Viper Energy (VNOM) Valuation Update - April 24

[dan_s]

I have updated my forecast/valuation model for Viper based on their April 16th press release and for my updated oil & gas prices.

We will be publishing an updated profile on the company this afternoon.

Viper Energy, Inc. (VNOM) is one of my Top Picks in our High Yield Income Portfolio.

On April 16th Viper pre-announced Q1 2025 production volumes that exceeded their previous production guidance. Since the press release, 8 energy sector analysts have submitted updated price targets to TipRanks that range from $48 to $62. All 8 of them rate VNOM a BUY or STRONG BUY. The average of the 8 fresh price targets is $55.

At the time of this post VNOM was trading at $40.86. My updated current valuation is $58.

Viper is a "Growth + Income" company, which is one of my largest holdings. Current dividend yield is ~6.1%.
It is one of my Top Picks because I believe it has significant potential for production growth, which will turn into share price appreciation.

Viper's relationship with Diamondback Energy (FANG) gives it more growth potential than the other three minerals/royalties companies (BSM, KRP, STR) in the portfolio combined. There is nothing wrong with the other three and they pay higher dividends, but VNOM offers investors more long-term growth potential, and the Wall Street Gang loves it. I do expect Viper to increase dividends in 2H 2025.

Viper's production increased by 26.9% year-over-year in 2024.
> Q1 2025 production of 57,367 Boepd exceeded the high end of the Company's guidance.
> Viper's production guidance for Q2 thru Q4 2025 is 85,000 to 88,000 Boepd (~56% oil, 21% NGLs and 23% natural gas), the big production increase is the result of the big drop down transaction from Diamondback Energy announced in January.
> I was pleased to see that Viper's realized natural gas price more than doubled from Q4 2024 to Q1 2025.
> At the mid-point of their full-year production guidance, Viper's production will increase by 59% year-over-year in 2025.

[dan_s]

The updated profile for Viper Energy has been posted to the EPG website. EPG members can download it directly from the home page.