Contrasting Viper Energy Partners (VNOM) & Rex Energy (REXX)

Viper Energy Partners (NASDAQ: VNOM) and Rex Energy (NASDAQ:REXX) are both energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, risk, profitability and institutional ownership.

Insider and Institutional Ownership

27.0% of Viper Energy Partners shares are owned by institutional investors. Comparatively, 12.8% of Rex Energy shares are owned by institutional investors. 7.9% of Rex Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Viper Energy Partners has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, Rex Energy has a beta of 1.88, meaning that its stock price is 88% more volatile than the S&P 500.

Valuation and Earnings

This table compares Viper Energy Partners and Rex Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viper Energy Partners $172.03 million 15.05 -$10.89 million $1.05 21.66
Rex Energy $139.02 million 0.08 -$176.71 million ($13.31) -0.09

Viper Energy Partners has higher revenue and earnings than Rex Energy. Rex Energy is trading at a lower price-to-earnings ratio than Viper Energy Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Viper Energy Partners and Rex Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viper Energy Partners 64.80% 14.61% 13.86%
Rex Energy -61.80% -140.84% -3.76%

Analyst Recommendations

This is a summary of recent ratings and target prices for Viper Energy Partners and Rex Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viper Energy Partners 0 0 11 1 3.08
Rex Energy 0 5 0 0 2.00

Viper Energy Partners currently has a consensus target price of $25.50, suggesting a potential upside of 12.14%. Rex Energy has a consensus target price of $5.34, suggesting a potential upside of 368.60%. Given Rex Energy’s higher possible upside, analysts plainly believe Rex Energy is more favorable than Viper Energy Partners.

Dividends

Viper Energy Partners pays an annual dividend of $1.35 per share and has a dividend yield of 5.9%. Rex Energy does not pay a dividend. Viper Energy Partners pays out 128.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Viper Energy Partners beats Rex Energy on 13 of the 17 factors compared between the two stocks.

Viper Energy Partners Company Profile

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.

Rex Energy Company Profile

Rex Energy Corporation is an independent oil, natural gas liquid (NGL) and natural gas company. The Company has operations in the Appalachian Basin and Illinois Basin. In the Appalachian Basin, the Company is focused on its Marcellus Shale, Utica Shale and Upper Devonian (Burkett) Shale drilling and exploration activities. In the Illinois Basin, the Company is focused on its developmental oil drilling on its properties. The Company owns an interest in approximately 1,820 oil and natural gas wells. The Company produces an average of over 195.8 net millions of cubic feet equivalent (MMcfe) per day, composed of approximately 62.4% natural gas, over 9.5% oil and approximately 28.1% NGLs. In the Illinois Basin, the Company produces an average of approximately 1,998 barrels of oil per day (bopd). Including both developed and undeveloped acreage, the Company controls approximately 99,200 gross (over 79,700 net) acres in Illinois, Indiana and Kentucky.

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