Viper Energy combines unhedged Permian royalty growth, Diamondback development visibility, and a $2.00 base dividend, with a probability-weighted five-year target of $78.85 versus roughly $44 today.
Overview
Viper Energy owns perpetual mineral and royalty interests concentrated in the oil-weighted Permian Basin, receiving production-linked royalties without the drilling CAPEX, LOE, or development inflation borne by E&Ps. Its approximately 90,212 net royalty acres reflect major consolidation, including the $4.1 billion all-equity Sitio acquisition and Riverbend. Diamondback operates a substantial portion of the acreage and provides visibility into development, while third-party operators diversify activity. Q2 2026 revenue was $677.0 million, up 128% year over year and above consensus; adjusted EBITDA was $642 million at a 94.8% margin, while adjusted EPS of $0.76 missed estimates because acquired-asset DD&A increased. Free cash flow was $487 million and CAD was $262 million. Management raised 2026 production guidance and increased the annual base dividend 32% to $2.00 per share, about a 4.5% yield, with stated protection to roughly $30 WTI. Shares were about $44.03, with forward P/E estimated at 15.5x–20.0x and FY2026 forward P/S around 3.5x. **The royalty model pairs exceptional cash conversion with no direct CAPEX burden.** The report’s base case implies $77.58 in five years, with near-term catalysts in Q3 distributions and Permian development updates.