Group 1 - Viper Energy Inc. (VNOM) is experiencing significant activity in the options market, particularly with the Mar 21, 2025 $33.00 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Viper Energy Inc. holds a Zacks Rank 3 (Hold) in the Oil and Gas - Exploration and Production - United States industry, which is in the top 30% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, one analyst has raised their earnings estimate for the current quarter, while four analysts have lowered theirs, resulting in a flat Zacks Consensus Estimate of 40 cents for the current quarter [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as expected by expiration [4]

Group 1 - The price of the black commodity has increased from the high-$60 range in the fourth quarter of the previous year to the high-$70 range, marking the highest price level since the summer of 2024 [1]

Core Viewpoint - Viper Energy Partners reported mixed results in its Q3 2024 earnings, with adjusted earnings per share beating estimates but revenues falling short, leading to a decline in overall performance compared to the previous year [2][3]. Financial Performance - Adjusted earnings per share for Q3 2024 were 49 cents, exceeding the Zacks Consensus Estimate of 43 cents, but down from $1.10 in the same quarter last year [2]. - Operating income was $209.6 million, missing the Zacks Consensus Estimate of $213 million, and down from $293.2 million year-over-year [3]. - Total expenses increased to $74 million from $50.4 million in the prior-year quarter, surpassing the estimate of $69.6 million [8]. - Net cash provided by operating activities decreased to $203 million from $239.7 million in Q3 2023 [9]. Production Metrics - The company produced 4,542 thousand oil-equivalent barrels (MBoe) in Q3 2024, up from 3,721 MBoe a year ago, exceeding the estimate of 4,376 MBoe [4]. - Oil production specifically increased to 2,482 thousand barrels (MBbls) from 2,037 MBbls year-over-year, beating the estimate of 2,443 MBbls [4]. Pricing Trends - The average realized price per barrel of oil equivalent was $45.83, down from $52.57 in Q3 2023, and below the estimate of $49.11 [6]. - The average realized oil price was $75.24 per barrel, down from $82.48 year-over-year, missing the estimate of $77.99 [6]. - Natural gas prices fell to 13 cents per thousand cubic feet from $1.81 a year ago, also missing the estimate of 80 cents [7]. Guidance and Outlook - The company updated its total production guidance for 2024 to 48.75-49.25 Mboe/d, indicating an increase from 39.2 Mboe/d reported in the previous year [11]. - Fourth-quarter net production is expected to be in the range of 52.50-53.00 Mboe/d [11]. - Overall, estimates for the stock have been trending downward, with a Zacks Rank of 3 (Hold) indicating an expectation of in-line returns in the coming months [15]. Industry Comparison - Viper Energy operates within the Zacks Oil and Gas - Exploration and Production - United States industry, where competitor SM Energy reported revenues of $643.61 million, reflecting a year-over-year change of +0.4% [16][17]. - SM Energy's EPS for the same period was $1.62, down from $1.73 a year ago, with a projected earnings increase of +25% for the current quarter [17].

Acquisitions - The company completed the TWR Acquisition on October 1, 2024, for approximately $458.9 million in cash and 10.09 million Operating Company units, adding about 3,067 net royalty acres in the Permian Basin [111]. - The company completed the Q Acquisition on September 3, 2024, for $113.6 million, and the M Acquisition for $75.8 million, expanding its mineral and royalty interests [113][114]. - Approximately 15% of the overall increase in production is attributable to the GRP Acquisition, with an additional 11% from the Q&M Acquisitions [9]. Financial Performance - Total operating income for Q3 2024 was $209.588 million, a decrease from $216.708 million in Q2 2024 [126]. - Net income attributable to Viper Energy, Inc. for Q3 2024 was $48.917 million, down from $56.901 million in Q2 2024 [126]. - Total operating income for the nine months ended September 30, 2024, was $631.7 million, compared to $623.0 million for the same period in 2023, indicating a slight increase [139]. - Net income for the nine months ended September 30, 2024, was $330.8 million, a decrease of 11.9% compared to $375.4 million in the same period of 2023 [139]. - Oil income rose to $558.2 million in the nine months ended September 30, 2024, compared to $443.9 million in the same period of 2023, reflecting increased production [139]. Production Metrics - The company increased its full-year 2024 net production guidance to 27.00 - 27.25 MBO/d and 48.75 - 49.25 MBOE/d, reflecting the impact of recent acquisitions [121]. - Oil production increased to 2,482 MBbls for the three months ended September 30, 2024, up from 2,398 MBbls for the three months ended June 30, 2024, representing a growth of approximately 3.5% [128]. - Natural gas production rose to 6,150 MMcf for the three months ended September 30, 2024, compared to 5,631 MMcf for the previous quarter, marking an increase of about 9.2% [128]. - The average daily combined volumes increased to 49,370 BOE/d in Q3 2024, up from 47,473 BOE/d in Q2 2024, reflecting a growth of approximately 4% [128]. - Production volumes for oil reached 7,192 MBbls, a 24.6% increase from 5,771 MBbls in the same period of 2023 [141]. - Average daily oil volumes increased to 26,248 BO/d, up from 21,139 BO/d in the same period of 2023 [141]. Revenue and Income - Royalty income decreased by $7.3 million in Q3 2024 compared to Q2 2024, primarily due to a $15.3 million reduction in average prices, partially offset by an $8.0 million increase from a 5% growth in production volumes [130]. - Royalty income for the nine months ended September 30, 2024, increased by $113.8 million compared to the same period in 2023, driven by a 27% growth in production [143]. - The average sales price for oil was $75.24 per Bbl in Q3 2024, down from $81.04 per Bbl in Q2 2024, a decrease of approximately 7.5% [128]. Expenses - Depletion expense increased by $6.2 million in Q3 2024, primarily due to a higher depletion rate of $12.01 per BOE, up from $11.19 per BOE in Q2 2024 [135]. - General and administrative expenses rose by $7.5 million for the nine months ended September 30, 2024, totaling $14.1 million compared to $6.7 million in 2023 [150]. - Depletion expense increased by $48.5 million for the nine months ended September 30, 2024, primarily due to a $27.2 million increase from production volume growth and a $21.3 million increase in the depletion rate to $11.47 per BOE [148]. Cash Flow and Liquidity - Net cash provided by operating activities decreased to $461.7 million for the nine months ended September 30, 2024, down from $492.4 million in 2023 [159]. - Net cash used in investing activities was $(183.4) million for the nine months ended September 30, 2024, compared to $(176.7) million in 2023 [161]. - Net cash used in financing activities totaled $(135.5) million for the nine months ended September 30, 2024, primarily due to $348.4 million in dividends paid [162]. - As of September 30, 2024, the company had approximately $1.0 billion in liquidity, consisting of $168.6 million in cash and $850.0 million available under the revolving credit facility [155]. Dividends - The company raised its annual base dividend to $1.20 per share starting from the second quarter of 2024, with a combined cash dividend of $0.61 per share declared for Q4 2024 [116][118]. - The company declared a cash dividend of $0.61 per share of Class A Common Stock for the third quarter of 2024, payable on November 21, 2024 [168]. - A cash dividend of $0.61 per share of Class A Common Stock will be paid on November 21, 2024, consisting of a base dividend of $0.30 and a variable dividend of $0.31 [168]. Risk Management - The company has entered into commodity derivative contracts to mitigate volatility in oil and natural gas prices [157]. - The company expects adequate funding sources to meet both short-term and long-term liquidity requirements despite potential market volatility [158].

Core Insights - Viper Energy Inc. reported third-quarter 2024 adjusted earnings per share of 49 cents, exceeding the Zacks Consensus Estimate of 43 cents, but down from $1.10 in the same quarter last year [1] - The company generated an operating income of $209.6 million, which fell short of the Zacks Consensus Estimate of $213 million, and also declined from $293.2 million year-over-year [1] Production - Viper Energy produced 4,542 thousand oil-equivalent barrels (MBoe) in Q3 2024, an increase from 3,721 MBoe a year ago, surpassing the estimate of 4,376 MBoe [3] - Oil accounted for 54.6% of total production, with oil production rising to 2,482 thousand barrels (MBbls) from 2,037 MBbls year-over-year, beating the estimate of 2,443 MBbls [3] Realized Prices - The average realized price per barrel of oil equivalent was $45.83, down from $52.57 in Q3 2023, and below the estimate of $49.11 [5] - The average realized oil price was $75.24 per barrel, down from $82.48 year-over-year, missing the estimate of $77.99 [5] - Natural gas prices were 13 cents per thousand cubic feet, significantly lower than $1.81 in the prior year, and below the estimate of 80 cents [6] - The price for natural gas liquids was $19.89 per barrel, down from $21.58 a year ago, and slightly above the estimate of $19.88 [6] Costs & Expenses - Total expenses in Q3 were $74 million, up from $50.4 million in the prior-year quarter, exceeding the estimate of $69.6 million [7] - On a per barrel of oil-equivalent (Boe) basis, total operating expenses were $4.16, compared to $3.71 in the year-ago quarter, and below the estimate of $4.98 [7] Cash Flow - Net cash provided by operating activities was $203 million, down from $239.7 million in Q3 2023 [8] Balance Sheet - As of September 30, 2024, Viper Energy had cash and cash equivalents of $168.6 million and reported net long-term debt of $821.5 million [9] Guidance - The company updated its total production guidance for 2024 to 48.75-49.25 Mboe/d, indicating an increase from 39.2 Mboe/d reported in the year-ago quarter, with fourth-quarter net production expected to be in the range of 52.50-53.00 Mboe/d [9]

Investor Presentation November 2024 Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Viper's: future performance; business strategy; future operations; estimates and projections of operating income, losses, costs and expenses, returns, cash fl ...

Financial Data and Key Metrics Changes - The third quarter of 2024 marked continued organic production growth and the closing of the Tumbleweed acquisition, indicating a strong operational performance [6][7] - The company reported a distribution payout of 83% for the third quarter, which was a one-off increase above the usual 75% minimum commitment due to the addition of shares from the Tumbleweed acquisition [16][17] Business Line Data and Key Metrics Changes - The company experienced a significant increase in work-in-progress wells, particularly on Diamondback-operated acreage, which is expected to drive growth in the upcoming quarters [13][14] - The Tumbleweed acquisition added approximately five to six net wells to the company's portfolio, enhancing growth prospects [14] Market Data and Key Metrics Changes - Viper Energy was added to the S&P MidCap 400 in September 2024, following its inclusion in the Russell 1000 earlier in the year, reflecting improved trading liquidity and investor base [10] Company Strategy and Development Direction - The company aims to consolidate high-quality mineral and royalty assets through a disciplined approach, leveraging its alignment with Diamondback to enhance growth [7][8] - The merger between Diamondback and Endeavor is expected to provide further alignment and growth opportunities for Viper [8][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver consistent organic growth and highlighted the strategic advantages of being a consolidator in a fragmented minerals and royalty space [9][10] - The company anticipates a modest increase in leverage for future acquisitions, with a target of around 1.5 turns on a pro forma basis, which can be quickly paid down [29][30] Other Important Information - The company is focused on maintaining a balance between shareholder returns and debt repayment, with a commitment to a base dividend that is well-protected even at lower oil prices [17][30] Q&A Session Summary Question: Future well activity and production guidance - Management indicated that the fourth quarter guidance of 29.5 BO per day is based on current operations and expected growth from both Diamondback and third-party operators [12][14] Question: Shareholder return and capital allocation - The company plans to maintain a distribution payout of around 75% of cash available for distribution, with the third quarter's 83% being a unique situation due to the Tumbleweed acquisition [16][17] Question: Endeavor mineral drop-down and funding - Management stated that a modest leverage increase is expected for the Endeavor drop-down, with a focus on maintaining a balanced capital structure [19][20] Question: Impact of Endeavor merger on visibility and growth - The merger is expected to enhance visibility on Diamondback's activity and provide significant growth opportunities for Viper's mineral assets [23][24] Question: Future acquisition opportunities post Endeavor drop - Management noted that there are larger opportunities for high-quality mineral asset consolidation, and the company will remain selective in pursuing new deals [33][34]

Production and Operations - Q3 2024 average production reached 26,978 bo/d (49,370 boe/d), a 2.4% increase from Q2 2024[2] - Viper's average daily production guidance for Q4 2024 is set at 29,250 to 29,750 bo/d (52,500 to 53,000 boe/d)[2] - The company turned to production 330 gross horizontal wells in Q3 2024, with an average lateral length of 11,866 feet[11] - Total production for Q3 2024 included 2,482 MBbls of oil, 6,150 MMcf of natural gas, and 1,035 MBbls of natural gas liquids, resulting in combined volumes of 4,542 MBoe[29] - Average daily oil production increased to 26,978 bo/d, up 21.1% from 22,141 bo/d in Q3 2023[29] Financial Performance - Consolidated net income for Q3 2024 was $109.0 million, with net income attributable to Viper Energy, Inc. at $48.9 million, or $0.52 per common share[2] - Total operating income for Q3 2024 was $209.6 million[6] - Net income attributable to Viper Energy, Inc. was $48,917,000 in Q3 2024, a decrease of 37.9% compared to $78,599,000 in Q3 2023[27] - Net income for Q3 2024 was $109,045, a decrease of 47.4% compared to $207,213 in Q3 2023[28] - Adjusted EBITDA for Q3 2024 was $104,371, reflecting a decrease from the previous year[32] Cash Flow and Dividends - Cash available for distribution to common shares in Q3 2024 was $75.4 million, or $0.73 per Class A common share[2] - Declared a total base-plus-variable cash dividend of $0.61 per Class A common share for Q3 2024, implying a 4.7% annualized yield based on the November 1, 2024 share closing price of $52.16[2] - Cash and cash equivalents increased significantly to $168,649,000 as of September 30, 2024, up from $25,869,000 at the end of 2023[24] - The company reported a net cash provided by operating activities of $202,974 for Q3 2024, down from $239,728 in Q3 2023[28] - The company incurred a net cash used in investing activities of $244,844 in Q3 2024, compared to $52,292 in Q3 2023[28] Debt and Liabilities - As of September 30, 2024, Viper had a cash balance of $168.6 million and total long-term debt of $830.4 million, resulting in net debt of $661.7 million[7] - Following the TWR IV acquisition on October 1, 2024, pro forma net debt was approximately $1.1 billion[8] - Long-term debt decreased to $821,505,000 as of September 30, 2024, down from $1,083,082,000 at the end of 2023, a reduction of 24.2%[25] - Total liabilities decreased to $870,502,000 as of September 30, 2024, down from $1,116,539,000 at the end of 2023, a decline of 22.0%[25] Revenue and Income Sources - Viper Energy reported oil income of $186,750,000 for Q3 2024, an increase of 11.0% from $168,008,000 in Q3 2023[27] - The company reported a total royalty income of $208,158,000 for Q3 2024, an increase of 6.9% from $195,614,000 in Q3 2023[27] - Average unhedged realized prices in Q3 2024 were $75.24 per barrel of oil, $0.13 per Mcf of natural gas, and $19.89 per barrel of natural gas liquids, leading to a total equivalent realized price of $45.83/boe[5] Shareholder Information - The weighted average number of common shares outstanding increased to 93,695,000 in Q3 2024 from 70,925,000 in Q3 2023[27] - The weighted average Class A common shares outstanding for diluted earnings per share was 93,747[36] - Adjusted net income attributable to Viper Energy, Inc. for the same period was $45,622 thousand, or $0.49 per diluted share[36] Other Financial Metrics - Total operating expenses per barrel of oil equivalent (boe) were $4.16, compared to $3.71 in Q3 2023[29] - The average sales price for oil in Q3 2024 was $75.24 per Bbl, down from $82.48 per Bbl in Q3 2023[29] - Proceeds from borrowings under the credit facility amounted to $375,000 in Q3 2024, significantly higher than $69,000 in Q3 2023[28] - Pre-tax income attributable to Viper Energy, Inc. for the three months ended September 30, 2024, was $66,111 thousand, with an effective cash tax rate of 23.3%[35] - Adjusted net income excluding non-cash and non-recurring items was $101,678 thousand for the three months ended September 30, 2024[36]

Core Viewpoint - Viper Energy, Inc. reported strong financial and operational results for Q3 2024, highlighting production growth and successful acquisitions, while maintaining a robust cash dividend policy and positive outlook for future production. Financial Performance - Q3 2024 average production was 26,978 barrels of oil per day (bo/d), a 2.4% increase from Q2 2024 [2] - Consolidated net income for Q3 2024 was $109.0 million, with net income attributable to Viper Energy of $48.9 million, or $0.52 per common share [2][5] - Cash available for distribution to common shares was $75.4 million, equating to $0.73 per Class A common share [2] - Declared a base cash dividend of $0.30 per Class A common share, implying a 2.3% annualized yield [2] - Total return of capital for Q3 2024 was $62.4 million, representing 83% of cash available for distribution [2] Operational Highlights - 330 gross horizontal wells were turned to production in Q3 2024, with an average lateral length of 11,866 feet [2][10] - The company closed acquisitions of mineral and royalty interests from Tumbleweed-Q Royalty Partners and Tumbleweed Royalty IV, increasing its pro forma acreage to approximately 35,634 net royalty acres [2][11] - Q4 2024 average daily production guidance is set at 29,250 to 29,750 bo/d [2] Market and Pricing - Average unhedged realized prices for Q3 2024 were $75.24 per barrel of oil, $0.13 per Mcf of natural gas, and $19.89 per barrel of natural gas liquids, leading to a total equivalent realized price of $45.83 per barrel of oil equivalent (boe) [4][25] - Average hedged realized prices were slightly lower, at $74.27 per barrel of oil and $0.56 per Mcf of natural gas [4][25] Debt and Liquidity - As of September 30, 2024, the company had a cash balance of $168.6 million and total long-term debt of $830.4 million, resulting in net debt of $661.7 million [6] - Following the Tumbleweed IV acquisition, pro forma net debt as of October 1, 2024, was approximately $1.1 billion [7] Guidance and Future Outlook - The company increased its full-year 2024 average daily production guidance to 27,000 to 27,250 bo/d [2] - Viper Energy's CEO emphasized the company's strategy of consolidating high-quality mineral and royalty assets and maintaining strong free cash flow despite commodity price volatility [2][3]

Viper Energy Partners (VNOM) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate. The po ...