Viper Energy Partners: Royalty With An Edge

Oct. 09, 2022 8:13 AM ETViper Energy, Inc. (VNOM) StockFANG, VNOM17 Comments

Summary

  • Viper only buys acreage that is likely to be developed soon.
  • The acreage purchased tends to be expensive. That expense is offset by the onset of cash flow.
  • Cyclical growth minimizes the risk of the variable distribution nature of the partnership.
  • The partnership transitioned to keeping some cash on hand to repay debt and to invest in more royalties.
  • The upstream risk is largely gone when investing in a royalty company.
  • This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Learn More »

Oil pump, oil industry equipment

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(Note: This article appeared in the newsletter on August 21, 2022, and has been updated as needed.)

Viper Energy Partners (NASDAQ:VNOM) is an atypical royalty company. Most royalty companies purchase an overriding royalty interest in large acreage holdings to

I analyze oil and gas companies and related companies like Viper Energy Partners in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. This article is an example of what I do. But for Oil & Gas Value Research members, they get it first and they get analysis on some companies that is not published on the free site. Interested? Sign up here for a free two-week trial.

This article was written by

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Long Player believes oil and gas is a boom-bust, cyclical industry. It takes patience, and it certainly helps to have experience. He has been focusing on this industry for years. He is a retired CPA, and holds an MBA and MA.

He leads the investing group Oil & Gas Value Research. He looks for under-followed oil companies and out-of-favor midstream companies that offer compelling opportunities. The group includes an active chat room in which Oil & Gas investors discuss recent information and share ideas. Learn more.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of VNOM FANG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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