A month has gone by since the last earnings report for Viper Energy Partners (
VNOM Quick Quote VNOM - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.
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 the most recent earnings report in order to get a better handle on the important drivers.
Viper Energy Misses Q1 Earnings Estimates, Revenues Beat
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.
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.
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.
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.
Net cash from operating activities was recorded at $135.8 million, up from $54.7 million in the first quarter of 2021.
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%.
For 2022, Viper Energy 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 partnership sets its average daily production guidance at 31-32.25 Mboe/d for the second and third quarters of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Viper Energy has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Viper Energy has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Viper Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Antero Resources (
AR Quick Quote AR - Free Report) , a stock from the same industry, has gained 15.2%. The company reported its results for the quarter ended March 2022 more than a month ago.
Antero Resources reported revenues of $786.84 million in the last reported quarter, representing a year-over-year change of -34.7%. EPS of $1.15 for the same period compares with $0.62 a year ago.
Antero Resources is expected to post earnings of $1.58 per share for the current quarter, representing a year-over-year change of +1028.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Antero Resources. Also, the stock has a VGM Score of A.