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Diamondback (FANG) Q2 Earnings Top Estimates on Solid Output

Zacks Equity Research

Diamondback Energy, Inc. FANG delivered strong second-quarter 2020 earnings. Better-than-expected production led to this outperformance. Precisely, overall volumes came in at 294.1 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 293.3 MBOE/d.

The company’s adjusted net income per share of 15 cents outpaced the Zacks Consensus Estimate of 3 cents.

However, the bottom line plunged 91.2% from the year-ago figure of $1.70 due to weaker average oil price realization.

This Permian pure play’s total revenues of $899 million also missed the Zacks Consensus Estimate of $966 million. Moreover, the top line fell 58.4% from the year-earlier figure of $1.02 billion.

Production & Realized Prices

The 2018 buyouts of Energen Corporation and Ajax Resources helped Diamondback transform into one of the leading Permian Basin oil producers. Production of oil and natural gas averaged 294.1 MBOE/d comprising 60% oil. The figure jumped 4.9% from the year-ago quarter and also surpassed the Zacks Consensus Estimate of 293.3 MBOE/d. While oil output was marginally down year over year, natural gas volumes surged 48.6% year over year.

The average realized crude oil price in the second quarter was $21.99 per barrel, reflecting a 59.6% drop from the year-ago realization of $54.41. Overall, the company fetched $15.39 per barrel compared with $39.19 a year ago.

Expenses & Financials

Second-quarter cash operating cost was $6.44 per barrel of oil equivalent (BOE), down 25.7% from the prior-year figure of $8.67 per BOE. Diamondback’s lease operating expense (LOE) of $3.85 was down 22.7% year over year. Moreover, production taxes plummeted nearly 67% from the prior-year quarter to $2.51 per BOE. Meanwhile, gathering and transportation expense was $1.35, higher than 67 cents in the second quarter of 2019.

Capital expenditure in the quarter totalled $562 million. The company shelled out $456 million on drilling and completion and spent another $32 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $24 million and $50 million, respectively.

As of Jun 30, 2020, this Permian-focused operator had $51 million in cash and cash equivalents, and long-term debt of $5.95 billion. The debt-to-capitalization of the company was 35.7%.

Diamondback’s board of directors declared a quarterly dividend of 37.5 cents per share for the second quarter. The amount will be paid out on Aug 20, 2020 to its shareholders of record as of Aug 13. This indicates the company’s annual dividend yield to be 3.8%.

Diamondback Energy, Inc. Price, Consensus and EPS Surprise

Diamondback Energy, Inc. Price, Consensus and EPS Surprise
Diamondback Energy, Inc. Price, Consensus and EPS Surprise

Diamondback Energy, Inc. price-consensus-eps-surprise-chart | Diamondback Energy, Inc. Quote

Guidance

Diamondback projects 2020 average daily production to be 290-305 MBOE/d, lower than the previous guidance of 295-310 MBOE/d. Its average daily oil production is estimated between 178 MBO/d and 182MBO/d with expected capital spend of $1,800-$1,900 million. Further, this Midland, TX-headquartered company plans to complete 153-180 net wells and drill 205-215 gross wells in 2020.

Diamondback trims LOE and G&A unit view by a combined $0.35/BOE at the midpoint of each guided range, indicating total cost savings in excess of $38 million for 2020.

Zacks Rank & Key Picks

Diamondback currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Halliburton Company HAL, Core Laboratories NV CLB and Pembina Pipeline Corp PBA, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Halliburton Company (HAL) : Free Stock Analysis Report
 
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