Viper Energy (VNOM) should post better-than-expected Q3 production as an earlier-than-expected closing of its drop-down acquisition of mineral and royalty interests from Diamondback Energy (FANG) boosts output, RBC Capital Markets said.

Channel checks indicate Viper continues to outperform the midpoint of production guidance, and the earlier closing of the drop-down transaction adds 600 to 700 barrels of oil per day for one month of Q3, according to the note Thursday.

RBC estimates Q3 earnings per share of $0.72 above consensus estimates of $0.67. It forecast production of 137,000 barrels of oil equivalent per day, compared with consensus of 136,000 and company guidance of 133,500 to 135,500.

The company is scheduled to report its Q3 results on Nov. 2 after market close.

The brokerage said it modelled fixed-rate dividend payout of $0.50 per share and buybacks of $80 million to $100 million after the company moved away from its variable dividend strategy to one that is more balance-sheet enhancing.

RBC reiterated its outperform rating on the stock and lifted its price target to $57 per share from $55.

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