Good day, and thank you for standing by. Welcome to the Viper Energy second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during your session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand it over to your first speaker today, Chip Seale, Investor Relations Director. Please go ahead. Thank you, Amber. Good morning and welcome to Viper Energy's second quarter 2026 conference call. During our call today, we may reference an updated investor presentation which can be found on Viper's website. Representing Viper today are Kaes Van't Hof, CEO, and Austen Gilfillian, President. During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I will now turn the call over to Kaes. Thank you, Chip. Welcome everyone, and thank you for listening to Viper's second quarter 2026 conference call. The second quarter continued the trend of strong execution for Viper, highlighted by steady development activity from both Diamondback and our third-party operators across our asset base. During the quarter, operators turned 691 gross horizontal wells to production on our acreage, in which Viper owned an average 3% net revenue interest. As a result of this strong activity, as well as our continued execution on our acquisition strategy, we have initiated average production guidance for the third quarter that implies roughly 4.5% growth relative to the second quarter. Importantly, the midpoint of our third quarter guidance implies an approximate 15% annualized growth rate in oil production per share relative to the fourth quarter of 2025. Strong underlying organic growth, combined with accretive acquisitions and opportunistic share repurchases, is fundamental to Viper's value creation proposition. Turning to return of capital, for the second quarter, we are returning 75% of available cash for distribution to stockholders. This return of capital includes $132 million in share repurchases completing during the quarter, as well as a combined base plus variable dividend of $0.67 a share. Looking ahead, yesterday we announced an important evolution in our return of capital strategy. Going forward, we will be shifting to a framework which includes a high base dividend and greater flexibility in how we allocate the balance of cash available for distribution. Effective beginning in the third quarter, our board approved a 32% increase to our base dividend, now up to $2 per Class A share on an annual basis. With this increase to the base dividend, we also announced that beginning in the third quarter, we will be removing our previous quarterly commitment to return at least 75% of cash available for distribution. First and foremost, we believe this new outsized base dividend, rather than a variable payout that fluctuates with commodity prices, best showcases what is truly unique about Viper. At our current share price, the increased base dividend implies an annualized yield of approximately 4.5%. This yield remains meaningfully above the average of our E&P peers and is underpinned by one of the lowest dividend breakevens in the sector. Given our zero required capital expenditures and long-lived asset base, we believe the durability of this dividend should be compared to the most durable business models in the market, not just our energy peers. The base dividend is sacrosanct, and we are committed to prioritizing steady growth of this base dividend over time. Beyond the increased base dividend, we remain committed to returning a significant amount of capital to our shareholders through the cycle. While we are removing the quarterly commitment to return at least 75% of cash available for distribution, there's a solid floor under our returns, given the increased base dividend represents approximately 50% of free cash flow at $70 a barrel WTI. However, the flexibility created by retaining excess cash flow during periods of higher commodity prices will allow us to opportunistically repurchase shares, reduce debt, or pursue a disciplined M&A strategy. There are extremely attractive investment opportunities ahead today for Viper, and we believe that allocating incremental capital through a cyclical lens will create long-term stockholder value. In short, we do not believe the market is currently valuing the variable dividend framework, and as such, have put that mechanism aside for now. In its place, we believe our new capital allocation framework will better highlight the attractiveness of Viper's dividend and enable a more compelling growth outlook to be paired with the existing yield. Operator, please open the line for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Betty Jiang of Barclays. Your line is now open. Hi. Good morning. Clearly, today's big news is the change in the cash return strategy. I think it really reflects how the royalty model and business has evolved over the last many years. It started as a distribution vehicle. Viper has shown growth, both organic and inorganic, and while distributing strong cash flow through the years. I just want to unpack sort of the rationale to change the cash return strategy today. How that's reflective of the value proposition that you see Viper offering long term. How do you think about Viper's competitive advantage against an E&P going forward? Yeah, Betty, a lot in that question. I'll start with the base dividend move. Certainly not something we take lightly. The Board looked at this and the data surrounding this decision in great detail. We kind of all came to the conclusion that the cash distribution yield was not being rewarded by the market. Instead, we figured that a very high base dividend yield that is higher than majors, higher than our E&P competitors, higher than midcap E&Ps, higher than utilities, but with a utility level of protection, should be something that gets rewarded by the market. For us to have a 4.5% base dividend yield today, at today's stock price, that's protected to $30 a barrel, that's about as secure a dividend as you could possibly find in the market, and certainly the most secure you can find in oil and gas. I think what's interesting is that Viper is a business here that, if you look at slide four, has had a 17% CAGR in per share growth. That excludes price impacts, right? This is just production per million shares. Viper's valuation today absolutely does not reflect that reality. I think the other interesting thing is, in a year where people are questioning shale growth and how much longer can the Permian grow, you got Viper growing 15% in 2026 with zero reward from the market on that growth. What we decided is, okay, let's have a big base dividend and let's be able to repurchase a lot of shares at these levels. If the multiple goes up and the stock performs well, we pull back and use cash for deals or to fortify the balance sheet. At the end of the day, this is about freely allocating capital to a business that I think is severely mispriced, particularly relative to its growth profile. Yeah, no, that makes a lot of sense, and do agree that a lot of the value is not getting recognized by the market, and having more share buyback would be good. My follow-up will be sort of on the M&A strategy and funding of M&A. I think given the shift, there's also a move towards potentially self-funding deals in going forward, and that's a difference from in the past where you guys had tapped into the public market. How do you think about M&A financing have changed under this new framework? Yeah. Let me add a couple things to the rest of the original comments I made. I think the other point of this evolution is Viper's growing up into a real company and a real business that should be valued relative to S&P 500 comps. That's our stated goal, and I think it's just a natural evolution from the distribution model where we distributed all of our cash every quarter and needed to rely on equity financing to grow the business. Well, now, as an investor, you can say my 4.5% base dividend is set and growing and safe. The company now has flexibility to allocate the rest of the free cash to either deals or repurchase shares or the balance sheet, depending on which is the best value creation opportunity for the business. That kind of ties to the market we're in today. I've never seen an A&D market, certainly on the larger side of deals, that's been more available and the opportunity set so large. We obviously did the Riverbend deal. There's a lot of deals in the market. We don't need to buy all these deals. Naturally, if we have an advantage in our modeling or what we see in the asset base, I think those deals should naturally come to us. I think this flexibility in terms of base dividend going up, but more cash to play around with gives us an opportunity to put more cash in deals or do not have to tap the equity markets for every deal. That makes sense. Thank you. Thanks, Betty. Thank you. Our next question comes from Neal Dingmann of William Blair. Your line is open. Morning. Thanks, guys. Maybe I'll just hit you with both since my first is pretty quick. My first quick one is just on the payout that you've talked about. Specifically, what percent do you believe is the most appropriate cash available for distribution on a go forward? I know that's been a little bit flexible, but what do we think is most appropriate? Maybe just secondly is a little bit like Betty's second question just on future strategy and what most specifically, how do you all believe you can continue to take advantage of Viper's dominant size and strong balance sheet for opportunity going forward? Yeah. Listen, I think there's going to be quarters where we distribute all of our free cash in the form of buying back shares plus a big base dividend. When the market isn't rewarding Viper for the growth prospects we put out there, I think this is a market today where we've been in the market almost every day since over the last two or three months buying back shares. If the stock doesn't respond, we're going to keep buying back and shrink the share count. Tying to the other side of the equation, it's been frustrating to watch Viper's valuation versus other royalty-like models in the basin, right? This is a pure free cash flow stream. It's a bet on Permian Basin technology, productivity, activity, and growth. To see Viper trade where it trades relative to some of the non-commodity exposed royalty streams in this basin is flummoxing to me. Our mindset was basically, let's put a big base dividend in place, and let's buy back shares. If the market doesn't realize the value, we're just going to keep buying them back. That also applies to Diamondback Energy. Diamondback Energy's a large shareholder of Viper, and Diamondback Energy has a lot of free cash to do things with, too. That could be buying more Viper, because I just think we're pounding the table that relative to what else is out there, this is the best value proposition in E&P land or i n the Permian in general. Thank you. Our next question comes from Paul Diamond of Citi. Your line is now open. Thank you. Good morning. Thanks for taking the call. Just wanted to touch base on some of the new base dividends. Is that over time and is there any level of volatility over time that would really shift your hedging framework at all? Is there a level you would ramp up given the concrete nature of the distribution now versus the relative one previously? I think generally, we like buying these $50 puts just to protect the extreme downside. Obviously, there's a huge gap between $50 and $30 oil where the base dividend is protected today. We set the base dividend to grow, and to grow meaningfully on a percentage basis. I think as production grows, as share count shrinks, as debt gets reduced, or as we do deals that are accretive, that provides more capacity for the base dividend to grow. I think two different sides of the equation, but generally, the base dividend needs to grow, and we still like the puts in place to protect that extreme downside. Just one more, I guess, high level strategic question. I talked in previous calls a bit about the opportunity set and the acreage from new and emerging benches. Is there any update there? Has there been any more work done on either at Diamondback's level or some of the third-party stuff that would shift your view there? Or is that more of just an emerging opportunity set? Paul, I think the big emergence over the last couple of quarters has been, at least from a leasing perspective on the Woodford and the Delaware. We've had five or six quarters now where we've been extremely active leasing the Barnett in the Midland Basin. The Woodford on the Delaware side has really picked up over the last couple of quarters, and I think if you look from probably the early part of 2025 to what we've done in the first half of 2026, it's pretty evenly split. I think everything in the door now, we're probably $25 million-$30 million of lease bonuses just on deep rights there, which is about a third of our total leasing effort over that time period. That money up front is good, but that also typically means a three-year clock for operators to go start developing those minerals. I think it's going to equate to more production growth over that time period as well. Understood. I should have clarity with it there. Thank you. Our next question comes from Derrick Whitfield of Texas Capital. Your line is open. Good morning again, guys. Morning, Derrick. Wanted to start first with your production outlook. When you think about the growth in your near-term inventory in your line of sight wells and compare that to the amount of wells required to hold your production flat, what does that suggest about the underlying growth rate of the business on a consolidated basis as you look out to 2027? Derrick, it's certainly strong. If you just look at Q2 and then compare that to the guide for Q3, we incorporate the 2,000 bbl a day of production contribution from the Riverbend assets, but that still implies 1,000 bbl a day of quarter-over-quarter growth on purely an organic basis. You can kind of do the math as well on what might be implied in Q4, I think the takeaway there will be continued organic growth. I think it sets us up for a really strong second half of the year, I think slide five of the investor presentation for the first time lays out explicitly what Permian production was for Viper, going back to the fourth quarter of last year as well as the first quarter of this year. Stripping out the noise associated with the non-Permian divestiture. All in, you're looking at about high single-digit organic growth in 2026. I don't know if we'll maintain that level on a percentage basis going into next year, certainly the line of sight we have in terms of activity is going to support some modest growth off the exit rate this year. Great. Certainly makes sense. Maybe referencing an earlier call, the Diamondback call. You guys noted a full well pad targeting the Barnett and Spanish Trail, which again, exceptionally high NRI area for you. As you look further on the development curve, how much activity does Diamondback have planned? There are other areas with very high NRIs. I think generally, it's pretty consistent. There's really three parts to the equation. One is what is Diamondback gross activity levels, two, what is Viper's exposure to that gross activity levels, three, what is our average NRI within those wells? We've been extremely consistent, going back over five years now of capturing about 75%-80% of Diamondback's gross activity with around a 6% average NRI. That gets skewed and you benefit from certain wells where you own the full royalty and get a 25% NRI. I think we still feel confident in maintaining that alignment with Diamondback here for the next couple of years. Hopefully we'll have some encouraging results, which we expect to on that first Spanish Trail Barnett development. As you get more gross wells there with those high NRIs, that helps the net exposure quite significantly. Here's what I'll add, wearing kind of two hats here, Derrick, is that if that pad produces how we expect and the costs come in how we expect, particularly since Diamondback not only has a high working interest in Spanish Trail, but Viper has the high NRI. Full section development in the Barnett will probably move to the top decile of our combined inventory in terms of rate of return, plus NPV. Should the results be what we expect, we're going to mow down Spanish Trail very quickly in the Barnett. Sounds very promising for Viper. Nice quarter, guys. Thanks, Derrick. Our next question comes from Jack Cavanagh of Goldman Sachs. Your line is now open. Thanks guys, for taking my question. Appreciate your comments on the market, not maybe rewarding Viper's value proposition at this point. I was just wondering if you could kind of overlay those comments with how you're viewing maybe the near-term outlook for opportunistic repurchases maybe relative to what we've seen this quarter and what we've seen historically from you guys, and what those levels could look like in the second half of this year. Yeah. I think we did a little under $150 million in Q2. We've kind of continued at a similar daily pace. Obviously, it's hard during the blackout window to alter your pace much. After the window opens, we'll see where the stock is in the next couple of days and be back in the market aggressively. I think we just fundamentally disagree that this should be a double-digit type yield, low double-digit type yield. I recognize that oil prices were well above mid-cycle in Q2. Even if you look at a normalized price environment, which is how we look at everything, both Diamondback and Viper, the value proposition is pretty obvious. I think generally, we'll be ready to step in here in a couple of days. Got it. Appreciate that. Maybe for my follow-up, just looking at 2027, obviously really strong on the organic growth side, you've obviously mentioned there's maybe potential for inorganic opportunities as well. Beyond that, I'm wondering if there, beyond 2027, if you see the potential for continued organic growth or if you think the structure could shift more to a higher returns, higher yield scenario, or what you're kind of seeing as the organic volume growth outlook beyond 2027. I think from what we can see, there's certainly organic growth potential beyond 2027, particularly led by Diamondback development of kind of the Barnett, right? That's going to drive the stuff we can see. I guess the bet on the rest of the basin is that the basin continues to grow, and that we grow relatively higher to the rest of the basin. I think as we do our underwriting process for third-party acquisitions, that third party's inventory and the quality of their inventory goes into our calculus for what we want to buy and what we don't buy. Generally, we've outperformed the growth in the basin by buying minerals in places that get developed first. Got it. Appreciate that. Thank you. Our next question comes from Scott Hanold of RBC. Your line is open. Thanks. It looks like your development wells and line of sight wells stepped up pretty nicely this quarter, and a lot of it looks like third-party operated stuff. Can you give us some sense and color on what you're seeing there? Is it just the uptick in rig activity is aligning with the Viper acreage or is there some other dynamic there? That's it, Scott. I would say generally, third-party activity has been pretty consistent from a gross perspective. It kind of moves around quarter to quarter on a net basis. Kaes just mentioned, we spend a lot of time and effort thinking about it from an operator's perspective of what is the highest returning projects they have ahead of them, and how do we get exposure to that. I think it's certainly not a coincidence in how you've seen our third party activity trend over the last couple of years, and it's just representative of us targeting the highest quality undeveloped acreage that we can in the Permian Basin, regardless of the operator. Got it. Okay. I guess this one's for you, Kaes. Obviously, you're pivoting more to stock buybacks and it feels like you all have some frustration on the Viper valuation. If you step back and look at stock buybacks, whether it's in E&P or even with Viper, it doesn't seem that it quite has moved the needle. I get the fact that there's more production or EPS per share for existing shareholders, what would be the next step if buybacks don't do the trick in pushing Viper stock higher? Are there other alternatives you're evaluating? Clearly, the move to more index inclusion was a big benefit to Viper a couple of years ago. We have our sights set, obviously you got to dream big. We'd like to get into the S&P 500 as a goal at some point. I think that opens us up to a broader investor universe. People start to pay more attention to the dividend yield and the size of the company. I understand the concept that stock buybacks, while a tool, may not be a silver bullet. I think if you firmly believe you're buying back shares below NAV at a mid-cycle price and a reasonable rate of return, then whether someone buys the stock or not should result in value accretion to the rest of the shareholder base, of which Diamondback's a significant shareholder. There's obviously other tools in the toolkit, I think being a pure play mineral company today is still the best position for Viper. I just think it's interesting to see people or investors pay 20+ times for surface right royalties in the basin when the biggest mineral owner in the public space that's growing 15% a year trades at half that. I just don't think that that makes sense. Appreciate the color. Thank you. Thank you. Our next question comes from Leo Mariani of ROTH. Your line is open. Hi, I was hoping you could talk a bit more about what you're seeing with third-party operator activity trends. I think you mentioned on the FANG call that you think the rig count in the Permian Basin is going to continue to sort of grow as we get kind of later in the year. Maybe you can provide a little bit more color around what you're seeing there. Leo, we've seen rig count trend up. We've seen that in the basin, and we've seen that specific to Viper as well. Really, that gets reflected in the work in progress in line of sight wells. I talk about this pretty consistently, but really what's most impactful for Viper is the conversion rates of those, what percentage of the permits or the DUCs get converted to production, and then also how quickly they do that. I think as rig count trends up, those existing permits get converted to production more quickly than potentially we underwrite, and that just brings forward some volume. I think we've positioned this business really well, where we benefit from the growth of Diamondback and their focus on Viper's concentrated mineral interest, and then also kind of a broad basin exposure to other third-party operators and whatever their activity levels may be, and also whatever learnings they might have across the entire Permian Basin. Yeah, I feel good about the third-party asset base and how it's performing, especially here recently with kind of where commodity prices have been. Okay. I wonder if you expand a bit more on the M&A side. Looks like you guys did about $103 million in M&A in the quarter. You announced kind of $160-ish million drop down from FANG. You talked about a pretty robust kind of M&A opportunity set. Can you provide a little bit more color about what you're seeing? Is it kind of a lot of smaller bite-size deals? Are there bigger deals kind of starting to get floated? Just any more color on that'd be helpful. I think it's a combination of both. We really have gained a lot of traction over the last quarter or two on the ground game. Those are conversations we've always had. I think we've just had a little bit higher success rate on converting those into deals we're closing. That's exciting, and it's a pretty core part of our business of bulking up and netting up and adding value around the edges. On the bigger packages, there were certainly a lot of calls over the last couple of months with sellers seeing where oil prices were or at least potential sellers. I think Riverbend is reflective of a good type of deal that Viper can do pretty easily now. The volatility has not been helpful, that's for sure. I think there's still a really constructive A&D market out there, and Viper expects to play a very significant role within that. As part of allocating capital today, if you think about all of the different uses, the investment opportunity in buying back shares looks pretty attractive relative to even what M&A might look like. Okay. Thank you. Thank you. This concludes the question and answer session. I would now like to turn it back over to the CEO, Kaes Van't Hof, for closing remarks. Thanks everybody for your interest in Viper Energy. I think we laid out a very clear future value proposition for our shareholders, and we look forward to delivering on it. Thank you. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.