What to Know About Oaktree's New $240 Million Viper Energy Stake Following Sitio Merger
Key Points
Oaktree reported holding nearly 6.3 million shares of Viper Energy, worth an estimated $240.2 million, at the end of the third quarter.
The position represents 3.7% of Oaktree's 13F reportable assets.
Viper stood as the fund’s fifth-largest holding at quarter-end.
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Oaktree Capital Management disclosed a new position in Viper Energy (NASDAQ:VNOM), acquiring nearly 6.3 million shares valued at approximately $240.2 million during the third quarter, according to an SEC filing on Thursday.
What Happened
According to a filing submitted to the U.S. Securities and Exchange Commission on Thursday, Oaktree Capital Management LP initiated a new position in Viper Energy (NASDAQ:VNOM) during the third quarter. The firm acquired 6,285,062 shares, resulting in a quarter-end stake valued at $240.2 million, representing 3.7% of the firm's $6.5 billion in reportable U.S. equity assets.
What Else to Know
Top holdings after the filing:
- NASDAQ:TRMD: $834.6 million (17.6% of AUM)
- NASDAQ:EXE: $537.8 million (11.3% of AUM)
- NASDAQ:GTX: $434.4 million (9.2% of AUM)
- NYSE:AU: $294.3 million (6.2% of AUM)
- NASDAQ:VNOM: $240.2 million (3.7% of AUM)
As of Thursday, Viper shares were priced at $37.14, down 29% over the past year and far underperforming the S&P 500's 13% gain in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Thursday) | $37.14 |
| Market Capitalization | $12.1 billion |
| Revenue (TTM) | $980.7 million |
| Dividend Yield | 5.6% |
Company Snapshot
- Viper Energy owns and acquires mineral and royalty interests in oil and natural gas properties, primarily in the Permian Basin and Eagle Ford Shale.
- The company operates a recurring cash flow model by collecting royalty payments from third-party operators extracting oil and gas on its mineral acreage.
- It serves as a subsidiary of Diamondback Energy, focusing on low-cost, high-margin royalty streams in U.S. shale basins.
Viper Energy generates revenue through royalty payments, providing stable cash flows with minimal operating costs. Its business model centers on acquiring high-quality mineral interests and maximizing royalty income in key U.S. energy regions.
Foolish Take
Oaktree's lofty new position in Viper Energy appears directly linked to its prior holdings in Sitio Royalties Corp., as confirmed in an SEC Schedule 13D filing released in August. The filing shows that Oaktree and affiliated entities disposed of their Sitio equity on August 19, when Sitio merged with Viper Energy in a $4.1 billion all-stock transaction. The move effectively converted Oaktree’s Sitio stake into shares of the newly combined Viper entity.
The acquisition boosted Viper’s footprint by roughly 42% to nearly 86,000 net royalty acres, while management projects 8% to 10% accretion to distributable cash flow per share and over $50 million in annual cost synergies. Meanwhile, Viper’s third-quarter results reflected the transition—oil production jumped 36% sequentially, and it's expected to climb 20% in the fourth quarter on a yearly basis.
For Oaktree, which is known for opportunistic, yield-focused investments, the position aligns with its broader portfolio exposure to energy, industrial, and shipping names such as Torm, AngloGold Ashanti, and Garrett Motion. Long-term investors may find appeal in Viper’s high-margin model and growing dividend, though, of course, integration risk from the Sitio deal and oil price volatility remain key variables.
Glossary
13F reportable AUM: The total value of U.S. equity assets a fund manager must disclose in SEC Form 13F filings.
Position: The amount of a particular security or investment held by an individual or institution.
Quarter-end stake: The value or number of shares held in a security at the end of a fiscal quarter.
Dividend yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Mineral and royalty interests: Ownership rights to receive a portion of revenue from oil and gas production, without operating the property.
Permian Basin: A major oil- and gas-producing region in western Texas and southeastern New Mexico.
Eagle Ford Shale: A significant oil and natural gas producing geological formation in South Texas.
Subsidiary: A company controlled by another, typically through majority ownership of voting stock.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Garrett Motion and Viper Energy. The Motley Fool has a disclosure policy.
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