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What Drove Vanguard Natural Resources’ 2Q16 Earnings?

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Vanguard Natural’s 2Q16 earnings estimates

Vanguard Natural Resources (VNR), an upstream MLP (master limited partnership) involved in crude oil, natural gas, and NGL (natural gas liquid) exploration and production, is scheduled to release its 2Q16 earnings on July 27, 2016. In this series, we’ll talk about VNR’s 2Q estimates, commodity hedges, market performance, key performance indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.

Wall Street analysts’ 2Q16 consensus EBITDA (earnings before interest, tax, depreciation, and amortization) estimate for VNR is $96.4 million. VNR’s 2Q16 estimate is 4.7% higher than its 2Q15 adjusted EBITDA and 3.2% higher than the previous quarter’s adjusted EBITDA.

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Vanguard Natural’s 2Q16 EBITDA drivers

Vanguard Natural’s 2Q16 quarter-over-quarter EBITDA growth is expected to be driven by several factors.

  • A slight recovery in crude oil, natural gas, and NGL prices could positively affect Vanguard’s EBITDA. Similarly, VNR’s peers, Memorial Production Partners (MEMP), EV Energy Partners (EVEP), and Legacy Reserves (LGCY) are expected to benefit from the slight recovery in commodity prices.
  • VNR’s measures to reduce its operating expenses are also expected to boost its EBITDA.

The above factors might be slightly offset by a decline in production due to a lower capital expenditure. VNR lowered its 2016 capital expenditure to reduce its growing leverage.

Vanguard Natural’s adjusted EBITDA versus consensus estimates

While the 1Q16 EBITDA estimate for VNR was $93.4 million, the adjusted EBITDA was $92.8 million—a marginal miss of 0.7%. We’ll have to wait for the 2Q16 earnings release to see whether VNR beats or misses its 2Q16 EBITDA estimates. We’ll cover this in our post-earnings results series for VNR.

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