Diamondback Energy (FANG) ended the recent trading session at $142.70, demonstrating a -1.61% swing from the preceding day's closing price. This change lagged the S&P 500's 1.12% gain on the day. Elsewhere, the Dow saw an upswing of 1.14%, while the tech-heavy Nasdaq appreciated by 1.46%.The energy exploration and production company's stock has dropped by 12.78% in the past month, falling short of the Oils-Energy sector's loss of 5.86% and the S&P 500's loss of 4.13%.Market participants will be closely foll ...

U.S. energy operator Diamondback Energy (FANG) reported fourth-quarter 2024 adjusted earnings per share of $3.64, which beat the Zacks Consensus Estimate of $3.26 on strong production and lower costs.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.However, the company’s bottom line fell sharply from the year-ago adjusted profit of $4.74. The underperformance primarily reflects a fall in overall realization.Meanwhile, revenues of $3.7 billion rose 67% from the year-ago quarter’s sales ...

Samuel Smith has a diverse background that includes being lead analyst and Vice President at several highly regarded dividend stock research firms and running his own dividend investing YouTube channel. He is a Professional Engineer and Project Management Professional and holds a B.S. in Civil Engineering & Mathematics from the United States Military Academy at West Point and has a Masters in Engineering from Texas A&M with a focus on applied mathematics and machine learning.Samuel leads the High Yield Inve ...

Production and Drilling Activity - For the year ended December 31, 2024, total oil production was 123,325 MBbls, an increase from 96,176 MBbls in 2023, representing a growth of 28.3%[67] - The company drilled a total of 372 operated horizontal wells in 2024, compared to 350 in 2023, indicating a 6.3% increase in drilling activity[68] - The company completed 410 operated horizontal wells in 2024, an increase from 315 in 2023, representing a growth of 30.2%[68] - The company has approximately 9,188 gross (7,130 net) identified economic potential horizontal drilling locations based on an assumed price of $50.00 per Bbl WTI[64] - As of December 31, 2024, the company owned an interest in 30,928 gross productive wells, with an average working interest of 77%[69] - Only 1,381 of the identified drilling locations were attributed to proved reserves, indicating a significant portion of growth strategy relies on speculative drilling[188] - Approximately 33% of the total estimated proved reserves as of December 31, 2024, were proved undeveloped reserves, which may require significant capital expenditures for development[199] Financial Performance and Projections - Average oil price for 2024 was $73.52 per Bbl, down from $75.68 in 2023, reflecting a decrease of 2.5%[67] - The average production cost per BOE for 2024 was $7.50, up from $7.10 in 2023, marking a 5.6% increase[67] - In 2024, the company's total capital expenditures were approximately $2.9 billion, with a projected increase to between $3.80 billion and $4.20 billion in 2025, representing a 40% increase[177] - The company expects to increase production levels in 2025 due to the Endeavor Acquisition and other pending acquisitions[154] - The company’s ability to finance future capital expenditures is dependent on cash flow from operations, which is influenced by proved reserves and oil and natural gas production volumes[178] - The company’s future success relies on finding, developing, or acquiring additional economically recoverable oil and natural gas reserves, as current proved reserves will decline over time[182] Regulatory and Compliance Issues - The company believes it is in substantial compliance with environmental laws and regulations, although changes could materially affect operations and financial position[85] - The company is subject to stringent regulations under the Clean Air Act, which may increase compliance costs and delay project developments[95] - The Texas Railroad Commission has imposed stricter regulations on flaring and venting gas, which could increase operational costs for the company[98] - The company is monitoring ongoing governmental reviews that may lead to further regulations on hydraulic fracturing practices, potentially increasing compliance costs[105] - The oil and natural gas industry is heavily regulated, with increasing regulatory burdens affecting profitability, but these burdens are consistent across similar companies in the industry[110] - Compliance with various governmental regulations can be burdensome and expensive, potentially leading to increased operational costs and sanctions for non-compliance[213] Environmental and Climate Change Considerations - The Infrastructure Investment and Jobs Act and the Inflation Reduction Act include billions in incentives for renewable energy, potentially decreasing demand for oil and natural gas[96] - The U.S. aims to reduce greenhouse gas emissions by 50-52% below 2005 levels by 2030, which could impact the company's market[99] - The EPA's methane emissions charge starts at $900 per ton in 2024, increasing to $1,200 in 2025 and $1,500 in 2026, which could raise operating costs for the company[97] - The company faces potential increases in operational costs due to climate change-related regulations, including a methane emissions charge under the IRA, which could adversely impact financial condition and cash flows[163] Workforce and Safety - As of December 31, 2024, the company had 1,983 full-time employees, with a low annual attrition rate of approximately 15%[136][139] - The company reported 11 OSHA recordable cases in 2024, an increase from 3 in 2023, resulting in a total recordable incident rate (TRIR) of 0.88, up from 0.30 in 2023[142] - The company aims to maintain a TRIR of 0.25 or less as a short-term goal[142] - The company is focused on expanding recruitment efforts, particularly in college recruitment and internship programs, to attract top talent[139] - Over 24% of the company's employees are women, and over 42% self-identify as ethnic minorities[138] Market and Operational Risks - The company faces risks related to market volatility in oil and natural gas prices, which could adversely affect revenue and cash flows[149] - The company is subject to credit risk due to the concentration of oil and natural gas receivables with several significant customers, which may impact overall credit risk[191] - The company’s producing properties are concentrated in the Permian Basin, exposing it to regional supply and demand risks and potential production interruptions[200] - The marketability of oil and natural gas production is dependent on third-party transportation facilities, which may lead to interruptions and reduced revenues if unavailable[212] - The company may incur substantial costs due to the need to implement new technologies in response to competitive pressures[234] Debt and Financial Management - The company incurred substantial debt to finance the Endeavor Acquisition, which may limit operational and financial flexibility[247] - The company expects to fund capital expenditures through borrowings, cash flow from operations, and proceeds from debt and equity offerings[249][250] - The company may face liquidity concerns that could lead to a downgrade in debt ratings, impacting access to financing and increasing borrowing costs[255] - The company is subject to restrictive covenants in its debt instruments, which may limit its ability to respond to market changes and pursue business opportunities[251][252] - The weighted average interest rate on borrowings under the company's revolving credit facility was 6.33% for the year ended December 31, 2024, while Viper LLC's was 7.34%[256][257]

Financial Data and Key Metrics Changes - The company reported a free cash flow per share decrease of nine dollars per barrel compared to the previous year, indicating improved capital efficiency and successful accretive deals [12][26] - At seventy dollars per barrel, the business generates twenty dollars per share of free cash flow in 2025, representing a yield of approximately twelve and a half to thirteen percent [26] Business Line Data and Key Metrics Changes - The company is drilling fewer wells while completing more, with a significant drawdown of drilled but uncompleted (DUC) wells planned in the capital expenditure (CapEx) budget [16] - The completion efficiency has improved, with solid frac fleets achieving about one hundred wells per fleet per year, up from eighty a year ago [18] Market Data and Key Metrics Changes - The company has consolidated many quality positions in the Permian Basin, indicating a pause in mergers and acquisitions (M&A) activity [24] - The market conditions will influence the execution of the company's commitment to return at least fifty percent of free cash flow to shareholders [45] Company Strategy and Development Direction - The company aims to focus on share repurchases at current valuation levels, viewing it as a great use of capital [26] - The strategy includes leveraging the quality of the inventory acquired from the Double Eagle transaction while digesting the recent acquisitions [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong capital efficiency and productivity levels despite market volatility [67] - The company is exploring opportunities to build a large gas power plant in the basin, which could enhance operational flexibility and reduce costs [52] Other Important Information - The company plans to reduce midstream infrastructure CapEx to five to seven percent of total capital expenditures [38] - There is a commitment to a one and a half billion dollar asset sale program, primarily targeting non-core assets without selling operated acreage [58] Q&A Session Summary Question: What are the drivers behind the free cash flow changes? - Management indicated that the decrease in the breakeven price for free cash flow per share is due to improved capital efficiency and successful acquisitions [12] Question: How does the company view its M&A strategy post-Double Eagle acquisition? - Management stated that they see limited opportunities for further acquisitions in the core area and are focusing on digesting existing assets [24] Question: What is the expected impact of the Double Eagle transaction on capital and production? - Management noted that there would be no capital impact from the agreement, and it is expected to generate about one hundred million dollars of free cash flow on a consolidated basis by 2026 [74] Question: How does the company plan to manage its power needs? - Management mentioned a budget of seventy to a hundred million dollars annually for power needs and is exploring partnerships for a gas power plant [51][52] Question: What are the expectations for capital efficiency in the upcoming years? - Management expressed confidence in maintaining strong capital efficiency, with a focus on reducing ancillary CapEx while maximizing production [67] Question: How does the company plan to handle the share overhang from the Endeavor transaction? - Management indicated that they are comfortable with their ownership structure and are focused on maximizing shareholder value through share repurchases [130]

Investor Presentation February 2025 1 Forward-Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements Operating cash flow before working capital changes, which is a non-GAAP financial measure representing net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The Company believes operating cash flow before working capital changes is a useful measure of an oil and gas company's ability to generate cash used to fu ...

Core Insights - Diamondback Energy reported $3.71 billion in revenue for Q4 2024, a 66.6% year-over-year increase, with an EPS of $3.64 compared to $4.74 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $3.4 billion by 9.18%, and the EPS surpassed the consensus estimate of $3.26 by 11.66% [1] Financial Performance - Average daily production was 883,424 BOE/D, exceeding the eight-analyst average estimate of 848,018.4 BOE/D [4] - Total production volume was 81,275 MBOE, above the five-analyst average estimate of 77,953.35 MBOE [4] - Revenue from oil, natural gas, and natural gas liquids was $3.47 billion, compared to the $3.37 billion average estimate, reflecting a 60.3% year-over-year change [4] Price Metrics - Average price for natural gas liquids, hedged, was $19.27 per barrel, slightly below the $19.37 per barrel estimate [4] - Average price for oil, hedged, was $68.72 per barrel, compared to the $69.35 per barrel average estimate [4] - Average price for natural gas, hedged, was $0.82 per thousand cubic feet, lower than the $0.88 estimate [4] Stock Performance - Diamondback shares returned -9.9% over the past month, while the Zacks S&P 500 composite changed by -0.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Core Insights - Diamondback Energy reported quarterly earnings of $3.64 per share, exceeding the Zacks Consensus Estimate of $3.26 per share, but down from $4.74 per share a year ago, indicating an earnings surprise of 11.66% [1] - The company generated revenues of $3.71 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 9.18% and significantly up from $2.23 billion year-over-year [2] - Diamondback has outperformed consensus EPS estimates three times in the last four quarters and has topped consensus revenue estimates four times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.91 on revenues of $3.56 billion, while for the current fiscal year, the estimate is $15.67 on revenues of $14.99 billion [7] - The estimate revisions trend for Diamondback is mixed, leading to a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently in the top 20% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Production and Reserves - Average production for Q4 2024 was 475.9 MBO/d (883.4 MBOE/d) with full year 2024 average production of 337.0 MBO/d (598.3 MBOE/d) [4] - Proved reserves as of December 31, 2024 were 3,557 MMBOE, a 63% increase year over year, with proved developed producing reserves up 59% to 2,385 MMBOE [23] - Daily oil production increased to 475,924 BO/d in Q4 2024, up from 273,087 BO/d in Q4 2023, representing a growth of 74.3% [44] - The company expects net production for 2025 to be between 883 and 909 MBOE/d, with oil production projected at 485 to 498 MBO/d [30] - The company expects to drill between 446 - 471 gross wells and complete between 557 - 592 gross wells in 2025 [9] Financial Performance - Net cash provided by operating activities for Q4 2024 was $2.3 billion, totaling $6.4 billion for the full year 2024 [12] - Consolidated Adjusted EBITDA for Q4 2024 was $2.6 billion, with full year 2024 Adjusted EBITDA totaling $7.7 billion [14] - Total revenues for Q4 2024 reached $3,711 million, a 66.7% increase from $2,228 million in Q4 2023 [40] - Net income attributable to Diamondback Energy, Inc. for Q4 2024 was $1,074 million, compared to $960 million in Q4 2023, reflecting an increase of 11.9% [40] - Adjusted EBITDA for the year ended December 31, 2024, was $7,282 million, up from $6,099 million in 2023, reflecting a 19.43% growth [48] - Free Cash Flow for the year ended December 31, 2024, reached $3,642 million, compared to $2,923 million in 2023, indicating a 24.59% increase [57] Dividends and Shareholder Returns - The company increased its annual base dividend by 11% to $4.00 per share, declaring a Q4 2024 cash dividend of $1.00 per share [4] - The company repurchased 2,326,247 shares of common stock in Q4 2024 for $402 million, and a total of 5,525,276 shares for $959 million in 2024 [4] Costs and Expenses - Cash operating costs for Q4 2024 were $10.30 per BOE, including lease operating expenses of $5.67 per BOE [17] - Total costs and expenses for Q4 2024 were $2,299 million, a significant rise from $1,023 million in Q4 2023, marking an increase of 124.4% [40] - The average cost per BOE for lease operating expenses was $5.67 in Q4 2024, down from $5.97 in Q4 2023, reflecting a decrease of 5.0% [44] - The company incurred merger and integration expenses of $30 million in Q4 2024, compared to no such expenses in Q4 2023 [40] Capital Expenditures and Investments - Diamondback's total capital expenditures for 2025 are projected to be between $3,800 million and $4,200 million, with Q1 2025 capital expenditures estimated at $900 million to $1,000 million [30] - The total acquisition costs for proved properties in 2024 were $21,275 million, a significant increase from $1,314 million in 2023 [28] - The company's total cash capital expenditures for the year ended December 31, 2024, were $2,867 million, up from $2,701 million in 2023, reflecting a 6.15% increase [57] Debt and Cash Position - The company reported a net debt of $3,500 million as of December 31, 2024, down from $4,000 million in 2023, showing a reduction of 12.50% [58] - Diamondback Energy's total debt as of December 31, 2024, was $13,160 million, an increase of 46 million from the previous quarter [60] - The company's net debt stood at $12,999 million, up from $12,744 million in the prior quarter [60] - The company reported cash and cash equivalents of $(161) million as of December 31, 2024, a decrease from $(370) million in the previous quarter [60] Future Outlook - The pending acquisition of Double Eagle is expected to close on April 1, 2025, which will contribute to the company's future production and financial performance [29] - The estimated cash taxes for Q1 2025 are projected to be between $280 million and $340 million [30] - The average lateral length for wells in 2025 is expected to be approximately 11,500 feet, with Midland Basin well costs per lateral foot estimated at $555 to $605 [30] Derivative Instruments and Hedging - For Q1 2025, Diamondback has long puts on Crude Brent Oil at a volume of 52,000 Bbls/day with a long put price of $60.00/Bbl [62] - The company has long puts on WTI (Cushing) at a volume of 142,000 Bbls/day with a long put price of $56.58/Bbl for Q1 2025 [62] - Costless collars for natural gas at Henry Hub are set at 750,000 Mmbtu/day with a long put price of $2.52/Mmbtu for Q1 2025 [62] - The ceiling price for natural gas in the costless collars is $5.26/Mmbtu for Q1 2025 [62] - The deferred premium for long puts on Crude Brent Oil is projected to be $-1.48/Bbl for Q1 2025 [62] - The company has a natural gas basis swap at Waha Hub with a volume of 670,000 Mmbtu/day and a price of $-0.82 for Q1 2025 [62]

Core Points - Diamondback Energy, Inc. reported strong financial and operational results for Q4 and full year 2024, highlighting significant increases in production and cash flow [1][2][3] Financial Highlights - Q4 2024 net income was $1.1 billion, or $3.67 per diluted share, with adjusted net income also at $1.1 billion, or $3.64 per diluted share [11] - For the full year 2024, net income reached $3.3 billion, or $15.53 per diluted share, with adjusted net income at $3.6 billion, or $16.57 per diluted share [11] - Q4 2024 net cash provided by operating activities was $2.3 billion, while for the full year it was $6.4 billion [12] - Free Cash Flow for Q4 2024 was $1.3 billion, with adjusted Free Cash Flow at $1.4 billion; for the full year, Free Cash Flow was $3.6 billion, and adjusted Free Cash Flow was $4.0 billion [15] Operational Highlights - Average production in Q4 2024 was 475.9 MBO/d (883.4 MBOE/d) [6] - For the full year 2024, average production was 337.0 MBO/d (598.3 MBOE/d) [6] - The company drilled 131 gross wells in the Midland Basin and 6 in the Delaware Basin during Q4 2024, with a total of 342 gross wells drilled in 2024 [10][9] Dividend and Share Repurchase - The company increased its annual base dividend by 11% to $4.00 per share, declaring a Q4 2024 cash dividend of $1.00 per share [6][19] - In Q4 2024, Diamondback repurchased approximately 2.3 million shares for $402 million, and to date has repurchased about 25.8 million shares for a total cost of approximately $3.5 billion [20] Reserves and Guidance - Proved reserves as of December 31, 2024, were 3,557 MMBOE, a 63% increase year-over-year, with proved developed producing reserves up 59% [22] - The company provided 2025 oil production guidance of 485 - 498 MBO/d (883 - 909 MBOE/d) and cash capital expenditures guidance of $3.8 - $4.2 billion [28][30]