Viper reportedly exploring sale of US assets beyond Permian

Viper Energy, the mineral and royalties arm of US shale producer Diamondback Energy, is reportedly exploring a sale of its assets outside of the prolific Permian Basin.

Citing sources familiar with the matter, Bloomberg reported that while it was not clear how much the assets could fetch, they were part of Viper’s $4.1bn acquisition of Sitio Royalties, which closed in August. The sources added that no final decision had been made and that Viper could still opt to hold on to the assets.

Previous announcements show that Sitio’s assets beyond the Permian included royalty acreage in the Eagle Ford shale, as well as the Denver-Julesburg (DJ) and Williston Basins. Sitio’s total holdings comprised roughly 25,300 net royalty acres (102 square km), with the assets outside the Permian accounting for around 9,000 acres (36 square km) of that. Beyond this, however, it is not clear which of these assets could be for sale.

The deal illustrates that mineral and royalties players are influenced by some of the same trends that have been driving consolidation among upstream shale players. Indeed, there have been a number of major upstream deals in recent years, and as top-tier acreage becomes more scarce, a number of producers have increasingly looked beyond their core focus areas. This has resulted in a number of deals being struck involving multi-basin acreage, with the buyers often going on to shed some of the non-core assets they have picked up.

In the minerals space, meanwhile, Viper has been on a similar shopping spree. Earlier this year, Viper also agreed to acquire all of the equity of certain other mineral- and royalties-owning subsidiaries of Diamondback for about $4.5bn. Viper generates cash flow by leasing its mineral rights to oil drillers and Bloomberg noted that it is now larger than many shale operators, with a market capitalisation of about $13.6bn.