Oil is a big deal today. And it’s been a bigger deal for the past months as the US and many, many other countries are consuming more than is being produced. Not only is demand outpacing supply but stockpiles are dropping.
Every week, the US Department of Energy (DOE) and its Energy Information Administration (EIA) posts its report on US storage of crude oil. And week after week, the EIA shows more drops in oil held in tanks and other storage facilities around the US.
This is also further confirmed by the private American Petroleum Institute (API) that shows even further bad news for buyers of oil – there’s less of it available.
Oil Price Flaring Up
The US economy is back online. This means trucks are moving even more around the nation and in your neighborhood.
Trains are pulling more goods from over-stressed ports and sucking down fuel as they move along the tracks. Planes are back in the air with cargo and passengers – again burning refined oil products by the second.
And you’ve heard and read that Trans-Pacific container ships and dry bulk freighters are steaming or waiting for port access – again burning fuel minute after minute.
US crude oil prices as measured by the benchmark West Texas Intermediate (WTI) are now closing in on $80 a barrel. And our chief technician Josh Martinez has been targeting $95 a barrel for some time now.
US Crude Oil Price -- Source: Dow Jones
This is the proof element for buying the right oil company. And not just for long-term exploration and production – but for getting paid right now from the flare up in oil prices.
The Stock to Buy Now
Viper Energy (VNOM) is the oil stock that I wrote to you about in the Oct. 4 issue of Traders Agency Insider when it was at $22.09. Since then, it has risen to $23.39 as of yesterday.
And it is just getting noticed…
The company is what I refer to as the landlord of the Permian. The Permian Basin is one of the world’s most valuable tracts of land for oil, gas and other resources.
Largely in Texas and stretching into neighboring states, the Permian is where fracking really, really works as there is so much oil and gas that we don’t really completely know how much there is to find and pump for the decades to come.
Viper owns vast stretches of land in the Permian. It was formed not many years ago as it was spun down from Diamondback Energy (FANG). Diamondback took land that it owned and set up Viper to lease out the land and collect rent as well as royalties from oil and gas lifted from it by E&P companies.
It’s that simple. No capital spending or investment needed. No risks from its operations. No need for rigs, wellheads and roughnecks. All it needs to do is get E&P companies to lease land and pay them their cut of the production of oil and gas.
Oil and gas prices go up – more cash for Viper. Oil and gas prices go down – less cash for Viper, but still cash comes. The key is that Viper needs to keep leasing to the right E&P companies, which includes Diamondback as one of the leading companies on its properties.
Revenue dropped with last year’s lower oil and gas prices. But now, revenue is gushing with the latest quarter showing a gain of 249.41%. And with prices high and demand outpacing supply, revenue should continue to be very good for Viper.
Viper Energy Price -- Source: Dow Jones
The stock is climbing and climbing more sharply. But there is plenty more revenue flowing into the bank account from royalties now and for the quarters to follow. And the more it takes in, the more it pays out in dividend distributions that are now yielding 5.76%.
You can buy and own it for a while – or you can trade it as it gains on its massive ownership of oil getting pumped out of its land. Either way, this is a prime Permian play on cash from higher oil prices.
With the current price at $23.00, VNOM is a buy under $24.25 with a near-term target of $26.64 and even more beyond that. And for safety, consider a stop at $19.88.
As always, I want to hear from you as an Insider here at Traders Agency.
This includes your thoughts on our work here and what we should be covering and how to improve our services to you.
I can be reached directly at neilgeorge@tradersagency.com.
All my best,
P.S. Did you attend the big session yesterday with Josh Martinez and Tim Sykes?
Tim focuses on micro-cap stocks. These are the extra small stocks that are starting and building the major transformative companies in the making.
These are the stocks that are not tied to the general market as they trade on their own merits. They aren’t part of leading indexes, so they don’t get dumped merely on down days for the general market.
If you have interest in investing in what’s next – without the market drama of the day – click here now to watch their powerful training session.
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