Workflow
Diamondback Energy(FANG) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Part I provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 Condensed Consolidated Financial Statements (Unaudited) The unaudited Q1 2025 financial statements reflect significant growth driven by the Endeavor acquisition, with increased assets, revenues, and net income Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows total assets of $70.07 billion, reflecting growth in cash and equity Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,816 | $161 | | Property and equipment, net | $64,896 | $64,472 | | Total assets | $70,066 | $67,292 | | Liabilities & Equity | | | | Total current liabilities | $4,753 | $4,811 | | Long-term debt | $12,996 | $12,075 | | Total liabilities | $28,323 | $27,430 | | Total equity | $41,743 | $39,862 | Condensed Consolidated Statements of Operations Q1 2025 operations show total revenues of $4.05 billion and net income of $1.41 billion, significantly up year-over-year due to acquisitions Q1 2025 vs. Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $4,048 | $2,227 | | Income from operations | $1,673 | $1,118 | | Gain (loss) on derivative instruments, net | $226 | $(48) | | Net income (loss) attributable to Diamondback | $1,405 | $768 | | Diluted Earnings (loss) per common share | $4.83 | $4.28 | Condensed Consolidated Statements of Cash Flows Q1 2025 cash flows show strong operating cash generation of $2.36 billion, with increased investing and financing activities Q1 2025 vs. Q1 2024 Cash Flows (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,355 | $1,334 | | Net cash used in investing activities | $(1,653) | $(751) | | Net cash provided by (used in) financing activities | $1,175 | $(269) | | Net increase in cash and cash equivalents | $1,877 | $314 | Notes to the Condensed Consolidated Financial Statements Notes detail significant corporate events, including the Endeavor acquisition, subsequent Double Eagle acquisition, and Viper asset drop-down - The company is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas31 - Diamondback continues to consolidate its subsidiary Viper Energy, Inc., determining it to be a Variable Interest Entity (VIE) of which Diamondback is the primary beneficiary, despite ownership falling below 50%3443 - On September 10, 2024, the Company completed its acquisition of Endeavor for total consideration of $27.42 billion, consisting of $7.31 billion in cash and 117.27 million shares of common stock. This acquisition added $1.4 billion in revenue and $477 million in net income for Q1 2025697376 - Subsequent to quarter end, on April 1, 2025, the company completed the acquisition of Double Eagle for $3.0 billion in cash and ~6.84 million shares156 - Subsequent to quarter end, on May 1, 2025, the company divested certain Endeavor royalty assets to its subsidiary Viper in a '2025 Drop Down' transaction for $1.0 billion in cash and 69.63 million Viper LLC units. The cash proceeds were used to repay $900 million in Tranche A Loans153 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q1 2025 performance driven by the Endeavor acquisition, strategic post-quarter transactions, and a revised capital budget prioritizing free cash flow First Quarter 2025 Financial and Operating Highlights Q1 2025 highlights include $1.4 billion net income, 850.7 MBOE/d average production, and $942 million in capital expenditures Q1 2025 Key Metrics | Metric | Value | | :--- | :--- | | Net Income | $1.4 billion | | Average Production | 850.7 MBOE/d | | Dividends Paid | $290 million | | Stock Repurchased | $575 million | | Cash Operating Costs | $10.48 per BOE | | Cash Capital Expenditures | $942 million | Results of Operations Q1 2025 results show a 74% year-over-year revenue increase driven by production volume growth from acquisitions, with quarter-over-quarter revenue up due to higher prices - YoY Comparison (Q1 2025 vs Q1 2024): - Oil, natural gas, and NGL revenues increased by $1.6 billion (74%), driven by an 82% growth in combined production volumes, with 73% of the increase from the Endeavor Acquisition207208 - Lease operating expenses increased in total due to costs from acquired Endeavor wells, but decreased on a per-BOE basis from $6.08 to $5.33212 - DD&A expense increased by $613 million, driven by production growth and a higher depletion rate from the addition of higher-value assets212 - QoQ Comparison (Q1 2025 vs Q4 2024): - Oil, natural gas, and NGL revenues increased by $186 million, as a $306 million improvement from higher prices was partially offset by a $120 million decrease from a 6% decline in production volumes188 - Lease operating expenses decreased by $53 million, primarily due to reduced cost estimates for Endeavor properties and a volume discount for water services191 Production and Average Prices | Metric | Q1 2025 | Q1 2024 | Q4 2024 | | :--- | :--- | :--- | :--- | | Daily Combined Volumes (BOE/d) | 850,656 | 461,110 | 883,424 | | Oil ($ per Bbl) | $70.95 | $75.06 | $69.48 | | Natural Gas ($ per Mcf) | $2.11 | $0.99 | $0.48 | | Combined ($ per BOE) | $47.77 | $50.07 | $42.71 | Liquidity and Capital Resources As of March 31, 2025, the company maintained strong liquidity of $3.8 billion and revised its 2025 capital budget to prioritize free cash flow - At March 31, 2025, the company had approximately $3.8 billion of liquidity, consisting of $1.3 billion in cash and $2.5 billion available under its credit facility222 - The company revised its 2025 capital budget to $3.40 billion to $3.80 billion to prioritize free cash flow generation due to recent weakness in commodity prices245 - The company maintains a commitment to return at least 50% of free cash flow to stockholders through base dividends, variable dividends, and share repurchases249 - In Q2 2025, the company repurchased $220 million in principal of its senior notes in open market transactions for $167 million248 Quantitative and Qualitative Disclosures About Market Risk The company manages primary market risks, including commodity price volatility and interest rate exposure, through derivative instruments and swaps - The company's main market risk is the pricing of its oil and natural gas production. It uses derivative instruments to reduce price volatility261262 - A sensitivity analysis shows that a 10% increase in forward commodity prices would decrease the net asset value of its derivatives by $2 million, while a 10% decrease would increase it by $15 million263 - The company is exposed to interest rate risk on its revolving credit facilities and Tranche A Loans. It also uses interest rate swaps with a notional amount of $900 million to manage fair value changes on its fixed-rate debt266268 Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2025, excluding recently acquired Endeavor entities from internal control assessment - Management concluded that disclosure controls and procedures were effective as of March 31, 2025270 - The assessment of internal control over financial reporting did not include the internal controls of the entities acquired in the Endeavor Acquisition, as the company is still in the process of integration271 PART II. OTHER INFORMATION Part II provides additional information on legal proceedings, risk factors, equity sales, and other disclosures Legal Proceedings The company is involved in routine legal proceedings not expected to materially impact its financial condition or operations - The company is party to various routine legal proceedings arising in the ordinary course of business, which are not expected to have a material adverse effect274 Risk Factors Risk factors remain largely unchanged from the 2024 10-K, with an added emphasis on potential impacts from U.S. trade policy changes - Risk factors are largely unchanged from the Annual Report on Form 10-K for the year ended December 31, 2024276 - The report highlights the risk that changes in U.S. trade policy, tariffs, and trade restrictions could cause market volatility, reduce demand for oil and gas, and have a material adverse effect on the business277278 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 3.66 million shares for approximately $575 million, with $2.1 billion remaining in the buyback program Q1 2025 Share Repurchases | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Value Remaining in Plan (millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | 689 | $173.16 | $2,556 | | Feb 2025 | 853 | $158.94 | $2,420 | | Mar 2025 | 2,114 | $151.87 | $2,100 | | Total | 3,656 | $157.30 (approx.) | $2,100 | - The board of directors approved an increase in the common stock repurchase program from $4.0 billion to $6.0 billion on September 18, 2024284 Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025283 Exhibits This section indexes exhibits filed with the 10-Q, including merger agreements, corporate governance, and officer certifications