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Why Is Diamondback (FANG) Up 41.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have added about 41.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Diamondback due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q3 Earnings and Revenues Top Estimates
Diamondback Energy delivered strong third-quarter 2020 earnings. Better-than-expected production led to this outperformance. Precisely, overall volumes came in at 287.3 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 286.2 MBOE/d.
The company’s adjusted net income per share of 62 cents outpaced the Zacks Consensus Estimate of 37 cents.
However, the bottom line plunged 57.8% from the year-ago figure of $1.47 due to weaker average oil price realization.
This Permian pure play’s total revenues of $720 million outperformed the Zacks Consensus Estimate of $701 million. However, the top line fell 26.2% from the year-earlier figure of $975 million.
Production & Realized Prices
The 2018 buyouts of Energen Corporation and Ajax Resources helped Diamondback transform into one of the leading Permian Basin oil producers. Production of oil and natural gas averaged 287.3 MBOE/d comprising 59.2% oil. The figure jumped marginally from the year-ago quarter and also surpassed the Zacks Consensus Estimate of 286.2 MBOE/d. While oil output was 8.4% down year over year, natural gas volumes rose 23.7% year over year.
The average realized crude oil price in the third quarter was $38.75 per barrel, reflecting a 25.1% drop from the year-ago realization of $51.71. Overall, the company fetched $26.75 per barrel compared with $36.2 a year ago.
Expenses & Financials
Third-quarter cash operating cost was $7.61 per barrel of oil equivalent (BOE), down 12.5% from the prior-year figure of $8.7. Diamondback’s lease operating expense (LOE) of $3.86 was down 20.4% year over year. Moreover, production taxes fell nearly 10% from the prior-year quarter to $2.08 per BOE. However, gathering and transportation expense was $1.25, higher than 95 cents in the third quarter of 2019.
Capital expenditure in the quarter totalled $281 million. The company shelled out $219 million on drilling and completion and spent another $7 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $16 million and $39 million, respectively.
As of Sep 30, 2020, this Permian-focused operator had $92 million in cash and cash equivalents, and a long-term debt of $5.66 billion. The debt-to-capitalization of the company was 34.6%.
Diamondback’s board of directors declared a quarterly dividend of 37.5 cents per share for the third quarter. The amount will be paid out on Nov 19, 2020 to its shareholders of record as of Nov 12. This projects the company’s annual dividend yield to be 5.8%.
Further, the company generated free cash flow (as defined and reconciled below) of $153 million in the third quarter.
Guidance
Diamondback anticipates 2020 average daily production to be 290-305 MBOE/d, lower than the previous guidance of 295-310 MBOE/d. Its average daily oil production is estimated between 178 MBO/d and 182 MBO/d with an expected capital spend of $1,800-$1,900 million. Further, this Midland, TX-headquartered company plans to complete 153-180 net wells.
Diamondback trims its predictions for 2020 LOE and G&A units, estimating the two in the $4-$4.20 per BOE and 45-55 cents guided range, respectively.
The company is on course to realize its fourth-quarter average production goal set within the 170,000-175,000 barrels of oil per day range, expecting it to be the benchmark for its development plan next year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 13.38% due to these changes.
VGM Scores
At this time, Diamondback has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Diamondback (FANG) Up 41.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have added about 41.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Diamondback due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q3 Earnings and Revenues Top Estimates
Diamondback Energy delivered strong third-quarter 2020 earnings. Better-than-expected production led to this outperformance. Precisely, overall volumes came in at 287.3 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 286.2 MBOE/d.
The company’s adjusted net income per share of 62 cents outpaced the Zacks Consensus Estimate of 37 cents.
However, the bottom line plunged 57.8% from the year-ago figure of $1.47 due to weaker average oil price realization.
This Permian pure play’s total revenues of $720 million outperformed the Zacks Consensus Estimate of $701 million. However, the top line fell 26.2% from the year-earlier figure of $975 million.
Production & Realized Prices
The 2018 buyouts of Energen Corporation and Ajax Resources helped Diamondback transform into one of the leading Permian Basin oil producers. Production of oil and natural gas averaged 287.3 MBOE/d comprising 59.2% oil. The figure jumped marginally from the year-ago quarter and also surpassed the Zacks Consensus Estimate of 286.2 MBOE/d. While oil output was 8.4% down year over year, natural gas volumes rose 23.7% year over year.
The average realized crude oil price in the third quarter was $38.75 per barrel, reflecting a 25.1% drop from the year-ago realization of $51.71. Overall, the company fetched $26.75 per barrel compared with $36.2 a year ago.
Expenses & Financials
Third-quarter cash operating cost was $7.61 per barrel of oil equivalent (BOE), down 12.5% from the prior-year figure of $8.7. Diamondback’s lease operating expense (LOE) of $3.86 was down 20.4% year over year. Moreover, production taxes fell nearly 10% from the prior-year quarter to $2.08 per BOE. However, gathering and transportation expense was $1.25, higher than 95 cents in the third quarter of 2019.
Capital expenditure in the quarter totalled $281 million. The company shelled out $219 million on drilling and completion and spent another $7 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $16 million and $39 million, respectively.
As of Sep 30, 2020, this Permian-focused operator had $92 million in cash and cash equivalents, and a long-term debt of $5.66 billion. The debt-to-capitalization of the company was 34.6%.
Diamondback’s board of directors declared a quarterly dividend of 37.5 cents per share for the third quarter. The amount will be paid out on Nov 19, 2020 to its shareholders of record as of Nov 12. This projects the company’s annual dividend yield to be 5.8%.
Further, the company generated free cash flow (as defined and reconciled below) of $153 million in the third quarter.
Guidance
Diamondback anticipates 2020 average daily production to be 290-305 MBOE/d, lower than the previous guidance of 295-310 MBOE/d. Its average daily oil production is estimated between 178 MBO/d and 182 MBO/d with an expected capital spend of $1,800-$1,900 million. Further, this Midland, TX-headquartered company plans to complete 153-180 net wells.
Diamondback trims its predictions for 2020 LOE and G&A units, estimating the two in the $4-$4.20 per BOE and 45-55 cents guided range, respectively.
The company is on course to realize its fourth-quarter average production goal set within the 170,000-175,000 barrels of oil per day range, expecting it to be the benchmark for its development plan next year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 13.38% due to these changes.
VGM Scores
At this time, Diamondback has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.