HomeBusinessBank of America is lighting the fuse on these two energy stocks

Bank of America is lighting the fuse on these two energy stocks

Global energy demand is rising and at the heart of this revolution is the rapid rise of AI technology. Fueled by the insatiable electricity needs of sprawling data centers, AI is reshaping the energy landscape at unprecedented speed. Mizuho Research predicts that energy demand for data centers will skyrocket and triple by 2030 as AI applications expand their reach.

Meanwhile, Bank of America has spotted this growing trend and analyst Kalei Akamine has lit the fuse to buy two energy stocks that he thinks are poised to outperform market expectations.

To dive deeper, we turned to the TipRanks platform to discover the details of these BofA recommendations. Let’s explore the picks and insights driving Akamine’s bullish call.

Viper energy (VNOM)

The first stock we’ll look at here, Venom Energy, is a $10 billion-plus partnership company focused on owning, acquiring and operating high-production oil and natural gas properties in North America. The company partners with Diamondback, a major hydrocarbon production company, and collects royalties on the fossil fuel wealth produced on its land holdings. We should note here that Diamondback owns a significant stake in Viper.

Viper’s goal is to generate an ‘attractive return’ for its own investors, and to this end the company focuses on operating income and distributable profits. In support of this business, Viper had an ownership interest in 32,567 net royalty acres as of September 30 of this year. Viper didn’t rest there, however, and on October 1, the company completed the acquisition of several mineral and royalty-interest subsidiaries of Tumbleweed Royalty, a move that increased Viper’s footprint to 35,634 net royalty acres. Of that total, 19,227 net royalty acres were operated by Diamondback.

In total, Viper has access to more than 10,700 horizontally producing wells on its properties, along with an additional 1,125 view wells. Average production from this portfolio was 49,370 boe/d, up 2.4% from the previous year, and it was this production that supported Viper’s earnings and dividend payments.

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In terms of financial results, we see that Viper generated total operating income of $209.6 million in Q3 24, the last reported period. This was $1.38 million better than expected, although it was down more than 28% year-over-year. Ultimately, Viper’s non-GAAP earnings were 49 cents per share, in line with forecasts.

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