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VNOM - Viper Energy Partners: Growth Steadies The Variable Distribution
Viper Energy Partners LP
Royalty companies like Viper Energy Partners LP (VNOM) tout their lower risk than the exploration companies. These royalty companies get their share of the revenue "off the top" before a whole lot of other company expenses. In the meantime, they have no dry hole costs or abandonment expenses.
But royalty companies are very dependent upon the price of oil. If that price is too low, then the operators will not drill on the leases because it will not be profitable to produce oil. Then income falls with production from the existing wells. Volatile