Back to top

Image: Bigstock

Viper Energy (VNOM) Announces Buyback After Q3 Earnings Beat

Read MoreHide Full Article

Viper Energy Partners LP (VNOM - Free Report) recently announced that its board of directors has approved a unit repurchase program. This authorized the subsidiary of Diamondback Energy, Inc. (FANG - Free Report) to buy back up to $100 million of its common units through Dec 31, 2021.

Viper Energy intends to use expected free cash flow for the repurchase of units under the program. Moreover, it has plans to use a portion of the free cash flow and proceeds from the divestment of non-operated minerals to decrease net debt. The partnership’s robust performance and higher production volumes are expected to support the unit buyback program and debt-reduction plans. Let’s take a look at the partnership’s third-quarter earnings to get a profound picture of its operations.

Better-Than-Expected Q3 Results

Viper Energy reported breakeven third-quarter 2020 adjusted earnings per unit against the Zacks Consensus Estimate of a loss of 9 cents. Notably, the partnership reported a profit of 13 cents in the year-ago quarter.

The partnership — with mineral interests in North American oil and gas resources — generated operating income of $62.9 million, which beat the Zacks Consensus Estimate of $51 million. However, the metric decreased from the year-ago level of $71.8 million.

The better-than-expected quarterly results can be attributed to a rise in oil equivalent production volumes and lower per unit operating costs. This was partially offset by lower oil and gas price realizations due to dented energy demand on account of the coronavirus outbreak.

Viper Energy Partners LP Price, Consensus and EPS Surprise

Viper Energy Partners LP Price, Consensus and EPS Surprise

Viper Energy Partners LP price-consensus-eps-surprise-chart | Viper Energy Partners LP Quote

Distribution

The partnership was authorized by the board of directors of its general partner to make cash distribution of 10 cents per common unit for the September quarter of 2020.

Production

The resources, wherein the partnership has mineral interests, produced 2,430 thousand oil equivalent barrels (MBoe) for the September quarter of 2020, up from 1,956 MBoe a year ago. Of the total volumes, oil accounted for 59.9% of total production. Production of crude oil, natural gas and natural gas liquids rose from the year-ago levels in the quarter under review.

Realized Prices

Overall average realized price per barrel of oil equivalent was recorded at $25.76 compared with $36.33 in third-quarter 2019. Average realized oil prices for the quarter were recorded at $36.80 per barrel, down from $51.53 a year ago. The same for natural gas was recorded at $1.07 per thousand cubic feet, down from $1.28 in the year-ago period. However, the price of natural gas liquids was $12.44 a barrel, up from the year-ago quarter’s $9.84.

Cost & Expenses

Total expenses for the quarter under review amounted to $31.6 million versus $25.2 million in the prior-year quarter. On a per barrel of oil equivalent (Boe) basis, total operating expenses were recorded at $2.71 versus $3.11 in the year-ago quarter.

Cash Flow

Net cash from operating activities were recorded at $27.3 million, down from $62.5 million in the year-ago period. Despite the current market uncertainties, the partnership expects to generate more cash from operations in the coming days, supported by favorable hedges.

Balance Sheet

As of Sep 30, 2020, Viper Energy’s cash and cash equivalents were recorded at $7.4 million. It reported net long-term debt of $597.9 million, representing a debt to capitalization of 23.4%.

Guidance

The partnership issued its daily average oil equivalent production guidance of 25.5-27 thousand barrels of oil equivalent per day (MBoe/d) for fourth-quarter 2020 and first-quarter 2021. For 2020, the partnership increased its average production guidance to 26-26.5 MBoe/d.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) and Antero Resources Corporation (AR - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.

Antero Resources’ bottom line for 2021 is expected to rise 30.5% year over year.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Published in