Rattler Midstream LP (RTLR) Update - May 4

[dan_s]

I have updated my forecast/valuation model for RTLR for their strong Q1 results and updated guidance.
At the time of this post RTLR was trading at $13.96. They recently increased their quarterly dividend to $0.30 for annualized yield of ~8.6%

Rattler is a midstream partnership that was created by Diamondback Energy, one of the large-caps in our Sweet 16. Diamondback owns a controlling interest. It has elected to be taxed as a C-Corp.

TipRanks: "In the last 3 months, 6 ranked analysts set 12-month price targets for RTLR. The average price target among the analysts is $15.33."

My updated valuation is $16.00. It has share price upside because operating cash flow, which is tied to Diamondbacks drilling program, has been steadily increasing since Q1 2021 and I expect that trend to continue. Plus, they have started getting significant revenues from services provided to 3rd parties ($6.9 million in Q4 to $10.4 million in Q1 2022). That trend should also continue as upstream activity continues to increase in the Permian Basin.

Thanks to the relationship with Diamondback, Rattler is a rock solid midstream company that offers high yield cash dividends and modest share price appreciation that is also supported by a share buyback that is fully funded and underway.

[mikelp]

Dan: what's your thoughts on the RTLR & FANG news this morning?

do you see FANG increasing dividends ?