VNOM - Viper Energy: Upside Exposure To Oil Prices Should Boost Its 2024 Dividend

2024-04-13 00:46:36 ET

Summary

• Viper Energy is projected to generate $3.76 per share in 2024 free cash flow at current strip. This is a $0.26 increase from my January estimate.
• Viper is benefiting from higher oil prices, as its hedges don't start limiting its upside until mid-$90s oil.
• Viper is expected to maintain a 75% payout ratio. If it spends $100 million on share repurchases, its quarterly dividend will average $0.56 to $0.57 during 2024.
• Diamondback's Endeavor deal may open up opportunities for more dropdown transactions for Viper.

Viper Energy ( VNOM ) is now projected to generate $3.76 per share in free cash flow at current strip prices for 2024. This is a $0.26 per share increase compared to when I looked at it in January , helped mainly by stronger oil prices. Approximately 56% of Viper's production is oil, and it has full participation in increasing oil prices until oil reaches the mid-$90s....

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