Viper Energy (VNOM) Up 7.8% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

Wed, Sep 4, 2024, 8:30 AM 4 min read

Will the recent positive trend continue leading up to its next earnings release, or is Viper Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Viper Energy Q2 Earnings Top Estimates

Viper Energy Partners LP reported second-quarter 2024 adjusted earnings per unit of 61 cents, which beat the Zacks Consensus Estimate of 42 cents. The bottom line increased from the year-ago quarter’s 47 cents.

The company, with mineral interests in North America oil and gas resources, generated an operating income of $216.7 million, which missed the Zacks Consensus Estimate of $218 million. The top line significantly increased from the year-ago quarter’s $160.8 million.

Higher oil-equivalent production volumes aided Viper Energy’s strong quarterly earnings.

Production

The resources, wherein the company has mineral interests, produced 4,320 thousand oil-equivalent barrels (MBoe) in the June-end quarter of 2024, up from 3,429 MBoe a year ago. The reported figure surpassed our estimate of 4,128 Mboe.

Of the total volume, oil contributed 55.5% to 2,398 thousand barrels (MBbls), up from 1,924 MBbls a year ago. The metric also beat our estimate of 2,369 MBbls.

The production of crude oil, natural gas and natural gas liquids increased from the prior-year quarter’s levels.

Realized Prices

The overall average realized price per barrel of oil equivalent was $49.88 compared with $46.14 in second-quarter 2023. Our estimate for the same was pinned at $52.02 per barrel.

Average realized oil prices in the quarter under review were $81.04 per barrel, up from $72.40 in the year-ago quarter and beating our estimate of $79.08.

The price of natural gas was 20 cents per thousand cubic feet, down from $1.09 in the year-ago quarter and also missing our estimate of $1.08.

The price for natural gas liquids was $20.35 a barrel, up from $19.07 a year ago. Our estimate for the same was pinned at $23.21 per barrel.

Costs & Expenses

In the second quarter, total expenses were $68.2 million compared with $48.7 million in the prior-year quarter. The figure beat our estimate of $67.5 million.

On a per barrel of oil-equivalent (Boe) basis, total operating expenses were $4.36 compared with $4.19 in the year-ago quarter. The figure lagged our estimate of $5.21.

Cash Flow

Net cash provided by operating activities was $143.3 million, down from $145.4 million in the second quarter of 2023.

Balance Sheet

As of Jun 30, 2024, Viper Energy’s cash and cash equivalents were $35.2 million. The company reported a net long-term debt of $998 million.

Guidance

For 2024, the company expects total production of 46.75-48.25 MBoe/d, indicating an increase from the 43.8 MBoe/d reported in 2023. For the third quarter, it anticipates a production of 47.50-48.50 MBoe/d.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Viper Energy has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Viper Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Viper Energy belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Magnolia Oil & Gas Corp (MGY), has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Magnolia Oil & Gas Corp reported revenues of $336.73 million in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $0.56 for the same period compares with $0.44 a year ago.

For the current quarter, Magnolia Oil & Gas Corp is expected to post earnings of $0.56 per share, indicating a change of +3.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.7% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Magnolia Oil & Gas Corp. Also, the stock has a VGM Score of B.

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