Q & A Highlights

Q: Clearly, today's big news is the change in the cash return strategy. Can you unpack the rationale for the change and how it reflects Viper's long-term value proposition and competitive advantage against an E&P? A: Kaes Van't Hof (CEO) explained that the Board decided the market was not rewarding the variable dividend yield. They shifted to a high base dividend (a 32% increase to $2 per share annually) that is protected down to $30 oil, which they believe is more secure than utilities and the most secure in oil and gas. He emphasized that Viper has a 17% CAGR in per-share production growth and is growing 15% in 2026, yet the valuation does not reflect this. The new framework allows for opportunistic share repurchases at current levels, or if the multiple expands, they can pivot to using cash for deals or fortifying the balance sheet.

Q: Given the shift to a higher base dividend and more flexibility, how has your M&A financing strategy changed, particularly regarding self-funding deals versus tapping the public market? A: Kaes Van't Hof (CEO) stated that Viper is "growing up" into a real company that should be valued relative to S&P 500 comps. The evolution away from distributing all cash quarterly means they no longer need to rely on equity financing for every deal. The new flexibility allows them to allocate retained cash to either M&A, share repurchases, or the balance sheet, depending on which creates the most value. He noted the A&D market is very active and that this flexibility allows them to put more cash into deals without tapping equity markets.

Q: What percentage of cash available for distribution do you believe is most appropriate on a go-forward basis? And how will you use your dominant size and balance sheet for future opportunities? A: Kaes Van't Hof (CEO) said there will be quarters where they distribute all free cash flow via buybacks plus the base dividend if the market doesn't reward their growth. He expressed frustration that Viper trades at a discount to other royalty models in the basin, calling it "flummoxing." Their mindset is to put a big base dividend in place and buy back shares aggressively if the market doesn't realize the value. He also noted that Diamondback, as a large shareholder, could also buy more Viper shares, as they believe it is the best value proposition in E&P land.

Q: Does the new, more concrete base dividend change your hedging framework at all? Would you ramp up hedging given the fixed nature of the distribution? A: Kaes Van't Hof (CEO) said they generally like buying $50 puts to protect extreme downside, but there is a huge gap between $50 and $30 oil where the base dividend is protected. The base dividend is set to grow meaningfully as production grows, share count shrinks, or debt is reduced. He confirmed they still like the puts in place to protect against extreme downside scenarios.

Q: Is there any update on the opportunity set from new and emerging benches like the Woodford or Barnett on your acreage? A: Austen Gilfillian (President) noted the big emergence has been on the Woodford in the Delaware Basin, with leasing activity picking up significantly over the last couple of quarters. They have spent roughly $25 million to $30 million on lease bonuses for deep rights there, about a third of their total leasing effort. This upfront money typically starts a three-year clock for operators to develop those minerals, which should equate to more production growth over that period.

Q: When comparing your near-term inventory and line-of-sight wells to the amount needed to hold production flat, what does that suggest about the underlying growth rate into 2027? A: Austen Gilfillian (President) said the growth is strong. Q3 guidance incorporates 2,000 barrels a day from Riverbend, but still implies 1,000 barrels a day of purely organic quarter-over-quarter growth. He pointed to slide 5, which shows high single-digit organic growth in 2026. While they may not maintain that percentage into next year, the line of sight on activity supports modest growth off the exit rate this year.

Q: You noted a four-well pad targeting the Barnett at Spanish Trail with a high NRI. How much activity does Diamondback have planned there or in other high-NRI areas? A: Austen Gilfillian (President) explained the equation has three parts: Diamondback's gross activity, Viper's exposure to it, and the average NRI. They have consistently captured 75% to 80% of Diamondback's gross activity with around a 6% average NRI, which is skewed higher by wells where they own the full royalty. Kaes Van't Hof (CEO) added that if the Spanish Trail-Barnett pad produces as expected, it will move to the top decile of their combined inventory in terms of rate of return, and they will develop it very quickly.

Q: Given your comments on the market not rewarding Viper, how should we view the near-term outlook for opportunistic repurchases relative to Q2? A: Kaes Van't Hof (CEO) said they did a little under $150 million in Q2 and have continued at a similar daily pace. They fundamentally disagree that Viper should have a low double-digit yield. Even in a normalized price environment, the value proposition is obvious. He confirmed they will be back in the market aggressively once the blackout window opens.

Q: Beyond 2027, do you see potential for continued organic growth, or could the structure shift to a higher returns/higher yield scenario? A: Kaes Van't Hof (CEO) said there is certainly organic growth potential beyond 2027, particularly led by Diamondback's development of the Barnett. The bet on the rest of the basin is that it continues to grow, and Viper grows relatively higher. When underwriting third-party acquisitions, the quality of their inventory is a key factor, and they have generally outperformed basin growth by buying minerals in areas that get developed first.

Q: Your line-of-sight wells stepped up nicely, with a lot of third-party operated activity. What are you seeing there? Is it just an uptick in rig activity aligning with your acreage? A: Austen Gilfillian (President) confirmed that third-party activity has been consistent from a gross perspective, moving around quarter-to-quarter on a net basis. They spend significant time thinking from an operator's perspective about the

For the complete transcript of the earnings call, please refer to the full earnings call transcript .