STR Stock Forecast & Price Target

Sitio Royalties Corp reported a noteworthy increase in both oil production and overall production in 4Q24, with oil production rising 1% quarter-over-quarter and 14% year-over-year, reaching 19.4 MBopd, and total production increasing 6% quarter-over-quarter and 14% year-over-year to 40.9 MBoed. The company's financial robustness is further underscored by a 9% increase in the borrowing base on its revolver to $925 million during the quarter, indicating strong liquidity and financial flexibility. Additionally, Sitio's EBITDA and cash flow per share exceeded consensus expectations by 9% and 15%, respectively, driven by robust production results.

Sitio Royalties Corp is facing significant challenges, as evidenced by an 8% decline in Line of Sight (LOS) wells to 44.9 net, largely driven by decreased operator activity in the Permian and DJ basins, with net permits and spuds also down. Additionally, concerns about the potential for declining oil and natural gas prices looms over the company's near-term cash flow and EBITDA estimates, which may further depress long-term price forecasts and NAV estimates. Furthermore, the inability to secure additional mineral ownership in a competitive market could hinder growth, compounding the company's negative outlook amid potential governmental or regulatory changes.