Viper Energy, Inc.

Good day, and thank you for standing by. Welcome to the Viper Energy third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during that time, you need to press star 11 on your telephone, and you'll hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Chip Seale, Investor Relations Director. Please go ahead.

Thank you, Sarah. Good morning and welcome to Viper Energy's third 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 Energy's third quarter 2026 conference call. Q3 was another strong quarter for Viper. Oil production averaged just above the high end of our guidance range at over 69,000 barrels per day, up more than 6% quarter over quarter, driven by recent acquisitions and continued development from both Diamondback and our third-party operators. During the quarter, operators turned 689 gross horizontal wells to production on our acreage, including 123 Diamondback-operated wells at an average NRI of over 9%. On the acquisition front, we closed two previously announced transactions, the Riverbend acquisition on July 1st and the drop down from Diamondback on September 1st. Diamondback took its consideration entirely in equity for the drop down, further increasing its stake in Viper and reinforcing our alignment with our parent company. In September, we also closed the McElroy Ranch acquisition for an aggregate purchase price of $529 million. This adds about 7,400 net royalty acres in Upton and Crane counties. This ranch gives us a concentrated ownership of roughly 12% NRI across 60,000 gross acres in what we expect to be the core fairway of emerging Barnett development in the western Midland Basin. It is more than 95% undeveloped with over 40 net inventory locations and we expect its development to support our production profile and continued growth outlook over the next decade. Additionally, today we also announced an agreement to acquire nearly 1,600 net royalty acres in the Midland Basin from Buckhorn Minerals for $280 million in cash and 1.8 million Class A shares. Approximately 80% of the Buckhorn acreage overlaps with Viper's existing footprint, and the asset is roughly 60% undeveloped, including exposure to the highly undeveloped driver unit. We think this is one of the highest quality sizable mineral assets left in the Midland Basin. By our estimates, nearly half of its net inventory ranks in the top quartile of remaining inventory in the Midland Basin, and 70% of the inventory ranks in the top half. Together, the McElroy Ranch and Buckhorn acquisitions add nearly 60 net locations across two largely undeveloped assets. Notably, we're funding these deals primarily with cash, delivering on the commitment we made when we revised our return of capital framework last quarter to pursue accretive M&A with less reliance on equity. Reflecting the strength of our base business in these acquisitions, we are again raising our full year 2026 oil production guidance with a new midpoint of 67,500 barrels of oil per day. We're also initiating fourth quarter oil production guidance of 70,000 to 71,000 barrels of oil per day, up nearly 1,500 barrels per day from our third quarter actuals, and inclusive of a partial quarter contribution from Buckhorn. Turning to our financial results for the quarter, we generated $520 million of free cash flow, which represents a free cash flow margin of almost 80%. With the cash generated during the quarter, we declared a base dividend of 50 cents a share in addition to $90 million of repurchases during the quarter. As part of our revised capital allocation framework announced last quarter, we will also retain a significant amount of incremental cash to pay down debt from our previously discussed acquisitions very quickly. In conclusion, every part of the VIPER model showed up this quarter. Organic growth, High quality acquisitions funded primarily with cash and a durable growing base dividend paired with opportunistic share repurchases. With a capital light royalty model and an unmatched acreage position in the Permian Basin, we continue to believe Viper is uniquely positioned to deliver durable per share growth and attractive long-term stockholder returns. With that, operator, now please open the line for questions.