Sitio Royalties Corp. Reports 14% Revenue Decline in Q2 2025 Amid Merger Agreement

Sitio Royalties Corp. reported a decline in financial performance for the second quarter of 2025, with total revenues of $145.7 million, down 14% from $168.5 million in the same period last year. The decrease was primarily attributed to a 20% drop in average realized prices, despite a 7% increase in production volumes. Crude oil revenues fell by 23% to $110.8 million, while natural gas revenues surged by 68% to $10 million, reflecting a significant increase in average realized prices. For the first half of 2025, total revenues were $309.2 million, a 3% decrease from $319.9 million in the prior year.

Operating expenses for the second quarter decreased by 3% to $108.5 million, driven by an 11% reduction in depreciation, depletion, and amortization expenses. However, general and administrative expenses rose by 49% to $20.1 million, largely due to increased merger-related costs and higher employee compensation. The company reported net income of $14.5 million for the quarter, a 50% decline from $29 million in the previous year, with net income attributable to Class A stockholders at $7.3 million, down 43%.

In terms of strategic developments, Sitio announced a merger agreement with Viper Energy, which is expected to be completed in the near future. This all-equity transaction will result in Sitio becoming a wholly owned subsidiary of New Viper, with Sitio stockholders owning approximately 20% of the combined entity. The merger has been unanimously approved by both companies' boards and is subject to customary conditions, including regulatory approvals.

Operationally, Sitio's average daily production for the second quarter was 41,879 BOE/d, an increase from 39,231 BOE/d in the prior year. The company owned mineral and royalty interests representing approximately 275,071 net royalty acres as of June 30, 2025. The company has also been active in acquisitions, completing 215 transactions since its inception, with a focus on expanding its mineral and royalty interests.

Looking ahead, Sitio anticipates continued challenges due to fluctuating commodity prices and economic conditions. The company is focused on maintaining liquidity, with $437.2 million available as of June 30, 2025, including cash and credit facilities. Sitio's management remains committed to returning capital to stockholders while navigating the complexities of the oil and gas market, including potential impacts from geopolitical events and regulatory changes.