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Viper Energy Partners (VNOM) Prices $500M Senior Notes at Par

Zacks Equity Research

Viper Energy Partners LP VNOM recently announced the pricing of senior notes with aggregate principal amount of $500 million. The notes, carrying an interest rate of 5.375%, are likely to mature by 2027.

Notably, the senior notes, which were recently upsized by $100 million, have been priced at par. The partnership will be offering the notes to qualified institutional buyers and selected investors from outside America. Viper Energy is likely to conclude the offering of senior notes by Oct 16, which awaits regulatory approvals.

The partnership has estimated net proceeds from the offering at roughly $492 million. Viper Energy Partners added that the proceeds are likely be lent to Viper Energy Partners LLC (Viper Operating Company). It is to be noted that the net proceeds will thus be utilized for clearing outstanding borrowings under the revolving credit facility of Viper Operating Company.

Based in Midland, TX, Viper Energy Partners has mineral interests in the prolific Permian. Those mineral acres are being leased to working interest owners and the partnership receives royalty income in return. Drillers in the basin are getting more efficient since they are able to produce more oil despite employing lower rigs. This secures stable royalty income for the partnership.

Notably, Viper Energy Partners is scheduled to report third-quarter 2019 earnings on Oct 29, after the closing bell. The Zacks Consensus Estimate for the partnership’s quarterly earnings per unit is pegged at 9 cents, reflecting a year-over-year increase of 80%.

The partnership, an affiliate of Diamondback Energy, Inc. FANG, currently carries a Zacks Rank #3 (Hold). Meanwhile, two better-ranked stocks in the energy space are Matrix Service Company MTRX and Shell Midstream Partners LP SHLX. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Matrix Service has managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters.

Shell Midstream has an average positive earnings surprise of 3.8% for the past four quarters.

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