Viper Energy acquires GRP assets in third largest ever minerals transaction

byAndrew Dittmar

In a year that began with lackluster minerals-focused M&A activity, there were signs of life in Q2 with the first transaction exceeding $10 million as Kimbell Royalty Partners acquired MB Minerals for $143 million. Compared to operating company M&A, even this deal gets lost in the shadow of E&P mergers and acquisitions where there were six deals exceeding $1 billion in Q2 (five of which were Permian-specific). Relatively speaking, mineral and royalty deals have appeared diminutive – until now. Mineral deals rarely breach the $1 billion mark, but Viper Energy Partners deployed more than $1 billion, mostly in cash supplemented with stock to acquire mineral and royalty assets from affiliates of Warwick Capital Partners and GRP Energy Capital (GRP) in the third-largest mineral deal ever tracked by Enverus Intelligence Research. Following the completion of the transaction, Viper Energy gains 7,322 net royalty acres (at 100% or 58,580 normalized to 1/8 NRA). Not surprisingly the deal is heavily weighted with Permian acreage, significantly expanding Viper Energy’s Midland and Delaware positions.

This acquisition raised the question: Is this magnitude of minerals M&A a flash in the pan or is this a sign of things to come? Given the trainwreck caused by demand destruction and plunging commodity prices in 2020 and 2021, the minerals market began its road to recovery in 2022. Given continued growth in the oil and gas sector, the path forward will likely see minerals M&A continue to heat up. Mineral and royalty interests represent a very attractive asset class to own given that operators bear the cost of extracting hydrocarbons while interest owners collect revenue streams. Thus the fight is for prized Permian acreage.

Among public buyers, the bid for GRP’s assets was a two-horse race between Viper Energy and Sitio Royalties who likely saw the mineral interests as an excellent fit for their own footprint in the Permian. Asset diversification was also at play here with about 20% of the deal including assets in the DJ Basin, which would also have complemented Sitio Royalties’ existing holdings in the Rockies.

A niche within the oil and gas sector, mineral holding companies must increase investor exposure and drive down G&A costs per BOE. This deal accomplishes both for Viper Energy along with increasing free cash flow at the cost of diluting its focused asset exposure to the Permian. While Permian assets may be prized for resource expansion, diversifying mineral holdings is a good strategy for any buyer given the battle and cost of securing Permian acreage.

Increasing interest from large mineral funds and institutional buyers for limited minerals and royalty ownership opportunities is leading to a fierce competitive landscape. The tools of the past are no longer enough to keep pace, underscoring the need for asset buyers to embrace a data-driven and analytics-intensive approach to quickly identify, valuate and seize mineral M&A opportunities. Those who do it well will thrive, build a strong portfolio and extract maximum ROI from their assets.

Want to dive deeper into how you can stay on top in a competitive M&A market? Learn more about Enverus solutions, designed specifically to solve these challenges, and more. Fill out the form below to download our Intelligence solutions overview and speak with our experts.

About Enverus Intelligence Publications

Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.

Andrew Dittmar

Andrew Dittmar

Andrew Dittmar is a Director on the Enverus Intelligence team. Andrew specializes in deal analysis, research and valuations for upstream assets. He focuses largely on placing individual deals into context around broader industry trends and outlooks, and has been quoted by Reuters, CNBC, the Wall Street Journal, Houston Chronicle and other media outlets. Andrew holds a BBA in Finance from Texas A&M University and a JD from The University of Texas School of Law.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Energy Transition
ByAlex Nevokshonoff

Each hub developed a unique hydrogen production strategy that was chosen to best utilize the regionally available resources such as renewable energy type and quality, nuclear availability, existing infrastructure and carbon sequestration basin viability.

OFS-banner-485926689 (1)
ByErin Faulkner

Nearly a decade ago, Enverus, then known as DrillingInfo, posted a Gulf of Mexico (GOM) primer on its blog. It remains one of our most popular posts. A few things have changed since 2014, so we decided it was time...

Electric Vehicle Charging
Energy Transition
ByPrashant Kumar

The electric vehicle (EV) and plug-in hybrid EV markets are experiencing significant growth in North America, Europe and China. The surge in demand has prompted notable advancements in battery technology to cater to the expanding market.

Energy Analytics Financial Services
ByTucker Keren

The North American play-level inventory rankings are in, and there’s been some shakeups. After almost a year since the last publication by Enverus Intelligence Research (EIR), the remaining inventory by play has seen some movement on the leaderboards. While EIR...

Enverus Blog - What you should know about the future of mineral acquisitions
ByPhillip Dunning

Take the guess work out of providing your family insights into the estate and be empowered to manage your assets.

Intelligence Midstream
ByErin Faulkner

Midstream operators connected 3,524 oil and gas wells to gathering systems in the U.S. during Q2, according to an analysis using Enverus Core data presented in the most recent issue of Midstream Pulse. This is up slightly from the 3,447...

Energy Transition Financial Services

The shift away from hydrocarbons and towards renewable and low-carbon technologies is not only changing the way we power our lives, but also offers a wealth of investment opportunities for those who can decipher the complex landscape. Traditional institutional investors...

Enverus Blog - Analyst Takes: Looking back at March energy trends
Analyst Takes Trading and Risk
ByChris Griggs

As we commence October, it’s crucial to examine the ever-evolving energy landscape from the past month. Our Enverus Intelligence® | Research (EIR) team has diligently dissected key trends and breakthroughs, delivering insightful and data-driven perspectives that empower you to make...

Power and Renewables

2022 marked a significant milestone for renewable wind generation in North America. New wind capacity reached 14.7GW (gigawatts) from 93 projects, an increase from 2021 of 12GW from 54 projects. Looking to 2024, winds of opportunity show 55GW from a...

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Get Energy Transition Research updates straight to your inbox by filling out the form below.

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert