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Viper Energy (VNOM) Q2 Earnings Lag Estimates on Low Oil Price

Viper Energy Partners LP’s VNOM earnings per unit came in at 4 cents, lagging the Zacks Consensus Estimate of 6 cents and declining from the year-ago 31 cents. The underperformance can be attributed to lower realized oil prices, partially offset by higher production volumes.  

The partnership generated operating income of $72.2 million, which beat the Zacks Consensus Estimate of $71 million. However, the top line declined 4% year over year.

Cash Distribution

The partnership received authorization from the board of directors of its general partner to report cash distributions for the June quarter of 2019 at 47 cents per common unit.  The new distribution reflects a sequential increase of 24%.

Production & Realized Prices

The resources where the partnership has mineral interest produced 1,783 thousand oil equivalent barrels (MBoE) in the June quarter of 2019, up from 1,485 MBoE a year ago. Of the total volumes, oil accounted for 67%.

Realized oil prices during the quarter were recorded at $54.81 per barrel, down from $62.61 a year ago. The price of natural gas liquids was recorded at $18.33 a barrel, down from the year-ago quarter’s $26.48.

Balance Sheet

As of Jun 30, 2019, the partnership’s cash and cash equivalents were recorded at $12.8 million. The partnership reported long-term debt of $212.5 million, representing a debt-to-capitalization ratio of roughly 12%.

Guidance

For third and fourth quarter of 2019, the partnership projects daily net production in the band of 23 to 25 MMBoE. For 2019, Viper Energy expects daily net production in the range of 21.5 to 22 MMBoE. The partnership added that the proportion of oil, of the total expected production volumes, is projected in the band of 67% to 71%.

Zacks Rank & Stocks to Consider

Viper Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include MPLX LP MPLX, Oasis Midstream Partners LP OMP and Cheniere Energy, Inc. LNG. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MPLX is likely to see earnings growth of 23.6% through 2019.

Oasis Midstream has an average positive earnings surprise of 0.3% for the past four quarters.

Cheniere is likely to see earnings growth of 4.7% through 2019.

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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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