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Diamondback Q3 Earnings Lag Estimates, Updates Guidance Post Merger
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U.S. energy operator Diamondback Energy (FANG - Free Report) reported third-quarter 2024 adjusted earnings per share of $3.38, which missed the Zacks Consensus Estimate of $3.80 and decreased from the year-ago adjusted figure of $5.49. The underperformance primarily reflects a fall in overall realization.
However, revenues of $2.6 billion rose 13% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by 6.6% on strong production.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
FANG repurchased $515 million of shares in the third quarter and a further $185 million worth of shares in the current quarter. As previously announced, the company gave an additional $2 billion share repurchase approval.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 571,098 barrels of oil equivalent per day (BOE/d), comprising 56% oil. The figure was up 26.1% from the year-ago quarter and beat our estimate of 565,040.9 BOE/d. While crude and natural gas output increased 20.6% and 34.6% year over year, respectively, natural gas liquids volumes rose 33.3%.
The average realized oil price during the most recent quarter was $73.13 per barrel, 10.3% lower than the year-ago realization of $81.57 but ahead of our projection of $66.34. Meanwhile, the average realized natural gas price plunged to (26 cents) per thousand cubic feet (Mcf) from $1.62 in the year-ago period and came below our estimate of 9 cents. Overall, the upstream oil and gas company fetched $44.80 per barrel compared with $54.37 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $11.49 per barrel of oil equivalent (BOE) compared with $10.51 in the prior-year quarter and our projection of $12.29. The rise in costs compared to the year-ago period reflected an increase in lease operating expenses to $6.01 per BOE from $5.42 in the third quarter of 2023. Further, FANG’s gathering, processing and transportation expenses increased 10.9% year over year to $1.94 per BOE, while cash G&A expenses rose in the third quarter of 2024 to 63 cents per BOE from 51 cents during the corresponding period of 2023. Compounding the issue, production and ad valorem taxes rose 2.8% year over year to $2.91 per BOE.
Diamondback spent $688 million in capital expenditure — $633 million on drilling and completion, $52 million on infrastructure, environment and $3 million on midstream. The company booked $1 billion in free cash flow in the third quarter.
As of Sept. 30, the Permian-focused operator had approximately $373 million in cash and cash equivalents and $11.9 billion in long-term debt, representing a debt-to-capitalization of 25%.
Guidance
Diamondback Energy’s latest guidance takes into account the Endeavor merger, which was completed on Sept. 10. FANG looks to pump around 587,000-590,000 BOE/d of hydrocarbon in 2024, up from 462,000-470,000 BOE/d before. Of this, oil volumes are likely to be between 335,000 and 337,000 barrels per day (273,000-276,000 previously). This Zacks Rank #5 (Strong Sell) company also revised its forecast of a capital spending budget to between $2.88 billion and $3 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 third-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 third-quarter 2024 adjusted earnings per share of $1.78, which beat the Zacks Consensus Estimate of $1.68. The outperformance can be attributed to higher oil equivalent production volumes and decreased total costs and expenses.
As of Sept. 30, 2024, ConocoPhillips had $5.2 billion in cash and cash equivalents. The company had a total long-term debt of $16.99 billion and a short-term debt of $1.3 billion as of the same date. Capital expenditure and investments totaled $2.92 billion. Net cash provided by operating activities was $5.8 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported earnings from continuing operations of 12 cents per share, which beat the Zacks Consensus Estimate of 5 cents. The better-than-expected quarterly earnings were driven by higher gas equivalent sales volume, offset partially by lower oil price realizations.
EQT’s sales volume increased to 581.4 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s level of 522.7 Bcfe. The reported figure also beat our estimate of 552.7 Bcfe. Natural gas sales volume was 547.2 Bcf, up from 491.5 Bcf in the year-ago quarter. The figure also beat our estimate of 521.6 Bcf.
EOG Resources (EOG - Free Report) , another U.S. energy operator, reported third-quarter 2024 adjusted earnings per share of $2.89, which beat the Zacks Consensus Estimate of $2.73. Better-than-expected quarterly earnings were driven by higher oil-equivalent production volumes, offset partially by decreased realizations of crude oil and condensates, and NGL prices.
As of Sept. 30, 2024, EOG Resources had cash and cash equivalents worth $6.1 billion and long-term debt of $3.7 billion. The current portion of the long-term debt totaled $34 million. In the reported quarter, the company generated $1.5 billion in free cash flow. Capital expenditure amounted to $1.5 billion.
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Diamondback Q3 Earnings Lag Estimates, Updates Guidance Post Merger
U.S. energy operator Diamondback Energy (FANG - Free Report) reported third-quarter 2024 adjusted earnings per share of $3.38, which missed the Zacks Consensus Estimate of $3.80 and decreased from the year-ago adjusted figure of $5.49. The underperformance primarily reflects a fall in overall realization.
However, revenues of $2.6 billion rose 13% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by 6.6% on strong production.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
FANG repurchased $515 million of shares in the third quarter and a further $185 million worth of shares in the current quarter. As previously announced, the company gave an additional $2 billion share repurchase approval.
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 571,098 barrels of oil equivalent per day (BOE/d), comprising 56% oil. The figure was up 26.1% from the year-ago quarter and beat our estimate of 565,040.9 BOE/d. While crude and natural gas output increased 20.6% and 34.6% year over year, respectively, natural gas liquids volumes rose 33.3%.
The average realized oil price during the most recent quarter was $73.13 per barrel, 10.3% lower than the year-ago realization of $81.57 but ahead of our projection of $66.34. Meanwhile, the average realized natural gas price plunged to (26 cents) per thousand cubic feet (Mcf) from $1.62 in the year-ago period and came below our estimate of 9 cents. Overall, the upstream oil and gas company fetched $44.80 per barrel compared with $54.37 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $11.49 per barrel of oil equivalent (BOE) compared with $10.51 in the prior-year quarter and our projection of $12.29. The rise in costs compared to the year-ago period reflected an increase in lease operating expenses to $6.01 per BOE from $5.42 in the third quarter of 2023. Further, FANG’s gathering, processing and transportation expenses increased 10.9% year over year to $1.94 per BOE, while cash G&A expenses rose in the third quarter of 2024 to 63 cents per BOE from 51 cents during the corresponding period of 2023. Compounding the issue, production and ad valorem taxes rose 2.8% year over year to $2.91 per BOE.
Diamondback spent $688 million in capital expenditure — $633 million on drilling and completion, $52 million on infrastructure, environment and $3 million on midstream. The company booked $1 billion in free cash flow in the third quarter.
As of Sept. 30, the Permian-focused operator had approximately $373 million in cash and cash equivalents and $11.9 billion in long-term debt, representing a debt-to-capitalization of 25%.
Guidance
Diamondback Energy’s latest guidance takes into account the Endeavor merger, which was completed on Sept. 10. FANG looks to pump around 587,000-590,000 BOE/d of hydrocarbon in 2024, up from 462,000-470,000 BOE/d before. Of this, oil volumes are likely to be between 335,000 and 337,000 barrels per day (273,000-276,000 previously). This Zacks Rank #5 (Strong Sell) company also revised its forecast of a capital spending budget to between $2.88 billion and $3 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 third-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 third-quarter 2024 adjusted earnings per share of $1.78, which beat the Zacks Consensus Estimate of $1.68. The outperformance can be attributed to higher oil equivalent production volumes and decreased total costs and expenses.
As of Sept. 30, 2024, ConocoPhillips had $5.2 billion in cash and cash equivalents. The company had a total long-term debt of $16.99 billion and a short-term debt of $1.3 billion as of the same date. Capital expenditure and investments totaled $2.92 billion. Net cash provided by operating activities was $5.8 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported earnings from continuing operations of 12 cents per share, which beat the Zacks Consensus Estimate of 5 cents. The better-than-expected quarterly earnings were driven by higher gas equivalent sales volume, offset partially by lower oil price realizations.
EQT’s sales volume increased to 581.4 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s level of 522.7 Bcfe. The reported figure also beat our estimate of 552.7 Bcfe. Natural gas sales volume was 547.2 Bcf, up from 491.5 Bcf in the year-ago quarter. The figure also beat our estimate of 521.6 Bcf.
EOG Resources (EOG - Free Report) , another U.S. energy operator, reported third-quarter 2024 adjusted earnings per share of $2.89, which beat the Zacks Consensus Estimate of $2.73. Better-than-expected quarterly earnings were driven by higher oil-equivalent production volumes, offset partially by decreased realizations of crude oil and condensates, and NGL prices.
As of Sept. 30, 2024, EOG Resources had cash and cash equivalents worth $6.1 billion and long-term debt of $3.7 billion. The current portion of the long-term debt totaled $34 million. In the reported quarter, the company generated $1.5 billion in free cash flow. Capital expenditure amounted to $1.5 billion.