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Viper Energy (VNOM) Completes Swallowtail Acreage Buyout
Viper Energy Partners LP (VNOM - Free Report) recently completed the acquisition of certain royalties from Swallowtail Royalties LLC and Swallowtail Royalties II LLC. The divesters are portfolio companies of Blackstone Inc.’s (BX - Free Report) energy-focused private equity business, Blackstone Energy Partners.
Viper Energy, an affiliate of Diamondback Energy, Inc. (FANG - Free Report) , received mineral and royalty interests for $225 million of cash and 15.25 million units of Viper common stock. It acquired 2,302 net royalty acres, located in the Northern Midland Basin of the larger Permian Basin. Of the total acquired acreage, around 65% is operated by Diamondback.
The acquisition is expected to have boosted Diamondback-operated acreage of the partnership by more than 10% to 14,191 net royalty acres. The deal also increased Viper Energy’s footprint in the prolific basin. As a result of the acquisition, it is expected to witness immense organic growth possibilities without incurring hefty capital costs. Hence, the partnership is expected to generate high margins from the basin, wherein it has major undeveloped acreages.
The move will also boost its free cash flow generating abilities. In the trailing 12-month period, the company’s free cash flow after dividends rose 31.1% to $167 million. The acquisition of mineral and royalty interests in Midland Basin is expected to further increase the figure.
Price Performance
Units of the partnership have popped 90.1% in the year-to-date period compared with a 100.3% rise of the industry it belongs to.
Zacks Rank & Stock to Consider
The partnership currently has a Zacks Rank #3 (Hold). A better-ranked stock from the energy space is Cheniere Energy, Inc. (LNG - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cheniere Energy’s bottom line for third-quarter 2021 is expected to surge 239.1% year over year.