Texas independent oil and natural gas company Diamondback Energy reported worse than expected third second quarter earnings after the market close Tuesday. $FANG said oil production declined in the quarter due to asset sales earlier in the year.
Texas independent oil and natural gas company Diamondback Energy reported worse than expected third second quarter earnings after the market close Tuesday. $FANG said oil production declined in the quarter due to asset sales earlier in the year.
Diamondback Energy Inc (NASDAQ): $FANG Reported Earnings after Close Tuesday
$1.47 Missed Exp $1.70 EPS AND $975M Missed $1.05 Billion forecast in revenue
Earnings
Diamondback Energy (FANG) released third quarter earnings on Tuesday of $368 million, or $2.26 a share, in the quarter, compared with $157 million, or $1.59 a share, in the year-ago quarter. Adjusted for one-time items, the company earned $239 million, or $1.47 a share, compared with $1.67 a share a year ago.
Revenue rose to $975 million from $537 million a year ago. Analysts polled by FactSet had expected adjusted earnings of $1.70 a share on sales of $1.05 billion.
Viper Energy Update
Viper Energy Partners LP, a subsidiary of Diamondback energy reported fourth quarter earnings after the market close Feb 5, 2019. $VNOM surpassed $1 billion in aquistions since it’s IPO four years ago. The company raised production guidance and a Q4 2018 cash distribution of $0.51 per common unit , up 11% year over year; implies a 6.4% annualized yield based on the February 4, 2019 unit closing price of $31.95.
Diamondback Energy Inc (NASDAQ): $FANG
Market Reaction – After hours $79.60 −$10.63 (11.78%)
Highlights
. “After growing significantly during the first two quarters of the year, Diamondback’s oil production declined in the third quarter due to the sale of our Central Basin Platform assets effective July 1, 2019, which removed ~5,800 barrels per day of low-margin oil production from our asset base,” Diamondback Chief Executive Travis Stice said in a statement.
- FANG said Q3 oil production fell due to the sale of its Central Basin Platform assets, which removed ~5,800 bbl/day of low-margin oil production from its asset base; overall production rose 2% Q/Q and 133% Y/Y to 287.1K boe/day but the oil percentage declined.
- FANG expects realized prices to improve relative to WTI through the rest of 2019 and 2020 as fixed differential contracts roll off and convert to the company’s commitments on the EPIC and Gray Oak pipelines or move to the current Midland market price.
Production & Capex Outlook
- FANG said Q3 oil production fell due to the sale of its Central Basin Platform assets, which removed ~5,800 bbl/day of low-margin oil production from its asset base; overall production rose 2% Q/Q and 133% Y/Y to 287.1K boe/day but the oil percentage declined.
- FANG narrows its full-year production guidance to 281K-282K boe/day from a previous range of 277K-284K boe/day and its full-year capex outlook to $2.85B-$2.9B; for FY 2020, FANG forecasts capex of $2.8B-$3B, with plans to operate 20-23 drilling rigs.
- FY 2020 production guidance of 310K-325K boe/day implies growth of 10%-15% from the midpoint of anticipated 2019 output, and FY 2020 oil production guidance of 205K-215K boe/day also implies 10%-15% growth from the midpoint of forecast 2019 production.
Price Outlook
FANG expects realized prices to improve relative to WTI through the rest of 2019 and 2020 as fixed differential contracts roll off and convert to the company’s commitments on the EPIC and Gray Oak pipelines or move to the current Midland market price.
Ajax Resources Acerage Buy
Diamondback also agreed to acquire all leasehold interests and related assets of Ajax Resources for $900 million in cash and 2.58 million shares of common stock. The deal gives Diamondback 25,493 net leasehold acres in the Northern Midland Basin. Producing over net 12,100 boe/d (88% oil) as of August 6, 2018
The acerage has 362 net identified potential horizontal drilling locations with an average lateral length of over 9,500 feet; ~220 net potential locations in the top quartile of Diamondback’s current inventory ~99% of acreage operated, with average 99% working interest and 23% average royalty burden. The acreage HBP allows for 12+ well multi-zone pad development in the Middle Spraberry, Lower Spraberry and Wolfcamp A
Takeway From June Presentation
About Diamondback
Diamondback Energy is an independent oil and natural gas company headquartered in Midland, TX. Diamondback’s growth strategy is focused on the acquisition, development, exploration and exploitation of unconventional, long-life, onshore oil and natural gas reserves in the major oil producing Permian Basin in West Texas. The Company’s operations are directed primarily at the large acreage areas of the Clearfork, Spraberry, Wolfcamp, Cline, Strawn and Atoka formations, collectively known as the Wolfberry Trend.
Source Diamondback Energy
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