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Diamondback (FANG) Q4 Earnings & Revenues Beat, Dividend Up

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U.S. energy explorer Diamondback Energy FANG reported fourth-quarter 2021 adjusted earnings per share of $3.63, beating the Zacks Consensus Estimate of $3.38 and significantly above the year-earlier period’s profit of 82 cents.

The outperformance reflects higher-than-expected production, which was partly offset by escalating costs. Precisely, FANG’s average Q4 output came in at 387,065 barrels of oil-equivalent per day (BOE/d), ahead of the consensus mark of 375,551 BOE/d.

Revenues of $2 billion outpaced the Zacks Consensus Estimate by 23.3% and surged 163% from the year-ago quarter’s sales of $769 million.

In more news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 60 cents per share to its common shareholders of record on Mar 4. The payout, which represents a 20% sequential increase, will be made on Mar 11. The company also executed $409 million of share repurchases during the fourth quarter of 2021 at $105.96 apiece.

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

Production & Realized Prices

FANG’s production of oil and natural gas averaged 387,065 BOE/d, which comprises 58% oil. The figure rose 29.5% from the year-ago quarter and also surpassed the Zacks Consensus Estimate of 375,551 BOE/d. While crude output was up 28.7% year over year, natural gas volumes improved 32.7% year over year.

The average realized oil price during the fourth quarter was $74.50 per barrel, 92.8% higher than the year-ago realization of $38.64 but a touch below the consensus mark of $75. Meanwhile, the average realized natural gas price jumped to $4.56 per thousand cubic feet (Mcf) from $1.35 in the year-ago period but again missed the Zacks Consensus Estimate of $4.87. Overall, the company fetched $56.47 per barrel compared with $27.41 a year ago.

Costs & Financial Position

Diamondback’s fourth-quarter cash operating cost was $10.17 per barrel of oil equivalent (BOE), up 48% from the prior-year quarter. Lease operating expense was $4.21 per BOE, compared with $3.38 in the fourth quarter of 2020. FANG’s production taxes almost doubled year over year to $3.40 per BOE. Gathering and transportation expenses increased in the fourth quarter of 2021 to $1.63 per BOE from $1.27 at the end of 2020.

Diamondback spent $434 million in capital expenditure — $347 million on drilling and completion, $80 million on infrastructure and $7 million on midstream. The company booked $772 million of free cash flows in the fourth quarter.

As of Dec 31, the Permian-focused operator had approximately $654 million in cash and cash equivalents, and $6.6 billion in long-term debt, representing a debt-to-capitalization of 33.4%.

Guidance

In 2022, FANG said it looks to pump 369,000-376,000 BOE/d of hydrocarbon, with the midpoint approximately 4% below the Q4 average. Of this, oil volumes are likely to be 218,000-222,000 barrels per day. The company forecast a capital spending budget between $1.75 billion and $1.9 billion, which represents an increase from the 2021 actual figure of $1.5 billion. Finally, stressing on its shareholder return program, Diamondback has committed to return half of the free cash flow through dividends and buybacks.

Zacks Rank & Stock Picks

Diamondback currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Cenovus Energy CVE, ConocoPhillips COP and Marathon Oil MRO. All the companies sport a Zacks Rank #1 (Strong Buy) You can see the complete list of today’s Zacks #1 Rank stocks here.

Cenovus Energy: Cenovus Energy is valued at more than $30 billion. The Zacks Consensus Estimate for CVE’s 2022 earnings has been revised 16% upward over the past 30 days.

Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in Q4. CVE shares have gained around 109.3% in a year.

ConocoPhillips: ConocoPhillips is valued at around $116 billion. The consensus estimate for COP’s 2022 earnings has been revised 14.6% upward over the past 30 days.

COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 73.6% in a year.

Marathon Oil: Marathon Oil has a projected earnings growth rate of 75.8% for this year. The Zacks Consensus Estimate for MRO’s 2022 earnings has been revised 26% upward over the past 30 days.

Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have gained around 96.4% in a year.


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