Viper Energy (VNOM) Valuation Update - Nov 17

[dan_s]

At the time of this post VNOM was trading for $36.77

I have updated my forecast/valuation model for Viper Energy and posted it to the EPG website.
> Adjusted Net Income for Q3 2025, ignoring the $360 million impairment charge, was close to my forecast.
> Q3 production was 108,859 Boepd with 56,057 bpd of crude oil. < Q2 2025 production was 79,286 Boepd with 41,615 bpd of crude oil.

The Sitio Acquisition closed on August 19, 2025.
> Q4 production guidance is ~126,000 Boepd with ~66,000 bpd of crude oil. Viper regularly exceeds their guidance.
> Viper's operating cash flow for the year 2025 should be approximately $1.1 billion.

2026
> Viper has not provided 2026 guidance, so I am using 130,000 Boepd. Diamondback Energy's drilling program should push Viper's production over 140,000 Boepd in 2H 2026.
> Closing of the Non-Permian Asset Sale for $670 million "sometime in Q1 2026" will impact reported production and interest net interest expense, so my 2026 forecast is a bit of a WAG at this point. Sales proceeds will go to debt reduction. The assets being sold have current production of approximately 9,500 Boepd with 4,750 bpd of crude oil.
> Viper should generate operating cash flow of approximately $1.5 billion, so 2026 dividends should be within the range of $3.00 to $3.50.
> Viper could raise the dividend, but it appears they are wanting to use more free cash flow for stock buybacks. That tells me that they believe that VNOM's current share price is not a reflection of the per share value. I agree.

My current valuation of VNOM is now $46.00. < The four most recent price targets submitted to TipRanks are $51, $51, $54 and $60.