Viper Energy, Inc., a subsidiary of Diamondback Energy, Inc., announced plans to acquire Sitio Royalties Corp. (NYSE:STR) in an all-stock transaction valued at approximately $4.1 billion, including debt. Disclosed early Tuesday, the merger agreement received unanimous board approvals and backing from 48% of Sitio Royalties Corp. (NYSE:STR)’s voting stakeholders.
A close-up of an oil derrick against a colorful sunset sky, a symbol of the company’s success.
With its merger, Sitio Royalties Corp. brings approximately 34,300 net royalty acres spread across key U.S. basins. This includes 25,300 acres in the Permian. Since roughly half of the company’s Permian production overlaps with Viper’s current wells, this footprint would complement the latter’s production progress. Viper anticipates the newly formed entity to hold about 85,700 net royalty acres in the Permian alone, with 43% operated by Diamondback.
The transaction is forecasted to deliver immediate 8–10% cash accretion per share in addition to generating more than $50 million in annual cost synergies. Notably, the merger will lower the breakeven for base dividends to under $20 WTI. In addition, it will prompt Viper’s board to boost the annual base dividend by 10% to $1.32 per share.
The stock price of Sitio Royalties Corp. experienced a decline of 11.58% over the past year. However, its past-week performance saw a growth of 15.43%, indicating a positive translation of acquisition buzz among investors.
Sitio Royalties Corp., the Colorado-based company, focuses on investing in mineral and royalty interests in the Permian and other productive U.S. oil basins, delivering passive exposure to upstream cash flows.
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