Viper (VNOM) Update - Nov 29

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Viper (VNOM) Update - Nov 29

Post by dan_s »

VNOM is now one of my TOP PICKS in our High Yield Income Portfolio.
It closed today at $21.89. First Call's price target is $26.88.
TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for VNOM. The average price target among the analysts is $26.38."
Raymond James and UBS both rate it a BUY with price targets of $29.00.

Viper's revenues are going up in 2022 thanks to a recent acquisition and Diamondback's aggressive drilling program on leasehold where Viper owns the minerals. Plus, they have some "Bad Hedges" that expire at year-end.
I am now forecasting that Viper's revenues go from $325 million in 2021 to $460 million in 2022.

Viper is a variable dividend payer. They pay out 70% of DCF each quarter and I expect them to raise it to 75% in 2022. Q3 dividend was $0.38 and based on my forecast the Q4 dividend should be $0.45/share. Dividends should increase to at least $0.50/quarter in 2022.

Production will increase from Q3 to Q4 by 1,500 to 2,000 Boepd based on their guidance, which is always conservative.

My current valuation is $26.50 per share.

VNOM has elected to be taxes as a C-Corp.
Dan Steffens
Energy Prospectus Group
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