Will Diamondback's Permian Surge Fuel a Q2 Earnings Beat?

Core Viewpoint - Diamondback Energy (FANG) is expected to report second-quarter 2025 results on August 4, with a consensus estimate of $2.63 earnings per share and $3.4 billion in revenues, reflecting a significant year-over-year revenue increase of 35.9% despite a projected earnings decline of 41.8% [1][3][9]. Group 1: Previous Performance - In the first quarter, Diamondback reported adjusted earnings per share of $4.54, exceeding the Zacks Consensus Estimate of $4.09, with revenues of $4 billion surpassing estimates by 8.1% [2]. - The company has beaten the Zacks Consensus Estimate in three of the last four quarters, indicating a strong performance trend [3]. Group 2: Production and Operations - Diamondback holds approximately 900,000 net acres in the Delaware and Midland regions, with nearly 9,600 drilling locations and a production capacity exceeding 880,000 barrels of oil equivalent per day [4]. - The company’s wells have low oil price breakeven costs, requiring prices below $40 per barrel to remain profitable [4]. - Following the $26 billion acquisition of Endeavor Energy, Diamondback is expected to benefit from increased production, with an anticipated average second-quarter volume of 884,987.3 BOE/d, representing an 86.4% increase from the previous year [5][6]. Group 3: Earnings Expectations - The current earnings model suggests a likely earnings beat for Diamondback, supported by a positive Earnings ESP of +1.28% and a Zacks Rank of 3 [7]. - The consensus estimate for the second quarter indicates a significant decline in earnings year-over-year, contrasting with the expected revenue growth [3][9].