Minerals

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.

Picture of 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

nuclear-worker
Energy Transition
ByCarson Kearl

This past week two companies in the advanced reactor space went public. Oklo Inc. (NYSE: OKLO) and Nano Nuclear (NASDAQ: NNE) had mixed opening days, with OKLO seeing nearly a 50% price drop from open and NNE trading up well...

Enverus Press Release - Tapping Alberta’s overlooked lithium brines
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

Equinor is acquiring 45% stakes in two of Standard Lithium’s direct lithium extraction (DLE) projects in the Smackover Formation in Southwest Arkansas and East Texas, less than a month after closing the book on its U.S. onshore shale operatorship.

Enverus Press Release: Beyond the horizon: US solar and storage solutions are on the rise
Power and Renewables
ByMarie Amice

Learn how Enverus Contiguous Acreage enhancement simplifies parcel discovery, making negotiations easier and projects more viable.

kid-solar-gallery
Power and Renewables
ByColton Wright

Harnessing Sunlight and Soil As the early morning light filters through the countryside, you find yourself on a quiet rural road. You’re sipping coffee and humming your favorite tune. You’re on your way to see loved ones, explore a national...

emissions-wind-women-working
Power and Renewables
ByBryan DiRenzo

In the United States, the anticipated load growth and the retirement of aging plants to meet state mandates are creating a compelling narrative for the expansion of battery storage infrastructure.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints
Energy Transition
ByJeffery Jen

On March 25, 2024, the EPA released its final rulemaking on the update to 40 CFR Part 60 implementing its New Source Performance Standards for New, Modified and Reconstructed Fossil Fuel-Fired Electricity Generating Units.

accurate-grid-forecastin
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

In March 2021, the Biden administration set a goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. These efforts have faced significant growing pains.

Enverus News Release - Defying peak oil predictions
Trading and Risk
ByEnverus

Crude and product stocks are currently at levels that suggest Brent should be ~$85/bbl.

ev-image
Energy Transition Power and Renewables
ByPrashant Kumar

The pace of electric vehicle (EV) sales growth has slowed down based on the most recent North American EV sales data.

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

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert