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Texas independent oil and natural gas company Diamondback Energy reported worse than expected second quarter earnings after the market close  Wednesday. $FANG increased full year production guidance and annnouced buying Permian assets of Ajax Resources.


Diamondback Drilling

Diamondback Energy Inc (NASDAQ): $FANG Missed Earnings After Close Wednesday

$1.59 Missed $1.64 EPS and $526.3 million Beat $477 million forecast in revenue 

Earnings

EPS of $1.59 on revenue of $526.3 million missed forecast EPS to $1.64 but beat revenue of $477 million. This compares to earnings of $1.40 per share a year ago

Diamondback Energy Inc (NASDAQ): $FANG

Market Reaction - After hours $131.00 −$2.79 (2.09%)

"I am extremely pleased with our organization's continued ability to deliver on securing firm takeaway out of the Permian as we look to maximize our exposure to international pricing. Diamondback's oil marketing strategy in the near term is to secure firm transportation at fixed discounts to Gulf Coast pricing while not compromising realizations over the long term," said CEO Travis Stice in a statement.

Highlights

  • Production rose 46% to 112,600 barrels of oil equivalent per day.
  • Average realized prices were $50.26 per boe, down 1% from Q1.
  • Q2 2018 cash dividend of $0.125 per share payable on August 27, 2018; implies a 0.4% annualized yield based on August 6, 2018 share closing price of $133.62
  • Executed agreement for option to acquire up to 10% equity interest in the EPIC Crude Oil Pipeline project; increases previously announced volume commitment from 50,000 bo/d to 100,000 bo/d (50% take or pay)

 

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

Diamondback Permian takeway

Takeway From June Presentation

Outlook

Full-year production is now seen at 115,000-119,000 boe per day, up 4% at the midpoint from prior guidance. Management also narrowed full-year capital spending guidance to $1.4 billion-$1.5 billion from $1.3 billion-$1.5 billion previously.

About Diamindback

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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