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Texas independent oil and natural gas company Diamondback Energy reported better than expected first quarter earnings after the market close Monday. $FANG said it will cut oil production further due to the demand collapse from the Covid-19 lockdown.

Diamondback Drilling

Diamondback operates exclusively in the Permian basin.

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

$1.45 (adj) Beat Exp $1.30 EPS AND $899M Missed$968 Billion forecast in revenue 

Earnings

Diamondback Energy (FANG)  released first quarter earnings on Monday of adjusted first-quarter profit above Wall Street expectations.  . Diamondback said it lost $272 million, or $1.72 a share, in the quarter, versus a profit of $10 million, or 6 cents a share, in the year-ago period.

Adjusted for one-time items, the company earned $230 million, or $1.45 a share, compared with $1.39 a share a year ago. Sales rose to $899 million from $864 million a year ago. Analysts polled by FactSet had expected the company to report an adjusted profit of $1.30 a share on sales of $968 million

Viper Energy Update

Viper Energy Partners LP, a subsidiary of Diamondback energy reported first quarter earnings after the market close also. $VNOM reported a first-quarter loss of $142.2 million, after reporting a profit in the same period a year earlier. On a per-share basis it had a loss of $2.10. Earnings, adjusted for non-recurring costs, came to 21 cents per share. The results beat Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for a loss of 6 cents per share. Revenue was $78.7 million in the period, which also beat Street forecasts. Eight analysts surveyed by Zacks expected $75.3 million.

Viper Energy shares have fallen 65% since the beginning of the year. In the final minutes of trading on Monday, shares hit $8.60, a decline of 73% in the last 12 months.

 

Diamondback Energy Inc (NASDAQ): $FANG

Market Reaction - After hours $43.35 +0.83 (+1.95%)

Highlights

  • Q1 2020 capital expenditures of $790 million; turned 80 gross operated horizontal wells to production
  • Declared Q1 2020 cash dividend of $0.375 per share payable on May 21, 2020; implies a 3.7% annualized yield based on the May 1, 2020 share closing price of $40.28
  • Standalone liquidity of $1.9 billion as of March 31, 2020 Q1 2020
  • Cash operating costs of $8.52 per BOE; including cash general and administrative ("G&A") expenses of $0.51 per BOE

"The challenges presented so far in 2020 are unprecedented, but we have taken quick and decisive action to preserve our strength through this cycle," Chief Executive Travis Stice said in a statement.

 Diamondback OIl Takeaway Q1 2020

 Production & Capex Outlook

  • Diamondback’s Q1 2020 production averaged 321.1 MBOE/d (201.4 MBO/d), up 7% quarter over quarter from 301.3 MBOE/d in Q4 2019, and up 22% year over year from 262.6 MBOE/d in Q1 2019.
  • Diamondback's Q1 2020 average oil production increased 3% quarter over quarter from 195.0 MBO/d in Q4 2019 and increased 12% year over year from 179.1 MBO/d in Q1 2019.
  • During the first quarter of 2020, Diamondback drilled 55 gross horizontal wells in the Midland Basin and 38 gross horizontal wells in the Delaware Basin.
  • The Company turned 34 operated horizontal wells to production in the Midland Basin and 46 operated horizontal wells in the Delaware Basin.
  • The average lateral length for the wells completed during the first quarter was 9,751 feet.
  • Operated completions during the first quarter consisted of 47 Wolfcamp A wells, nine Wolfcamp B wells, seven Lower Spraberry wells, six Middle Spraberry wells, five Second Bone Spring wells, four Third Bone Spring wells and two Jo Mill wells.

Price Outlook in Response To Covid-19 Demand Destruction

  • Immediately ceased all completion operations in early March 2020 for minimum of one month
  • Hedged ~100% of expected 2020 oil production, including basis differentials and a majority of WTI contract roll exposure; removed all three way collar hedge exposure to maximize downside protection
  • Hedged approximately 50% of expected 2021 oil production in the form of swaps and two way collars
  • The Company plans to voluntarily curtail 10 - 15% of expected May 2020 oil production in areas where the Company can manage production economically and without the addition of material operating expense.
  • Diamondback will continue to monitor whether additional strategic curtailments are warranted in June and beyond Immediately reduced full year 2020 capital budget by over 40%, with run rate activity based capital spend 60% below original 2020 expectations

 Diamondback Oil Hedges Q1 2020

Diamondback Hedges Q1 2020

Diamondback basis and natutal gas Hedges Q1 2020

About Diamondback

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. Diamondback's activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork, Bone Spring and Cline formations..

Source Diamondback Energy

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