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Viper Energy (VNOM) Gains Marginally Despite Weak Q1 Earnings

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Viper Energy Partners LP (VNOM - Free Report) units have gained marginally despite reporting lower-than-expected earnings for the first quarter of 2022. The stock movement is expected to have resulted from the company’s increased cash distribution, and the year-over-year increase in production and prices.

Viper Energy reported first-quarter 2022 adjusted earnings per unit of 23 cents, missing the Zacks Consensus Estimate of 33 cents. However, the bottom line significantly improved from the year-ago quarter’s loss of 8 cents per share.

The partnership, with mineral interests in North America oil and gas resources, generated an operating income of $201.9 million, beating the Zacks Consensus Estimate of $174 million. The top line increased from the year-ago quarter’s $97 million.

The lower-than-expected earnings can be attributed to significantly increased costs and expenses. The negatives were partially offset by higher oil-equivalent production volumes and commodity price realizations.

Viper Energy Partners LP Price, Consensus and EPS Surprise

 

Distribution

The partnership was authorized by the board of directors of its general partner to make a cash distribution of 67 cents per common unit, payable May 19, 2022, to shareholders of record as of May 12, 2022. The metric increased 42.6% from the prior-quarter figure of 47 cents per common unit.

Moreover, Viper Energy’s board increased the authorization of its common unit repurchase program to $250 million from $150 million announced last November.

Production

The resources, wherein the partnership has mineral interests, produced 2,841 thousand oil-equivalent barrels (MBoe) for the March-end quarter of 2022, up from 2,346 MBoe in the year-ago quarter. Of the total volume, oil contributed 57.5%. The production of crude oil, natural gas and natural gas liquids increased from the prior-year quarter.

Realized Prices

Overall average realized price per barrel of oil equivalent was recorded at $67.97 compared with $41.14 in first-quarter 2021. Average realized oil prices for the quarter under review were $94.95 per barrel, up from $56.16 a year ago. The price of natural gas was $4.07 per thousand cubic feet, up from $2.77 in the year-ago quarter. The same for natural gas liquids was $38.99 a barrel, up from the year-ago quarter’s $22.42.

Costs & Expenses

In first-quarter 2022, total expenses amounted to $43.2 million versus $33.8 million in the prior-year quarter. On a per barrel of oil equivalent (Boe) basis, total operating expenses were recorded at $5.47 versus $3.64 in the year-ago quarter.

Cash Flow

Net cash from operating activities was recorded at $135.8 million, up from $54.7 million in the first quarter of 2021.

Balance Sheet

As of Mar 31, 2022, Viper Energy’s cash and cash equivalents were $33.1 million. It reported net long-term debt of $721 million, representing a debt-to-capitalization of 24.3%.

Guidance

For 2022, the partnership projects average oil equivalent production at 30.5-32.75 thousand barrels of oil equivalent per day (MBoe/d). This suggests an increase from the aforementioned 29.5-31.5 MBoe/d.

The Zacks Rank #2 (Buy) partnership sets its average daily production guidance at 31-32.25 Mboe/d for the second and third quarters of the year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of Other Upstream Energy Players

Let’s take a look at other upstream energy players, which have turned in strong bottom-line numbers in the first quarter.

Pioneer Natural Resources Company (PXD - Free Report) reported first-quarter 2022 earnings of $7.74 per share (excluding one-time items), beating the Zacks Consensus Estimate of $7.32. The strong quarterly earnings were aided by higher oil-equivalent production volumes and commodity price realizations.

For the second quarter, Pioneer Natural announced a dividend payment of $7.38 per share of common stock, which includes a variable dividend of $6.60 per share and a base dividend of 78 cents. This suggests a 95.2% increase from the prior dividend of $3.78 per share.

EOG Resources, Inc. (EOG - Free Report) reported first-quarter 2022 adjusted earnings per share of $4.00, beating the Zacks Consensus Estimate of $3.69. Strong earnings were driven by higher oil-equivalent production and commodity prices.

EOG Resources announced a special dividend of $1.80 per share. The special dividend is likely to be paid out on Jun 30 to stockholders of record as of Jun 15. In the reported quarter, EOG generated $2,363 million in free cash flow.

ConocoPhillips (COP - Free Report) reported first-quarter 2022 adjusted earnings per share of $3.27, beating the Zacks Consensus Estimate of $3.24. The strong quarterly results have been aided by increased oil-equivalent production volumes and realized commodity prices.

ConocoPhillips hiked its expected 2022 return of capital to shareholders. The new guidance is pegged at $10 billion, reflecting an increase from the aforementioned $8 billion. The incremental returns to stockholders will get distributed through share repurchases and VROC tiers.

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