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Viper Energy (VNOM) Q4 Earnings Lag Estimates, Improve Y/Y

Zacks Equity Research

Viper Energy Partners LP VNOM reported fourth-quarter 2019 earnings per unit of 3 cents, missing the Zacks Consensus Estimate of 9 cents but improving from the year-ago loss of 1 cent.  

The partnership generated operating income of $92.7 million, which beat the Zacks Consensus Estimate of $89 million. Also, the top line increased from the year-ago level of $73.7 million.

The weaker-than-expected earnings can be attributed to fall in overall average realized price and higher costs and expenses, partially offset by increased production volumes.

In fourth-quarter 2019, the partnership closed nine acquisitions for $912.9 million. These acquisitions boosted its mineral interests to 24,304 net royalty acres. The partnership had proved reserves of 88.9 million barrels of oil equivalent as of Dec 31, 2019, of which crude oil constituted 54.4 million barrels. Proved reserves increased 41% year over year.

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

Cash Distribution

The partnership was authorized by the board of directors of its general partner to make cash distribution of 45 cents per common unit for the December quarter of 2019. The new distribution reflects a sequential decrease of 2.2%.

It generated $236.7 million of net cash from operating activities in 2019, lower than the year-ago period’s $244.5 million.

Production Rises

The resources wherein the partnership has mineral interests produced 2,405 thousand oil equivalent barrels (MBoe) in the December quarter of 2019, up from 1,858 MBoe a year ago. Of the total volumes, oil accounted for 63%. Production of crude oil, natural gas and natural gas liquids rose from the year-ago levels in the quarter under review.

Overall Realized Prices Decline

Overall average realized price per barrel of oil equivalent was recorded at $38.20, lower than $39.17 in fourth-quarter 2018. Average realized oil prices during the quarter were recorded at $53.90 per barrel, up from $48.73 a year ago. Natural gas prices were recorded at $$1.29 per thousand cubic feet, lower than the year-ago quarter’s $2.41. The price of natural gas liquids was $14.53 a barrel, down from the year-ago quarter’s $22.13.

Cost & Expenses Rise

Total expenses in the quarter under review amounted to $35.3 million, significantly higher than $24.2 million in the prior-year period. On a per BOE basis, total operating expenses were recorded at $3.34, higher than $3.26 in the year-ago period.

Balance Sheet

As of Dec 31, 2019, the partnership’s cash and cash equivalents were recorded at $3.6 million. It reported long-term debt of $586.8 million, representing a debt-to-capitalization ratio of 20.7%.

Guidance

The partnership provided its first-half 2020 guidance of net production in the band of 26-28.5 MBoe/d. It expects first-half 2020 net oil production in the range of 16.5-18 MBbls/d. For full-year 2020, Viper Energy expects net production in the range of 27-30 MBoe/d.

Zacks Rank & Stocks to Consider

Viper Energy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include Denbury Resources Inc. DNR, Chevron Corporation CVX and Hess Corporation HES, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Denbury Resources’ earnings per share estimates of 30 cents for 2020 have been unchanged over past seven days.

Chevron’s bottom line for 2020 is expected to rise 12.8% year over year.

Hess’ bottom line for 2020 is expected to rise 93.7% year over year.

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