Diamondback Energy Earns Record $1.18 Billion with Higher Permian Production

Texas independent oil and natural gas company Diamondback Energy reported better than expected third quarter earnings after the market close Monday. FANG reported adjusted gains of $6.48 per share beating expectations $6.66. Revenue increased to $2.44 billion from $1.91 billion. The average price of oil was $89.79 per barrel in the third quarter of 2022, compared with $68.27 in the third quarter of last year, Diamondback said.

The release follows last week’s earnings from oil and gas heavyweights Chevron, Exxon, Shell and Phillps 66. Goldman Sachs has named the stock among its top five picks for 2022. Rattler Midstream LP buy-in transaction expected to close in late August 2022

Diamondback Drilling

Diamondback operates exclusively in the Permian basin.

Diamondback Energy Inc (NASDAQ): $FANG Reported Earnings after Close Monday

Earnings

Diamondback Energy (FANG) released third-quarter of 2022 net income of $1.18 billion, compared with $649 million a year earlier. Earnings per share rose to $6.72 from $3.55 in the third quarter of last year, while adjusted earnings per share reached $6.48. Revenue increased to $2.44 billion from $1.91 billion.

  • Q3 net income of $6.72 per share, adjusted for non-recurring gains, were $6.48 per share.
  • Q3 revenue increased to $2.44 billion from $1.91 billion last year.
  • Diamondback Energy has beaten earnings and revenue estimates in 6 of the past 10 quarters.
  • Average production of 224.3 MBO/d (390.6 MBOE/d)
  • Third quarter 2022 average unhedged realized prices were $89.79 per barrel of oil, $6.46 per Mcf of natural gas and $34.96 per barrel of natural gas liquids (“NGLs”), resulting in a total equivalent unhedged realized price of $67.25 per BOE.
  • Cash flow from operating activities of $1.93 billion;
  • Operating Cash Flow Before Working Capital Changes of $1.65 billion
  • Cash capital expenditures of $491 million
  • Free Cash Flow of $1.16 billion
  • Completed Rattler Midstream LP (“Rattler”) buy-in transaction on August 24, 2022

Stock Market Reaction

  • 52wk High 165.67 (Stock Traded There Today before Earnings)
  • 163.30▼ 0.19 (0.12%) After Hours
  • 163.30▲ +49.7 (+43.68%) past year
  • 163.30▲ +52.34 (+47.09%) past 5 years

Our high cash margins and best-in-class well costs contributed to nearly $1.2 billion of Free Cash Flow, of which approximately $874 million, or ~75%, is being returned to our stockholders through $472 million in share repurchases and approximately $402 million in total dividends,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback.”

Dividends and Capital

  • Declared Q3 2022 base cash dividend of $0.75 per share payable on November 25, 2022; implies a 1.9% annualized yield based on November 4, 2022 closing share price of $161.37
  • Declared a variable cash dividend of $1.51 per share payable on November 25, 2022; total base-plus-variable dividend of $2.26 per share implies a 5.6% annualized yield based on November 4, 2022 closing share price of $161.37
  • Repurchased 3,922,418 shares of common stock in Q3 2022 for $472 million (at a weighted average price of $120.50/share)
  • Total Q3 2022 return of capital of $874 million from stock repurchases and the declared base-plus-variable dividend; represents ~75% of Q3 2022 Free Cash Flow

Asset Sales and Acquisitions

  • Completed divestiture of non-core Delaware Basin acreage for net proceeds of $155 million; divested assets included approximately 3,250 net acres, with net production of approximately 550 BO/d (800 BOE/d)
  • In conjunction with its previously announced target of at least $500 million of non-core asset sales by year-end 2023, Diamondback expects to use net proceeds from this transaction towards debt reduction
  • Previously announced acquisition of leasehold interest and related assets from FireBird Energy LLC (“FireBird”) for $775 million in cash and 5.86 million shares; transaction expected to close on November 30, 2022, subject to certain closing conditions and adjustments
  • Previously announced target to reduce Scope 1+2 GHG intensity by at least 50% from 2020 levels by 2030

Guidance for 22

  • Total net production – MBOE/d 385 – 386 (v 374 – 380 Mboe/d)
  • Q4 Oil production – MBO/d 223 – 224
  • Q4 2022 oil production – MBO/d 224 – 228 (total – MBOE/d) (386 – 393)
  • FireBird Q4 2022 contribution MBO/d 5.7 (total – MBOE/d) (7.4)
  • Q3 2022 Capital expenditures $470 – $510
Texas Railroad Commission 2021 Operators
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 Source Diamondback Energy

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