UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~June 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-36505

Viper Energy, ~~Partners LP~~Inc.

(Exact Name of Registrant As Specified in Its Charter)

46-5001985

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

500 West Texas Ave.

Suite 100

Midland, TX

79701

(Address of principal executive offices)

(Zip code)

(432) 221-7400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common ~~Units~~Stock
$0.000001 par value

VNOM

The Nasdaq Stock Market LLC

(NASDAQ Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 28, 2023,~~April 26, 2024, 91,423,830 shares of Class A Common Stock and 85,431,453 shares of Class B Common Stock of the registrant ~~had outstanding 70,904,057 common units representing limited partner interests and 90,709,946 Class B units representing limited partner interests.~~were outstanding.

VIPER ENERGY, ~~PARTNERS LP~~INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 30, 2023~~MARCH 31, 2024

TABLE OF CONTENTS


			Page
Glossary of Oil and Natural Gas Terms			ii
Glossary of Certain Other Terms			~~iii~~iv
Cautionary Statement Regarding Forward-Looking Statements			ivv

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Changes to ~~Unitholders’~~Stock holders’ Equity			3
Condensed Consolidated Statements of Cash Flows			54
Condensed Notes to Consolidated Financial Statements			65

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17

Item 3. Quantitative and Qualitative Disclosures about Market Risk			2728

Item 4. Controls and Procedures			2829

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			2930

Item 1A. Risk Factors			2930

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2930

Item 5. Other Information			2930

Item 6. Exhibits			3031

Signatures			3132

Table of Contents

GLOSSARY OF OIL AND NATURAL GAS TERMS

The following is a glossary of certain oil and natural gas terms that are used in this Quarterly Report on Form 10-Q (this “report”):



Argus WTI Midland			Grade of oil that serves as a benchmark price for oil at Midland, Texas.
Basin			A large depression on the earth’s surface in which sediments accumulate.
Bbl or barrel			One stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.

BO			One barrel of crude oil.
BO/d			One BO per day.
BOE			One barrel of oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of oil.
BOE/d			BOE per day.
British Thermal Unit or Btu			The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
Completion			The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
Condensate			Liquid hydrocarbons associated with the production of a primarily natural gas reserve.
Crude oil			Liquid hydrocarbons retrieved from geological structures underground to be refined into fuel sources.




Development well			A well drilled within the proved area of a natural gas or oil reservoir to the depth of a stratigraphic horizon known to be productive.
Differential			An adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas.
Dry hole or dry well			A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.



Field			An area consisting of either a single reservoir or multiple reservoirs, all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

Fracturing			The process of creating and preserving a fracture or system of fractures in a reservoir rock typically by injecting a fluid under pressure through a wellbore and into the targeted formation.
Gross acres or gross wells			The total acres or wells, as the case may be, in which a working interest is owned.










Henry Hub			Natural gas gathering point that serves as a benchmark price for natural gas futures on the NYMEX.
Horizontal wells			Wells drilled directionally horizontal to allow for development of structures not reachable through traditional vertical drilling mechanisms.

~~MBbls~~MBbl			~~Thousand~~One thousand barrels of crude oil orand other liquid hydrocarbons.
MBOE			One thousand barrels of crude oil equivalent, determined using a ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.
MBOE/d			One thousand BOE per day.
Mcf			One thousand cubic feet of natural gas.

Mineral interests			The interests in ownership of the resource and mineral rights, giving an owner the right to profit from the extracted resources.
MMBtu			One million British Thermal Units.
MMcf			Million cubic feet of natural gas.




Net royalty acres			Net mineral acres multiplied by the average lease royalty interest and other burdens.
Oil and natural gas properties			Tracts of land consisting of properties to be developed for oil and natural gas resource extraction.
Operator			The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease.







Proved reserves			The estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.

Table of Contents


Reserves			The estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to the market and all permits and financing required to implement the project. Reserves are not assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
Reservoir			A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or crude oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

Royalty interest			An interest that gives an owner the right to receive a portion of the resources or revenues without having to carry any costs of development, which may be subject to expiration.
Spud			Commencement of actual drilling operations.
Waha Hub			Natural gas gathering point that serves as a benchmark price for natural gas at western Texas and New Mexico.




Wellbore			The hole drilled by the bit that is equipped for oil or natural gas production on a completed well.
Working interest



			An operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.
WTI			West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil that serves as a benchmark for oil on the NYMEX.
WTI Cushing			Grade of oil that serves as a benchmark price for oil at Cushing, Oklahoma.

iiiii

Table of Contents

GLOSSARY OF CERTAIN OTHER TERMS

The following is a glossary of certain other terms that are used in this report:



Adjusted EBITDA
			Consolidated Adjusted EBITDA, a non-GAAP measure, generally equals net income (loss) attributable to Viper Energy, Inc. plus net income (loss) attributable to non-controlling interest before interest expense, net, non-cash share-based compensation expense, depletion expense, non-cash (gain) loss on derivative instruments, other non-cash operating expenses, other non-recurring expenses and provision for (benefit from) income taxes, which measure is used by management to more effectively evaluate the operating performance and determine dividend amounts for purposes of the dividend policy.
ASU			Accounting Standards Update.
Class A Common Stock			Class A Common Stock, $0.000001 par value per share of Viper Energy, Inc.
Class B Common Stock			Class B Common Stock, $0.000001 par value per share of Viper Energy, Inc.
Common Stock			Collectively, Class A Common Stock, and Class B Common Stock.
Diamondback			Diamondback Energy, Inc., a Delaware corporation.

Exchange Act			The Securities Exchange Act of 1934, as amended.
GAAP			Accounting principles generally accepted in the United States.



~~LTIP~~General Partner			Viper Energy Partners LPGP LLC, a Delaware limited liability company, and the General Partner of the Partnership.


LTIP			Viper Energy, Inc. Long Term Incentive Plan.
Nasdaq			The Nasdaq Global Select Market.
Notes			The outstanding senior notes of Viper Energy, Inc. issued under indentures where Viper Energy Partners LLC is the sole guarantor, consisting of the 5.375% Senior Notes due 2027 and the 7.375% Senior Notes due 2031.
NYMEX			New York Mercantile Exchange.
OPEC			Organization of the Petroleum Exporting Countries.
Operating Company			Viper Energy Partners LLC, a Delaware limited liability company and a consolidated subsidiary of Viper Energy, ~~Partners LP.~~Inc.
Partnership

			Viper Energy Partners LP, the predecessor of the Company, which converted into the Company in the Conversion.
SEC			United States Securities and Exchange Commission.
Securities Act			The Securities Act of 1933, as amended.
SOFR			The secured overnight financing ~~rate~~rate.
~~Notes~~			~~The 5.375% Senior Notes due 2027 issued on October 16, 2019.~~

~~iii~~iv

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding our: future performance; business strategy; future operations; estimates and projections of operating income, losses, costs and expenses, returns, cash flow, and financial position; production levels on properties in which we have mineral and royalty interests, developmental activity by other operators; reserve estimates and our ability to replace or increase reserves; our intent to convert into a corporate structure and expectations regarding the timing of such conversion, potential inclusion into certain indices and benchmarks, trading liquidity, tax treatment for our public unitholders post-conversion and related statements; anticipated benefits other of strategic transactions (including acquisitions and divestitures); and plans and objectives of management (including Diamondback’s plans for developing our acreage and our cash ~~distribution~~dividend policy and repurchases of our common ~~units~~shares and/or senior notes) are forward-looking statements. When used in this report, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to us are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular, the factors discussed in this report and detailed under Part II. Item 1A. Risk Factors, and our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, could affect our actual results and cause our actual results to differ materially from expectations, estimates or assumptions expressed, forecasted or implied in such forward-looking statements. Unless the context requires otherwise, references to “we,” “us,” “our” or ~~“the Partnership”~~the “Company” are intended to mean the business and operations of the ~~Partnership~~Company and the Operating Company.

Factors that could cause the outcomes to differ materially include (but are not limited to) the following:

•changes in supply and demand levels for oil, natural gas, and natural gas liquids and the resulting impact on the price for those commodities;

•the impact of public health crises, including epidemic or pandemic diseases and any related company or government policies or actions;

•actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments;

•changes in general economic, business or industry conditions, including changes in foreign currency exchange rates, interest rates, inflation rates, instability in the financial sector and concerns over a potential economic downturn or recession;

•regional supply and demand factors, including delays, curtailment delays or interruptions of production on our mineral and royalty acreage, or governmental orders, rules or regulations that impose production limits on such acreage;

•federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations;

•physical and transition risks relating to climate change;

•restrictions on the use of water, including limits on the use of produced water by our operators and a moratorium on new produced water well permits recently imposed by the Texas Railroad Commission in an effort to control induced seismicity in the Permian Basin;

•significant declines in prices for oil, natural gas, or natural gas liquids, which could require recognition of significant impairment charges;

•changes in U.S. energy, environmental, monetary and trade policies;

•conditions in the capital, financial and credit markets, including the availability and pricing of capital for drilling and development by our operators and environmental and social responsibility projects undertaken by Diamondback and our other operators;

•changes in availability or cost of rigs, equipment, raw materials, supplies and oilfield services impacting our operators;

•changes in safety, health, environmental, tax, and other regulations or requirements impacting us or our operators (including those addressing air emissions, water management, or the impact of global climate change);

•security threats, including cybersecurity threats and disruptions to our business from breaches of ~~our~~Diamondback’s information technology systems, or from breaches of information technology systems of our operators or third parties with whom we transact business;

ivv

Table of Contents

•lack of, or disruption in, access to adequate and reliable transportation, processing, storage and other facilities impacting our operators;

•severe weather conditions;

•acts of war or terrorist acts and the governmental or military response thereto;

•changes in the financial strength of counterparties to the credit ~~agreement~~facility and hedging contracts of our operating subsidiary;

•changes in our credit rating; and

•other risks and factors disclosed in this report.

In light of these factors, the events anticipated by our forward-looking statements may not occur at the time anticipated or at all. Moreover, new risks emerge from time to time. We cannot predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements we may make. Accordingly, you should not place undue reliance on any forward-looking statements made in this report. All forward-looking statements speak only as of the date of this report or, if earlier, as of the date they were made. We do not intend to, and disclaim any obligation to, update or revise any forward-looking statements unless required by applicable law.

vvi

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Viper Energy, ~~Partners LP~~Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


		June 30,		December 31,
		2023		2022
		(In thousands, except unit amounts)
	March 31,						March 31,		December 31,
	2024						2024		2023
	(In thousands, except share amounts)							(In thousands, except share amounts)
Assets	Assets
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	13,079	$	18,179

Royalty income receivable (net of allowance for credit losses)	Royalty income receivable (net of allowance for credit losses)	80,765		81,657
Royalty income receivable (net of allowance for credit losses)
Royalty income receivable (net of allowance for credit losses)
Royalty income receivable—related party	Royalty income receivable—related party	4,384		6,260
Income tax receivable
Derivative instruments	Derivative instruments	—		9,328
Other current assets		7,566		3,196
Prepaid expenses and other current assets
Total current assets	Total current assets	105,794		118,620
Property:	Property:
Oil and natural gas interests, full cost method of accounting ($1,195,923 and $1,297,221 excluded from depletion at June 30, 2023 and December 31, 2022, respectively)		3,590,476		3,464,819
Oil and natural gas interests, full cost method of accounting ($1,719,140 and $1,769,341 excluded from depletion at March 31, 2024 and December 31, 2023, respectively)
Oil and natural gas interests, full cost method of accounting ($1,719,140 and $1,769,341 excluded from depletion at March 31, 2024 and December 31, 2023, respectively)
Oil and natural gas interests, full cost method of accounting ($1,719,140 and $1,769,341 excluded from depletion at March 31, 2024 and December 31, 2023, respectively)
Land	Land	5,688		5,688
Accumulated depletion and impairment	Accumulated depletion and impairment	(785,286)		(720,234)
Property, net	Property, net	2,810,878		2,750,273

Derivative instruments	Derivative instruments	—		442
Derivative instruments
Derivative instruments
Deferred income taxes (net of allowances)	Deferred income taxes (net of allowances)	49,124		49,656
Other assets	Other assets	1,242		1,382
Total assets	Total assets	$	2,967,038	$	2,920,373
Liabilities and Unitholders’ Equity
Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	19	$	1,129
Accounts payable—related party	Accounts payable—related party	—		306
Accrued liabilities	Accrued liabilities	18,127		19,600
Derivative instruments	Derivative instruments	8,349		—
Income taxes payable	Income taxes payable	1,584		911
Total current liabilities	Total current liabilities	28,079		21,946
Long-term debt, net	Long-term debt, net	649,416		576,895

Derivative instruments	Derivative instruments	3,373		7
Derivative instruments
Derivative instruments
Total liabilities	Total liabilities	680,868		598,848
Commitments and contingencies (Note 12)	Commitments and contingencies (Note 12)					Commitments and contingencies (Note 12)

Unitholders’ equity:
General Partner		609		649
Common units (71,206,622 units issued and outstanding as of June 30, 2023 and 73,229,645 units issued and outstanding as of December 31, 2022)		665,511		689,178
Class B units (90,709,946 units issued and outstanding as of June 30, 2023 and December 31, 2022)		782		832
Total Viper Energy Partners LP unitholders’ equity		666,902		690,659
Stockholders’ equity:
Stockholders’ equity:
Stockholders’ equity:

Class A Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 91,423,830 shares issued and outstanding as of March 31, 2024 and 86,144,273 shares issued and outstanding as of December 31, 2023

Class A Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 91,423,830 shares issued and outstanding as of March 31, 2024 and 86,144,273 shares issued and outstanding as of December 31, 2023

Class A Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 91,423,830 shares issued and outstanding as of March 31, 2024 and 86,144,273 shares issued and outstanding as of December 31, 2023
Class B Common Stock, $0.000001 par value: 1,000,000,000 shares authorized; 85,431,453 shares issued and outstanding as of March 31, 2024 and 90,709,946 shares issued and outstanding as of December 31, 2023
Additional paid-in capital
Retained earnings (accumulated deficit)
Total Viper Energy, Inc. stockholders’ equity
Non-controlling interest	Non-controlling interest	1,619,268		1,630,866
Total equity	Total equity	2,286,170		2,321,525
Total liabilities and unitholders’ equity		$	2,967,038	$	2,920,373
Total liabilities and stockholders’ equity

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(In thousands, except per unit amounts)
Operating income:
Royalty income $ 158,197 $ 238,830 $ 319,282 $ 431,919
Lease bonus income—related party 1,277 — 8,348 6,280
Lease bonus income 1,134 329 1,534 2,731
Other operating income 179 163 581 295
Total operating income 160,787 239,322 329,745 441,225
Costs and expenses:
Production and ad valorem taxes 12,621 16,039 25,508 29,909
Depletion 34,064 31,962 65,051 59,373
General and administrative expenses 2,008 1,880 4,772 3,833
Total costs and expenses 48,693 49,881 95,331 93,115
Income (loss) from operations 112,094 189,441 234,414 348,110
Other income (expense):
Interest expense, net (11,291) (9,782) (20,977) (19,427)
Gain (loss) on derivative instruments, net (12,594) (1,889) (27,697) (20,248)
Other income, net 172 32 313 38
Total other expense, net (23,713) (11,639) (48,361) (39,637)
Income (loss) before income taxes 88,381 177,802 186,053 308,473
Provision for (benefit from) income taxes 8,450 6,182 17,856 8,812
Net income (loss) 79,931 171,620 168,197 299,661
Net income (loss) attributable to non-controlling interest 49,381 137,598 103,680 249,034
Net income (loss) attributable to Viper Energy Partners LP $ 30,550 $ 34,022 $ 64,517 $ 50,627
Net income (loss) attributable to common limited partner units:
Basic $ 0.42 $ 0.44 $ 0.89 $ 0.66
Diluted $ 0.42 $ 0.44 $ 0.89 $ 0.66
Weighted average number of common limited partner units outstanding:
Basic 71,771 76,620 72,249 76,861
Diluted 71,771 76,729 72,249 76,978


	Three Months Ended March 31,
	2024		2023
	(In thousands, except per share amounts)
Operating income:
Oil income	$	177,118	$	136,619
Natural gas income	6,797		8,991
Natural gas liquids income	21,152		15,475
Royalty income	205,067		161,085
Lease bonus income—related party	120		7,071
Lease bonus income	50		400

Other operating income	155		402
Total operating income	205,392		168,958
Costs and expenses:
Production and ad valorem taxes	14,406		12,887

Depletion	46,933		30,987

General and administrative expenses	5,033		2,764
Other operating expense	94		—
Total costs and expenses	66,466		46,638
Income (loss) from operations	138,926		122,320
Other income (expense):
Interest expense, net	(19,588)		(9,686)


Gain (loss) on derivative instruments, net	(7,492)		(15,103)

Other income, net	258		141
Total other expense, net	(26,822)		(24,648)
Income (loss) before income taxes	112,104		97,672
Provision for (benefit from) income taxes	12,529		9,406
Net income (loss)	99,575		88,266
Net income (loss) attributable to non-controlling interest	56,215		54,299
Net income (loss) attributable to Viper Energy, Inc.	$	43,360	$	33,967

Net income (loss) attributable to common shares:
Basic	$	0.49	$	0.47
Diluted	$	0.49	$	0.47
Weighted average number of common shares outstanding:
Basic	87,537		72,732
Diluted	87,629		72,815

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Consolidated Statements of Changes to ~~Unitholders'~~Stockholders' Equity

(Unaudited)

Limited Partners General Partner Non-Controlling Interest
Common Class B Amount Amount
Units Amount Units Amount Total
(In thousands)
Balance at December 31, 2022 73,230 $ 689,178 90,710 $ 832 $ 649 $ 1,630,866 $ 2,321,525
Unit-based compensation — 370 — — — — 370
Vesting of restricted stock units 4 — — — — — —
Distribution equivalent rights payments — (72) — — — — (72)
Distributions to public — (35,253) — — — — (35,253)
Distributions to Diamondback — (358) — (25) — (48,983) (49,366)
Distributions to General Partner — — — — (20) — (20)
Change in ownership of consolidated subsidiaries, net — 11,449 — — — (11,449) —
Repurchased units as part of unit buyback (1,115) (33,022) — — — — (33,022)
Net income (loss) — 33,967 — — — 54,299 88,266
Balance at March 31, 2023 72,119 666,259 90,710 807 629 1,624,733 2,292,428
Unit-based compensation — 259 — — — — 259
Distribution equivalent rights payments — (43) — — — — (43)
Distributions to public — (23,513) — — — — (23,513)
Distributions to Diamondback — (241) — (25) — (38,097) (38,363)
Distributions to General Partner — — — — (20) — (20)
Change in ownership of consolidated subsidiaries, net — 16,749 — — — (16,749) —
Repurchased units as part of unit buyback (912) (24,509) — — — — (24,509)
Net income (loss) — 30,550 — — — 49,381 79,931
Balance at June 30, 2023 71,207 $ 665,511 90,710 $ 782 $ 609 $ 1,619,268 $ 2,286,170


	Common Stock(1)
		Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Non-Controlling Interest		Total
					Class A Shares			Class B Shares

			(In thousands)
Balance at December 31, 2023			86,144	90,710		$	1,031,078	$	(16,786)	$	1,843,262	$	2,857,554

Common shares issued to related party			5,279	(5,279)		—		—		—		—
Equity-based compensation			—	—		485		—		—		485
Issuance of shares upon vesting of equity awards			1	—		—		—		—		—
Distribution equivalent rights payments			—	—		—		(56)		—		(56)
Dividends to shareholders			—	—		—		(43,791)		—		(43,791)
Dividends to Diamondback			—	—		20		(4,490)		(62,590)		(67,060)
Change in ownership of consolidated subsidiaries, net			—	—		69,753		—		(52,298)		17,455
Cash paid for tax withholding on vested equity awards			—	—		(28)		—		—		(28)

Net income (loss)			—	—		—		43,360		56,215		99,575
Balance at March 31, 2024			91,424	85,431		$	1,101,308	$	(21,763)	$	1,784,589	$	2,864,134

(1) The par values of the outstanding shares of Class A Common Stock and Class B Common Stock each round to zero at March 31, 2024.


							General		Non-Controlling Interest		Total
	Limited Partners						Partner
	Common Units	Amount		Class B Units	Amount		Amount

	(In thousands)
Balance at December 31, 2022	73,230	$	689,178	90,710	$	832	$	649	$	1,630,866	$	2,321,525

Unit-based compensation	—	370		—	—		—		—		370
Issuance of shares upon vesting of equity awards	4	—		—	—		—		—		—
Distribution equivalent rights payments	—	(72)		—	—		—		—		(72)
Distributions to public	—	(35,253)		—	—		—		—		(35,253)
Distributions to Diamondback	—	(358)		—	(25)		—		(48,983)		(49,366)
Distributions to General Partner	—	—		—	—		(20)		—		(20)
Change in ownership of consolidated subsidiaries, net	—	11,449		—	—		—		(11,449)		—

Repurchased units as part of unit buyback	(1,115)	(33,022)		—	—		—		—		(33,022)
Net income (loss)	—	33,967		—	—		—		54,299		88,266
Balance at March 31, 2023	72,119	$	666,259	90,710	$	807	$	629	$	1,624,733	$	2,292,428

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Consolidated Statements of ~~Changes to Unitholders' Equity - (Continued)~~Cash Flows

(Unaudited)

Limited Partners General Partner Non-Controlling Interest
Common Class B Amount Amount
Units Amount Units Amount Total
(In thousands)
Balance at December 31, 2021 78,546 $ 813,161 90,710 $ 931 $ 729 $ 1,418,007 $ 2,232,828
Unit-based compensation — 284 — — — — 284
Distribution equivalent rights payments — (64) — — — — (64)
Distributions to public — (35,830) — — — — (35,830)
Distributions to Diamondback — (344) — (25) — (42,634) (43,003)
Distributions to General Partner — — — — (20) — (20)
Change in ownership of consolidated subsidiaries, net — 14,195 — — — (14,195) —
Repurchased units as part of unit buyback (1,580) (39,260) — — — — (39,260)
Net income (loss) — 16,605 — — — 111,436 128,041
Balance at March 31, 2022 76,966 768,747 90,710 906 709 1,472,614 2,242,976
Unit-based compensation — 335 — — — — 335
Distribution equivalent rights payments — (113) — — — — (113)
Distributions to public — (51,077) — — — — (51,077)
Distributions to Diamondback — (490) — (25) — (63,497) (64,012)
Distributions to General Partner — — — — (20) — (20)
Change in ownership of consolidated subsidiaries, net — 11,523 — — — (11,523) —
Repurchased units as part of unit buyback (1,020) (28,949) — — — (28,949)
Net income (loss) — 34,022 — — — 137,598 171,620
Balance at June 30, 2022 75,946 $ 733,998 90,710 $ 881 $ 689 $ 1,535,192 $ 2,270,760


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	99,575	$	88,266
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for (benefit from) deferred income taxes	(641)		429
Depletion	46,933		30,987

(Gain) loss on derivative instruments, net	7,492		15,103
Net cash receipts (payments) on derivatives	(2,754)		(2,215)






Other	1,341		643
Changes in operating assets and liabilities:

Royalty income receivable	(23,152)		(1,381)
Royalty income receivable—related party	(30,052)		(30,064)


Accounts payable and accrued liabilities	5,305		(2,534)

Accounts payable—related party	(1,330)		(306)
Income taxes payable	12,143		8,566

Other	582		(251)
Net cash provided by (used in) operating activities	115,442		107,243
Cash flows from investing activities:

Acquisitions of oil and natural gas interests—related party	—		(75,073)
Acquisitions of oil and natural gas interests	(20,774)		(39,602)



Proceeds from sale of oil and natural gas interests	429		(1,908)


Net cash provided by (used in) investing activities	(20,345)		(116,583)
Cash flows from financing activities:
Proceeds from borrowings under credit facility	90,000		118,000
Repayment on credit facility	(80,000)		—










Repurchased shares/units under buyback program	—		(33,022)
Dividends/distributions to shareholders	(43,847)		(35,325)
Dividends/distributions to Diamondback	(67,060)		(49,366)
Other	(54)		(20)
Net cash provided by (used in) financing activities	(100,961)		267
Net increase (decrease) in cash and cash equivalents	(5,864)		(9,073)
Cash, cash equivalents and restricted cash at beginning of period	25,869		18,179
Cash, cash equivalents and restricted cash at end of period	$	20,005	$	9,106

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Viper Energy, ~~Partners LP~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Six Months Ended June 30,
2023 2022
(In thousands)
Cash flows from operating activities:
Net income (loss) $ 168,197 $ 299,661
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for (benefit from) deferred income taxes 532 —
Depletion 65,051 59,373
(Gain) loss on derivative instruments, net 27,697 20,248
Net cash receipts (payments) on derivatives (6,212) (17,029)
Other 1,222 2,893
Changes in operating assets and liabilities:
Royalty income receivable 892 (53,876)
Royalty income receivable—related party 1,876 (8,445)
Accounts payable and accrued liabilities (2,583) (5,580)
Accounts payable—related party (306) —
Income tax payable 673 2,288
Other (4,370) (513)
Net cash provided by (used in) operating activities 252,669 299,020
Cash flows from investing activities:
Acquisitions of oil and natural gas interests—related party (75,073) —
Acquisitions of oil and natural gas interests (48,609) 1,862
Proceeds from sale of oil and natural gas interests (1,975) 29,336
Other 1,200 —
Net cash provided by (used in) investing activities (124,457) 31,198
Cash flows from financing activities:
Proceeds from borrowings under credit facility 191,000 144,000
Repayment on credit facility (119,000) (198,000)
Repayment of senior notes — (48,963)
Repurchased units as part of unit buyback (57,531) (68,209)
Distributions to public (58,881) (87,084)
Distributions to Diamondback (87,729) (107,015)
Other (1,171) (83)
Net cash provided by (used in) financing activities (133,312) (365,354)
Net increase (decrease) in cash and cash equivalents (5,100) (35,136)
Cash, cash equivalents and restricted cash at beginning of period 18,179 39,448
Cash, cash equivalents and restricted cash at end of period $ 13,079 $ 4,312

~~See accompanying notes to condensed consolidated financial statements.~~

~~Table of Contents~~

~~Viper Energy Partners LP~~Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

Effective November 13, 2023 (the “Effective Time”), Viper Energy Partners LP (the “Partnership”) isconverted from a publicly traded Delaware limited partnership to a Delaware corporation pursuant to a plan of conversion (the “Conversion”) and changed names from Viper Energy Partners LP to Viper Energy, Inc. This report includes the results for the Partnership prior to the Conversion and Viper Energy, Inc. (the “Company”) following the Conversion. References to the “Company” refer to (i) Viper Energy, Inc. and its consolidated subsidiaries following the Conversion and (ii) the Partnership and its consolidated subsidiaries prior to the Conversion. References to shares or per share amounts prior to the Conversion refer to units or per unit amounts. Unless otherwise noted, all references to shares or per share amounts following the Conversion refer to shares or per share amounts of the Company’s Common Stock. References to dividends prior to the Conversion refer to distributions. There are no tax impacts resulting from the Conversion as Viper Energy Partners LP was treated as a corporation for tax purposes.

The Company is a publicly traded Delaware corporation focused on owning and acquiring mineral interests and royalty interests in oil and natural gas properties primarily in the Permian Basin.

AsPrior to March 8, 2024, the Company was a “controlled company” under the rules of ~~June 30, 2023, Viper Energy Partners GP~~the Nasdaq Stock Market LLC (the ~~“General Partner”~~“Nasdaq Rules”) ~~held~~. On March 8, 2024, our parent, Diamondback, completed an underwritten public offering in which it sold approximately 13.2 million shares of the Company’s Class A Common Stock (the “Diamondback Offering”). Following the Offering, Diamondback owned no shares of the Company’s Class A Common Stock and owned 85,431,453 shares of the Company’s Class B Common Stock, reducing its beneficial ownership to approximately 48% of the Company’s total Common Stock outstanding. As such, the Company ceased to be a ~~100%~~“controlled company” under the Nasdaq Rules. Prior to the Offering, the Company’s board of directors had a majority of independent directors and a standing audit committee comprised of all independent directors but had elected to take advantage of certain exemptions from corporate governance requirements applicable to controlled companies under the Nasdaq Rules and, until March 8, 2024, did not have a compensation committee or a committee of independent directors that selects director nominees.

Effective as of March 8, 2024, the Company’s board of directors formed (i) the compensation committee for purposes of making certain executive and other compensation decisions and (ii) the nominating and corporate governance committee for purposes of making certain nominating and corporate governance decisions, with each such committee’s rights and obligations being subject to the terms and conditions of (x) our certificate of incorporation, (y) such committee’s charter as adopted by the board and (z) the Services and Secondment Agreement, dated as of November 2, 2023, pursuant to which Diamondback provides personnel and general ~~partner interest~~and administrative services to us, including the services of the executive officers and other employees, substantially in the ~~Partnership and Diamondback Energy, Inc. (“Diamondback”) beneficially owned approximately 57% of~~same manner as those provided to us by the ~~Partnership’s total limited partner units outstanding. Diamondback owns and controls~~former General Partner prior to the ~~General Partner.~~Conversion.

Basis of Presentation

The accompanying condensed consolidated financial statements and related notes thereto were prepared in accordance with GAAP. All material intercompany balances and transactions have been eliminated upon consolidation. We report our operations in one reportable segment.

These condensed consolidated financial statements have been prepared by the ~~Partnership~~Company without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to SEC rules and regulations, although the ~~Partnership~~Company believes the disclosures are adequate to make the information presented not misleading. This report should be read in conjunction with the ~~Partnership’s~~Company’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, ~~2022,~~2023, which contains a summary of the ~~Partnership’s~~Company’s significant accounting policies and other disclosures.

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported total assets, total liabilities, ~~unitholders’~~stockholders’ equity, results of operations or cash flows.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Certain amounts included in or affecting the ~~Partnership’s~~Company’s financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts the ~~Partnership~~Company reports for assets and liabilities and the ~~Partnership’s~~Company’s disclosure of contingent assets and liabilities as of the date of the financial statements.

Making accurate estimates and assumptions is particularly difficult in the oil and natural gas industry given the challenges resulting from volatility in oil and natural gas prices. For instance, the war in Ukraine and the Israel-Hamas war, rising interest rates, global supply chain disruptions ~~concerns about a potential economic downturn or recession,~~ and recent measures to combat persistent inflation and instability in the financial sector have contributed to recent pricing and economic volatility. The financial results of companies in the oil and natural gas industry have been and may continue to be impacted materially as a result of changing market conditions. Such circumstances generally increase uncertainty in the ~~Partnership’s~~Company’s accounting estimates, particularly those involving financial forecasts.

The ~~Partnership~~Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the ~~Partnership~~Company considers reasonable in each particular circumstance. Nevertheless, actual results may differ significantly from the ~~Partnership’s~~Company’s estimates. Any effects on the ~~Partnership’s~~Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

interests, estimates of third party operated royalty income related to expected sales volumes and prices, the recoverability of costs of unevaluated properties, the fair value determination of assets and liabilities, including those acquired by the ~~Partnership,~~Company, fair value estimates of commodity derivatives and estimates of income taxes, including deferred tax valuation allowances.

Related Party Transactions

Royalty Income Receivable

As of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Diamondback, either directly or through its consolidated subsidiaries, owed the ~~Partnership $4.4~~Company $33.4 million and ~~$6.3~~$3.3 million, respectively, for royalty income received from third parties for the ~~Partnership’s~~Company’s production, which had not yet been remitted to the ~~Partnership.~~Company.

Lease Bonus Income

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and the six months ended June 30, 2022,~~ Diamondback ~~either directly or through its consolidated subsidiaries,~~ paid the ~~Partnership $1.3 million, $8.3~~Company $0.1 million and ~~$6.3~~$7.1 million, respectively, of lease bonus income primarily related to new leases in the Permian Basin and Midland Basin. ~~There was no lease bonus income for the three months ended June 30, 2022.~~

Other Related Party Transactions

See Note 4—Acquisitions and Divestitures for significant related party acquisitions of oil and natural gas interests.

See Note 7—Stockholder's Equity for further details regarding equity transactions with related parties.

All other significant related party transactions with Diamondback or its affiliates have been stated on the face of the condensed consolidated financial statements as of ~~June 30, 2023~~March 31, 2024, and for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~2023.

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

Accrued Liabilities

Accrued liabilities consist of the ~~following:~~following as of the dates indicated:


		June 30,		December 31,
		2023		2022
		(In thousands)
	March 31,					March 31,		December 31,
	2024					2024		2023
	(In thousands)						(In thousands)
Interest payable	Interest payable	$	4,449	$	3,972
Ad valorem taxes payable	Ad valorem taxes payable	9,963		12,492
Derivatives instruments payable	Derivatives instruments payable	1,756		1,684
Other	Other	1,959		1,452
Total accrued liabilities	Total accrued liabilities	$	18,127	$	19,600

Recent Accounting Pronouncements

Recently Adopted Pronouncements

There are no recently adopted pronouncements.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The ~~Partnership~~amendments are effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which requires that certain information in a reporting entity’s tax rate reconciliation be disaggregated, and provides additional requirements regarding income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

The Company considers the applicability and impact of all ASUs. ~~There are no recent accounting pronouncements~~ASUs not ~~yet adopted that are expected~~discussed above were assessed and determined to ~~have a~~be either not applicable, previously disclosed, or not material ~~effect on the Partnership~~ upon ~~adoption, as applicable.~~adoption.

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained from third party purchasers by the operator of the wells in which the ~~Partnership~~Company owns a royalty interest. Royalty income is recognized at the point control of the product is transferred to the purchaser at the wellhead or at the gas processing facility based on the ~~Partnership’s~~Company’s percentage ownership share of the revenue, net of any deductions for gathering and transportation. Virtually all of the pricing provisions in the ~~Partnership’s~~Company’s contracts are tied to a market index.

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

The following table disaggregates the ~~Partnership’s total royalty income~~Company’s revenue from oil, natural gas and natural gas liquids by ~~product type:~~revenue generated from production on properties operated by Diamondback and revenue generated from production on properties operated by third parties:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In thousands)
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
		Three Months Ended March 31, 2024
		Revenue Generated from Diamondback Operated Properties
		Revenue Generated from Diamondback Operated Properties
		Revenue Generated from Diamondback Operated Properties
		(In thousands)
		(In thousands)
		(In thousands)
Oil income
Oil income
Oil income	Oil income	$	139,300	$	191,195	$	275,919	$	346,246
Natural gas income	Natural gas income	5,090		23,793		14,081		38,983
Natural gas income
Natural gas income
Natural gas liquids income
Natural gas liquids income
Natural gas liquids income	Natural gas liquids income	13,807		23,842		29,282		46,690
Total royalty income	Total royalty income	$	158,197	$	238,830	$	319,282	$	431,919
Total royalty income
Total royalty income

4. ACQUISITIONS AND DIVESTITURES

2024 Activity

Acquisitions

In the first quarter of 2024, the Company acquired, in individually insignificant transactions from unrelated third-party sellers, mineral and royalty interests representing 131 net royalty acres in the Midland Basin for an aggregate purchase price of approximately $32.0 million, subject to customary post-closing adjustments.

2023 Activity

Acquisitions

GRP Acquisition

On November 1, 2023, the Company and the Operating Company acquired certain mineral and royalty interests from Royalty Asset Holdings, LP, Royalty Asset Holdings II, LP and Saxum Asset Holdings, LP, affiliates of Warwick Capital Partners and GRP Energy Capital (collectively, “GRP,”) pursuant to a definitive purchase and sale agreement for approximately 9.02 million common units and $749.5 million in cash, including transactions costs and subject to customary post-closing adjustments (the “GRP Acquisition”). The mineral and royalty interests acquired in the GRP Acquisition represent approximately 4,600 net royalty acres in the Permian Basin, plus approximately 2,700 additional net royalty acres in other major basins. The cash consideration for the GRP Acquisition was funded through a combination of cash on hand and held in escrow, borrowings under the Operating Company’s revolving credit facility, proceeds from the 7.375% Senior unsecured notes due 2031 and proceeds from the $200.0 million common unit issuance to Diamondback.

Drop Down Transaction

On March 8, 2023, the ~~Partnership completed the acquisition of~~Company acquired certain mineral and royalty interests from subsidiaries of Diamondback for approximately $74.5 million in cash, including customary ~~post-closing~~closing adjustments for net title benefits (the ‘‘Drop Down’’). The mineral and royalty interests acquired in the Drop Down represent approximately 660 net royalty acres in Ward County in the Southern Delaware Basin, 100% of which are operated by Diamondback, and have an average net royalty interest of approximately 7.2% and ~~current~~ production of approximately 300 BO/~~d, approximately 72% of which is from oil.~~d. The ~~Partnership~~Company funded the Drop Down through a combination of cash on hand and borrowings under the Operating Company’s revolving credit facility. The Drop Down was accounted for as a transaction between entities under common control with the properties acquired recorded at Diamondback’s historical carrying value in the ~~Partnership’s~~Company’s condensed consolidated balance sheet. The historical carrying value of the properties approximated the Drop Down purchase price.

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

Other Acquisitions

Additionally, induring the ~~first half of~~year ended December 31, 2023, the ~~Partnership~~Company acquired, in individually insignificant transactions from unrelated third-party sellers, mineral and royalty interests representing ~~203~~286 net royalty acres in the Permian Basin for an aggregate purchase price of approximately ~~$48.1~~$70.4 million, ~~subject to~~including customary ~~post-closing~~closing adjustments. The ~~Partnership~~Company funded these acquisitions with cash on hand and borrowings under the Operating Company’s revolving credit facility.

~~2022 Activity~~

~~Acquisitions~~

~~During the~~ ~~year ended December 31, 2022~~, in individually insignificant transactions, the Partnership acquired, from unrelated third-party sellers, mineral and royalty interests representing 375 net royalty acres in the Permian Basin for an aggregate net purchase price of approximately $65.8 million, including certain customary post-closing adjustments. The Partnership funded these acquisitions with cash on hand and borrowings under the Operating Company’s revolving credit facility.

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

~~Divestitures~~

In the first quarter of 2022, the Partnership divested 325 net royalty acres of third party operated acreage located entirely in Upton and Reagan counties in the Midland Basin for an aggregate net sales price of $29.3 million, including customary closing adjustments.

In the third quarter of 2022, the Partnership divested 93 net royalty acres of third party operated acreage located entirely in Loving county in the Delaware Basin for an aggregate net sales price of $29.9 million, including customary closing adjustments.

In the fourth quarter of 2022, the Partnership divested its entire position in the Eagle Ford Shale consisting of 681 net royalty acres of third party operated acreage for an aggregate net sales price of $53.7 million, including customary closing adjustments.

5. OIL AND NATURAL GAS INTERESTS

Oil and natural gas interests include the ~~following:~~following for the periods presented:


		June 30,		December 31,
		2023		2022
		(In thousands)
	March 31,					March 31,		December 31,
	2024					2024		2023
	(In thousands)						(In thousands)
Oil and natural gas interests:	Oil and natural gas interests:
Subject to depletion
Subject to depletion
Subject to depletion	Subject to depletion	$	2,394,553	$	2,167,598
Not subject to depletion	Not subject to depletion	1,195,923		1,297,221
Gross oil and natural gas interests	Gross oil and natural gas interests	3,590,476		3,464,819
Accumulated depletion and impairment	Accumulated depletion and impairment	(785,286)		(720,234)
Oil and natural gas interests, net	Oil and natural gas interests, net	2,805,190		2,744,585
Land	Land	5,688		5,688
Property, net of accumulated depletion and impairment	Property, net of accumulated depletion and impairment	$	2,810,878	$	2,750,273

As of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the ~~Partnership~~Company had mineral and royalty interests representing ~~27,178~~34,346 and ~~26,315~~34,217 net royalty acres, respectively.

No impairment expense was recorded on the ~~Partnership’s~~Company’s oil and natural gas interests for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ based on the results of the respective quarterly ceiling tests. In addition to commodity prices, the ~~Partnership’s~~Company’s production rates, levels of proved reserves, transfers of unevaluated properties and other factors will determine its actual ceiling test limitations and impairment analysis in future periods. If the trailing 12-month commodity prices decline as compared to the commodity prices used in prior quarters, the ~~Partnership may~~Company could have material write-downs in subsequent quarters.

6. DEBT

Long-term debt consisted of the following as of the dates indicated:


		June 30,		December 31,
		2023		2022
		(In thousands)
5.375% senior unsecured notes due 2027		$	430,350	$	430,350
	March 31,					March 31,		December 31,
	2024					2024		2023
	(In thousands)						(In thousands)
5.375% Senior unsecured notes due 2027
7.375% Senior unsecured notes due 2031
Revolving credit facility	Revolving credit facility	224,000		152,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(1,171)		(1,306)
Unamortized discount	Unamortized discount	(3,763)		(4,149)
Total long-term debt	Total long-term debt	$	649,416	$	576,895

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

The Operating Company’s Revolving Credit Facility

~~On May 31, 2023, the~~The Operating ~~Company entered into~~Company’s credit facility, as amended to date, provides for a ~~tenth amendment to the existing~~revolving credit ~~agreement, which among other things, (i) maintained~~facility in the maximum credit amount of $2.0 billion ~~(ii) increased the~~and a borrowing base ~~from $580.0 million to $1.0 billion and (iii) increased the elected commitment amount from $500.0 million to $750.0 million~~. of $1.3 billion. The borrowing base is scheduled to be redetermined semi-annually in May and November. As of ~~June 30, 2023,~~March 31, 2024, the Operating Company had ~~$224.0~~elected a commitment amount of $850.0 million, with $273.0 million of outstanding borrowings and ~~$526.0~~$577.0 million available for future borrowings. During the

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~, the weighted average interest rates on the Operating Company’s revolving credit facility were ~~7.53%, 7.24%, 3.20%~~7.65% and ~~2.88%~~6.10%, respectively. The revolving credit f~~acility~~facility will mature on ~~June 2, 2025.~~September 22, 2028.

As of ~~June 30, 2023,~~March 31, 2024, the Operating ~~Company~~ Company was in compliance with the financial maintenance covenants under its credit ~~agreement.~~facility.

7. ~~UNITHOLDERS’~~STOCKHOLDERS’ EQUITY ~~AND DISTRIBUTIONS~~

~~The Partnership has General Partner and limited partner units.~~ At ~~June 30, 2023,~~March 31, 2024, the ~~Partnership~~Company had a total of ~~71,206,622 common units~~91,423,830 shares of Class A Common Stock issued and outstanding and ~~90,709,946~~85,431,453 shares of Class B ~~units~~Common Stock issued and outstanding, of which ~~731,500 common units and 90,709,946~~85,431,453 shares of Class B ~~units~~Common Stock were beneficially owned by Diamondback, representing approximately ~~57%~~48% of the ~~Partnership’s~~Company’s total ~~units~~shares outstanding. ~~At June 30, 2023,~~ Diamondback also beneficially ~~owns 90,709,946~~owned 85,431,453 Operating Company units, representing a ~~56%~~48% non-controlling ownership interest in the Operating ~~Company.~~Company, and the Company owned the remaining 91,423,830 Operating Company units. The Operating Company units and the ~~Partnership’s~~Company’s Class B ~~units~~Common Stock beneficially owned by Diamondback are exchangeable from time to time for the ~~Partnership’s common units~~Company’s Class A Common Stock (that is, one Operating Company unit and one ~~Partnership~~share of the Company’s Class B ~~unit,~~Common Stock, together, will be exchangeable for one ~~Partnership~~share of the Company’s Class A Common Stock).

2023 Viper Issuance of Common Units to Diamondback

In October 2023, the Company issued approximately 7.22 million of its common ~~unit)~~units to Diamondback at a price of $27.72 per unit for a total net proceeds of approximately $200.0 million. The net proceeds of this common unit issuance were used to fund a portion of the cash consideration for the GRP Acquisition.

Common ~~Unit~~Stock Repurchase Program

The Company’s board of directors ~~of the Partnership’s General Partner~~ has ~~approved~~authorized a ~~common unit repurchase program to acquire up to~~ $750.0 million common stock repurchase program, with respect to the repurchase of the ~~Partnership’s~~ ~~outstanding common units,~~Company’s Class A Common Stock, excluding excise tax, over an indefinite period of time. The ~~Partnership~~Company has and intends to continue to purchase ~~common units~~shares of Class A Common Stock under the repurchase program opportunistically with funds from cash on hand, free cash flow from operations and potential liquidity events such as the sale of assets. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Company’s board of directors of ~~the Partnership’s~~ ~~General Partner~~ at any time.

There were no repurchases of Class A Common Stock during the three months ended March 31, 2024. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2023, ~~and 2022,~~ the ~~Partnership~~Company repurchased, excluding excise tax, approximately ~~$24.3~~$32.7 million ~~$57.0 million, $28.9 million and $68.2 million of~~ common units under the repurchase program, respectively. Repurchases for the six months ended June 30, 2022 include approximately $37.3 million for the repurchase of 1.5 million common units from a significant unitholder in a privately negotiated transaction in the first quarter of 2022.program. As of ~~June 30, 2023, $472.4~~March 31, 2024, approximately $434.2 million remains available under the repurchase program, excluding excise tax.

Cash ~~Distributions~~Dividends

The board of directors of the Company has established a dividend policy, whereby the Operating Company distributes all or a portion of its available cash on a quarterly basis to its shareholders (including Diamondback and the Company). The Company in turn distributes all or a portion of the available cash it receives from the Operating Company to shareholders of its Class A Common Stock through base and variable dividends that take into account capital returned to shareholders via its stock repurchase program. The Company’s available cash and the available cash of the Operating Company for each quarter is determined by the board of directors following the end of such quarter.

~~Effective with~~The cash available for distribution by the ~~Partnership’s distribution payable~~Operating Company, a non-GAAP measure, generally equals the Company’s consolidated Adjusted EBITDA for the ~~third~~applicable quarter, ~~of 2022,~~less cash needed for income taxes payable, debt service, contractual obligations, fixed charges and reserves for future operating or capital needs that the board of directors of the ~~General Partner approved a~~Company deems necessary or appropriate, lease bonus income (net of applicable taxes), distribution ~~policy consisting of a base~~equivalent rights payments and ~~variable distribution, that takes into account capital returned to unitholders via our common unit repurchase program.~~preferred dividends, if any. For a detailed description of the ~~Partnership’s~~Company’s and the Operating Company’s ~~distribution~~dividend policy, see Note 7—~~Unitholders’ Equity and Distributions—~~Stockholders’ Equity—Cash ~~Distributions~~Dividends in the ~~Partnership's~~Company's Annual Report on ~~Form~~F orm 10-K for the year ended December 31, ~~2022.~~2023.

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

The percentage of cash available for distribution by the Operating Company pursuant to ~~the~~its distribution policy may change quarterly to enable the Operating Company to retain cash flow to help strengthen the ~~Partnership’s~~Company’s balance sheet while also expanding the return of capital program through the ~~Partnership’s common unit~~Company’s stock repurchase program. The ~~Partnership~~Company is not required to pay ~~distributions~~dividends to its ~~common unitholders~~Class A Common stockholders on a quarterly or other basis.

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

The following table presents information regarding cash ~~distributions approved by the board of directors of the General Partner for~~dividends paid during the periods presented (in thousands, except for per ~~unit~~share amounts):


Period	Period	Amount per Operating Company Unit		Operating Company Distributions to Diamondback		Amount per Common Unit		Distributions to Common Unitholders(1)		Declaration Date	Unitholder Record Date	Payment Date
Q4 2022		$	0.54	$	48,983	$	0.49	$	35,683	February 15, 2023	March 3, 2023	March 10, 2023
Q1 2023		$	0.42	$	38,097	$	0.33	$	23,797	April 26, 2023	May 11, 2023	May 18, 2023

Period

Period														Amount per Operating Company Unit		Operating Company Distributions to Diamondback		Amount per Common Share		Common Stockholders(1)(2)		Declaration Date	Stockholder Record Date	Payment Date
Q4 2023													Q4 2023	$	0.69	$	62,590	$	0.56	$	48,337	February 15, 2024	March 5, 2024	March 12, 2024

Q4 2022

Q4 2022

Q4 2022														$	0.54	$	48,983	$	0.49	$	35,683	February 15, 2023	March 3, 2023	March 10, 2023

(1)~~Includes~~For dividends paid in 2024, includes amounts paid to Diamondback for the 7,946,507 shares of Class A Common Stock then beneficially owned by Diamondback and distribution equivalent rights payments. As of March 31, 2024, Diamondback did not beneficially own any shares of Class A Common Stock. See Note 1—Organization and Basis of Presentation for further details.

(2)For distributions paid in 2023, includes amounts paid to Diamondback for the 731,500 common units then beneficially owned by ~~Diamondback and distribution equivalent rights payments.~~Diamondback.

Cash ~~distributions~~dividends will be made to the common ~~unitholders~~stockholders of record on the applicable record date, generally within 60 days after the end of each quarter.

Change in Ownership of Consolidated Subsidiaries

Non-controlling interest in the accompanying condensed consolidated financial statements represents Diamondback’s ownership in the net assets of the Operating Company. Diamondback’s relative ownership interest in the Operating Company can change due to its purchase or sale of the ~~Partnership’s~~Company’s Common Stock, the Company’s public offerings of shares of Class A Common Stock, issuance of ~~units~~shares of Class A Common Stock for acquisitions, ~~issuance of unit-based~~share-based compensation, repurchases of ~~common units~~shares of Class A Common Stock and distribution equivalent rights paid on the ~~Partnership’s units.~~Company’s Class A Common Stock. These changes in ownership percentage result in adjustments to non-controlling interest and ~~common unitholder~~stockholders’ equity, tax effected, but do not impact earnings.

The following table summarizes the changes in ~~common unitholder~~stockholders’ equity due to changes in ownership interest during the period:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(In thousands)
Net income (loss) attributable to the Partnership $ 30,550 $ 34,022 $ 64,517 $ 50,627
Change in ownership of consolidated subsidiaries 16,749 11,523 28,198 25,718
Change from net income (loss) attributable to the Partnership's unitholders and transfers to non-controlling interest $ 47,299 $ 45,545 $ 92,715 $ 76,345


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Net income (loss) attributable to the Company	$	43,360	$	33,967

Change in ownership of consolidated subsidiaries	69,753		11,449




Change from net income (loss) attributable to the Company's stockholders and transfers with non-controlling interest	$	113,113	$	45,416

8. EARNINGS PER COMMON ~~UNIT~~SHARE

The net income (loss) per common ~~unit~~share on the condensed consolidated statements of operations is based on the net income (loss) attributable to the ~~Partnership’s~~Company’s Class A Common Stock or common units for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022. The Partnership’s net income (loss) is allocated wholly to the common units, as the General Partner does not have an economic interest.~~respectively.

Basic and diluted earnings per common ~~unit is~~share are calculated using the two-class method. The ~~two class~~two-class method is an earnings allocation proportional to the respective ownership among holders of ~~common units~~Class A Common Stock and participating securities. Basic net income (loss) per common ~~unit~~share is calculated by dividing net income (loss) by the weighted-average ~~number of common units outstanding during the period. Diluted net income (loss) per common unit gives effect, when applicable, to unvested common units granted under the LTIP.~~

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

of Class A Common Stock or common units outstanding during the period. Diluted net income (loss) per common share gives effect, when applicable, to unvested shares of Class A Common Stock granted under the LTIP.

A reconciliation of the components of basic and diluted earnings per common ~~unit~~share is presented in the table below:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(In thousands, except per unit amounts)
Net income (loss) attributable to the period $ 30,550 $ 34,022 $ 64,517 $ 50,627
Less: distributed and undistributed earnings allocated to participating securities(1)
56 113 123 177
Net income (loss) attributable to common unitholders $ 30,494 $ 33,909 $ 64,394 $ 50,450
Weighted average common units outstanding:
Basic weighted average common units outstanding 71,771 76,620 72,249 76,861
Effect of dilutive securities:
Potential common units issuable(2)
— 109 — 117
Diluted weighted average common units outstanding 71,771 76,729 72,249 76,978
Net income (loss) per common unit, basic $ 0.42 $ 0.44 $ 0.89 $ 0.66
Net income (loss) per common unit, diluted $ 0.42 $ 0.44 $ 0.89 $ 0.66


	Three Months Ended March 31,
	2024		2023
	(In thousands, except per share amounts)
Net income (loss) attributable to the period	$	43,360	$	33,967
Less: distributed and undistributed earnings allocated to participating securities(1)	56		72
Net income (loss) attributable to common stockholders	$	43,304	$	33,895
Weighted average common shares outstanding:
Basic weighted average common shares outstanding	87,537		72,732
Effect of dilutive securities:
Potential common shares issuable(2)	92		83
Diluted weighted average common shares outstanding	87,629		72,815
Net income (loss) per common share, basic	$	0.49	$	0.47
Net income (loss) per common share, diluted	$	0.49	$	0.47

(1) Unvested restricted stock units and performance restricted stock units that contain non-forfeitable distribution equivalent rights granted are considered participating securities and are therefore ~~are~~ included in the earnings per ~~unit~~share calculation pursuant to the two-class method.

(2) For the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ there were no other significant potential common ~~units~~shares excluded from the computation of diluted earnings per common ~~unit because their inclusion would have been anti-dilutive.~~share.

9. INCOME TAXES

The following table provides the ~~Partnership’s~~Company’s provision for (benefit from) income taxes and the effective income tax rate for the dates indicated:


		Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
		(In thousands, except for tax rate)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		(In thousands, except for tax rate)
		(In thousands, except for tax rate)
		(In thousands, except for tax rate)
Provision for (benefit from) income taxes	Provision for (benefit from) income taxes	$	8,450		$	6,182		$	17,856		$	8,812
Effective tax rate	Effective tax rate	9.6		%	3.5		%	9.6		%	2.9		%
Effective tax rate
Effective tax rate

The ~~Partnership’s~~Company’s effective income tax rate for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and March 31, 2023 differed from the amount computed by applying the United States federal statutory tax rate to pre-tax income for the period primarily due to net income attributable to the non-controlling interest. The Partnership’s effective income tax rate for the three and six months ended June 30, 2022 differed from the amount computed by applying the United States federal statutory tax rate to pre-tax income for the period primarily due to net income attributable to the non-controlling interest and the impact of maintaining a valuation allowance on the Partnership’s deferred tax assets.

As of ~~June 30,~~March 31, 2024 and 2023, the ~~Partnership~~Company maintained a partial valuation allowance against its deferred tax assets considered not more likely than not to be realized, based on its assessment of all available evidence, both positive and negative as required by applicable accounting standards.

As During the three months ended March 31, 2024, Diamondback converted approximately 5.28 million shares of ~~June 30, 2022,~~ the ~~Partnership had~~Company’s Class B Common Stock along with 5.28 million Operating Company units into an equivalent number of shares of Class A Common Stock. In connection with this transaction, the Company recognized a ~~full valuation allowance against~~$28.2 million increase in its deferred tax ~~assets, based on~~asset and a $10.8 million increase in its ~~assessment of all available evidence, both positive and negative, supporting realizability of the Partnership’s deferred tax assets.~~valuation allowance through additional paid-in capital.

The Inflation Reduction Act of 2022 (“IRA”) was enacted on August 16, 2022, and imposed an excise tax of 1% on the fair market value of certain public company stock/unit repurchases for tax years beginning after December 31, 2022, and included several other provisions applicable to U.S. income taxes for corporations. The Partnership’sCompany incurred no excise tax during the three ~~and six~~ months ended ~~June 30, 2023 was~~March 31, 2024 and an immaterial ~~and is recognized as part~~amount of excise tax for the ~~cost basis of the units repurchased.~~three months ended March 31, 2023.

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

10. DERIVATIVES

All derivative financial instruments are recorded at fair value. The ~~Partnership~~Company has not designated its derivative instruments as hedges for accounting purposes and, as a result, marks its derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the condensed consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”

Commodity Contracts

The ~~Partnership~~Company historically has used fixed price swap contracts, fixed price basis swap contracts and costless collars with corresponding put and call options to reduce price volatility associated with certain of its royalty income. At ~~June 30, 2023,~~March 31, 2024, the ~~Partnership~~Company has put options, costless collars and fixed price basis swaps outstanding.

The ~~Partnership’s~~Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with put contracts for oil based on WTI Cushing and fixed price basis swaps for oil based on the spread between the WTI Cushing crude oil price and the Argus WTI Midland crude oil price. The ~~Partnership’s~~Company’s fixed price basis swaps for natural gas are for the spread between the Waha Hub natural gas price and the Henry Hub natural gas price. The weighted average differential represents the amount of reduction to the WTI Cushing oil price and the Waha Hub natural gas price for the notional volumes covered by the basis swap contracts. Under the Company’s costless collar contracts, each collar has an established floor price and ceiling price. When the settlement price is below the floor price, the counterparty is required to make a payment to the Company, and when the settlement price is above the ceiling price, the Company is required to make a payment to the counterparty. When the settlement price is between the floor and the ceiling, there is no payment required.

By using derivative instruments to economically hedge exposure to changes in commodity prices, the ~~Partnership~~Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the ~~Partnership,~~Company, which creates credit risk. The ~~Partnership’s~~Company’s counterparties are all participants in the amended and restated credit ~~agreement,~~facility, which is secured by substantially all of the assets of the Operating Company; therefore, the ~~Partnership~~Company is not required to post any collateral. The ~~Partnership’s~~Company’s counterparties have been determined to have an acceptable credit risk; therefore, the ~~Partnership~~Company does not require collateral from its counterparties.

As of ~~June 30, 2023,~~March 31, 2024, the ~~Partnership~~Company had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed.


						Swaps	Puts
						Swaps
						Swaps
						Swaps										Collars		Puts
Settlement Month	Settlement Month	Settlement Year	Type of Contract	Bbls/Mcf Per Day	Index	Weighted Average Differential		Strike Price	Deferred Premium	Settlement Month	Settlement Year	Type of Contract	Bbls/MMBtu Per Day	Index	Weighted Average Differential	Weighted Average Floor Price	Weighted Average Ceiling Price	Strike Price	Deferred Premium
OIL	OIL
Apr. - Jun.
Apr. - Jun.
Apr. - Jun.											2024	Puts	14,000	WTI Cushing	$—	$—	$—	$59.29	$(1.51)
Jul. - Sep.	Jul. - Sep.	2023	Puts	12,000	WTI Cushing	$—		$55.00	$1.80	Jul. - Sep.	2024	Puts	16,000	WTI Cushing	$—	$—	$—	$55.00	$(1.65)
Oct. - Dec.	Oct. - Dec.	2023	Puts	12,000	WTI Cushing	$—		$55.00	$1.85	Oct. - Dec.	2024	Puts	16,000	WTI Cushing	$—	$—	$—	$55.00	$(1.70)

Apr. - Jun.										Apr. - Jun.	2024	Costless Collar	6,000	WTI Cushing	$—	$65.00	$95.55	$—
Jul. - Dec.	Jul. - Dec.	2023	Basis Swaps	4,000	Argus WTI Midland	$1.05		$—	$—	Jul. - Dec.	2024	Costless Collar	4,000	WTI Cushing	$—	$55.00	$93.66	$—
NATURAL GAS	NATURAL GAS
Jul. - Dec.		2023	Basis Swaps	30,000	Waha Hub	$(1.33)		$—	$—
Apr. - Dec.
Apr. - Dec.
Apr. - Dec.											2024	Basis Swaps	30,000	Waha Hub	$(1.20)	$—	$—
Jan. - Dec.	Jan. - Dec.	2024	Basis Swaps	30,000	Waha Hub	$(1.20)		$—	$—	Jan. - Dec.	2025	Basis Swaps	40,000	Waha Hub	$(0.68)	$—	$—

Table of Contents

Viper Energy, Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

Balance Sheet Offsetting of Derivative Assets and Liabilities

The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 11—Fair Value Measurements for further details.

~~Table of Contents~~

~~Viper Energy Partners LP~~

~~Condensed Notes to Consolidated Financial Statements - (Continued)~~

~~(Unaudited)~~

Gains and Losses on Derivative Instruments

The following table summarizes the gains and losses on derivative instruments included in the condensed consolidated statements of operations and the net cash receipts (payments) on derivatives for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
(In thousands)
Gain (loss) on derivative instruments $ (12,594) $ (1,889) $ (27,697) $ (20,248)
Net cash receipts (payments) on derivatives(1)
$ (3,997) $ (6,765) $ (6,212) $ (17,029)

~~(1)The six months ended June 30, 2022 includes cash paid on commodity contracts terminated prior to their contractual maturity of $4.2 million.~~


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Gain (loss) on derivative instruments	$	(7,492)	$	(15,103)
Net cash receipts (payments) on derivatives	$	(2,754)	$	(2,215)

11. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As discussed in ~~Note~~No te 11—Fair Value Measurements in the ~~Partnership's~~Company's Annual Report on Form 10-Kfor the year ended December 31, ~~2022,~~2023, certain assets and liabilities are reported at fair value on a recurring basis on the ~~Partnership��s~~Company’s condensed consolidated balance sheets, including the ~~Partnership’s~~Company’s derivative instruments. The fair values of the ~~Partnership’s~~Company’s derivative contracts are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third party, the contracted notional volumes, and time to maturity. These valuations are Level 2 inputs in the fair value hierarchy. The net amounts are classified as current or noncurrent based on their anticipated settlement dates.

The following table provides (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented in the ~~Partnership’s~~Company’s condensed consolidated balance sheets as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		As of June 30, 2023
		Level 1		Level 2		Level 3		Total Gross Fair Value		Gross Amounts Offset in Balance Sheet		Net Fair Value Presented in Balance Sheet
		(In thousands)
	As of March 31, 2024																		As of March 31, 2024
	Level 1													Level 1	Level 2	Level 3	Total Gross Fair Value	Gross Amounts Offset in Balance Sheet	Net Fair Value Presented in Balance Sheet
	(In thousands)																		(In thousands)
Assets:	Assets:
Current:	Current:
Current:
Current:
Derivative instruments
Derivative instruments
Derivative instruments
Non-current:

Derivative instruments	Derivative instruments	$	—	$	1,541	$	—	$	1,541	$	(1,541)	$	—

Derivative instruments

Derivative instruments
Liabilities:	Liabilities:
Current:	Current:
Current:
Current:
Derivative instruments
Derivative instruments
Derivative instruments	Derivative instruments	$	—	$	9,890	$	—	$	9,890	$	(1,541)	$	8,349
Non-current:	Non-current:
Derivative instruments	Derivative instruments	$	—	$	3,373	$	—	$	3,373	$	—	$	3,373
Derivative instruments
Derivative instruments

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)


		As of December 31, 2022
		Level 1		Level 2		Level 3		Total Gross Fair Value		Gross Amounts Offset in Balance Sheet		Net Fair Value Presented in Balance Sheet
		(In thousands)
	As of December 31, 2023																		As of December 31, 2023
	Level 1													Level 1	Level 2	Level 3	Total Gross Fair Value	Gross Amounts Offset in Balance Sheet	Net Fair Value Presented in Balance Sheet
	(In thousands)																		(In thousands)
Assets:	Assets:
Current:	Current:
Current:
Current:
Derivative instruments
Derivative instruments
Derivative instruments	Derivative instruments	$	—	$	13,296	$	—	$	13,296	$	(3,968)	$	9,328
Non-current:	Non-current:

Derivative instruments	Derivative instruments	$	—	$	1,911	$	—	$	1,911	$	(1,469)	$	442

Derivative instruments

Derivative instruments
Liabilities:	Liabilities:
Current:	Current:
Current:
Current:
Derivative instruments
Derivative instruments
Derivative instruments	Derivative instruments	$	—	$	3,968	$	—	$	3,968	$	(3,968)	$	—
Non-current:	Non-current:
Derivative instruments	Derivative instruments	$	—	$	1,476	$	—	$	1,476	$	(1,469)	$	7
Derivative instruments
Derivative instruments

Assets and Liabilities Not Recorded at Fair Value

The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets:

June 30, 2023

December 31, 2022

Carrying Value

Fair Value

Carrying Value

Fair Value

(In thousands)

March 31, 2024

December 31, 2023

Carrying Value

Fair Value

Carrying Value

Fair Value

(In thousands)

Debt:

Revolving credit facility

224,000

152,000

5.375% senior notes due 2027(1)

425,416

413,097

424,895

411,634

Revolving credit facility

5.375% senior unsecured notes due 2027(1)

7.375% senior unsecured notes due 2031(1)

(1) The carrying value includes associated deferred loan costs and any discount.

The fair value of the Operating Company’s revolving credit facility approximates the carrying value based on borrowing rates available to the ~~Partnership~~Company for bank loans with similar terms and maturities and is classified as Level 2 in the fair value hierarchy. The fair value of the Notes was determined using the ~~June 30, 2023~~ quoted market price at each period end, a Level 1 classification in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include mineral and royalty interests acquired in asset acquisitions and subsequent write-downs of ~~our~~the Company’s proved oil and natural gas interests to fair value when they are impaired or held for sale.

Fair Value of Financial Assets

The ~~Partnership~~Company has other financial instruments consisting of cash and cash equivalents, royalty income receivable, income tax receivable, prepaid expenses, other ~~current~~ assets, accounts payable, accrued liabilities and income taxes payable. The carrying value of these instruments approximate their fair value because of the short-term nature of the instruments.

Table of Contents

Viper Energy, ~~Partners LP~~Inc.

Condensed Notes to Consolidated Financial Statements - (Continued)

(Unaudited)

12. COMMITMENTS AND CONTINGENCIES

The ~~Partnership~~Company is a party to various routine legal proceedings, disputes and claims from time to time arising in the ordinary course of its business. While the ultimate outcome of the pending proceedings, disputes or claims, and any resulting impact on the ~~Partnership,~~Company cannot be predicted with certainty, the ~~Partnership’s~~Company’s management believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the ~~Partnership’s~~Company’s financial condition, results of operations or cash flows. The ~~Partnership’s~~Company’s assessment is based on information known about the pending matters and its experience in contesting, litigating and settling similar matters. Actual outcomes could differ materially from the ~~Partnership’s~~Company’s assessment. The ~~Partnership~~Company records reserves for contingencies related to outstanding legal proceedings, disputes or claims when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated.

13. SUBSEQUENT EVENTS

Cash ~~Distribution~~Dividend

On ~~July~~April 25, ~~2023,~~2024, the board of directors of the ~~General Partner~~Company approved ~~an increase to the Partnership’s annual base~~a cash dividend ~~to $1.08 per common unit beginning with the distribution payable~~ for the ~~second~~first quarter of ~~2023,~~2024 of $0.59 per share of Class A Common Stock and ~~a cash distribution for the second quarter of 2023 of $0.36~~$0.70 per ~~common~~Operating Company unit, ~~and $0.44 per Class B unit,~~in each case, payable on ~~August 17, 2023,~~May 22, 2024, to ~~eligible unitholders~~holders of record at the close of business on ~~August 10, 2023. For the second quarter of 2023, the distribution to common unitholders~~May 15, 2024. The dividend on Class A Common Stock consists of a base quarterly ~~distribution~~dividend of $0.27 per ~~common unit~~share and a variable quarterly ~~distribution~~dividend of ~~$0.09~~$0.32 per ~~common unit.~~share.

Divestiture of Non-Permian Assets

On May 1, 2024, the Company divested all of its non-Permian assets for a purchase price of approximately $90.3 million, subject to customary post-closing adjustments. The divested properties consisted of approximately 2,726 net royalty acres with current production of approximately 450 BO/d.

Table of Contents

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On November 13, 2023, we converted from a Delaware limited partnership to a Delaware corporation. See Note 1—Organization and Basis of Presentation of the notes to the condensed consolidated financial statements for additional discussion of the Conversion. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto presented in this report as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. See Part II. Item 1A. Risk Factors and Cautionary Statement Regarding Forward-Looking Statements.

Overview

We are a publicly traded Delaware ~~limited partnership formed by Diamondback to own~~corporation focused on owning and ~~acquire~~acquiring mineral and royalty interests in oil and natural gas properties primarily in the Permian Basin. We operate in one reportable segment. ~~Since May 10, 2018, we have been treated as a corporation for U.S. federal income tax purposes.~~

Recent Developments

Divestiture of Non-Permian Assets

On May 1, 2024 we divested all of our non-Permian assets for a purchase price of approximately $90.3 million, subject to customary post-closing adjustments. The divested properties consisted of approximately 2,726 net royalty acres with current production of approximately 450 BO/d.

Diamondback Offering

On March 8, 2024, Diamondback completed the Diamondback Offering, whichreduced its beneficial ownership to approximately 48% of our total Common Stock outstanding. As a result, we have ceased to be a “controlled company” under the Nasdaq Rules. See Note 1—Organization and Basis of Presentation of the notes to the condensed consolidated financial statements for further detail.

Acquisitions Update

In the first quarter of 2024, we acquired, in individually insignificant transactions from unrelated third-party sellers, mineral and royalty interests representing 131 net royalty acres in the Midland Basin for an aggregate purchase price of approximately $32.0 million, subject to customary post-closing adjustments.

At March 31, 2024, our footprint of mineral and royalty interests totaled 34,346 net royalty acres, approximately 49% of which are operated by Diamondback.

Commodity Prices

Prices for oil, natural gas and natural gas liquids are determined primarily by prevailing market conditions. Regional and worldwide economic activity, ~~including any economic downturn or recession that has occurred or may occur in the future,~~ extreme weather conditions and other substantially variable factors influence market conditions for these products. These factors are beyond our control and are difficult to predict. During the first half of 2023 and 2022, the NYMEX WTI price averaged $74.77 and $101.77 per Bbl, respectively, and NYMEX Henry Hub price averaged $2.54 and $6.04 per MMBtu, respectively. The war in Ukraine, rising interest rates, global supply chain disruptions, concerns about a potential economic downturn or recession, measures to combat persistent inflation and instability in the financial sector have contributed to recent economic and pricing volatility and may continue to impact pricing throughout 2023. Additionally, OPEC and its non-OPEC allies, known collectively as OPEC+, ~~continues~~continue to meet regularly to evaluate the state of global oil supply, demand and inventory ~~levels.~~levels and can heavily influence volatility in oil prices. During the three months ended 2024 and 2023, NYMEX WTI prices averaged $76.91 and $75.99 per Bbl, respectively, and NYMEX Henry Hub prices averaged $2.10 and $2.74 per MMBtu, respectively.

~~Cash Distribution Update~~

On July 25, 2023, the board of directors of the General Partner approved an increase to the Partnership’s annual base dividend to $1.08 per common unit beginning with our distribution payable for the second quarter of 2023.

~~Intent to Convert into Corporate Structure~~

On July 31, 2023, we announced our intent to convert our legal status from a Delaware limited partnership into a Delaware corporation. The conversion is expected to be completed by or before December 31, 2023. After the conversion, it is expected that our current limited partners would own the same percentage of the corporation’s outstanding shares as they currently own of the Partnership’s outstanding equity interests.

In connection with the conversion, we intend to adopt a corporate governance structure designed to meet the eligibility requirements for certain indices and benchmarks, which we believe would further broaden our investor base and improve our trading liquidity, although no assurances can be provided regarding inclusion in any such index or benchmark. Because we are already treated as a corporation for U.S. federal income tax purposes, we expect that the conversion of our entity form into a Delaware corporation will not impact the current tax treatment for the Partnership’s current public common unitholders.

Upon conversion, it is intended that our common stockholders will have the ability to vote on all matters on which stockholders of a corporation are generally entitled to vote under the Delaware General Corporation Law, including the election of our board of directors. Immediately following the proposed conversion, we would be a “controlled company” under the Nasdaq rules because Diamondback would own more than 50% of the voting power of our common stock. In addition, Diamondback intends to continue to provide general and administrative services to us post-conversion in substantially the same manner as Diamondback currently provides. At or around the actual conversion, we intend to provideFor additional information ~~regarding the post-conversion structural arrangements, including the terms of our post-conversion governing documents~~around risks related to commodity prices, see Part II. Item 3. Quantitative and the arrangements providing for Diamondback’s provision of services to us post-conversion. It is expected that post-conversion, our publicly traded common stock will be traded on Nasdaq under the existing ticker symbol “VNOM.”Qualitative Disclosures About Market Risk—Commodity Price Risk.

Table of Contents

Guidance

The following table presents our current estimates of certain financial and operating results for the full year, as well as production and cash tax guidance for the second quarter of 2024, giving effect to the loss of approximately 450 BO/d of production from the non-Permian assets for the remainder of 2024 following the divestiture completed on May 1, 2024.


			2024 Guidance
Q2 2024 net production - MBO/d			26.00 - 26.50
Q2 2024 net production - MBOE/d			46.50 - 47.25
Full year 2024 net production - MBO/d			25.75 - 26.75
Full year 2024 net production - MBOE/d			46.00 - 48.00

Costs ($/BOE)
Depletion			$11.00 - $11.50

Cash general and administrative expenses			$1.00 - $1.20
Non-cash share-based compensation			$0.10 - $0.15
Interest expense			$4.25 - $4.50

Production and ad valorem taxes (% of revenue)			~7%
Cash tax rate (% of pre-tax income attributable to Viper Energy, Inc.)			20% - 22%
Q2 2024 cash taxes ($ - million)(1)			$13.0 - $18.0

(1)Attributable to Viper Energy, Inc.

Production and Operational Update

~~Our footprint~~As of ~~mineral and royalty interests totaled 27,178 net royalty acres, approximately 58% of which~~March 31, 2024, there are operated by Diamondback, as of June 30, 2023. Continuing the trend of increasing production, average oil production per day during the second quarter of 2023 was the highest in the Partnership’s history. There are currently 4768 rigs operating on our mineral and royalty acreage, ~~eight~~10 of which are operated by Diamondback. AsDespite commodity prices declining during the quarter, our continued production growth, along with what we believe is a ~~result of the continued outperformance of~~best-in-class cost structure, allowed for us to increase our cash available for dividends per share quarter over quarter. We continue to see strong activity levels across our acreage position and expect that production ~~goals, we have increased our third quarter 2023 oil production guidance by approximately four percent at midpoint compared to average daily oil production in~~growth will continue beyond the second quarter, ~~of 2023. Due to Diamondback’s consistent focus on developing~~as is reflected in our ~~high concentration royalty acreage, primarily in the Northern Midland Basin, we expect our Diamondback-operated~~revised full year ~~2023 oil production to increase by over 15% compared to 2022, with a further increase of approximately 10% expected for the full year 2024.~~guidance above.

Table of Contents

The following table summarizes our gross well information for the ~~second~~first quarter ended ~~June 30, 2023:~~March 31, 2024:


		Diamondback Operated		Third Party Operated		Total
	Diamondback Operated										Diamondback Operated				Third Party Operated				Total
Horizontal wells turned to production(1):	Horizontal wells turned to production(1):
Gross wells
Gross wells
Gross wells	Gross wells	81		204		285		68				307				375
Net 100% royalty interest wells	Net 100% royalty interest wells	3.9		2.0		5.9		Net 100% royalty interest wells	3.7				3.3				7.0
Average percent net royalty interest	Average percent net royalty interest	4.8	%	1.0	%	2.1	%	Average percent net royalty interest	5.4	%			1.1	%			1.9	%

Horizontal producing well count:	Horizontal producing well count:
Horizontal producing well count:
Horizontal producing well count:
Gross wells
Gross wells
Gross wells	Gross wells	1,653		4,189		5,842		1,913				9,673				11,586
Net 100% royalty interest wells	Net 100% royalty interest wells	120.8		68.1		188.9		Net 100% royalty interest wells	131.6				110.3				241.9
Average percent net royalty interest	Average percent net royalty interest	7.3	%	1.6	%	3.2	%	Average percent net royalty interest	6.9	%			1.1	%			2.1	%

Horizontal active development well count(2):	Horizontal active development well count(2):
Horizontal active development well count(2):
Horizontal active development well count(2):
Gross wells
Gross wells
Gross wells	Gross wells	110		353		463		112				648				760
Net 100% royalty interest wells	Net 100% royalty interest wells	6.5		2.9		9.4		Net 100% royalty interest wells	5.7				8.1				13.8
Average percent net royalty interest	Average percent net royalty interest	5.9	%	0.8	%	2.0	%	Average percent net royalty interest	5.1	%			1.2	%			1.8	%

Line of sight wells(3):	Line of sight wells(3):
Line of sight wells(3):
Line of sight wells(3):
Gross wells
Gross wells
Gross wells	Gross wells	206		371		577		172				578				750
Net 100% royalty interest wells	Net 100% royalty interest wells	12.3		5.6		17.9		Net 100% royalty interest wells	11.3				7.4				18.7
Average percent net royalty interest	Average percent net royalty interest	6.0	%	1.5	%	3.1	%	Average percent net royalty interest	6.6	%			1.3	%			2.5	%

(1) Average lateral length of ~~11,403.~~10,872.

(2) The total ~~463~~760 gross wells currently in the process of active development are those wells that have been spud and are expected to be turned to production within approximately the next six to eight months.

(3) The total ~~577~~750 gross line-of-sight wells are those that are not currently in the process of active development, but for which we have reason to believe that they will be turned to production within approximately the next 15 to 18 months. The expected timing of these line-of-sight wells is based primarily on permitting by third party operators or Diamondback’s current expected completion schedule. Existing permits or active development of our royalty acreage does not ensure that those wells will be turned to production given the volatility in oil prices.

1819

Table of Contents

Comparison of the Three Months Ended ~~June 30, 2023~~March 31, 2024 and ~~March~~December 31, 2023

Results of Operations

The following table summarizes our income and expenses for the periods indicated:

Three Months Ended

March 31, 2024

Three Months Ended

June 30, 2023

March 31, 2023

(In thousands)

Operating income:

Oil income

139,300

136,619

Natural gas income

5,090

8,991

Natural gas income

Natural gas liquids income

13,807

15,475

Royalty income

158,197

161,085

Royalty income

Lease bonus income—related party

1,277

7,071

Lease bonus income—related party

Lease bonus income

1,134

400

Other operating income

179

402

Other operating income

Total operating income

160,787

168,958

Costs and expenses:

Production and ad valorem taxes

12,621

12,887

Production and ad valorem taxes

Depletion

34,064

30,987

General and administrative expenses

2,008

2,764

General and administrative expenses

Other operating expense

Total costs and expenses

48,693

46,638

Income (loss) from operations

112,094

122,320

Income (loss) from operations

Other income (expense):

Interest expense, net

(11,291)

(9,686)

Gain (loss) on derivative instruments, net

(12,594)

(15,103)

Gain (loss) on derivative instruments, net

Other income, net

172

141

Total other expense, net

(23,713)

(24,648)

Total other expense, net

Income (loss) before income taxes

88,381

97,672

Provision for (benefit from) income taxes

8,450

9,406

Provision for (benefit from) income taxes

Net income (loss)

79,931

88,266

Net income (loss) attributable to non-controlling interest

49,381

54,299

Net income (loss) attributable to Viper Energy Partners LP

30,550

33,967

Net income (loss) attributable to non-controlling interest

Net income (loss) attributable to Viper Energy, Inc.

1920

Table of Contents

The following table summarizes our production data, average sales prices and average costs for the periods indicated:

Three Months Ended

June 30, 2023

March 31, 2023

Three Months Ended

March 31, 2024

Production data:

Oil (MBbls)

1,924

1,810

Oil (MBbls)

Natural gas (MMcf)

4,685

4,224

Natural gas liquids (MBbls)

724

633

Natural gas liquids (MBbls)

Combined volumes (MBOE)(1)

3,429

3,147

Average daily oil volumes (BO/d)

21,143

20,111

Average daily oil volumes (BO/d)

Average daily combined volumes (BOE/d)

37,681

34,967

Average sales prices:

Oil ($/Bbl)

72.40

75.48

Natural gas ($/Mcf)

1.09

2.13

Natural gas liquids ($/Bbl)(3)

19.07

24.45

Natural gas ($/Mcf)

Natural gas liquids ($/Bbl)

Combined ($/BOE)(2)

46.14

51.19

Oil, hedged ($/Bbl)(3)

71.39

74.30

Oil, hedged ($/Bbl)(3)

Natural gas, hedged ($/Mcf)(3)

0.65

2.11

Natural gas liquids ($/Bbl)(3)

19.07

24.45

Natural gas liquids ($/Bbl)(3)

Combined price, hedged ($/BOE)(3)

44.97

50.48

Average costs ($/BOE):

Production and ad valorem taxes

3.68

4.10

General and administrative - cash component(4)

0.51

0.76

Production and ad valorem taxes

General and administrative - cash component

Total operating expense - cash

4.19

4.86

General and administrative - non-cash unit compensation expense

0.08

0.12

General and administrative - non-cash stock compensation expense

Interest expense, net

3.29

3.08

Depletion

9.93

9.85

Depletion

(1)Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.

(2)Realized price net of all deducts for gathering, transportation and processing.

(3)Hedged prices reflect the impact of cash settlements of our matured commodity derivative transactions on our average sales prices.

~~(4)Excludes non-cash unit-based compensation expense for the respective periods presented.~~

Royalty Income

Our royalty income is a function of oil, natural gas and natural gas liquids production volumes sold and average prices received for those volumes.

Royalty income ~~decreased~~increased by $2.9 million during the ~~second~~first quarter of ~~2023~~2024 compared to the fourth quarter of 2023. This increase consisted of (i) an additional $6.2 million attributable to the 4.2% increase in production volumes, which is primarily due to including production from the GRP acquisition for a full quarter in 2024, and (ii) a reduction of $3.3 million attributable to lower average oil and natural gas prices received for our production during the first quarter of ~~2023. Changes in average pricing contributed~~2024 compared to ~~approximately $14.7 million of~~ the ~~total decrease due to lower average prices for oil, natural gas and natural gas liquids received for our production in the second~~fourth quarter of 2023. The impact of lower pricing was partially offset by an increase of $11.8 million in royalty income due to 9% growth in production in the second quarter of 2023 compared to the first quarter of 2023, which resulted primarily from new well development in areas where Viper has a higher royalty interest.

2021

Table of Contents

Lease Bonus Income-Related Party

Lease bonus income from Diamondback decreased ~~$5.8~~by $2.1 million due ~~primarily~~ to receiving payment for ~~two~~only one new lease covering 40 net mineral acres in Martin County, Texas, in the first quarter of 2024, compared to receiving payment for five new leases ~~and two lease extensions~~ covering approximately 165 net mineral acres in Martin, Midland and Pecos Counties; Texas, in the ~~second~~fourth quarter of ~~2023 compared~~2023.

See Note 2—Summary of Significant Accounting Policies of the notes to ~~receiving payment~~the condensed consolidated financial statements for ~~one lease covering approximately 257 net mineral acres in Martin County, TX from Diamondback in the first quarter of 2023.~~further detail.

Production and Ad Valorem Taxes

The following table presents production and ad valorem taxes for the ~~three months ended June 30, 2023 and March 31, 2023~~periods indicated:


		Three Months Ended
		June 30, 2023						March 31, 2023
		Amount (In thousands)		Per BOE		Percentage of Royalty Income		Amount (In thousands)		Per BOE		Percentage of Royalty Income
	Three Months Ended																													Three Months Ended
	March 31, 2024																						March 31, 2024									December 31, 2023
	Amount (In thousands)																	Amount (In thousands)				Per BOE				Percentage of Royalty Income			Amount (In thousands)				Per BOE			Percentage of Royalty Income
Production taxes	Production taxes	$	7,807	$	2.28	5.0	%	$	8,177	$	2.60	5.1	%	Production taxes	$	10,344	$		$	2.46	5.0			5.0	%		$	10,100	$		$	2.51	5.0	5.0	%
Ad valorem taxes	Ad valorem taxes	4,814		1.40		3.0		4,710		1.50		2.9
Total production and ad valorem taxes	Total production and ad valorem taxes	$	12,621	$	3.68	8.0	%	$	12,887	$	4.10	8.0	%	Total production and ad valorem taxes	$	14,406	$		$	3.43	7.0			7.0	%		$	12,607	$		$	3.13	6.2	6.2	%

In general, production taxes are directly related to production revenues and are based upon current year commodity prices. Production taxes as a percentage of royalty income for the ~~second~~first quarter of ~~2023~~2024 were consistent with the ~~first~~fourth quarter of 2023.

Ad valorem taxes are based, among other factors, on property values driven by prior year commodity ~~prices, and were also consistent for the second quarter of 2023 compared to~~prices. The increase in the first quarter of ~~2023.~~2024 compared to the fourth quarter of 2023 was primarily due to the fourth quarter of 2023 including $1.2 million in reductions to the full year 2023 accrual for ad valorem taxes to reflect actual tax assessments received. The remaining increase in ad valorem taxes is primarily due to higher valuations assigned to our oil and natural gas interests period over period driven by higher average commodity prices and royalty income in 2024.

Depletion

The ~~$3.1~~$2.1 million increase in depletion expense for the ~~second~~first quarter of ~~2023~~2024 compared to the ~~first~~fourth quarter of 2023 was due primarily to production growth between the periods. The average depletion rate ~~also increased slightly to $9.93~~was relatively consistent at $11.18 per BOE for the ~~second~~first quarter of ~~2023~~2024 compared to ~~$9.85~~$11.12 per BOE for the ~~first~~fourth quarter of 2023.

Derivative Instruments

The following table shows the net gain (loss) on derivative instruments and the net cash receipts (payments) on derivatives for the periods presented:

Three Months Ended

June 30, 2023

March 31, 2023

(In thousands)

Three Months Ended

March 31, 2024

(In thousands)

Gain (loss) on derivative instruments

(12,594)

(15,103)

Net cash receipts (payments) on derivatives

(3,997)

(2,215)

We recorded losses on our derivative instruments for the three months ended June 30, 2023 and March 31, 2023 primarily due to a decrease in the differential spread compared to contract terms on our natural gas basis swaps. We are required to recognize all derivative instruments on our balance sheet as either assets or liabilities measured at fair value. See Note 10—Derivatives of the notes to the condensed consolidated financial statements for additional discussion of our open contracts at ~~June 30, 2023.~~March 31, 2024.

Provision for (Benefit from) Income Taxes

The ~~$1.0~~$6.3 million ~~decrease~~increase in income tax expense for the ~~second~~first quarter of ~~2023~~2024 compared to the ~~first~~fourth quarter of 2023 is primarily due to the fourth quarter of 2023 including the impact of a $7.0 million reduction in the valuation allowance on our deferred tax assets. Additionally, the decrease in ~~pre-tax~~net income between the first quarter of 2024 and the fourth quarter of 2023

Table of Contents

was largely offset by changes in net income attributable to the ~~Partnership.~~non-controlling interest as a result of a decrease in Diamondback’s ownership percentage in us after the Diamondback Offering. See Note 9—Income Taxes of the notes to the condensed consolidated financial statements for further details.

~~Table of Contents~~

Comparison of the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~

Results of Operations

The following table summarizes our income and expenses for the periods indicated:

Six Months Ended June 30,
2023 2022

Operating income:
Oil income $ 275,919 $ 346,246
Natural gas income 14,081 38,983
Natural gas liquids income 29,282 46,690
Royalty income 319,282 431,919
Lease bonus income—related party 8,348 6,280
Lease bonus income 1,534 2,731
Other operating income 581 295
Total operating income 329,745 441,225
Costs and expenses:
Production and ad valorem taxes 25,508 29,909
Depletion 65,051 59,373
General and administrative expenses 4,772 3,833
Total costs and expenses 95,331 93,115
Income (loss) from operations 234,414 348,110
Other income (expense):
Interest expense, net (20,977) (19,427)
Gain (loss) on derivative instruments, net (27,697) (20,248)
Other income, net 313 38
Total other expense, net (48,361) (39,637)
Income (loss) before income taxes 186,053 308,473
Provision for (benefit from) income taxes 17,856 8,812
Net income (loss) 168,197 299,661
Net income (loss) attributable to non-controlling interest 103,680 249,034
Net income (loss) attributable to Viper Energy Partners LP $ 64,517 $ 50,627


	Three Months Ended March 31,
	2024		2023


Operating income:
Oil income	$	177,118	$	136,619
Natural gas income	6,797		8,991
Natural gas liquids income	21,152		15,475
Royalty income	205,067		161,085
Lease bonus income—related party	120		7,071
Lease bonus income	50		400

Other operating income	155		402
Total operating income	205,392		168,958
Costs and expenses:
Production and ad valorem taxes	14,406		12,887

Depletion	46,933		30,987


General and administrative expenses	5,033		2,764
Other operating expense	94		—
Total costs and expenses	66,466		46,638
Income (loss) from operations	138,926		122,320
Other income (expense):
Interest expense, net	(19,588)		(9,686)


Gain (loss) on derivative instruments, net	(7,492)		(15,103)

Other income, net	258		141
Total other expense, net	(26,822)		(24,648)
Income (loss) before income taxes	112,104		97,672
Provision for (benefit from) income taxes	12,529		9,406
Net income (loss)	99,575		88,266
Net income (loss) attributable to non-controlling interest	56,215		54,299
Net income (loss) attributable to Viper Energy, Inc.	$	43,360	$	33,967

2223

Table of Contents

The following table summarizes our production data, average sales prices and average costs for the periods indicated:


		Six Months Ended June 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Production data:	Production data:
Oil (MBbls)
Oil (MBbls)
Oil (MBbls)	Oil (MBbls)	3,734		3,431
Natural gas (MMcf)	Natural gas (MMcf)	8,909		7,627
Natural gas liquids (MBbls)	Natural gas liquids (MBbls)	1,357		1,193
Combined volumes (MBOE)(1)	Combined volumes (MBOE)(1)	6,576		5,895

Average daily oil volumes (BO/d)	Average daily oil volumes (BO/d)	20,630		18,956
Average daily oil volumes (BO/d)
Average daily oil volumes (BO/d)
Average daily combined volumes (BOE/d)	Average daily combined volumes (BOE/d)	36,331		32,569

Average sales prices:	Average sales prices:

Average sales prices:

Average sales prices:
Oil ($/Bbl)
Oil ($/Bbl)
Oil ($/Bbl)	Oil ($/Bbl)	$	73.89	$	100.92
Natural gas ($/Mcf)	Natural gas ($/Mcf)	$	1.58	$	5.11
Natural gas liquids ($/Bbl)(3)		$	21.58	$	39.14
Natural gas liquids ($/Bbl)
Combined ($/BOE)(2)	Combined ($/BOE)(2)	$	48.55	$	73.27

Oil, hedged ($/Bbl)(3)
Oil, hedged ($/Bbl)(3)
Oil, hedged ($/Bbl)(3)	Oil, hedged ($/Bbl)(3)	$	72.80	$	99.14
Natural gas, hedged ($/Mcf)(3)	Natural gas, hedged ($/Mcf)(3)	$	1.34	$	4.22
Natural gas liquids ($/Bbl)(3)	Natural gas liquids ($/Bbl)(3)	$	21.58	$	39.14
Combined price, hedged ($/BOE)(3)	Combined price, hedged ($/BOE)(3)	$	47.61	$	71.09

Average costs ($/BOE):	Average costs ($/BOE):
Average costs ($/BOE):
Average costs ($/BOE):
Production and ad valorem taxes	Production and ad valorem taxes	$	3.88	$	5.07
General and administrative - cash component(4)		0.63		0.55
Production and ad valorem taxes
Production and ad valorem taxes
General and administrative - cash component
Total operating expense - cash	Total operating expense - cash	$	4.51	$	5.62

General and administrative - non-cash unit compensation expense		$	0.10	$	0.11
General and administrative - non-cash stock compensation expense
General and administrative - non-cash stock compensation expense
General and administrative - non-cash stock compensation expense
Interest expense, net	Interest expense, net	$	3.19	$	3.30
Depletion	Depletion	$	9.89	$	10.07

(1)Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.

(2)Realized price net of all deducts for gathering, transportation and processing.

(3)Hedged prices reflect the impact of cash settlements of our matured commodity derivative transactions on our average sales prices.

~~(4)Excludes non-cash unit-based compensation expense for the respective periods presented.~~

Royalty Income

Our royalty income is a function of oil, natural gas and natural gas liquids production volumes sold and average prices received for those volumes.

Royalty income ~~decreased $112.6~~increased $44.0 million during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in ~~2022. Changes~~2023. This net increase consisted of (i) an additional $48.6 million in ~~average pricing during 2023 contributed to approximately $156.2~~royalty income from the 33% growth in production, and (ii) a reduction of $4.6 million ~~of the total decrease~~ due ~~primarily~~ to lower average ~~oil prices,~~ natural gas and natural gas liquids prices, partially offset by higher average oil prices received for our production ~~in 2023. The decrease due to lower pricing was partially offset by $43.5 million in additional royalty income due to a 12% increase in production volumes~~ during the ~~six months ended June 30, 2023~~2024 compared to the same period in ~~2022. This~~2023. Approximately 69% of the increase in production is attributable to the GRP Acquisition and an additional 4% is attributable to including a full quarter of production from the Drop Down in 2024. The remainder of the growth ~~stems~~comes from new ~~well development in areas where Viper has a higher royalty interest~~wells added between periods.

2324

Table of Contents

Lease Bonus Income-Related Party

Lease bonus income from Diamondback decreased by $7.0 million due to receiving payment for one new lease covering 40 acres in Martin County Texas, for the three months ended March 31, 2024, compared to receiving payment for one lease covering 257 acres in Martin County, Texas, during the same period in 2023.

See Note 2—Summary of Significant Accounting Policies of the notes to the condensed consolidated financial statements for further details.

Production and Ad Valorem Taxes

The following table presents production and ad valorem taxes for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~:


		Six Months Ended June 30,
		2023						2022
		Amount (In thousands)		Per BOE		Percentage of Royalty Income		Amount (In thousands)		Per BOE		Percentage of Royalty Income
	Three Months Ended March 31,																													Three Months Ended March 31,
	2024																						2024									2023
	Amount (In thousands)																	Amount (In thousands)				Per BOE				Percentage of Royalty Income			Amount (In thousands)				Per BOE			Percentage of Royalty Income
Production taxes	Production taxes	$	15,984	$	2.43	5.0	%	$	21,894	$	3.71	5.1	%	Production taxes	$	10,344	$		$	2.46	5.0			5.0	%		$	8,177	$		$	2.60	5.1	5.1	%
Ad valorem taxes	Ad valorem taxes	9,524		1.45		3.0		8,015		1.36		1.9
Total production and ad valorem taxes	Total production and ad valorem taxes	$	25,508	$	3.88	8.0	%	$	29,909	$	5.07	7.0	%	Total production and ad valorem taxes	$	14,406	$		$	3.43	7.0			7.0	%		$	12,887	$		$	4.10	8.0	8.0	%

In general, production taxes are directly related to production revenues and are based upon current year commodity prices. Production taxes as a percentage of royalty income for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 remained consistent with the same period in ~~2022.~~ 2023.

Ad valorem taxes are based, among other factors, on property values driven by prior year commodity prices. ~~The increase in ad~~Ad valorem taxes isfor the three months ended March 31, 2024 as compared to the same period in 2023 decreased by $0.6 million primarily due to ~~higher valuations assigned~~a reduction in the expected ad valorem tax rates for 2024 compared to ~~our oil and natural gas interests period over period driven by higher average commodity prices~~the expected rates in ~~2022.~~the first quarter of 2023.

Depletion

The ~~$5.7~~$15.9 million increase in depletion expense for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in ~~2022~~2023 was due primarily to production growth between the periods resulting largely from ~~new well development.~~the GRP Acquisition and having one additional day of production between periods. The average depletion rate ~~decreased slightly~~increased to ~~$9.89~~$11.18 per BOE for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 compared to ~~the rate of $10.07~~ $9.85 per BOEfor the same period in ~~2022~~2023 due primarily to ~~lower~~higher value leasehold ~~being transferred into~~in the amortization base ~~during 2023.~~in the 2024 period mainly due to the GRP Acquisition.

Derivative Instruments

The following table shows the net gain (loss) on derivative instruments and the net cash receipts (payments) on derivatives for the periods presented:

Six Months Ended June 30,
2023 2022
(In thousands)
Gain (loss) on derivative instruments $ (27,697) $ (20,248)
Net cash receipts (payments) on derivatives(1)
$ (6,212) $ (17,029)

~~(1)The six months ended June 30, 2022 includes cash paid on commodity contracts terminated prior to their contractual maturity of $4.2 million.~~


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Gain (loss) on derivative instruments	$	(7,492)	$	(15,103)
Net cash receipts (payments) on derivatives	$	(2,754)	$	(2,215)

We recorded losses on our derivative instruments for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ primarily due to market prices being higher than the strike prices on our open derivative contracts. ~~We are required to recognize all derivative instruments on our balance sheet as either assets or liabilities measured at fair value.~~ See Note 10—Derivatives of the notes to the condensed consolidated financial statements for additional discussion of our open contracts at ~~June 30, 2023.~~March 31, 2024.

Table of Contents

Provision for (Benefit from) Income Taxes

The ~~$9.0~~$3.1 million increase in income tax expense for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in ~~2022 resulted~~2023 is primarily ~~from the increase~~due to (i) a reduction in ~~pre-tax~~net income attributable to ~~the Partnership~~non-controlling interest as a result of the ~~expiration of~~Diamondback Offering, and (ii) an increase in pre-tax income in 2024, which was largely attributable to the ~~special~~increase in royalty income ~~allocation at December 31, 2022 and the impact of maintaining a valuation allowance against the Partnership’s deferred tax assets as of June 30, 2022.~~discussed above. See Note 9—Income Taxes of the notes to the condensed consolidated financial statements for further details.

~~Net Income (Loss) Attributable to Non-controlling Interest~~

The $145.4 million decrease in net income (loss) attributable to non-controlling interest for the six months ended June 30, 2023 compared to the same period in 2022 is primarily due to the expiration of the special income allocation at December 31, 2022.

~~Table of Contents~~

Liquidity and Capital Resources

Overview of Sources and Uses of Cash

As we pursue our business and financial strategy, we regularly consider which capital resources, including cash flow and equity and debt financings, are available to meet our future financial obligations and liquidity requirements. Our future ability to grow proved reserves will be highly dependent on the capital resources available to us. Our primary sources of liquidity have been cash flows from operations, proceeds from sales of non-core assets, equity and debt offerings and borrowings under the Operating Company’s revolving credit ~~agreement.~~facility. Our primary uses of cash have been dividends to our stockholders, Operating Company distributions to ~~our unitholders,~~Diamondback, repayments of debt, capital expenditures for the acquisition of our mineral and royalty interests in oil and natural gas properties and repurchases of our common ~~units.~~shares. At ~~June 30, 2023,~~March 31, 2024, we had approximately ~~$539.1~~$597.0 million of liquidity consisting of ~~$13.1~~$20.0 million in cash and cash equivalents and ~~$526.0~~$577.0 million available under the Operating Company’s revolving credit ~~agreement~~facility. See further discussion of changes in our sources of cash in “—Capital Resources” below.

Our working capital requirements are supported by our cash and cash equivalents and the Operating Company’s revolving credit ~~agreement.~~facility. We may draw on the Operating Company’s revolving credit ~~agreement~~facility to meet short-term cash requirements, or issue debt or equity securities as part of our longer-term liquidity and capital management program. Because of the alternatives available to us as discussed above, we believe that our short-term and long-term liquidity are adequate to fund not only our current operations, but also our near-term and long-term funding requirements including our acquisitions of mineral and royalty interests, ~~distributions,~~dividends, debt service obligations and repayment of debt maturities, common ~~unit~~share and senior note repurchases and any amounts that may ultimately be paid in connection with contingencies.

In order to mitigate volatility in oil and natural gas prices, we have entered into commodity derivative contracts as discussed further in Part II. Item 3. Quantitative and Qualitative Disclosures About Market Risk—Commodity Price Risk.

Continued prolonged volatility in the capital, financial and/or credit markets due to the war in Ukraine and the ~~depressed commodity markets and,~~ Israel-Hamas war, and/or adverse macroeconomic conditions, including persistent inflation, ~~rising~~high interests rates and global supply chain disruptions ~~and increasing concerns over a potential economic downturn or recession,~~ may limit our access to, or increase our cost of, capital or make capital unavailable on terms acceptable to us or at all. Although we expect that our sources of funding will be adequate to fund our short-term and long-term liquidity requirements, we cannot assure you that the needed capital will be available on acceptable terms or at all.

Cash Flows

The following table presents our cash flows for the periods indicated:


		Six Months Ended June 30,
		2023		2022
		(In thousands)
Cash Flow Data:
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(In thousands)						(In thousands)
Cash flow data:
Net cash provided by (used in) operating activities
Net cash provided by (used in) operating activities
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	252,669	$	299,020
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(124,457)		31,198
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(133,312)		(365,354)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	$	(5,100)	$	(35,136)

Table of Contents

Operating Activities

Our operating cash flow is sensitive to many variables, the most significant of which are the volatility of prices for oil and natural gas and the volumes of oil and natural gas sold by our producers. The ~~decrease~~increase in net cash provided by operating activities during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 compared to the same period in ~~2022~~2023 was primarily driven by ~~lower~~higher royalty income. This increase in cash flow was partially offset by ~~an increase in cash flows from (i)~~ changes in our working capital accounts, most notably through an increase in our accounts receivable in 2024 compared to 2023 due primarily to ~~a reduction in~~the timing of our receipt of royalty income ~~receivables at June 30, 2023 compared to June 30, 2022 resulting~~payments from ~~lower commodity prices~~our operators, and ~~royalty income in 2023, (ii)~~ a decrease in cash ~~paid for derivative settlements, and (iii) a reduction in production and ad valorem taxes due to the corresponding decrease in royalty~~flows from related party lease bonus income. See “—Results of Operations” for discussion of significant changes in our revenues and expenses.

~~Table of Contents~~

Investing Activities

Net cash used in investing activities during the ~~six~~three months ended ~~June 30,~~March 31, 2024, primarily related to acquisitions of oil and natural gas interests from third parties.

Net cash used in investing activities during the three months ended March 31, 2023, primarily related to the acquisition of oil and natural gas interests in the Drop Down and from other third-party acquisitions.

~~Net cash provided by in investing activities during the six months ended June 30, 2022 primarily related to proceeds from the divestiture of oil and natural gas interests.~~

Financing Activities

Net cash used in financing activities during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024, primarily ~~resulted from distributions~~reflects the payment of ~~$146.6 million and $57.5 million of common unit repurchases as we continue to return capital to our unitholders.~~dividends totaling $110.9 million. These cash outflows were partially offset by net borrowings of ~~$72.0~~$10.0 million under the Operating Company’s revolving credit facility.

Net cash ~~used in~~provided by financing activities during the ~~six~~three months ended ~~June 30, 2022, was~~March 31, 2023, primarily ~~related to distributions of $194.1 million to our unitholders and $68.2~~resulted from $118.0 million of common unit repurchases which included approximately $37.3 million for the repurchase of 1.5 million common units from a significant unitholder in a privately negotiated transaction. Additionally, we paid $49.0 million for the repurchase of principal outstanding on the Notes and made net repayments of $54.0 millionborrowings under the Operating Company’s revolving credit ~~facility.~~facility, which were partially offset by dividend payments totaling $84.7 million and $33.0 million for the repurchase of common shares.

Capital Resources

The Operating Company’s Revolving Credit Facility

~~During the second quarter of 2023,~~At March 31, 2024, the Operating ~~Company entered into a tenth amendment to our existing~~Company’s credit ~~agreement,~~facility, which ~~strengthened our short and long-term liquidity positions by among other things, increasing our borrowing base from $580.0 million to $1.0 billion, and increasing our~~matures on September 22, 2028, had an elected commitment amount ~~from $500.0~~of $850.0 million, ~~to $750.0 million. The~~ ~~Operating Company’s credit agreement, which matures on June 2, 2025, had $224.0~~with $273.0 million in outstanding borrowings and ~~$526.0~~$577.0 million of ~~availability at June 30, 2023.~~availability.

See Note 6—Debt of the notes to the condensed consolidated financial statements included elsewhere in this report for additional discussion of our outstanding debt at ~~June 30, 2023.~~March 31, 2024.

Capital Requirements

Repurchases of Securities

Under our current common ~~unit~~stock repurchase program, the board of directors ~~of our General Partner~~ has authorized us to acquire up to $750.0 million of our ~~common units,~~Class A Common Stock, excluding excise tax. As of ~~June 30, 2023, $472.4~~March 31, 2024, $434.2 million remains available for use to repurchase ~~units~~shares under this repurchase program, excluding excise tax.

We may also from time to time opportunistically repurchase some of the outstanding Notes in open market purchases or in privately negotiated transactions.

Cash ~~Distributions~~Dividends

The Operating Company will pay a cash distribution for the ~~second~~first quarter of ~~2023 is $0.36~~2024 in accordance with its distribution policy of $0.70 per ~~common~~Operating Company unit ~~and $0.44 per Class B unit payable~~ on ~~August 17, 2023~~May 22, 2024 to eligible ~~unitholders~~holders of record at the close of business on ~~August 10, 2023.~~May 15, 2024.

Table of Contents

We will pay a cash dividend for the first quarter of 2024 in accordance with our dividend policy of $0.59 per share of Class A Common Stock on May 22, 2024 to eligible holders of record at the close of business on May 15, 2024. The dividend to ~~common unitholders~~shareholders consists of a base quarterly dividend of $0.27 per ~~common unit~~share of Class A Common Stock and a variable quarterly dividend of ~~$0.09~~$0.32 per ~~common unit.~~

share of Class A Common Stock. Future base and variable dividends are at the discretion of the board of ~~directors of our General Partner.~~directors.

See Note 7—~~Unitholders'~~Stockholders' Equity ~~and Distributions~~ of the notes to the condensed consolidated financial statements for further discussion of the repurchase program and ~~distributions.~~dividend.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

~~Table of Contents~~

Recent Accounting Pronouncements

See Note 2—Summary of Significant Accounting Policies included in the ~~condensed~~ notes to the condensed consolidated financial statements for recent accounting pronouncements not yet adopted, if any.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, including the effects of adverse changes in commodity prices and interest rates as described below. The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in oil and natural gas prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses.

Commodity Price Risk

Our major market risk exposure is in the pricing applicable to the oil and natural gas production of our operators. Realized prices are driven primarily by the prevailing worldwide price for crude oil and prices for natural gas in the United States. Both crude oil and natural gas realized prices are also impacted by the quality of the product, supply and demand balances in local physical markets and the availability of transportation to demand centers. Pricing for oil and natural gas production has been historically volatile and unpredictable and the prices that our operators receive for production depend on many factors outside of our or their control, such as the war in Ukraine ~~rising~~and the Israel-Hamas war, high interest rates, global supply chain disruptions ~~a potential economic downturn or recession~~ and actions taken by OPEC members and other exporting nations. We cannot predict events that may lead to future price volatility and the near term energy outlook remains subject to heightened levels of uncertainty.

We historically have used fixed price swap contracts, fixed price basis swap contracts and costless collars with corresponding put and call options to reduce price volatility associated with certain of our royalty income as discussed in Note 10—Derivatives of the notes to the condensed consolidated financial statements.

At ~~June 30, 2023~~March 31, 2024, we had a net liability derivative position related to our commodity price derivatives of ~~$11.7~~$7.5 million. Utilizing actual derivative contractual volumes under our contracts as of ~~June 30, 2023,~~March 31, 2024, a 10% increase in forward curves associated with the underlying commodity would have ~~decreased~~increased the net liability position by ~~$0.4~~$1.0 million to approximately ~~$11.4~~$8.5 million, while a 10% decrease in forward curves associated with the underlying commodity would have ~~increased~~decreased the net liability derivative position by ~~$0.3~~$0.5 million to approximately ~~$12.0~~$7.0 million. However, any cash derivative gain or loss would be substantially offset by a decrease or increase, respectively, in the actual sales value of production covered by the derivative instrument.

Credit Risk

We are subject to risk resulting from the concentration of royalty income in producing oil and natural gas interests and receivables with a limited number of significant purchasers and producers. We do not require collateral and the failure or inability of our significant purchasers to meet their obligations to us due to their liquidity issues, bankruptcy, insolvency or liquidation may adversely affect our financial results. Volatility in the commodity pricing environment and macroeconomic conditions may enhance our purchaser credit risk.

Table of Contents

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on our indebtedness under the Operating Company’s revolving credit ~~agreement.~~facility. The terms of the credit ~~agreement~~facility provide for interest on borrowings at a floating rate equal to (i) term SOFR plus 0.10% (“Adjusted Term SOFR”), or (ii) an alternate base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50%, and 1-month Adjusted Term SOFR plus 1.00%), in each case plus the applicable margin. The applicable margin ranges from 1.00% to 2.00% per annum in the case of the alternative base rate and from 2.00% to 3.00% per annum in the case of Adjusted Term SOFR, in each case depending on the amount of the loans outstanding in relation to the commitment, which is calculated using the least of the maximum credit amount, the aggregate elected commitment amount and the borrowing base. We are obligated to pay a quarterly commitment fee ranging from 0.375% to 0.500% per year on the unused portion of the commitment. As of ~~June 30, 2023,~~March 31, 2024, we had ~~$224.0~~$273.0 million in outstanding borrowings. During the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, the weighted average interest rate on the Operating Company’s revolving credit facility was ~~7.53% and 7.24%~~7.65%.

~~Table of Contents~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure ~~Control~~Controls and Procedures. Under the direction of ~~the~~our Chief Executive Officer and Chief Financial Officer, ~~of our General Partner,~~ we have established disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to management, including ~~the~~our Chief Executive Officer and Chief Financial Officer, ~~of our General Partner,~~ as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

As of ~~June 30, 2023,~~March 31, 2024, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of ~~our General Partner, of~~ the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under ~~the~~our Exchange Act. Based upon ~~the~~our evaluation, ~~the~~our Chief Executive Officer and Chief Financial Officer ~~of our General Partner~~ have concluded that as of ~~June 30, 2023,~~March 31, 2024, our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting that occurred during the quarter ended ~~June 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities. In the opinion of our management, none of the pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect on our financial condition, cash flows or results of operations. See Note 12—Commitments and Contingencies of the notes to the condensed consolidated financial statements.

ITEM 1A. RISK FACTORS

Our business faces many risks. Any of the risks discussed in this report and our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially impair our business operations, financial condition or future results.

As of the date of this filing, we continue to be subject to the risk factors previously disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on February ~~23, 2023~~22, 2024 and in subsequent filings we make with the SEC. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Issuer Repurchases of Equity Securities

Our common ~~unit~~share repurchase activity for the three months ended ~~June 30, 2023~~March 31, 2024 was as follows:

Period Total Number of Units Purchased
Average Price Paid Per Unit(1)(3)
Total Number of Units Purchased as Part of Publicly Announced Plan
Approximate Dollar Value of Units that May Yet Be Purchased Under the Plan(2)(3)
(In thousands, except unit amounts)
April 1, 2023 - April 30, 2023 102,000 $ 29.27 102,000 $ 493,700
May 1, 2023 - May 31, 2023 379,500 $ 26.91 379,500 $ 483,487
June 1, 2023 - June 30, 2023 430,500 $ 25.71 430,500 $ 472,420
Total 912,000 $ 26.61 912,000


Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share(2)(3)		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan(2)(3)
	(In thousands, except share amounts)
January 1, 2024 - January 31, 2024	—	$	—	—	$	434,161
February 1, 2024 - February 29, 2024	—	$	—	—	$	434,161
March 1, 2024 - March 31, 2024	792	$	—	—	$	434,161
Total	792	$	—	—

(1)~~The average price paid per common unit includes any commissions paid~~Includes 792 shares of Class A Common Stock repurchased from employees in order to ~~repurchase a common unit.~~satisfy tax withholding requirements. Such shares are cancelled and retired immediately upon repurchase.

(2)On July 26, 2022, the board of directors ~~of our General Partner~~ increased the authorization under our then-in-effect ~~common unit~~ repurchase program from $250.0 million to $750.0 ~~million, excluding excise tax.~~million. This repurchase program has no expiration date and remains subject to market conditions, applicable legal requirements, contractual obligations and other factors and may be suspended from time to time, modified, extended or discontinued by the board of directors ~~of our General Partner~~ at any time.

(3)~~The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.~~ All dollar amounts presented exclude such excise taxes, as applicable.

ITEM 5. OTHER INFORMATION

None of the Company’s directors or officers ~~of our General Partner~~ adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during our fiscal quarter ended ~~June 30, 2023.~~March 31, 2024.

2930

Table of Contents

ITEM 6. EXHIBITS


Exhibit Number						Description
~~2.1~~						Purchase and Sale Agreement dated August 6, 2021 by and among Swallowtail Royalties LLC, Swallowtail Royalties II LLC (collectively, as seller), Viper Energy Partners LLC (as buyer) and Viper Energy Partners LP (as parent, and collectively with Viper Energy Partners LLC, as buyer parties) (incorporated by reference to Exhibit 2.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on August 12, 2021).
3.1						Certificate of ~~Limited Partnership~~Conversion of Viper Energy Partners LP (incorporated by reference to Exhibit ~~3.1 of~~99.2 to the ~~Partnership’s Registration Statement~~Current Report on Form ~~S-1 (File 333-195769)~~8-K, filed by Viper Energy Partners LP with the SEC on ~~May 7, 2014)~~November 2, 2023).
3.2						~~Second Amended and Restated Agreement~~Certificate of ~~Limited Partnership~~Incorporation of Viper Energy, ~~Partners LP, dated as of May 9, 2018~~Inc. (incorporated by reference to Exhibit ~~3.1 of~~99.3 to the ~~Partnership’s~~ Current Report on Form 8-K, ~~(File 001-36505)~~ filed by Viper Energy Partners LP with the SEC on ~~May 15, 2018)~~November 2, 2023).
3.3						~~First Amendment to Second Amended and Restated Agreement of Limited Partnership~~Bylaws of Viper Energy, ~~Partners LP, dated as of May 10, 2018.~~Inc. (incorporated by reference to Exhibit ~~3.2 of~~99.4 to the ~~Partnership’s~~ Current Report on Form 8-K, ~~(File 001-36505)~~ filed by Viper Energy Partners LP with the SEC on ~~May 15, 2018)~~November 2, 2023).
3.4						Second Amended and Restated Limited Liability Company Agreement of Viper Energy Partners LLC, dated as of May 9, ~~2018.~~2018 (incorporated by reference to Exhibit 3.3 of the Partnership’s Current Report on Form 8-K (File 001-36505), filed on May 15, 2018).
3.5						First Amendment to Second Amended and Restated Limited Liability Company Agreement of Viper Energy Partners LLC, dated as of March 30, 2020, (incorporated by reference to Exhibit 3.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on March 31, 2020).

3.6						Second Amendment to the Second Amended and Restated Limited Liability Company Agreement of Viper Energy Partners LLC, dated as of December 27, 2021 (incorporated by reference to ~~Exhibit~~ 3.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on December 28, 2021).
4.1						Second Amended and Restated Registration Rights Agreement, dated as of ~~May 9, 2018,~~ November 10 , 20 23 , effective as of Nove mber 13, 2023, by and between Viper Energy Partners LP and Diamondback Energy, Inc. (incorporated by reference to Exhibit ~~4.1~~10.3 of the ~~Partnership’s~~Company ’s Current Report on Form 8-K (File 001-36505) filed on ~~May 15, 2018).~~







~~4.2~~						~~Registration Rights Agreement, dated as of October~~November 1 2021, by and among Viper Energy Partners LP, Swallowtail Royalties LLC and Swallowtail Royalties II LLC (incorporated by reference to Exhibit 4.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on October 7, 2021).
~~10.1~~						Tenth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement and Second Amendment to Guaranty and Collateral Agreement, dated as of May 31, 2023, by and among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Partnership's Current Report on Form 8-K (File No. 001-36505) filed on June 6, 2023)3 , 20 23 ).
31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1**						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101						The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2023,~~March 31, 2024, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statement of Changes in Unitholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statements.






104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

______________


*			Filed herewith.
**			The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

3031

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		VIPER ENERGY, INC.
		~~VIPER ENERGY PARTNERS LP~~

		By:	VIPER ENERGY, ~~PARTNERS GP LLC~~INC.
			~~its General Partner~~

Date:	~~August 3, 2023~~May 2, 2024	By:	/s/ Travis D. Stice
			Travis D. Stice
			Chief Executive Officer

Date:	~~August 3, 2023~~May 2, 2024	By:	/s/ Teresa L. Dick
			Teresa L. Dick
			Chief Financial Officer

3132


Period	Total Number of Units Purchased	Average Price Paid Per Unit(1)(3)		Total Number of Units Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Units that May Yet Be Purchased Under the Plan(2)(3)
	(In thousands, except unit amounts)
April 1, 2023 - April 30, 2023	102,000	$	29.27	102,000	$	493,700
May 1, 2023 - May 31, 2023	379,500	$	26.91	379,500	$	483,487
June 1, 2023 - June 30, 2023	430,500	$	25.71	430,500	$	472,420
Total	912,000	$	26.61	912,000