Viper Acquires Sitio Royalties
A sign of the things to come?
Welcome back to the ROI Club.
Whilst I was enjoying my time in the petrol zone in the ‘New Shale Basin’ in Argentina some BIG news broke in the ‘Old Shale Patch’ in Texas.
“The combination of Viper and Sitio signifies an important moment for mineral and royalty interests.. This combination creates a leader in size, scale, float, liquidity and access to investment grade capital in the highly fragmented minerals industry. Pro forma Viper is now clearly a must-own public mineral and royalty company in North America..”
- Kaes Van’t Hof, Chief Executive Officer of Viper.
This marks the beginning of an M&A cycle in land and royalty co.s, something I was expecting, albeit not quite so soon. I’ve discussed M&A in the Royalty space a few times with Uncle Rick - who has been spot on in his call that the smaller cap royalties will need to either re-rate higher or be acquired by the bigger players.
I own both the aforementioned companies and in today’s piece, premium members will discover why I think this is a BOON!
If you haven’t already registered for the Rule Investment Symposium you better hurry as it runs July 7-11 and you need to get your ticket before the event.
*The Rule Symposium Is Almost Here*
It will be recalled that the driving force behind my capital allocation decisions for the foreseeable future is the notion that we have entered into a stag-flationary environment begotten by the fiscal profligacy displayed almost ubiquitously by governments around the world, most importantly by that of the United States.
My two major investment themes to express this view are what I mentally classify as:
Fiat Currency debasement
Perpetual hard assets
From there stems the sub themes:
Gold, Bitcoin and associated royalties.
Land and water, ideally expressed via landholders who also have energy royalties associated.
Energy and the AI revolution is in turn a derivative of the above theme given that natgas, land and water are the bottlenecks to AI’s proliferation.
You might say it all comes down to Royalties attached to: water, minerals & energy + the wild card being Bitcoin; the world’s first currency with a pre-programmed supply limit.
On the subject of royalties, the recent news I believe is a sign of things to come.
Viper Acquires The Acquirer
Viper Energy, Inc. (VNOM)which is a spin-out a subsidiary of Diamondback Energy (FANG) has agreed to acquire Sitio Royalties Corp. in an all-equity transaction valued at about $4.1 billion and is due to close Q3 2025.
You can find my previous takes on each company below:
So, is this a good deal? And for Whom?
The Deal
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