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SA News • Mon, Sep. 15
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Viper Energy's Venom Less Lethal, But Not Harmless
- Viper Energy Partners is a mineral rights MLP playing off of the shale revolution's many opportunities.
- The MLP's unit price was hit hard likely because of its novel approach, underlying drivers and market overreactions.
- The idea of a mineral rights-based MLP is clever and its development is worth following - and the Midland Basin is the perfect petri dish.
Quiet Period Expiration For Viper Energy Partners IPO Could Have A Bite To It
- The 25-day quiet period on underwriter research for VNOM will expire on July 12, allowing the firm's IPO underwriters to publish research reports on July 13.
- In anticipation of positive analyst reports, share prices often rise two days before the quiet period expiration.
- VNOM's IPO priced well above its expected range, saw an impressive 24.4% first day return, and has since bounced between $32 and $34 per share.
- While domestic oil companies remain more stable bets than their foreign counterparts; we recommend VNOM as a Buy.
- Limited partnership formed by Diamondback, which has a $4.5 billion market cap, to own, acquire and exploit oil and natural gas properties in North America.
- Scheduled to pay out 100% of its project EBITDA for the 12 months ended June 15, 2015. The projected yield is 5.5% at the price range mid-point of $20.
- FANG will own 93% of VNOM post IPO.
- VNOM is an oil and gas E&P, formed by Diamondback Energy to acquire and exploit resources in North America.
- Diamondback will own and control VNOM's general partner, which in turn will hold some 93% of VNOM's common units.
- We suggest investors buy this energy IPO.
There are no Transcripts on VNOM.
Mon, Sep. 29, 12:26 PM
- Encana’s (ECA +2.3%) takeover of Athlon Energy (ATHL +24.6%) is good news for Diamondback Energy (FANG +2.3%) and Energen (EGN +2.2%), according to analysts at Sterne Agee.
- The acquisition implies a value of $98/share for FANG, Sterne says, based on FANG's 85K net acre leasehold position, estimated 19.8K boe/day of Q3 production, $585M of assumed debt, and a $1.7B market value for the Viper Energy Partners (NASDAQ:VNOM) units it owns.
- The firm sees even more upside for EGN, as ECA’s price implies a value of $102/share for EGN, based on 180K net acres across both sides of the Permian Basin, 48K boe/day of Q3 Permian Basin production, 132M cfe/day of Q3 San Juan Basin, and $835M of pro forma net debt as of Sept. 30.
- Permian producers Laredo Petroleum (LPI +5%), Parsley Energy (PE +5%) and RSP Permian (RSPP +4.8%) also are higher following the acquisition news.
Mon, Sep. 15, 6:19 PM
- Viper Energy Partners' (NASDAQ:VNOM) 3.5M-share offering prices at $28.50/unit, matching VNOM's Monday closing price and a 5.2% discount to its Friday close, the last close before the MLP announced the share sale.
- VNOM, a unit of driller Diamondback Energy (NASDAQ:FANG), is one of few MLPs focused on owning mineral rights, which entitle it to royalties sales of oil and gas drilled beneath Texas' Permian Basin region.
- VNOM units have cooled since their June trading debut but are still 9.6% above the IPO offer price.
Wed, Jun. 18, 10:57 AM
- Viper Energy Partners (VNOM) opened for trading this morning at $31/share after selling 5M shares at $26 each in a well-received IPO of the Diamondback Energy (FANG +0.8%) spinoff and easily exceeding the $19-$21 price range it had forecast earlier.
- Even in the wild west of energy deals, Viper is unusual: Its business consists of simply collecting royalty payments tied to mineral rights it owns, and is the first U.S.-listed company dedicated to acquiring mineral rights tied to shale energy production.
- The deal also looks to be a boon to FANG, which will retain a ~93% stake in VNOM; shares hit a new 52-week high yesterday.
VNOM vs. ETF Alternatives
Viper Energy Partners LP is engaged in the acquisition and exploitation of oil & natural gas properties in North America. Its property includes mineral interests underlying approximately 14,804 gross acres in Midland County, Texas in the Permian Basin.
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