations passed back to us. You know, and historically, if you just look at our realizations relative to Dynabank, for example, typically better across the three products that a lot of our leases have cost us without royalties, they've been there. And there are some of those operating expenses that can't be recouped, passed back to the lease owner. So I mean, it's certainly not good on the gas side, but you know, wouldn't expect negative realizations for Viper.

Speaker Change: Yes, so we won't have negative realizations past pass back to us.

Travis D. Stice: Storage if you just look at like our realizations relative to buyback for example.

Travis D. Stice: Better across the three products at a lot of our leases have coffee royalties on baked in there and there is some of those operating expenses.

Travis D. Stice: Thank you feedback pass back to the to lease owner. So I mean, it's certainly not good on the gas side, but with what you expect negative realizations for Viper.

Speaker Change: Just to be the mineral owner Derrick.

Travis D. Stice: Sure.

Speaker Change: Great update guys.

Speaker Change: Thank you thanks Derek.

Operator: Thank you. Our next question or comment comes from the line of Leo Mariani from Roth MKM. Mr. Mariani, your line is now open.

Operator: Thank you our next question or comment comes from the line of Leo Mariani from Roth.

Leo Paul Mariani: Mr. Mariani Your line is now open.

Leo Paul Mariani: I just wanted to follow up quickly on this cash G&A guidance here, you kind of bumped it up versus where you guys were in kind of, you know, mid to late February, when you came out with it originally. Were some of these just, you know, public, you know, sort of new kind of organizational structure costs, just coming a little higher than expected, as you guys kind of worked through the accounting, just curious as to kind of why Yeah,

Leo Paul Mariani: I just wanted to follow up quickly on this cash G&A guide.

Leo Paul Mariani: Guidance here.

Leo Paul Mariani: He kind of bumped it up <unk>.

Leo Paul Mariani: Where do you guys were in kind of mid to late February when you came out with it originally.

Leo Paul Mariani: Some of these.

Leo Paul Mariani: Public sort of in a new kind of organizational structure cost is that just comment a little higher than expected as you guys kind of worked through the accounting just curious as to kind of why it was tweaked only kind of a handful of months later.

Travis D. Stice: Yeah, I mean, we're just, you know, we're moving into this public C-Corp world, and there are more expenses that, you know, are going to Viper today. You know, at the end of the day, it's a real number on a percentage basis, but, you know, 20 cents on a business doing, you know, 200 million a quarter of a cash flow is minimal. We just don't want to get it right, the allocation between parent and sub, particularly as the sub continues to grow and get investor attention and likely, you know, continue to stand on its own two feet.

Leo Paul Mariani: Yes.

Travis D. Stice: We're moving into this public C Corp World and Theres been more expenses.

Travis D. Stice: Our go into Viper today.

Travis D. Stice: At the end of the day.

Travis D. Stice: It's a real number on a percentage basis, but 'twenty.

Travis D. Stice: Business doing 200 million a quarter of our cash flow is.

Travis D. Stice: Is minimal we just don't want to get it right the allocation between parents, particularly as the sub continues to grow and get investor attention and likely continue to stand on its own two feet.

Leo Paul Mariani: Okay. I appreciate that.

Travis D. Stice: Okay.

Speaker Change: Appreciate that and then just obviously I know you guys have to get the endeavor deal closed and it sounds like obviously, a larger transaction could be coming here for Viper, maybe it's early next year I guess, we'll wait on the timing but.

Leo Paul Mariani: And then, obviously, I know you guys have to get the Endeavor deal closed, and it sounds like, obviously, a larger transaction could be coming here for Viper. Maybe it's early next year. I guess we'll wait on the timing.

Leo Paul Mariani: But how do you think about the kind of potential, you know, funding for that? You talked about kind of one-time leverage really being, you know, a sweet spot for Viper. Would you kind of go above that temporarily to do kind of a major drop-down, you know, from the Endeavor-FANG combination? And if so, would you kind of prioritize, you know, maybe more debt payments now? And just can you kind of talk us through kind of how level, how you're thinking about kind of the funding part and kind of the limits on leverage?

Leo Paul Mariani: How do you think about kind of potential funding for that.

Leo Paul Mariani: <unk> talked about kind of one times leverage really being.

Leo Paul Mariani: <unk> bought.

Leo Paul Mariani: For Viper would you kind of go above that temporarily to do you kind of a major dropdown from.

Leo Paul Mariani: From the endeavor Fang combination and then if so would you kind of prioritize maybe more debt Paydown. Just can you kind of talk us through kind of high level, how you're thinking about kind of the funding part in kind of the limits on leverage.

Travis D. Stice: Yeah, I just think in a world where we see parent and sub consolidated, you know, levering up the sub at the expense of the parent doesn't make a ton of sense, you know, we look at leverage consolidated, you know, certainly there's going to be a lot of cash flow that comes with whatever asset, you know, does end up in, if it does end up in Viper's hands, you know, I just think we're going to be responsible stewards of capital of both our upstream business and our mineral business.

Travis D. Stice: Yeah, I just think in a world where we see parents all the time...

Speaker Change: Yes, I think in a world where are we.

Travis D. Stice: You see it paradigm sub consolidated.

Travis D. Stice: Some of the expense of the parent doesn't make a ton of sense, we look at leverage consolidated.

Travis D. Stice: Certainly theres going to be a lot of cash flow that comes with whatever asset.

Travis D. Stice: Does end up and if it does end up in Vipers hands I, just think we're going to be responsible stewards of capital both our upstream business and our mineral business.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you Leah.

Operator: Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Viper CEO, Mr. Travis Stice. Thank you again.

Travis D. Stice: Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to <unk> CEO, Mr. Travis Stice.

Travis D. Stice: Thank you again to everyone participating in today's call. If you have any questions, please contact us using the information provided.

Travis D. Stice: Thank you again to everyone participating in today's call. If you have any questions. Please contact us using the information provided.

Travis D. Stice: Okay.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.

Speaker Change: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.