It has been about a month since the last earnings report for Viper Energy Partners (VNOM). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Viper Energy due for a breakout? 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 catalysts.
Viper Energy Q1 Earnings Miss Estimates on Lower Oil Price
Viper Energy Partners LP’s loss per unit came in at a penny against the Zacks Consensus Estimate of earnings of 4 cents. In the prior-year quarter, the partnership had reported earnings of 38 cents.
The partnership generated operating income of $62 million, which missed the Zacks Consensus Estimate of $68 million. However, the top line was almost flat year over year.
The decline in realized commodity prices primarily attributed to the lower-than-expected quarterly results.
The partnership received authorization from the board of directors of its general partner to report cash distributions for the March quarter of 2019 at 38 cents per common unit. The new distribution reflects a sequential decline of 25.5%.
Production & Realized Prices
The resources where the partnership has mineral interest produced 1,714 thousand oil equivalent barrels (MBoE) in the March quarter of 2019, up from 1,271 MBoE a year ago. Of the total volumes, oil accounted for 67%.
Realized oil prices during the quarter were recorded at $45.31 per barrel, down from $61.41 a year ago. The price of natural gas liquids was recorded at $18.09 a barrel, down from the year-ago quarter’s $23.47. Moreover, the average sale price of natural gas fell to $2.05 per Mcf from $2.11 in the year-ago quarter.
As of Mar 31, 2019, the partnership’s cash and cash equivalents were recorded at $10.1 million. The partnership reported long-term debt of $157 million, representing a debt-to-capitalization ratio of roughly 9%.
For second and third quarter of 2019, the partnership projects daily net production in the band of 19 to 21 MBoE. For 2019, Viper Energy expects daily net production in the range of 20 to 23 MBoE. The partnership added that the proportion of oil, of the total expected production volumes, is projected in the band of 67% to 71%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.27% due to these changes.
At this time, Viper Energy has an average Growth Score of C, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Viper Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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