Why Is Diamondback (FANG) Up 11.9% Since Last Earnings Report?

Core Viewpoint - Diamondback Energy reported strong third-quarter earnings, beating estimates primarily due to increased production and lower operating costs, despite a decline in average realized oil prices compared to the previous year [2][3][10]. Financial Performance - Adjusted EPS for Q3 2025 was $3.08, exceeding the Zacks Consensus Estimate of $2.85, but down from $3.38 in the same quarter last year [2]. - Revenues reached $3.9 billion, a 48.4% increase year-over-year, and surpassed the Zacks Consensus Estimate by 13.4% [3]. - The company returned $892 million to shareholders, approximately 50% of its adjusted free cash flow, through share repurchases and dividends [3][4]. Production and Costs - Average production was 942,946 BOE/d, a 65% increase year-over-year, with 53% of this being oil [6]. - Average realized oil price was $64.60 per barrel, down 11.7% from $73.13 a year ago, but above the estimate of $54.94 [7]. - Cash operating costs decreased to $10.05 per BOE from $11.49 in the prior year, reflecting lower lease operating expenses [8][9]. Capital Expenditures and Financial Position - Capital expenditures for Q3 totaled $774 million, with $632 million allocated to drilling and completion [10]. - As of September 30, the company had $159 million in cash and cash equivalents and $15.9 billion in long-term debt, resulting in a debt-to-capitalization ratio of 25.8% [10]. Future Guidance - Diamondback increased its full-year 2025 oil production guidance to 495-498 MBO/d and expects annual BOE to rise to 910-920 MBOE/d [11]. - For Q4 2025, the company anticipates oil production of 505-515 MBO/d and cash capital expenditures between $875 million and $975 million [12]. Market Position and Estimates - Estimates for Diamondback have trended upward recently, indicating positive market sentiment [13][15]. - The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [15].