S&P Global Ratings moved Viper Energy Inc.'s (NASDAQ:VNOM) issuer credit outlook to positive from stable on Tuesday and left the company's BBB- issuer credit rating unchanged. The rating action followed a similar upward revision for parent Diamondback Energy Inc. (NASDAQ:FANG), which S&P said reflected stronger financial metrics, material free cash flow generation and rising production.
In addition to affirming the BBB- issuer rating, S&P reaffirmed the BBB- rating on VNOM's unsecured notes. The agency described Viper's stand-alone credit profile as bb and applied a two-notch uplift to that score based on the company's strategic linkage with Diamondback.
S&P characterized VNOM as a highly strategic subsidiary of Diamondback, noting that FANG owns roughly 40% of VNOM's equity and holds the right to appoint up to three board members so long as it retains at least 25% of VNOM's outstanding common shares.
On operational metrics, Viper's production is expected to rise sharply - to a range of 132,500 to 135,000 barrels of oil equivalent per day in 2026 - up from about 50,000 boe/d in 2024. Reported proved reserves grew to 406 million boe at year-end 2025 from 194 million boe at the end of 2024. S&P attributed the reserve expansion to recent transactions, including the July 1 close of Riverbend Oil & Gas IX and asset drop-downs from Diamondback announced on August 3.
Viper has also revised its capital-return policy. The company moved away from a framework that called for distributing at least 75% of cash available to shareholders. The new approach emphasizes growing a fixed base dividend, eliminates the previous variable dividend, allows for opportunistic share repurchases and prioritizes higher retained cash flow.
Looking at credit metrics, S&P expects Viper to sustain funds from operations to debt above 100% and to keep debt to EBITDA at 1x or below over the next two years. For Diamondback, S&P forecasted maintenance of production above 1 million boe/d and funds from operations to debt above 60%, alongside a plan to reduce gross debt toward a $10 billion net debt target by year-end 2027.
All of Viper's assets and operations are located in the Permian basin. As of July 1, the company reported 106 active rigs across its acreage. Approximately 38% of that acreage is operated by Diamondback on a pro forma basis for the recent transactions referenced by S&P.
Market prices noted in reporting: FANG +1.34% and VNOM +1.34% were shown in the pricing data accompanying the ratings commentary.
This coverage summarizes S&P's published credit view and the company disclosures that S&P relied on in revising Viper Energy's outlook and affirming its ratings.