Can Viper's Riverbend Deal Extend Production Growth Through 2026?

Viper's Riverbend Deal Expands Its Growth Base

After giving effect to Riverbend, Viper owned about 90,212 net royalty acres in the Permian Basin. The company also had 1,798 gross horizontal wells in active development and 1,589 additional line-of-sight wells as of July 1.

That inventory gives VNOM visibility beyond wells already producing. Active-development wells are expected to be turned to production within roughly six to eight months, while line-of-sight wells may reach production over approximately 15 to 18 months. Diamondback Energy FANG, Viper's parent, remains a key operator, but third parties accounted for 545 of the 691 gross wells turned to production in the second quarter.

VNOM's Production Outlook Moves Higher

Viper raised full-year 2026 production guidance to 132,500-135,000 barrels of oil equivalent per day, including oil production of 66,000-67,250 barrels per day. Third-quarter guidance calls for 133,500-135,500 barrels of oil equivalent per day and 67,500-68,500 barrels of oil per day.

Management said the third-quarter outlook includes about 2,000 barrels per day from Riverbend while still implying roughly 1,000 barrels per day of sequential organic growth. It also indicated that activity supports continued organic gains in the second half and modest growth off the 2026 exit rate into 2027.

Image Source: Zacks Investment Research

Viper's Royalty Model Supports Cash Conversion

Viper does not fund the drilling and completion costs on its royalty acreage. Those expenses are borne by working-interest operators, allowing the company to participate in production growth without the capital spending required of a traditional exploration and production company.

The cost structure remains lean in key cash categories, with 2026 cash general and administrative expense guidance of 70-90 cents per barrel of oil equivalent. Texas Pacific Land Corporation TPL, another Permian-focused land and royalty owner, reported second-quarter 2026 oil and gas royalty production of 39.7 thousand barrels of oil equivalent per day, offering another example of capital-light exposure to regional development.

VNOM's Bigger Scale Also Raises Costs

The larger producing base carries higher accounting and operating costs. Second-quarter total costs and expenses rose 53.7% to $249 million, while depreciation, depletion and amortization increased to $195 million from $124 million.

Viper expects 2026 depreciation, depletion and amortization of $14.75-$17.25 per barrel of oil equivalent. The key test is whether higher volumes and the low-cash-cost royalty structure can offset that larger expense base, especially if commodity prices weaken.

VNOM’s Earnings Estimates Support the 2026 Growth Case

The Zacks Consensus Estimate calls for Viper to earn 50 cents per share in the September quarter, up 25% year over year, followed by 51 cents in the December quarter, representing growth of 64.5%. For full-year 2026, the consensus estimate stands at $2.54 per share, implying an 80.1% increase from $1.41 in 2025. These projections complement the company’s higher production guidance following the Riverbend acquisition and suggest that rising volumes could support earnings through the remainder of 2026. However, the 2027 consensus estimate of $2.20 per share points to a 13.3% year-over-year decline, indicating that the current growth pace may be difficult to sustain. The estimate trend therefore supports the near-term production story while keeping the longer-term earnings outlook more measured.

Image Source: Zacks Investment Research

Viper's Signals Keep the Event in Perspective

Riverbend broadens Viper's development runway and supports higher 2026 guidance, while the active-development and line-of-sight inventory provides additional visibility. The acquisition therefore strengthens the case for continued production growth through 2026, but operator timing, commodity prices and rising costs will influence how effectively that growth converts into earnings and cash flow.

VNOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It has a Growth Score of A, Momentum Score of A, Value Score of D and VGM Score of B. The A grades point to favorable growth and momentum characteristics, while the D Value Score signals weaker valuation characteristics. The B VGM Score is constructive, but the #3 Rank means the stock does not carry one of Zacks' top near-term rankings.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research