Sitio Royalties Corp. ( STR ) shares are trading higher by more than 12.2% on Tuesday after the company inked a $4.1 billion deal with Viper Energy ( VNOM ) .

The all-equity transaction includes Sitio’s net debt of about $1.1 billion as of March 31, 2025.

As per the terms, Sitio stockholders will receive 0.4855 shares of Class A common shares in a new holding company (Pro forma Viper) for each share of Sitio Class A common stock.

Similarly, for each unit of Sitio’s operating subsidiary, holders will receive 0.4855 units of Viper’s operating subsidiary, Viper Energy Partners LLC, implying a value of $19.41 per share for each Sitio stockholder, based on Viper’s closing stock price on June 2.

Viper is a subsidiary of Diamondback Energy, Inc. ( FANG ) .

The boards of both companies unanimously approved the transaction, and Diamondback, as Viper’s majority stockholder, has provided its approval via written consent.

The transaction is anticipated to close in the third quarter of 2025, subject to customary closing conditions.

Upon the transaction’s completion, Diamondback is projected to hold about 41% of Pro forma Viper’s outstanding common stock.

Pro forma Viper: The new holding company is expected to hold roughly 85,700 net royalty acres in the Permian Basin (about 43% operated by Diamondback) and own an average 1.8% Net Royalty Interest (NRI) across approximately 33,300 gross producing horizontal wells (or ~608 net wells).

For the fourth quarter of 2025, Pro forma is expected to witness an average production of 64 – 68 thousand barrels of oil per day (mbo/d), or 122 – 130 thousand barrels of oil equivalent per day (mboe/d).

The company expects 2026 average production to rise by a mid-single-digit percentage from these levels. Synergies from the deal are expected to exceed $50 million annually.

Viper dividend Boost: Along with the deal, Viper’s board approved a 10% increase to its base dividend to $1.32 per share annually (or 33 cents per share quarterly).

Viper CEO Kaes Van’t Hof says the transaction “positions” Viper to compete for capital with mid- and large-cap E&Ps.

As of March 31, Viper had a cash balance of $560 million and a total long-term debt of $830 million.

Price Action: STR shares are up 8.37% at $18.77 premarket at the last check Tuesday.

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