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Diamondback (FANG) Q3 Earnings Beat Estimates on Higher Output
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U.S. energy operator Diamondback Energy (FANG - Free Report) reported third-quarter 2023 adjusted earnings per share of $5.49, beating the Zacks Consensus Estimate of $4.90. The outperformance primarily reflects strong production and lower costs.
However, the bottom line declined from the year-ago adjusted figure of $6.48 due to a significant drop in overall realization.
Meanwhile, revenues of $2.3 billion fell 4% from the year-ago quarter’s sales but outperformed the Zacks Consensus Estimate by $163 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 84 cents per share to its common shareholders of record on Nov 16. The payout will be made on Nov 24. In addition to the regular dividend, FANG declared a special dividend of $2.53 per share.
The company also executed $56 million of share repurchases during the third quarter of 2023 at $136.59 apiece.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 452,848 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 15.9% from the year-ago quarter and surpassed our estimate of 442,803 BOE/d. While crude and natural gas output increased 18.6% and 7.9% year over year, respectively, natural gas liquids volumes rose 16.6% from the third quarter of 2022.
The average realized oil price during the most recent quarter was $81.57 per barrel, 9.2% lower than the year-ago realization of $89.79 but ahead of our projection of $71.62. Meanwhile, the average realized natural gas price plunged to $1.62 per thousand cubic feet (Mcf) from $6.46 in the year-ago period, though it came ahead of our estimate of $1.49. Overall, the company fetched $54.37 per barrel compared with $67.25 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $10.51 per barrel of oil equivalent (BOE) compared to $11.97 in the prior-year quarter and our projection of $11.50. The cutback in costs came even though lease operating expenses rose to $5.42 per BOE from $5.09 in the third quarter of 2022. FANG’s production taxes decreased 34.8% year over year to $2.83 per BOE, while gathering and transportation expenses moved down in the third quarter of 2023 to $1.75 per BOE from $1.98 during the corresponding period of 2022.
Diamondback spent $684 million in capital expenditure — $611 million on drilling and completion, $34 million on infrastructure, environment and $39 million on midstream. The company booked $820 million in free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $830 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 26.8%.
Guidance
In 2023, FANG said it looks to pump around 447,000 BOE/d of hydrocarbon, up from the prior outlook of 435,000-445,000 BOE/d. Of this, oil volumes are likely to be around 263,000 barrels per day. The company forecast a capital spending budget between $2.66 billion and $2.7 billion.
Zacks Rank & Stock Picks
Diamondback — a Permian Basin-focused upstream oil and gas company — carries a Zacks Rank #3 (Hold) at present.
Meanwhile, investors interested in the energy sector might consider the operators mentioned below. These companies currently carry a Zacks Rank #2 (Buy).
Delek US Holdings (DK - Free Report) : DK beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 34.2%.
Delek US Holdings is valued at around $1.6 billion. DK has seen its shares move down 22.8% in a year.
EOG Resources (EOG - Free Report) : EOG Resources beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. EOG has a trailing four-quarter earnings surprise of 9.2%, on average.
EOG Resources is valued at around $71.6 billion. EOG has seen its shares drop 16.5% in a year.
TechnipFMC (FTI - Free Report) : The 2023 Zacks Consensus Estimate for FTI indicates 1,667.7% year-over-year earnings per share growth. Over the past 60 days, TechnipFMC saw the Zacks Consensus Estimate for 2023 move up 6.8%.
TechnipFMC is valued at around $9.4 billion. FTI has seen its shares surge 75.3% in a year.
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Diamondback (FANG) Q3 Earnings Beat Estimates on Higher Output
U.S. energy operator Diamondback Energy (FANG - Free Report) reported third-quarter 2023 adjusted earnings per share of $5.49, beating the Zacks Consensus Estimate of $4.90. The outperformance primarily reflects strong production and lower costs.
However, the bottom line declined from the year-ago adjusted figure of $6.48 due to a significant drop in overall realization.
Meanwhile, revenues of $2.3 billion fell 4% from the year-ago quarter’s sales but outperformed the Zacks Consensus Estimate by $163 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 84 cents per share to its common shareholders of record on Nov 16. The payout will be made on Nov 24. In addition to the regular dividend, FANG declared a special dividend of $2.53 per share.
The company also executed $56 million of share repurchases during the third quarter of 2023 at $136.59 apiece.
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 452,848 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 15.9% from the year-ago quarter and surpassed our estimate of 442,803 BOE/d. While crude and natural gas output increased 18.6% and 7.9% year over year, respectively, natural gas liquids volumes rose 16.6% from the third quarter of 2022.
The average realized oil price during the most recent quarter was $81.57 per barrel, 9.2% lower than the year-ago realization of $89.79 but ahead of our projection of $71.62. Meanwhile, the average realized natural gas price plunged to $1.62 per thousand cubic feet (Mcf) from $6.46 in the year-ago period, though it came ahead of our estimate of $1.49. Overall, the company fetched $54.37 per barrel compared with $67.25 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $10.51 per barrel of oil equivalent (BOE) compared to $11.97 in the prior-year quarter and our projection of $11.50. The cutback in costs came even though lease operating expenses rose to $5.42 per BOE from $5.09 in the third quarter of 2022. FANG’s production taxes decreased 34.8% year over year to $2.83 per BOE, while gathering and transportation expenses moved down in the third quarter of 2023 to $1.75 per BOE from $1.98 during the corresponding period of 2022.
Diamondback spent $684 million in capital expenditure — $611 million on drilling and completion, $34 million on infrastructure, environment and $39 million on midstream. The company booked $820 million in free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $830 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 26.8%.
Guidance
In 2023, FANG said it looks to pump around 447,000 BOE/d of hydrocarbon, up from the prior outlook of 435,000-445,000 BOE/d. Of this, oil volumes are likely to be around 263,000 barrels per day. The company forecast a capital spending budget between $2.66 billion and $2.7 billion.
Zacks Rank & Stock Picks
Diamondback — a Permian Basin-focused upstream oil and gas company — carries a Zacks Rank #3 (Hold) at present.
Meanwhile, investors interested in the energy sector might consider the operators mentioned below. These companies currently carry a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Delek US Holdings (DK - Free Report) : DK beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 34.2%.
Delek US Holdings is valued at around $1.6 billion. DK has seen its shares move down 22.8% in a year.
EOG Resources (EOG - Free Report) : EOG Resources beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. EOG has a trailing four-quarter earnings surprise of 9.2%, on average.
EOG Resources is valued at around $71.6 billion. EOG has seen its shares drop 16.5% in a year.
TechnipFMC (FTI - Free Report) : The 2023 Zacks Consensus Estimate for FTI indicates 1,667.7% year-over-year earnings per share growth. Over the past 60 days, TechnipFMC saw the Zacks Consensus Estimate for 2023 move up 6.8%.
TechnipFMC is valued at around $9.4 billion. FTI has seen its shares surge 75.3% in a year.