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Viper Energy (VNOM) Shares Gain 2.8% Despite Q1 Earnings Miss

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Viper Energy Partners LP’s VNOM shares, which declined 2% after the weak first-quarter 2021 earnings announcement on May 3, have jumped 2.8% since then. The company reported an adjusted loss per unit of 8 cents for the first quarter against the Zacks Consensus Estimate of a profit of 6 cents. Moreover, the bottom line significantly declined from the year-ago profit of 21 cents per share.

The partnership — with mineral interests in North America oil and gas resources — generated operating income of $97 million, beating the Zacks Consensus Estimate of $83 million. Also, the top line increased from the year-ago quarter’s $78.7 million.

The weak first-quarter earnings can be attributed to a decline in oil-equivalent production volumes and higher expenses. These were partially offset by higher commodity price realizations.

Viper Energy Partners LP Price, Consensus and EPS Surprise

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

Distribution

The partnership was authorized by the board of directors of its general partner to make a cash distribution of 25 cents per common unit, payable May 20, 2021, to all its shareholders of record as of May 13, 2021. Notably, the metric increased 78.6% from the prior-quarter figure of 14 cents per common unit.

Production

The resources, wherein the partnership has mineral interests, produced 2,346 thousand oil equivalent barrels (MBoe) for the March-end quarter of 2021, down from 2,509 MBoe in the year-ago quarter. Of the total volumes, oil contributed 59.5% to total production. The production of crude oil and natural gas liquids fell from the prior-year quarter figure. However, the production of natural gas rose from the year-ago level in the reported quarter.

Realized Prices

Overall average realized price per barrel of oil equivalent was recorded at $41.14 compared with $30.62 in first-quarter 2020. Average realized oil prices for the quarter under review were recorded at $56.16 per barrel, up from $45.49 a year ago. Moreover, the price of natural gas was $2.77 per thousand cubic feet, up from 13 cents in the year-ago quarter. Notably, the same for natural gas liquids was recorded at $22.42 a barrel, up from the year-ago quarter’s $8.94.

Cost & Expenses

Total expenses for first-quarter 2021 amounted to $33.8 million versus $33.5 million in the prior-year quarter. On a per barrel of oil equivalent (Boe) basis, total operating expenses were recorded at $3.64 versus $3.36 in the year-ago quarter.

Cash Flow

Net cash from operating activities was recorded at $54.7 million, down from $96.1 million in the first quarter of 2020. Despite the current market uncertainties, the partnership expects to generate more cash from operations in the coming days, supported by favorable hedges.

Balance Sheet

As of Mar 31, 2021, Viper Energy’s cash and cash equivalents were at $11.7 million. It reported net long-term debt of $528.9 million, representing a debt to capitalization of 22.2%.

Guidance

For 2021, the company expects daily average oil equivalent production of 25-27 thousand barrels of oil equivalent per day (MBoe/d), representing an increase from the previously mentioned 24.5-26.5 MBoe/d.

Moreover, the partnership sets its average daily production guidance for the second and third quarters of 2021 between 25 Mboe/d and 26.5 Mboe/d.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Suncor Energy Inc. SU, currently carrying a Zacks Rank #1 (Strong Buy), and Devon Energy Corporation DVN and Marathon Petroleum Corporation MPC, each sporting a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for Suncor’s 2021 earnings has been raised by 101.2%.

Devon’s bottom line for 2021 is expected to increase 24.3% year over year.

Marathon’s bottom line for 2021 is expected to surge 157.6% year over year.

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