Group 1 - Viper Energy (VNOM) is a fast-growing subsidiary of Diamondback Energy (FANG) and continues to show growth trends despite market fluctuations [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] - The analysis provided in the article focuses on identifying undervalued companies within the oil and gas sector, including balance sheet evaluations and competitive positioning [1] Group 2 - The article emphasizes the importance of thorough research and analysis for investors in the oil and gas industry, suggesting that members of Oil & Gas Value Research receive exclusive insights [1] - The author has a beneficial long position in VNOM and FANG, indicating a personal investment interest in these companies [3]

Company Overview - Viper Energy Partners (VNOM) shares have increased by approximately 0.3% since the last earnings report, outperforming the S&P 500 [1] - The most recent earnings report is essential for understanding the catalysts affecting the stock [1] Earnings Estimates - Estimates for Viper Energy have trended downward over the past month, indicating a negative outlook [2][4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting an expectation of an in-line return in the coming months [4] VGM Scores - Viper Energy has a poor Growth Score of F, a Momentum Score of F, and a Value Score of F, placing it in the fifth quintile for investment strategy [3] - The aggregate VGM Score for Viper Energy is F, which is significant for investors not focused on a single strategy [3] Industry Comparison - Viper Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry [5] - Comstock Resources (CRK), another player in the same industry, has seen a 9.2% increase in shares over the past month [5] - Comstock reported revenues of $366.51 million for the last quarter, reflecting a year-over-year decline of 10.7% [6] - Comstock's expected earnings for the current quarter are $0.14 per share, indicating a significant year-over-year increase of 566.7% [6] - Comstock has a Zacks Rank 1 (Strong Buy) and a VGM Score of D, contrasting with Viper Energy's performance [7]

Group 1 - Viper Energy, Inc. plans to release its first quarter 2025 financial results on May 5, 2025, after market close [1] - A conference call and webcast will be held on May 6, 2025, at 10:00 a.m. CT to discuss the financial results [1] - The live webcast and replay will be accessible on Viper's website under the "Investor Relations" section [1] Group 2 - Viper Energy is a subsidiary of Diamondback Energy, focused on owning, acquiring, and exploiting oil and natural gas properties in North America, particularly in the Permian Basin [2] - Diamondback Energy is an independent oil and natural gas company headquartered in Midland, Texas, concentrating on unconventional, onshore oil and natural gas reserves in the Permian Basin [3]

Core Viewpoint - Viper Energy Inc. reported fourth-quarter 2024 adjusted earnings per share of 42 cents, exceeding the Zacks Consensus Estimate of 41 cents, but down from 67 cents year-over-year. Following the earnings release, shares fell approximately 3.7% to close at $45.54 [1]. Financial Performance - The company generated an operating income of $228.7 million, surpassing the Zacks Consensus Estimate of $223 million and increasing from $204.7 million in the same quarter last year [2]. - Net cash provided by operating activities was $157.9 million, up from $145.8 million in the fourth quarter of 2023 [9]. Production Metrics - Viper Energy produced 5,162 thousand oil-equivalent barrels (MBoe) in Q4 2024, an increase from 4,208 MBoe a year ago, and exceeding the estimate of 4,850 MBoe. Oil accounted for 53.2% of total production, with oil production rising to 2,747 MBbls from 2,257 MBbls year-over-year, also beating the estimate of 2,711 MBbls [4][5]. Pricing Analysis - The average realized price per barrel of oil equivalent was $43.56, down from $50.20 in Q4 2023, but above the estimate of $43.04. The average realized oil price was $69.91 per barrel, down from $77.65 year-over-year, yet surpassing the estimate of $67.52 [6]. - The price of natural gas was 84 cents per thousand cubic feet, down from $1.50 in the prior year, missing the estimate of $1.11. Natural gas liquids were priced at $22.15 per barrel, higher than $21.47 a year ago, exceeding the estimate of $17.38 [7]. Cost Structure - Total expenses in Q4 were $85.3 million, higher than $61.7 million in the prior-year quarter and above the estimate of $80.8 million. On a per barrel of oil-equivalent basis, total operating expenses were $3.85, compared to $4.03 in the year-ago quarter, lagging the estimate of $4.32 [8]. Future Guidance - The company projects production for Q1 2025 to be in the range of 54-56 Mboe/d. Additionally, Viper Energy announced the acquisition of certain mineral and royalty interest subsidiaries from Diamondback Energy, expected to close in Q2 2025, with projected production for the remainder of 2025 between 85 and 88 Mboe/d [11].

Financial Performance and Strategy - The company aims to generate the highest value proposition for stockholders by focusing on long-term per share growth and robust free cash flow, while reducing debt and protecting the balance sheet [48]. - The company maintains a conservative capital structure, allowing for opportunistic purchases of accretive mineral interests and intends to repay debt using free cash flow [50]. - The company increased production on its acreage during 2024 while exercising capital discipline by prioritizing debt repayment and stockholder returns [111]. - The company’s cash available for dividends may vary significantly each quarter, and the board of directors has the discretion to modify or revoke the cash dividend policy [127]. - The company may face substantial liquidity problems if it cannot generate sufficient cash flow from operations to service its debt [156]. Production and Reserves - As of December 31, 2024, the company reported net production of 9,939 MBbls of oil, 24,606 MMcf of natural gas, and 4,181 MBbls of natural gas liquids, totaling 18,221 MBOE [60]. - The estimated proved reserves as of December 31, 2024, were audited by Ryder Scott, covering 100% of total proved reserves for the year [52]. - The company owned an average 2.7% net revenue interest in 14,707 gross productive wells as of December 31, 2024 [63]. - Approximately 16% of the company's total estimated proved reserves as of December 31, 2024, are proved undeveloped reserves, which may require significant capital expenditures for development [132]. - The company’s estimated reserves are based on subjective assumptions that may lead to inaccuracies affecting future production and cash flows [144]. Market Conditions and Pricing - Average sales price of oil decreased to $75.48 per barrel in 2024 from $77.13 in 2023, a decline of 2.1% [61]. - Average sales price of natural gas fell significantly to $0.60 per Mcf in 2024, down 63.0% from $1.62 in 2023 [61]. - The combined average sales price per BOE decreased to $46.85 in 2024 from $50.06 in 2023, a decline of 4.4% [61]. - NYMEX WTI prices ranged from $65.75 to $123.70 per Bbl from early 2022 to the end of 2024, with natural gas prices ranging from $1.58 to $9.68 per MMBtu [110]. Regulatory and Environmental Challenges - Regulatory compliance costs are increasing due to stringent environmental laws and regulations affecting oil and natural gas operations [71]. - The company faces potential liabilities under the Comprehensive Environmental Response, Compensation and Liability Act for hazardous substance releases [74]. - The Infrastructure Investment and Jobs Act of 2021 and the Inflation Reduction Act of 2022 include billions in incentives for renewable energy and clean technologies, which may decrease demand for oil and natural gas [82]. - The methane emissions charge starts at $900 per ton in 2024, increasing to $1,200 in 2025 and $1,500 in 2026, potentially raising operating costs for the company [83]. - The EPA's new rules aim for a 95% reduction in volatile organic compounds from oil and natural gas operations, requiring the use of "green completions" for hydraulically-fractured wells [89]. Competitive Landscape - The oil and natural gas industry remains highly competitive, with larger companies having greater resources to acquire properties [66]. - The company faces risks from potential future government regulations that may impose production limits and affect pipeline capacity in the Permian Basin [113]. - The company relies on a small number of operators for a substantial portion of development and production, and any reduction in expected drilling could adversely affect growth and results [130]. Financial Risks and Liabilities - The company may face liquidity concerns that could lead to a downgrade in its debt ratings, restricting access to financing [157]. - A significant reduction in the borrowing base under the revolving credit facility could negatively impact the company's ability to fund operations and may have a material adverse effect on its financial position [155]. - The company is subject to evolving privacy-related laws that could result in liabilities and impact its business operations [150]. - The company may be required to curtail capital expenditures if it cannot secure financing for its capital programs [151]. Corporate Governance and Shareholder Matters - Diamondback beneficially owned approximately 39% of the outstanding voting power of the company's capital stock, expected to increase to about 52% following the Pending 2025 Drop Down [159]. - The ability to pay dividends is limited by various factors, including financial condition, operating results, and contractual obligations [175]. - Anti-takeover provisions in the company's organizational documents may discourage or delay favorable acquisition attempts [172]. - Stockholder actions by written consent are prohibited unless consented to by the board of directors [172].

Financial Data and Key Metrics Changes - Viper Energy reported strong organic production growth for the full year, with average daily production guidance for Q1 2025 set at 30,000 to 31,000 barrels of oil per day, and an expected run rate of 48,000 barrels per day post-drop down in Q2 2025 [9][11] - The company anticipates production growth to approximately 31,000 barrels per day in 2026, up from around 27,000 barrels per day in 2025 [9] Business Line Data and Key Metrics Changes - The drop-down transaction with Diamondback is expected to significantly enhance Viper's alignment with Diamondback's development, allowing Viper to own an interest in about 75% of Diamondback's expected completions over the next five years [8] - The Quinn Ranch acquisition was successfully closed, contributing to Viper's differentiated acquisition strategy [7] Market Data and Key Metrics Changes - Viper is positioned to be a consolidator in a fragmented minerals market, particularly in the Permian Basin, with a current size of scale that ranks it among the largest U.S. independent E&Ps post-drop down [11] Company Strategy and Development Direction - The company aims to maintain a flexible business model, balancing between returning capital to shareholders and pursuing growth opportunities through acquisitions [25][66] - Viper is focused on owning high-quality mineral assets and leveraging its relationship with Diamondback to drive organic growth [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate significant cash flow, with a target of reaching $1 per share of distributable cash flow each quarter in the near term [81] - The management team highlighted the importance of maintaining a strong balance sheet while being opportunistic in pursuing acquisitions in a fragmented market [66][70] Other Important Information - The company has a repurchase plan in place, with over $400 million of capacity, which may be activated if stock prices decline further [63][64] - Viper's mineral business is expected to have the capacity to take on more leverage, although the company plans to maintain a low leverage profile [44] Q&A Session Summary Question: Potential upside from the Carty plan with Double Eagle - Management expects at least $50 million of upside to Viper from cash flow at $70 oil in 2026, with further clarity on timing to be provided as details are finalized [14] Question: Future opportunities for Viper - Management believes the opportunities remain strong, with a talented team and a clear vision for growth [19] Question: Payout perspective and balance sheet strength - The company plans to maintain a payout of 75% to 100% of free cash flow, with flexibility to adjust based on market conditions [22][25] Question: Opportunities for drop-downs from Double Eagle - Management indicated that while drop-down opportunities from Double Eagle may be limited, there are exciting prospects in Reagan County for accelerated development [28] Question: Thoughts on surface rights and data center development - Management believes that surface rights are better managed by operators, and Viper will remain a pure-play royalty company [35] Question: Balance between FANG and other operators - The company aims to grow its business while maintaining a strong relationship with Diamondback for development support [41] Question: Thoughts on leverage and balance sheet management - Management intends to keep leverage low while being open to taking on more if market conditions allow [44] Question: Opportunities in the mineral landscape - Viper sees significant opportunities for consolidation in the fragmented mineral market, with a strong balance sheet to pursue these opportunities [76][78]

Investor Presentation February 2025 Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Viper's: future performance; business strategy; future operations; estimates and projections of operating income, losses, costs and expenses, returns, cash fl ...

Core Insights - Viper Energy Partners reported revenue of $228.7 million for the quarter ended December 2024, reflecting an 11.7% increase year-over-year and a surprise of +2.47% over the Zacks Consensus Estimate [1] - The company's EPS was $0.42, down from $0.67 in the same quarter last year, with an EPS surprise of +2.44% compared to the consensus estimate of $0.41 [1] Financial Performance Metrics - Average daily combined volumes were 56,109 BOE/D, exceeding the estimated 54,471.87 BOE/D [4] - Average sales prices for natural gas liquids were $22.15, higher than the estimated $20.09, while natural gas prices averaged $0.84, below the estimated $1.17 [4] - Crude oil production was 2,747 MBBL, slightly above the estimated 2,729.34 MBBL, with average sales prices at $69.91, slightly below the estimated $70.48 [4] - Total production reached 5,162 MBOE, surpassing the estimated 4,932.6 MBOE [4] Income Breakdown - Natural gas income was reported at $6.05 million, exceeding the estimate of $4.91 million, but reflecting a -24.2% change year-over-year [4] - Natural gas liquids income was $26.78 million, significantly above the estimated $21.35 million, representing a +41.1% year-over-year change [4] - Oil income was $192.04 million, slightly above the estimated $191.11 million, with a year-over-year increase of +9.6% [4] - Royalty income was $224.87 million, exceeding the estimated $210.91 million, with an +11.2% change compared to the previous year [4]

Acquisitions and Transactions - Viper Energy, Inc. entered into a definitive equity purchase agreement to acquire Endeavor Subsidiaries for $1.0 billion in cash and the issuance of 69,626,640 OpCo Units and Class B Common Stock[2] - Viper completed the TWR Acquisition on October 1, 2024, for a total consideration of approximately $458.9 million in cash, 10,093,670 OpCo Units, and contingent cash consideration of up to $41.0 million[5] - The Q Acquisition involved approximately 406 net royalty acres for $113.6 million in cash and contingent cash consideration of up to $5.4 million[7] - The M Acquisition included approximately 267 net royalty acres for $75.8 million in cash and contingent cash consideration of up to $3.6 million[8] - The GRP Acquisition was completed for a total consideration of $747.6 million in cash and 9,018,760 common units[10] - The Pending Drop Down is subject to approval by a majority of the voting power of the Company's common stock and regulatory clearance under the Hart-Scott-Rodino Antitrust Improvement Act[4] - The Pending Drop Down consideration amounts to $4.32 billion, with $3.32 billion in OpCo Unit consideration and $1 billion in cash consideration[42] - The fair value of contingent consideration for the TWR Acquisition is estimated at $21.3 million[47] - The company issued 11.5 million shares of Class A Common Stock in September 2024 to partially fund the cash consideration for the TWR Acquisition[48] Financial Performance - Total operating income for the nine months ended September 30, 2024, was $1,056,483,000, reflecting a significant increase from the previous period[28] - Net income attributable to Viper Energy, Inc. was $158,299,000, compared to a loss of $82,281,000 in the prior period[28] - Basic earnings per share increased to $1.55, up from $1.64 in the previous period[28] - Total operating income for the year ended December 31, 2023, was $1,008,428,000, reflecting a significant increase from the previous year[34] - Net income attributable to Viper Energy, Inc. for the same period was $241,779,000, compared to $26,330,000 in the prior year, indicating a substantial growth[34] - Basic and diluted earnings per share for the year were both $2.43, up from $2.40 in the previous year[34] - Total costs and expenses amounted to $429,776,000, which includes production and ad valorem taxes of $73,605,000[28] - Total costs and expenses amounted to $306,055,000, which is an increase from $31,155,000 in the previous year[34] - The provision for income taxes was $55,897,000, reflecting the company's tax obligations for the period[28] - The provision for income taxes was $57,577,000, compared to $270,000 in the previous year, reflecting a higher tax burden due to increased income[34] - Interest expense, net, was reported at $(69,844,000), indicating a rise in financing costs[28] - The company incurred interest expense of $94,771,000, which is a significant cost impacting net income[34] Assets and Liabilities - Total assets as of September 30, 2024, amount to $4,976,542,000, reflecting an increase of $490,013,000 from historical values[21] - Current assets total $202,751,000, with cash and cash equivalents at $26,831,000[21] - Oil and natural gas interests using the full cost method of accounting are valued at $5,702,279,000, with a total property net value of $4,691,794,000[21] - Total liabilities stand at $1,172,688,000, including long-term debt of $1,101,505,000[23] - Stockholders' equity for Viper Energy, Inc. is reported at $1,400,958,000, with additional paid-in capital of $1,429,649,000[23] - The company has a non-controlling interest valued at $2,402,896,000, contributing to total equity of $3,803,854,000[23] - Total current liabilities are $45,052,000, with accrued liabilities at $42,227,000[23] Pro Forma Financial Statements - The pro forma financial statements reflect the impacts of the TWR Acquisition, Pending Drop Down, GRP Acquisition, and assumed Equity Offering as if they occurred on January 1, 2023[15] - The pro forma financial statements do not predict future results and should not be used to project the Company's financial performance for any future period[17] - The pro forma adjustments for the TWR Acquisition indicate a significant increase in total assets to $9,294,940,000[22] - The company anticipates further growth in equity with an additional $1,000,000,000 in paid-in capital from the acquisition[22] - The pro forma combined total operating income, including acquisitions, is projected to be $1,454,954,000[34] - The pro forma statements indicate a $15.1 million increase in interest expense for the nine months ended September 30, 2024, due to incremental borrowings[47] - The pro forma adjustments reflect a $378.8 million decrease in contributed capital and retained earnings due to the elimination of TWR's net equity interests[45] - The pro forma financial statements include a $280 million increase in cash and long-term debt to fund part of the cash consideration for the TWR Acquisition[47] Reserves and Future Projections - As of December 31, 2023, net proved oil reserves increased to 95,532 MBbls, up from 82,297 MBbls as of December 31, 2022, representing a growth of approximately 16.1%[55] - Total net proved natural gas reserves as of December 31, 2023, reached 290,553 MMcf, an increase from 224,962 MMcf in the previous year, marking a rise of about 29.1%[55] - The company reported a total of 189,374 MBOE in proved reserves as of December 31, 2023, compared to 154,693 MBOE as of December 31, 2022, indicating an increase of approximately 22.3%[56] - Pro forma total proved developed reserves as of December 31, 2023, were 149,909 MBOE, while proved undeveloped reserves were 39,465 MBOE[56] - Future net cash flows are projected to be $12,564,103, with a breakdown of $7,441,971 from Viper and $5,122,132 from TWR[60] - The standardized measure of discounted future net cash flows at the end of the period is $6,011,256, reflecting a decrease from the beginning of the period's $7,286,482[60] - The company reported a purchase of minerals in place amounting to $547,019, contributing positively to future cash inflows[60] - The company anticipates a 10% discount to reflect the timing of cash flows, amounting to $6,552,847[60] Income Tax and Cash Flow Considerations - The estimated incremental income tax provision associated with pro forma income before taxes for the nine months ended September 30, 2024, is calculated at a blended rate of 21.9%[51] - The company experienced a net change in income taxes amounting to $218,138, which may impact future cash flow projections[60] - Accretion of discount contributed $813,393 to the standardized measure, highlighting the importance of time value in cash flow assessments[60] - Extensions and discoveries added $706,855 to future cash flows, showcasing successful exploration efforts[60] - The company incurred future development costs of $58, which are minimal compared to overall cash flow projections[60] - The future production taxes are estimated at $1,025,515, which will affect net cash flow calculations[60]

Core Insights - Viper Energy, Inc. reported strong financial and operational results for Q4 and full year 2024, highlighting significant production growth and a successful acquisition strategy [1][6][18] Fourth Quarter Highlights - Average production for Q4 2024 was 29,859 barrels of oil per day (bo/d) or 56,109 barrels of oil equivalent per day (boe/d) [5] - Consolidated net income for Q4 2024 was $272.8 million, with net income attributable to Viper of $210.1 million, translating to $2.04 per Class A common share [5][36] - A one-time tax benefit of $155.9 million was recorded due to the reversal of the valuation allowance against deferred tax assets [5][8] - Cash available for distribution to Class A common shares was $89.0 million, or $0.86 per share [5] - Declared a total cash dividend of $0.65 per Class A common share for Q4 2024, which includes a base dividend of $0.30 and a variable dividend of $0.35 [10][11] Full Year 2024 Highlights - Full year average production was 27,156 bo/d (49,784 boe/d) [5] - Consolidated net income for the full year was $603.6 million, with net income attributable to Viper of $359.2 million, or $3.82 per share [5][36] - Total dividends declared during 2024 amounted to $2.49 per Class A common share [5] - Proved reserves as of December 31, 2024, were 195,873 thousand barrels of oil equivalent (Mboe), reflecting a 9% increase year-over-year [5][18] 2025 Outlook - The company initiated average daily production guidance for Q1 2025 of 30,000 to 31,000 bo/d (54,000 to 56,000 boe/d) [5][24] - Following the anticipated closing of a significant acquisition (Drop Down) in Q2 2025, average daily production for the remainder of 2025 is expected to be in the range of 47,000 to 49,000 bo/d (85,000 to 88,000 boe/d) [5][6] Financial Update - Average unhedged realized prices for Q4 2024 were $69.91 per barrel of oil, $0.84 per Mcf of natural gas, and $22.15 per barrel of natural gas liquids, resulting in a total equivalent realized price of $43.56 per boe [7] - The company had a cash balance of $26.9 million and total long-term debt of $1.1 billion as of December 31, 2024 [9] Operations Update - A total of 381 gross horizontal wells were turned to production in Q4 2024, with an average lateral length of 10,818 feet [5][12] - As of December 31, 2024, there were approximately 867 gross horizontal wells in active development on Viper's acreage [5][16]