Narratives are currently in beta

This is one of three major benefits the company brings to the table:

As I just briefly explained, the company has a high-margin business model, as it does not incur drilling costs.

The Permian is home to almost half of all onshore horizontal rigs in the United States. Essentially, it's the place to be for oil and gas production with elevated reserves and low breakeven prices. In a recent article, I showed the chart below. As we can see, the Permian has mostly undeveloped wells, which bodes well for future production.

Image

Bloomberg

Related to the second advantage, the Permian also benefits from decent infrastructure, a favorable regulatory environment, and lower operational risks compared to emerging basins. Nonetheless, because of elevated production, more infrastructure is needed in the years ahead, which is one of the reasons why I'm also very bullish on the midstream industry.

How well do narratives help inform your perspective?

Disclaimer

The user Idle holds no position in NasdaqGS:VNOM. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Read more narratives

Viper Energy

Analyst Price Target

Consensus Narrative from 12 Analysts

Permian Basin Acquisitions May Enhance Market Presence But Squeeze Future Margins

Key Takeaways Strategic growth through acquisitions and asset consolidations could enhance Viper's market presence and revenue in a fragmented market. Mergers and acquisitions, including Tumbleweed and Diamondback, aim to boost production and streamline operations, potentially improving revenues and net margins.

View narrative

US$57.92

19.0% undervalued

14.56%

Revenue growth p.a.

about 2 months ago