Intrinsic value of Viper Energy Partners Un - VNOM

Previous Close

$32.18

  Intrinsic Value

$0.37

stock screener

  Rating & Target

str. sell

-99%

Previous close

$32.18

 
Intrinsic value

$0.37

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of VNOM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.33
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  79
  275
  425
  636
  923
  1,302
  1,789
  2,402
  3,154
  4,058
  5,126
  6,365
  7,782
  9,380
  11,161
  13,123
  15,265
  17,584
  20,077
  22,738
  25,564
  28,552
  31,697
  34,999
  38,455
  42,065
  45,829
  49,749
  53,828
  58,069
  62,476
Variable operating expenses, $m
 
  307
  475
  710
  1,030
  1,453
  1,997
  2,681
  3,520
  4,529
  5,721
  7,104
  8,685
  10,469
  12,456
  14,645
  17,036
  19,624
  22,405
  25,375
  28,529
  31,864
  35,374
  39,059
  42,916
  46,945
  51,145
  55,520
  60,072
  64,805
  69,724
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  88
  307
  475
  710
  1,030
  1,453
  1,997
  2,681
  3,520
  4,529
  5,721
  7,104
  8,685
  10,469
  12,456
  14,645
  17,036
  19,624
  22,405
  25,375
  28,529
  31,864
  35,374
  39,059
  42,916
  46,945
  51,145
  55,520
  60,072
  64,805
  69,724
Operating income, $m
  -9
  -32
  -49
  -74
  -107
  -151
  -208
  -279
  -366
  -471
  -595
  -738
  -903
  -1,088
  -1,295
  -1,522
  -1,771
  -2,040
  -2,329
  -2,638
  -2,965
  -3,312
  -3,677
  -4,060
  -4,461
  -4,880
  -5,316
  -5,771
  -6,244
  -6,736
  -7,247
EBITDA, $m
  21
  90
  139
  208
  302
  426
  586
  787
  1,033
  1,330
  1,679
  2,085
  2,550
  3,073
  3,656
  4,299
  5,001
  5,761
  6,577
  7,449
  8,375
  9,354
  10,384
  11,466
  12,598
  13,781
  15,014
  16,298
  17,634
  19,023
  20,467
Interest expense (income), $m
  2
  5
  28
  70
  129
  210
  316
  453
  625
  836
  1,090
  1,390
  1,739
  2,137
  2,586
  3,086
  3,637
  4,239
  4,890
  5,590
  6,338
  7,132
  7,971
  8,855
  9,782
  10,753
  11,767
  12,825
  13,926
  15,072
  16,263
Earnings before tax, $m
  -11
  -37
  -77
  -144
  -236
  -361
  -524
  -732
  -991
  -1,307
  -1,685
  -2,129
  -2,641
  -3,225
  -3,880
  -4,608
  -5,408
  -6,279
  -7,219
  -8,228
  -9,303
  -10,444
  -11,648
  -12,915
  -14,243
  -15,633
  -17,084
  -18,596
  -20,170
  -21,808
  -23,511
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -11
  -37
  -77
  -144
  -236
  -361
  -524
  -732
  -991
  -1,307
  -1,685
  -2,129
  -2,641
  -3,225
  -3,880
  -4,608
  -5,408
  -6,279
  -7,219
  -8,228
  -9,303
  -10,444
  -11,648
  -12,915
  -14,243
  -15,633
  -17,084
  -18,596
  -20,170
  -21,808
  -23,511

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  671
  1,591
  2,458
  3,676
  5,333
  7,524
  10,344
  13,884
  18,231
  23,459
  29,631
  36,795
  44,985
  54,222
  64,514
  75,856
  88,239
  101,644
  116,050
  131,432
  147,769
  165,038
  183,222
  202,307
  222,284
  243,150
  264,909
  287,568
  311,143
  335,656
  361,135
Adjusted assets (=assets-cash), $m
  662
  1,591
  2,458
  3,676
  5,333
  7,524
  10,344
  13,884
  18,231
  23,459
  29,631
  36,795
  44,985
  54,222
  64,514
  75,856
  88,239
  101,644
  116,050
  131,432
  147,769
  165,038
  183,222
  202,307
  222,284
  243,150
  264,909
  287,568
  311,143
  335,656
  361,135
Revenue / Adjusted assets
  0.119
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
Average production assets, $m
  548
  1,221
  1,886
  2,821
  4,093
  5,774
  7,938
  10,655
  13,991
  18,003
  22,739
  28,237
  34,523
  41,612
  49,510
  58,214
  67,717
  78,005
  89,060
  100,865
  113,402
  126,655
  140,610
  155,256
  170,587
  186,600
  203,298
  220,688
  238,780
  257,592
  277,145
Working capital, $m
  21
  -5
  -7
  -11
  -16
  -22
  -30
  -41
  -54
  -69
  -87
  -108
  -132
  -159
  -190
  -223
  -260
  -299
  -341
  -387
  -435
  -485
  -539
  -595
  -654
  -715
  -779
  -846
  -915
  -987
  -1,062
Total debt, $m
  121
  512
  1,292
  2,388
  3,880
  5,852
  8,390
  11,576
  15,489
  20,194
  25,748
  32,196
  39,567
  47,880
  57,143
  67,351
  78,496
  90,560
  103,525
  117,370
  132,073
  147,615
  163,981
  181,157
  199,136
  217,916
  237,498
  257,892
  279,109
  301,171
  324,102
Total liabilities, $m
  123
  1,432
  2,212
  3,308
  4,800
  6,772
  9,309
  12,496
  16,408
  21,113
  26,668
  33,115
  40,487
  48,800
  58,062
  68,271
  79,415
  91,480
  104,445
  118,289
  132,992
  148,535
  164,900
  182,077
  200,056
  218,835
  238,418
  258,811
  280,029
  302,091
  325,021
Total equity, $m
  548
  159
  246
  368
  533
  752
  1,034
  1,388
  1,823
  2,346
  2,963
  3,679
  4,499
  5,422
  6,451
  7,586
  8,824
  10,164
  11,605
  13,143
  14,777
  16,504
  18,322
  20,231
  22,228
  24,315
  26,491
  28,757
  31,114
  33,566
  36,113
Total liabilities and equity, $m
  671
  1,591
  2,458
  3,676
  5,333
  7,524
  10,343
  13,884
  18,231
  23,459
  29,631
  36,794
  44,986
  54,222
  64,513
  75,857
  88,239
  101,644
  116,050
  131,432
  147,769
  165,039
  183,222
  202,308
  222,284
  243,150
  264,909
  287,568
  311,143
  335,657
  361,134
Debt-to-equity ratio
  0.221
  3.220
  5.260
  6.500
  7.280
  7.780
  8.110
  8.340
  8.500
  8.610
  8.690
  8.750
  8.800
  8.830
  8.860
  8.880
  8.900
  8.910
  8.920
  8.930
  8.940
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.970
Adjusted equity ratio
  0.814
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11
  -37
  -77
  -144
  -236
  -361
  -524
  -732
  -991
  -1,307
  -1,685
  -2,129
  -2,641
  -3,225
  -3,880
  -4,608
  -5,408
  -6,279
  -7,219
  -8,228
  -9,303
  -10,444
  -11,648
  -12,915
  -14,243
  -15,633
  -17,084
  -18,596
  -20,170
  -21,808
  -23,511
Depreciation, amort., depletion, $m
  30
  122
  189
  282
  409
  577
  794
  1,066
  1,399
  1,800
  2,274
  2,824
  3,452
  4,161
  4,951
  5,821
  6,772
  7,800
  8,906
  10,086
  11,340
  12,666
  14,061
  15,526
  17,059
  18,660
  20,330
  22,069
  23,878
  25,759
  27,714
Funds from operations, $m
  67
  85
  112
  139
  173
  217
  270
  334
  408
  493
  589
  695
  811
  936
  1,071
  1,213
  1,364
  1,522
  1,687
  1,859
  2,037
  2,222
  2,413
  2,611
  2,815
  3,027
  3,246
  3,473
  3,708
  3,951
  4,204
Change in working capital, $m
  -2
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -13
  -15
  -18
  -21
  -24
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -48
  -51
  -53
  -56
  -59
  -61
  -64
  -67
  -69
  -72
  -75
Cash from operations, $m
  69
  87
  114
  142
  178
  223
  279
  344
  421
  509
  607
  716
  835
  964
  1,101
  1,247
  1,400
  1,561
  1,729
  1,904
  2,085
  2,272
  2,466
  2,667
  2,874
  3,089
  3,310
  3,540
  3,777
  4,023
  4,279
Maintenance CAPEX, $m
  0
  -76
  -122
  -189
  -282
  -409
  -577
  -794
  -1,066
  -1,399
  -1,800
  -2,274
  -2,824
  -3,452
  -4,161
  -4,951
  -5,821
  -6,772
  -7,800
  -8,906
  -10,086
  -11,340
  -12,666
  -14,061
  -15,526
  -17,059
  -18,660
  -20,330
  -22,069
  -23,878
  -25,759
New CAPEX, $m
  0
  -458
  -665
  -935
  -1,272
  -1,681
  -2,164
  -2,717
  -3,336
  -4,012
  -4,736
  -5,498
  -6,285
  -7,089
  -7,898
  -8,705
  -9,503
  -10,287
  -11,055
  -11,805
  -12,537
  -13,253
  -13,955
  -14,646
  -15,331
  -16,013
  -16,698
  -17,389
  -18,092
  -18,812
  -19,553
Cash from investing activities, $m
  -206
  -534
  -787
  -1,124
  -1,554
  -2,090
  -2,741
  -3,511
  -4,402
  -5,411
  -6,536
  -7,772
  -9,109
  -10,541
  -12,059
  -13,656
  -15,324
  -17,059
  -18,855
  -20,711
  -22,623
  -24,593
  -26,621
  -28,707
  -30,857
  -33,072
  -35,358
  -37,719
  -40,161
  -42,690
  -45,312
Free cash flow, $m
  -137
  -447
  -673
  -981
  -1,376
  -1,867
  -2,463
  -3,167
  -3,980
  -4,903
  -5,930
  -7,056
  -8,274
  -9,577
  -10,958
  -12,409
  -13,924
  -15,498
  -17,126
  -18,807
  -20,539
  -22,321
  -24,154
  -26,040
  -27,982
  -29,983
  -32,048
  -34,180
  -36,384
  -38,667
  -41,033
Issuance/(repayment) of debt, $m
  86
  419
  780
  1,096
  1,492
  1,972
  2,538
  3,187
  3,912
  4,705
  5,554
  6,448
  7,371
  8,313
  9,262
  10,209
  11,145
  12,064
  12,965
  13,844
  14,703
  15,542
  16,366
  17,176
  17,979
  18,780
  19,582
  20,393
  21,218
  22,062
  22,930
Issuance/(repurchase) of shares, $m
  126
  215
  164
  265
  402
  580
  806
  1,086
  1,426
  1,830
  2,302
  2,845
  3,460
  4,148
  4,909
  5,742
  6,646
  7,619
  8,660
  9,766
  10,937
  12,171
  13,467
  14,823
  16,241
  17,720
  19,259
  20,862
  22,528
  24,259
  26,058
Cash from financing (excl. dividends), $m  
  211
  634
  944
  1,361
  1,894
  2,552
  3,344
  4,273
  5,338
  6,535
  7,856
  9,293
  10,831
  12,461
  14,171
  15,951
  17,791
  19,683
  21,625
  23,610
  25,640
  27,713
  29,833
  31,999
  34,220
  36,500
  38,841
  41,255
  43,746
  46,321
  48,988
Total cash flow (excl. dividends), $m
  74
  186
  271
  380
  518
  684
  880
  1,106
  1,357
  1,632
  1,927
  2,237
  2,557
  2,884
  3,214
  3,542
  3,867
  4,186
  4,498
  4,803
  5,101
  5,392
  5,678
  5,959
  6,238
  6,516
  6,794
  7,075
  7,362
  7,654
  7,956
Retained Cash Flow (-), $m
  -53
  -215
  -164
  -265
  -402
  -580
  -806
  -1,086
  -1,426
  -1,830
  -2,302
  -2,845
  -3,460
  -4,148
  -4,909
  -5,742
  -6,646
  -7,619
  -8,660
  -9,766
  -10,937
  -12,171
  -13,467
  -14,823
  -16,241
  -17,720
  -19,259
  -20,862
  -22,528
  -24,259
  -26,058
Prev. year cash balance distribution, $m
 
  19
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  2
  4
  6
  9
  13
  18
  25
  34
  44
  57
  72
  89
  109
  131
  156
  184
  214
  246
  281
  318
  358
  400
  444
  490
  538
  589
  642
  696
  754
  813
Cash available for distribution, $m
 
  -10
  107
  115
  116
  105
  75
  20
  -68
  -198
  -375
  -608
  -903
  -1,264
  -1,696
  -2,200
  -2,779
  -3,433
  -4,161
  -4,963
  -5,836
  -6,778
  -7,788
  -8,864
  -10,003
  -11,204
  -12,465
  -13,786
  -15,166
  -16,605
  -18,103
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  -9
  98
  100
  95
  81
  54
  13
  -42
  -112
  -194
  -284
  -378
  -470
  -556
  -629
  -685
  -722
  -738
  -733
  -709
  -667
  -612
  -547
  -477
  -406
  -337
  -272
  -214
  -164
  -123
Current shareholders' claim on cash, %
  100
  50.0
  24.6
  11.9
  5.7
  2.7
  1.3
  0.6
  0.3
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Viper Energy Partners LP is engaged in owning, acquiring and exploiting oil and natural gas properties in North America. The Company's assets are located in the Permian Basin of West Texas. As of December 31, 2016, the Permian Basin consisted of approximately 85,000 square miles. As of December 31, 2016, its assets consisted of mineral interests underlying 107,568 gross acres in the Permian Basin. As of December 31, 2016, there were 545 vertical wells and 190 horizontal wells producing on this acreage. As of December 31, 2016, its estimated proved oil and natural gas reserves of its assets was 31,435 thousand barrels of crude oil equivalent (MBOE). As of December 31, 2016, the Company's proved reserves were approximately 68% oil, 18% natural gas liquids and 14% natural gas. In addition to its mineral interests, the Company owns a minor equity interest in an entity that owns mineral, overriding royalty, net profits, leasehold and other similar interests.

FINANCIAL RATIOS  of  Viper Energy Partners Un (VNOM)

Valuation Ratios
P/E Ratio -256.9
Price to Sales 35.8
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 40.9
Price to Free Cash Flow 40.9
Growth Rates
Sales Growth Rate 5.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0.5
LT Debt to Equity 22.1%
Total Debt to Equity 22.1%
Interest Coverage -5
Management Effectiveness
Return On Assets -1.5%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital -1.8%
Ret/ On T. Cap. - 3 Yr. Avg. 2.9%
Return On Equity -2.1%
Return On Equity - 3 Yr. Avg. 4.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 93.7%
Gross Margin - 3 Yr. Avg. 92.7%
EBITDA Margin 26.6%
EBITDA Margin - 3 Yr. Avg. 67.6%
Operating Margin -11.4%
Oper. Margin - 3 Yr. Avg. 24.8%
Pre-Tax Margin -13.9%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin -13.9%
Net Profit Margin - 3 Yr. Avg. 18.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio -590.9%

VNOM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VNOM stock intrinsic value calculation we used $172 million for the last fiscal year's total revenue generated by Viper Energy Partners Un. The default revenue input number comes from 2016 income statement of Viper Energy Partners Un. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our VNOM stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for VNOM is calculated based on our internal credit rating of Viper Energy Partners Un, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Viper Energy Partners Un.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of VNOM stock the variable cost ratio is equal to 111.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for VNOM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Viper Energy Partners Un.

Corporate tax rate of 27% is the nominal tax rate for Viper Energy Partners Un. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the VNOM stock is equal to 1.4%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for VNOM are equal to 443.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Viper Energy Partners Un operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for VNOM is equal to -1.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for Viper Energy Partners Un - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 104 million for Viper Energy Partners Un is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Viper Energy Partners Un at the current share price and the inputted number of shares is $3.3 billion.

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Financial statements of VNOM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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