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Diamondback (FANG) Beats on Q2 Earnings, Ups Production View
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U.S. energy operator Diamondback Energy (FANG - Free Report) reported second-quarter 2024 adjusted earnings per share of $4.52, which beat the Zacks Consensus Estimate of $4.46 and increased from the year-ago adjusted figure of $3.68. The outperformance primarily reflects stronger production and a gain in overall realization.
Meanwhile, revenues of $2.5 billion rose 23.4% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by 14%.
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 90 cents per share to its common shareholders of record on Aug 15. The payout will be made on Aug 22. In addition to the regular dividend, FANG declared a special dividend of $1.44 per share.
As of Aug 2, the company executed $2.4 billion of share repurchases, with approximately $1.6 billion remaining on its current share buyback authorization.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 474,670 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure was up 5.5% from the year-ago quarter and beat our estimate of 462,689.5 BOE/d. While crude and natural gas output increased 4.9% and 1% year over year, respectively, natural gas liquids volumes rose 11.6%.
The average realized oil price during the most recent quarter was $79.51 per barrel, 11.5% higher than the year-ago realization of $71.33 and ahead of our projection of $75.74. Meanwhile, the average realized natural gas price plunged to 10 cents per thousand cubic feet (Mcf) from 94 cents in the year-ago period and came below our estimate of 81 cents. Overall, the upstream oil and gas company fetched $50.33 per barrel compared with $46.31 a year ago.
Costs & Financial Position
Diamondback’s second-quarter cash operating cost was $11.67 per barrel of oil equivalent (BOE) compared with $10.66 in the prior-year quarter and our projection of $12.55. The rise in costs compared to the year-ago period reflected a steep increase in lease operating expenses to $5.88 per BOE from $4.88 in the second quarter of 2023. Further, FANG’s gathering, processing and transportation expenses increased 14.5% year over year to $1.90 per BOE, while cash G&A expenses rose in the second quarter of 2024 to 63 cents per BOE from 51 cents during the corresponding period of 2023. On a somewhat bullish note, production and ad valorem taxes fell 9.7% year over year to $3.26 per BOE.
Diamondback spent $637 million in capital expenditure — $585 million on drilling and completion, $51 million on infrastructure, environment and $1 million on midstream. The company booked $816 million in free cash flow in the second quarter.
As of Jun 30, the Permian-focused operator had approximately $6.9 billion in cash and cash equivalents and $12 billion in long-term debt, representing a debt-to-capitalization of 39.3%.
Guidance
FANG looks to pump around 462,000-470,000 BOE/d of hydrocarbon in 2024, compared to 458,000-466,000 BOE/d predicted before. Of this, oil volumes are likely to be between 273,000 and 276,000 barrels per day (270,000-275,000 previously). This Zacks Rank #3 (Hold) company also narrowed its forecast of a capital spending budget to between $2.35 billion and $2.45 billion.
While we have discussed Diamondback Energy’s second-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported second-quarter 2024 adjusted earnings per share of $1.98, missing the Zacks Consensus Estimate of $2.06. The bottom line, however, improved from the prior-year quarter’s $1.84 per share. ConocoPhillips’ higher costs and expenses led to a weaker-than-expected bottom line. The negatives were partially offset by strong oil equivalent production volumes — up 7.8% year over year.
As of Jun 30, 2024, ConocoPhillips had $4.3 billion in cash and cash equivalents. COP’s total long-term debt was $17 billion, while it had a short-term debt of $1.3 billion. Capital expenditure and investments totaled $3 billion. Net cash provided by operating activities was $4.9 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported a second-quarter 2024 adjusted loss from continuing operations of 8 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 20 cents. The bottom line also improved from the year-ago quarter’s reported loss of 17 cents. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 508 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 471 Bcfe.
EQT’s adjusted operating cash flow was $405 million in the quarter, up from $340.8 million a year ago. Free cash flow in the quarter was a negative $171.1 million compared with a negative $129.3 million in the second quarter of 2023. Total capital expenditure for the company amounted to $576 million, rising from $470 million a year ago. As of Jun 30, 2024, EQT had $29.9 million in cash and cash equivalents. Net debt was $4.9 billion.
APA Corporation (APA - Free Report) , another U.S. energy operator, reported second-quarter 2024 adjusted earnings of $1.17 per share, beating the Zacks Consensus Estimate of 95 cents and improving from the year-ago adjusted figure of 85 cents. The outperformance primarily reflects higher-than-expected production owing to the contribution from the Callon Petroleum acquisition that was closed on Apr 1.
During the quarter under review, APA generated $877 million of cash from operating activities while it incurred $839 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1.1 billion. It also registered a free cash flow of $103 million compared to $94 million a year ago.
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Diamondback (FANG) Beats on Q2 Earnings, Ups Production View
U.S. energy operator Diamondback Energy (FANG - Free Report) reported second-quarter 2024 adjusted earnings per share of $4.52, which beat the Zacks Consensus Estimate of $4.46 and increased from the year-ago adjusted figure of $3.68. The outperformance primarily reflects stronger production and a gain in overall realization.
Meanwhile, revenues of $2.5 billion rose 23.4% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by 14%.
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 90 cents per share to its common shareholders of record on Aug 15. The payout will be made on Aug 22. In addition to the regular dividend, FANG declared a special dividend of $1.44 per share.
As of Aug 2, the company executed $2.4 billion of share repurchases, with approximately $1.6 billion remaining on its current share buyback authorization.
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 474,670 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure was up 5.5% from the year-ago quarter and beat our estimate of 462,689.5 BOE/d. While crude and natural gas output increased 4.9% and 1% year over year, respectively, natural gas liquids volumes rose 11.6%.
The average realized oil price during the most recent quarter was $79.51 per barrel, 11.5% higher than the year-ago realization of $71.33 and ahead of our projection of $75.74. Meanwhile, the average realized natural gas price plunged to 10 cents per thousand cubic feet (Mcf) from 94 cents in the year-ago period and came below our estimate of 81 cents. Overall, the upstream oil and gas company fetched $50.33 per barrel compared with $46.31 a year ago.
Costs & Financial Position
Diamondback’s second-quarter cash operating cost was $11.67 per barrel of oil equivalent (BOE) compared with $10.66 in the prior-year quarter and our projection of $12.55. The rise in costs compared to the year-ago period reflected a steep increase in lease operating expenses to $5.88 per BOE from $4.88 in the second quarter of 2023. Further, FANG’s gathering, processing and transportation expenses increased 14.5% year over year to $1.90 per BOE, while cash G&A expenses rose in the second quarter of 2024 to 63 cents per BOE from 51 cents during the corresponding period of 2023. On a somewhat bullish note, production and ad valorem taxes fell 9.7% year over year to $3.26 per BOE.
Diamondback spent $637 million in capital expenditure — $585 million on drilling and completion, $51 million on infrastructure, environment and $1 million on midstream. The company booked $816 million in free cash flow in the second quarter.
As of Jun 30, the Permian-focused operator had approximately $6.9 billion in cash and cash equivalents and $12 billion in long-term debt, representing a debt-to-capitalization of 39.3%.
Guidance
FANG looks to pump around 462,000-470,000 BOE/d of hydrocarbon in 2024, compared to 458,000-466,000 BOE/d predicted before. Of this, oil volumes are likely to be between 273,000 and 276,000 barrels per day (270,000-275,000 previously). This Zacks Rank #3 (Hold) company also narrowed its forecast of a capital spending budget to between $2.35 billion and $2.45 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Key E&P Earnings
While we have discussed Diamondback Energy’s second-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported second-quarter 2024 adjusted earnings per share of $1.98, missing the Zacks Consensus Estimate of $2.06. The bottom line, however, improved from the prior-year quarter’s $1.84 per share. ConocoPhillips’ higher costs and expenses led to a weaker-than-expected bottom line. The negatives were partially offset by strong oil equivalent production volumes — up 7.8% year over year.
As of Jun 30, 2024, ConocoPhillips had $4.3 billion in cash and cash equivalents. COP’s total long-term debt was $17 billion, while it had a short-term debt of $1.3 billion. Capital expenditure and investments totaled $3 billion. Net cash provided by operating activities was $4.9 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported a second-quarter 2024 adjusted loss from continuing operations of 8 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 20 cents. The bottom line also improved from the year-ago quarter’s reported loss of 17 cents. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 508 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 471 Bcfe.
EQT’s adjusted operating cash flow was $405 million in the quarter, up from $340.8 million a year ago. Free cash flow in the quarter was a negative $171.1 million compared with a negative $129.3 million in the second quarter of 2023. Total capital expenditure for the company amounted to $576 million, rising from $470 million a year ago. As of Jun 30, 2024, EQT had $29.9 million in cash and cash equivalents. Net debt was $4.9 billion.
APA Corporation (APA - Free Report) , another U.S. energy operator, reported second-quarter 2024 adjusted earnings of $1.17 per share, beating the Zacks Consensus Estimate of 95 cents and improving from the year-ago adjusted figure of 85 cents. The outperformance primarily reflects higher-than-expected production owing to the contribution from the Callon Petroleum acquisition that was closed on Apr 1.
During the quarter under review, APA generated $877 million of cash from operating activities while it incurred $839 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1.1 billion. It also registered a free cash flow of $103 million compared to $94 million a year ago.