Texas independent oil and natural gas company Diamondback Energy reported better than expected fourth quarter earnings after the market close Tuesday. FANG reported adjusted gains of $1.01B, or $5.62/share, from $1B, or $5.50/share, on revenues of $2.03B, roughly flat compared to sales of $2.02B, in the year-earlier quarter. Average production in Q4 was 226.1K bbl/day and FANG expects Q1 2023, production of 248K-252K bbl/day of oil, or 415K-422K boe/day, on capital spending of $625M-$675M.
Diamondback operates exclusively in the Permian basin.
Diamondback Energy Inc (NASDAQ): $FANG Reported Earnings after Close Tuesday
Q4 2022 Earnings
- Q4 net income $1.01B, or $5.62/share, from $1B, or $5.50/share, on revenues of $2.03B, roughly flat compared to sales of $2.02B, in the year-earlier quarter.
- Earnings, adjusted for non-recurring gains, were $5.29 per share. The results beat the average estimate of 10 analysts surveyed by Zacks Investment Research for earnings of $5.20 per share.
- For the year, the company reported profit of $4.39 billion, or $24.61 per share. Revenue was reported as $9.64 billion.
- The company said average production in Q4 of 226.1 MBO/d (391.4 MBOE/d)
- Cash capital expenditures of $542 million
- Free Cash Flow (as defined and reconciled below) of $1.13 billion
- Completed Rattler Midstream LP (“Rattler”) buy-in transaction on August 24, 2022
FANG Stock Market Reaction (Updated)
- 137.29 ▲+3.08 (2.30%) Market Close
- 137.29 ▲ +5.91 (4.50%)
- 137.29 ▲ +7.73 (5.97%) past year
- 137.29 ▲ +13.98 (11.34%) past 5 years
- 52wk High 168.19
- 52wk Low 101.46
“We expect to further strengthen our investment grade balance sheet by reducing debt through cash flow and our increased target of at least $1 billion of non-core asset sales,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback.”
Dividends and Capital
Diamondback was able to generate nearly $4.6 billion of Free Cash Flow and return approximately $3.1 billion of cash to our stockholders through a combination of our growing base dividend, variable dividend and share repurchase program.
- Increasing annual base dividend by 7% to $3.20 per share; declared Q4 2022 base cash dividend of $0.80 per share payable on March 10, 2023; implies a 2.4% annualized yield based on February 17, 2023 closing share price of $134.68
- Declared a variable cash dividend of $2.15 per share payable on March 10, 2023; total base-plus-variable dividend of $2.95 per share implies an 8.8% annualized yield based on February 17, 2023 closing share price of $134.68
- Repurchased 2,344,850 shares of common stock in Q4 2022 for $316 million (at a weighted average price of $134.49/share)
- Total Q4 2022 return of capital of $861 million from stock repurchases and the declared base-plus-variable dividend; represents ~76% of Q4 2022 Free Cash Flow (as defined and reconciled below)
Asset Sales and Acquisitions
- Closed the previously announced acquisition of all leasehold interests and related assets of FireBird Energy LLC on November 30, 2022 and the previously announced acquisition of all leasehold interest and related assets of Lario Permian, LLC, a wholly owned subsidiary of Lario Oil & Gas Company, and certain associated sellers, on January 31, 2023 (collectively, the “FireBird and Lario Acquisitions”)
Non-Core Asset Sale Update
- Completed divestiture of 10% equity ownership in the Gray Oak crude oil pipeline for gross proceeds of $180 million in Q1 2023
- Signed definitive agreements to divest ~19,000 net acres in Glasscock County and ~4,900 net acres in Ward and Winkler counties for total consideration of $439 million, subject to certain closing adjustments; estimated loss of 2023 production of 2 MBO/d (7 MBOE/d) accounted for in full year 2023 guidance
- Over $750 million of completed and pending asset sales since announcing initial target
- Increasing non-core asset sale target to at least $1 billion by year-end 2023
Guidance for 2023
- Full year 2023 oil production guidance of 256 – 262 MBO/d (430 – 440 MBOE/d)
- Full year 2023 cash CAPEX guidance of $2.50 – $2.70 billion
- The Company expects to drill between 325 and 345 gross (293 – 311 net) wells and complete between 330 and 350 gross (297 – 315 net) wells with an average lateral length of approximately 10,500 feet in 2023
- Q1 2023 oil production guidance of 248 – 252 MBO/d (415 – 422 MBOE/d)
- Q1 2023 cash CAPEX guidance of $625 – $675 million
Source Diamondback Energy
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