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Why Is Diamondback (FANG) Down 4.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Diamondback due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q2 Earnings and Revenues Top Estimates
Diamondback reported second-quarter 2021 adjusted earnings of $2.40 per share, which surpassed the Zacks Consensus Estimate of $2.25 and also the year-ago quarter’s earnings of 15 cents. The company’s bottom line was aided by better-than-expected production. Overall volumes were 401.5 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 389.8 MBOE/d.
The company’s quarterly revenues of $1.68 billion outperformed the Zacks Consensus Estimate of $1.36 billion and also increased from the year-earlier figure of $425 million.
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 401.5 MBOE/d comprising 60.4% oil. The figure increased 36.5% from the year-ago quarter’s 294.12 MBOE/d and also surpassed the Zacks Consensus Estimate of 389.8 MBOE/d. While oil output was up 37.5% year over year, natural gas volumes rose 39.7% year over year.
The average realized crude oil price in the second quarter was $63.22 per barrel, reflecting an 187.5% rise from the year-ago realization of $21.99. Overall, the company fetched $45.63 per barrel compared with $15.39 a year ago.
Expenses & Financials
Second-quarter cash operating costs were $9.33 per barrel of oil equivalent (BOE), up 44.9% from the prior-year figure of $6.44. Diamondback’s lease operating expense (LOE) of $4.3 was up 11.7% year over year. Production taxes rose 245.8% from the prior-year quarter to $2.87 per BOE. Gathering and transportation expenses were $1.53 per BOE, higher than $1.35 in the second quarter of 2020.
Capital expenditure in the quarter totaled $366 million. The company shelled out $330 million on drilling and completion, and spent another $12 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $14 million and $10 million, respectively.
As of Jun 30, 2020, this Permian-focused operator had $344 million in cash and cash equivalents, and a long-term debt of $7.4 billion with total debt-to-total capital of 40.2%.
Diamondback’s board of directors declared a quarterly dividend of 45 cents per share for the second quarter. This signifies a 12.5% hike in its quarterly payout from its previous levels of 40 cents.The amount will be paid out on Aug19, 2021 to its shareholders of record as of Aug 12.
It also generated free cash flow of $578 million in the second quarter.
Diamondback decided to divest its 95,000 net acres in the Williston Basin to Oasis Petroleum for $745 million. Proceeds from the sale will be used for debt repayment. The deal is slated to close in the third quarter of this year, contingent on certain conditions.
Outlook
Diamondback raised its average daily production guidance to 363-370 MBOE/d (above the 2020 level of 300 MBOE/d) for 2021. Full-year capital spend estimate is cut to $1.525-$1.625 billion, down 6% at the midpoint from the prior guided range of $1.60-$1.75 billion.
This Midland, TX-headquartered company predicts third-quarter daily production in the 388-398 MBOE/d range with an estimated capex between $430 million and $480 million. Permian Basin production for the September quarter is anticipated in the 363-370 MBOE/d band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 6.74% due to these changes.
VGM Scores
Currently, Diamondback has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Diamondback (FANG) Down 4.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Diamondback due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q2 Earnings and Revenues Top Estimates
Diamondback reported second-quarter 2021 adjusted earnings of $2.40 per share, which surpassed the Zacks Consensus Estimate of $2.25 and also the year-ago quarter’s earnings of 15 cents. The company’s bottom line was aided by better-than-expected production. Overall volumes were 401.5 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 389.8 MBOE/d.
The company’s quarterly revenues of $1.68 billion outperformed the Zacks Consensus Estimate of $1.36 billion and also increased from the year-earlier figure of $425 million.
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 401.5 MBOE/d comprising 60.4% oil. The figure increased 36.5% from the year-ago quarter’s 294.12 MBOE/d and also surpassed the Zacks Consensus Estimate of 389.8 MBOE/d. While oil output was up 37.5% year over year, natural gas volumes rose 39.7% year over year.
The average realized crude oil price in the second quarter was $63.22 per barrel, reflecting an 187.5% rise from the year-ago realization of $21.99. Overall, the company fetched $45.63 per barrel compared with $15.39 a year ago.
Expenses & Financials
Second-quarter cash operating costs were $9.33 per barrel of oil equivalent (BOE), up 44.9% from the prior-year figure of $6.44. Diamondback’s lease operating expense (LOE) of $4.3 was up 11.7% year over year. Production taxes rose 245.8% from the prior-year quarter to $2.87 per BOE. Gathering and transportation expenses were $1.53 per BOE, higher than $1.35 in the second quarter of 2020.
Capital expenditure in the quarter totaled $366 million. The company shelled out $330 million on drilling and completion, and spent another $12 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $14 million and $10 million, respectively.
As of Jun 30, 2020, this Permian-focused operator had $344 million in cash and cash equivalents, and a long-term debt of $7.4 billion with total debt-to-total capital of 40.2%.
Diamondback’s board of directors declared a quarterly dividend of 45 cents per share for the second quarter. This signifies a 12.5% hike in its quarterly payout from its previous levels of 40 cents.The amount will be paid out on Aug19, 2021 to its shareholders of record as of Aug 12.
It also generated free cash flow of $578 million in the second quarter.
Diamondback decided to divest its 95,000 net acres in the Williston Basin to Oasis Petroleum for $745 million. Proceeds from the sale will be used for debt repayment. The deal is slated to close in the third quarter of this year, contingent on certain conditions.
Outlook
Diamondback raised its average daily production guidance to 363-370 MBOE/d (above the 2020 level of 300 MBOE/d) for 2021. Full-year capital spend estimate is cut to $1.525-$1.625 billion, down 6% at the midpoint from the prior guided range of $1.60-$1.75 billion.
This Midland, TX-headquartered company predicts third-quarter daily production in the 388-398 MBOE/d range with an estimated capex between $430 million and $480 million. Permian Basin production for the September quarter is anticipated in the 363-370 MBOE/d band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 6.74% due to these changes.
VGM Scores
Currently, Diamondback has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.