High Yield Section of the View

[mkarpoff]

Thanks for another great View. They are worth the price of admission all by themselves. Awhile ago, I believe you said you might include target prices for all the companies in the Yield section of the View. There appears to be room on the Table to do so. I think that would be particularly useful now as more and more erstwhile growth companies are migrating to the Yield section. For Luddites such as myself, I find that having target prices in a such a comprehensive format to be much more user-friendly than having to go to the individual spread sheets. Please consider doing so. Thx.

I don't know if you have ever looked at Kimbell Royalty (KRP) as a possible inclusion in the Income group, but I have owned it off and on, and I think it is worthy of consideration.

[Fraser921]

Thank you for sharing your family history.
People in that era were called the “Greatest Generation”
In my view , we today , don’t even come close to what that generation accomplished.

On the other hand, Americans are the most generous people on earth. We deserve better leaders.
I worry for the next generation

[dan_s]

Here are my Fair Value Estimates and I will add them to the table in the next newsletter.
My valuations are in blue. The last numbers are First Call's price targets.

Primary Stock Share EPG First Call
Product Symbol Price Valuation Targets
6/17/2022

Midstream AM $9.10 $12.00 $10.71
Minerals BSM $13.97 $19.00 $19.33
Minerals MNRL $27.19 $38.00 $35.33
GAS CTRA $26.54 $54.00 $39.00
OIL DVN $58.02 $88.50 $81.29
OIL FANG $122.29 $233.00 $180.20
Midstream ENLC $8.54 $12.00 $11.63
Midstream OKE $53.39 $74.00 $72.17
OIL PXD $221.77 $365.00 $303.90
Midstream PAGP $10.15 $15.50 $14.29
Midstream RTLR $13.68 $16.00 $15.43
Minerals STR $24.89 $29.00 $35.29
Minerals VNOM $28.75 $41.00 $38.50

[dan_s]

If you believe that oil and gas prices are likely to stay high (as I do), there is a lot of upside for us in the minerals companies. MNRL is totally unhedged.

Minerals Companies do pay variable dividends that go up and down with commodity prices, but they have such low cash expenses that they should always payout a dividend each quarter. Plus, you can sell Covered Calls to increase yield and reduce risk.

[dan_s]

I have not updated my forecast/valuation model for Viper Energy Partners LP (VNOM) since they released Q1 results early in May, so I decided to update it this morning. Viper has elected to be taxed as a C-Corp., making it more suitable for an IRA account.

VNOM closed at $28.75 on June 17. Today I am increasing my valuation by $3 to $44.00.

TipRanks: "Barclays analyst Jeanine Wai raised the firm's price target on Viper Energy to $40 from $35 and keeps an Overweight rating on the shares. The analyst remains constructive on oil and exploration and production stocks following Barclays' updated oil price forecast, which is $11 and $23 higher in 2022 and 2023, respectively. Wai raised price targets by 18% on average and sees "healthy upside and compelling yield despite secular headwinds."

Jeanine Wai has been one of the most conservative energy sector analysts because she has been forced to use Barclays' oil & gas official price forecasts in all of her models. On June 3rd Stifel Nicolaus' price target was $37.00 and Capital One's price target was $41.00.

Viper pays "variable" quarterly dividends that have been running at about 70% of operating cash flow per share. Their Q1 dividend was $0.67/share, which compares to their Q1 2021 dividend of $0.25/share and $0.47/share in Q4 2021.

Their hedges are much better in 2022 and except for some natural gas basis Swaps, none of their production is hedged after December, 2022.

Based on my updated forecast, Viper's full-year dividends should be $3.10 to $3.25 this year and over $3.50 in 2023. < Double digit dividend yield + significant share price upside.

My updated forecast model for Viper has been posted to the EPG website.