Viper Energy (VNOM) Q2 Results - Aug 5

[dan_s]

We have four minerals/royalty companies in our High Yield Income Portfolio. Viper Energy (VNOM) is largest and the most heavily weighted to oil. When Diamondback Energy (FANG) completes the "Maga Merger" with Endeavor Energy, Viper will get a lot larger.

SECOND QUARTER HIGHLIGHTS

Q2 2024 average production of 26,352 bo/d (47,473 boe/d), an increase of 3.7% from Q1 2024 < Beat my forecast of 47,000 Boepd with 26,085 bpd of oil.

Q2 2024 consolidated net income (including non-controlling interest) of $122.2 million; net income attributable to Viper Energy, Inc. of $56.9 million, or $0.62 per common share

Q2 2024 cash available for distribution to Viper’s common shares of $78.4 million, or $0.86 per Class A common share

Increasing annual base dividend 11% to $1.20 per share; declared Q2 2024 base cash dividend of $0.30 per Class A common share; implies a 3.0% annualized yield based on the August 2, 2024 share closing price of $40.25

Q2 2024 variable cash dividend of $0.34 per Class A common share; total base-plus-variable dividend of $0.64 per Class A common share implies a 6.4% annualized yield based on the August 2, 2024 share closing price of $40.25 < The "Base + Variable" dividend beat my forecast of $0.55.

Total Q2 2024 return of capital of $58.8 million, or $0.64 per Class A common share, represents 75% of cash available for distribution
On May 1, 2024, closed divestiture of non-Permian assets for cash proceeds of approximately $90.2 million

375 total gross (6.1 net 100% royalty interest) horizontal wells turned to production on Viper’s acreage during Q2 2024 with an average lateral length of 12,037 feet

Initiating average daily production guidance for Q3 2024 of 26,500 to 27,000 bo/d (47,500 to 48,500 boe/d), the midpoint of which represents approximately 1.5% growth relative to Q2 2024

Increasing full year 2024 average daily production guidance to 26,000 to 26,750 bo/d (46,750 to 48,250 boe/d)

“The 11% increase in our base dividend announced today highlights our Board’s belief in a sustainable and growing base dividend that can be maintained through the cycle. This belief and commitment to our shareholders is supported by Viper’s strong balance sheet and durable cash flow profile. Relative to a year ago when we last increased our base dividend, Viper has grown oil production per share by 14% while maintaining our cash margins and conversion of Adjusted EBITDA into cash available for distribution at both around 80%. Importantly, at current production levels the annual fixed amount of the increased base dividend is protected down to below $30 WTI,” stated Travis Stice, Chief Executive Officer of Viper.

Mr. Stice continued, “Viper today also announced an increase to our production guidance range for full year 2024. This increase is due to both outperformance seen during the first half of the year, as well as an increase in expectations for the remainder of 2024. The midpoint of the guidance range we have provided for Q3 2024 implies 1.5% growth relative to Q2, despite losing roughly 150 bo/d of quarterly production contribution from the non-Permian assets we divested during the second quarter. Overall, we continue to see strong activity levels across our acreage position and benefit from Diamondback’s continued large-scale development of Viper’s high concentration royalty acreage.”

[dan_s]

I will be updating my forecast/valuation models for FANG and VNOM on Tuesday.

It is important that you understand the relationship between these two outstanding companies.