A month has gone by since the last earnings report for Viper Energy Partners (VNOM). Shares have added about 3.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Viper Energy due for a pullback? 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 Q3 Earnings Top Estimates, Revenues Miss
Viper Energy Inc. reported third-quarter 2024 adjusted earnings per share of 49 cents, which beat the Zacks Consensus Estimate of 43 cents. The bottom line declined from the year-ago level of $1.10.
The company, with mineral interests in North America’s oil and gas resources, generated an operating income of $209.6 million, which missed the Zacks Consensus Estimate of $213 million. The top line also declined from the year-ago quarter’s figure of $293.2 million.
Better-than-expected quarterly earnings can be attributed to higher oil equivalent production volumes, partially offset by lower realized commodity prices and higher costs and expenses.
Production
The resources, wherein the company has mineral interests, produced 4,542 thousand oil-equivalent barrels (MBoe) in the September-end quarter of 2024, up from 3,721 MBoe a year ago. The reported figure surpassed our estimate of 4,376 Mboe.
Oil contributed 54.6% to the total production volume. Oil production increased to 2,482 thousand barrels (MBbls) from 2,037 MBbls a year ago. The metric beat our estimate of 2,443 MBbls.
The production of crude oil, natural gas and natural gas liquids witnessed an increase from the prior-year levels.
Realized Prices
The overall average realized price per barrel of oil equivalent was $45.83 compared with $52.57 in the third quarter of 2023. Our estimate for the same was pinned at $49.11 per barrel.
Average realized oil price in the quarter under review was $75.24 per barrel, down from $82.48 in the year-ago quarter. The figure missed our estimate of $77.99.
The price of natural gas was 13 cents per thousand cubic feet, down from $1.81 in the year-ago quarter. The figure also missed our estimate of 80 cents.
The price for natural gas liquids was $19.89 a barrel, lower than $21.58 recorded a year ago. Our estimate for the same was pinned at $19.88 per barrel.
Costs & Expenses
In the third quarter, total expenses were $74 million, higher than $50.4 million recorded in the prior-year quarter. The figure also surpassed our estimate of $69.6 million.
On a per barrel of oil-equivalent (Boe) basis, total operating expenses were $4.16 compared with $3.71 in the year-ago quarter. The figure lagged our estimate of $4.98.
Cash Flow
Net cash provided by operating activities was $203 million, down from $239.7 million in the third quarter of 2023.
Balance Sheet
As of Sept. 30, 2024, Viper Energy’s cash and cash equivalents were $168.6 million. The company reported a net long-term debt of $821.5 million.
Guidance
The company updated its total production guidance for 2024 to 48.75-49.25 Mboe/d, the midpoint of which indicates an increase from 39.2 Mboe/d reported in the year-ago quarter. The company expects fourth-quarter net production to be in the 52.50-53.00 Mboe/d range.
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 -9.33% due to these changes.
VGM Scores
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. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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.
Outlook
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.
Performance of an Industry Player
Viper Energy belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, SM Energy (SM), has gained 8.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
SM Energy reported revenues of $643.61 million in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $1.62 for the same period compares with $1.73 a year ago.
SM Energy is expected to post earnings of $1.95 per share for the current quarter, representing a year-over-year change of +25%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for SM Energy. Also, the stock has a VGM Score of C.
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Viper Energy Inc. (VNOM) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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