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3 Upstream Stocks That Benefited From High Oil Price in Q2

·4-min read

The pricing environment of oil was significantly healthier in the June quarter of this year, backed primarily by the invasion of Ukraine by Russia. Higher crude price aided upstream business, as revealed in the second-quarter 2022 earnings report of three leading energy players.

Viper Energy Partners LP VNOM reported second-quarter 2022 adjusted earnings per unit of 43 cents, in line with the Zacks Consensus Estimate. The bottom line significantly improved from the year-ago quarter’s profit of 9 cents per share.

The partnership, with mineral interests in North America oil and gas resources, generated an operating income of $239.3 million, beating the Zacks Consensus Estimate of $220 million. The top line increased from the year-ago quarter’s $114.2 million.

Viper Energy’s quarterly results were aided by higher oil-equivalent production and prices.

Increase in Buyback Program

As a measure of enhancing its capital return plan, Viper Energy hiked its unit buyback authorization from $250 million to $750 million.

Production

The resources, wherein the partnership has mineral interests, produced 3,054 thousand oil-equivalent barrels (MBoe) for the June quarter of 2022, up from 2,489 MBoe in the year-ago quarter. Of the total volume, oil contributed 58.9%. The production of crude oil, natural gas and natural gas liquids increased from the prior-year quarter.

Realized Prices

Overall average realized price per barrel of oil equivalent was recorded at $78.20 compared with $45.58 in second-quarter 2021. Average realized oil prices in the second quarter were $106.34 per barrel, up from $62.51 a year ago. The price of natural gas was $6.10 per thousand cubic feet, up from $2.96 in the year-ago quarter. The same for natural gas liquids was $39.28 a barrel, up from $22.21.

Costs & Expenses

In second-quarter 2022, total expenses amounted to $49.9 million versus $34.3 million in the prior-year quarter. On a per barrel of oil equivalent (Boe) basis, total operating expenses were recorded at $5.76 versus $4.01 in the year-ago quarter.

Cash Flow

Net cash from operating activities was recorded at $163.2 million, up from $75 million in the second quarter of 2021.

Balance Sheet

As of Jun 30, 2022, Viper Energy’s cash and cash equivalents were $4.3 million. It reported net long-term debt of $674.4 million.

Guidance

For the third and fourth quarters, Viper Energy initiates its production in the range of 32,750 to 34,500 Boe/d. For 2022, the partnership is increasing its guidance for production to the band of 32,500 to 33,750 Boe/d from the prior range of 30,500 to 32,750 Boe/d.

Oil Price Aids These 2 Firms As Well

Two other upstream energy players that reported healthy second-quarter earnings are Matador Resources Company MTDR and ConocoPhillips COP.

Matador reported adjusted earnings of $3.47 per share, beating the Zacks Consensus Estimate of $3.16 per share. The bottom line significantly improved from the year-ago quarter’s earnings of $1.02 per share.

Total quarterly revenues of $944 million surpassed the Zacks Consensus Estimate of $835 million. The top line also increased from the year-ago level of $357 million.

Matador’s strong quarterly earnings were driven by higher oil-equivalent production volumes and realizations of commodity prices.

ConocoPhillips reported second-quarter 2022 adjusted earnings per share of $3.91, beating the Zacks Consensus Estimate of $3.78. The bottom line surged from the prior-year quarter’s $1.27 per share.

One of the world’s largest independent oil and gas producers based in Houston, TX, ConocoPhillips’ quarterly revenues of $21,989 million increased from second-quarter 2021 sales of $10,211 million. Also, the top line beat the Zacks Consensus Estimate of $18,019 million.

The strong quarterly results of ConocoPhillips have been aided by higher oil-equivalent production volumes and realized commodity prices.


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