How VNOM Could Benefit from the Diamondback–Energen Deal

How could VNOM benefit?

Viper Energy Partners (VNOM), a mineral interest MLP owned by Diamondback Energy (FANG), is expected to benefit from Diamondback Energy’s merger with Energen Corporation (EGN). Energen Corporation currently owns 266 net royalty acres in the Midland (71) and Delaware (195) Basins. According to the related investor presentation, a significant amount of this acreage has the potential to deliver more than 75.0% NRI (net revenue interest).

How VNOM Could Benefit from the Diamondback–Energen Deal

Diamondback Energy expects to drop down these mineral assets to Viper Energy Partners over time, which would increase Viper Energy Partners’ dropdown inventory. This could be the reason behind VNOM’s positive stock price reaction and upward target price revisions following the merger announcement. We’ll look into Diamondback Energy’s stock price reaction and analyst ratings in the next two articles.

For a comparative analysis of two major mineral interest MLPs, please read VNOM and BSM: A Comparative Analysis of Two Mineral Interest MLPs.

In the next article, we’ll look into Diamondback Energy’s stock price reaction following the deal announcement.