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Diamondback (FANG) Q4 Earnings Beat on Higher Production
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Diamondback Energy, Inc. (FANG - Free Report) reported fourth-quarter 2020 adjusted earnings of 82 cents per share, which surpassed the Zacks Consensus Estimate of 80 cents. The company’s bottom line was aided by better-than-expected production. Precisely, overall volumes were 299 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 291 MBOE/d.
However, the bottom line declined 57.5% from the prior-year figure of $1.93 due to weaker average oil price realization.
The company’s quarterly revenues of $769 million outperformed the Zacks Consensus Estimate of $765 million but fell 30.3% from the year-earlier figure of $1,104 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 299 MBOE/d, comprising 58.8% oil. The figure was down marginally from the year-ago quarter’s 301 MBOE/d but surpassed the Zacks Consensus Estimate of 291 MBOE/d. While oil output was down 9.8% year over year, natural gas volumes rose 20.6% year over year.
The average realized crude oil price in the fourth quarter was $38.64 per barrel, reflecting a 29.4% drop from the year-ago realization of $54.74. Overall, the company fetched $27.41 per barrel compared with $39.28 a year ago.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
Fourth-quarter cash operating costs were $6.87 per barrel of oil equivalent (BOE), down 21.7% from the prior-year figure of $8.77. Diamondback’s lease operating expense (LOE) of $3.38 was down 25.2% year over year. Moreover, production taxes fell 30.5% from the prior-year quarter to $1.71 per BOE. However, gathering and transportation expenses were $1.27 per BOE, slightly higher than $1.25 in the fourth quarter of 2019.
Capital expenditure in the quarter totaled $226 million. The company shelled out $197 million on drilling and completion, and spent another $10 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $12 million and $7 million, respectively.
As of Dec 31, 2020, this Permian-focused operator had $104 million in cash and cash equivalents, and long-term debt of $5.62 billion, with a debt-to-capitalization of 39%.
Diamondback’s board of directors declared a quarterly dividend of 40 cents per share for the fourth quarter. The amount will be paid out on Mar 11, 2021, to its shareholders of record as of Mar 4. This projects the company’s annual dividend yield to be 2.3%.
Further, it generated free cash flow of $242 million in the fourth quarter.
Outlook
Diamondback expects average daily oil production of 308-325 MBOE/d (above the 2020 level of 300 MBOE/d) for 2021, with an estimated capital spend between $1.35 billion and $1.55 billion. Further, this Midland, TX-headquartered company plans to complete 197-215 net wells, with an average lateral length of nearly 10,100 feet in 2021.
Diamondback also set predictions for 2021 LOE and G&A units, estimating the two to be $3.9-$4.30 per BOE and 45-55 cents, respectively.
The company also announced the 2021 low-carbon emissions target and commits to reduce its Scope 1 greenhouse gases and methane intensity by 50% and 70%, respectively, from 2019 levels by 2024. Notably, Diamondback unveiled the "Net Zero Now" initiative, which implies that every hydrocarbon molecule produced by the company is expected to be produced with zero net Scope 1 emissions. Notably, the initiative has been effective since Jan 1, 2021.
Shell’s bottom line for 2021 is expected to grow 19.2% year over year.
Eni’s bottom line for 2021 is expected to rise 65.3% year over year.
TOTAL’s bottom line for 2021 is expected to surge 14% year over year.
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Diamondback (FANG) Q4 Earnings Beat on Higher Production
Diamondback Energy, Inc. (FANG - Free Report) reported fourth-quarter 2020 adjusted earnings of 82 cents per share, which surpassed the Zacks Consensus Estimate of 80 cents. The company’s bottom line was aided by better-than-expected production. Precisely, overall volumes were 299 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 291 MBOE/d.
However, the bottom line declined 57.5% from the prior-year figure of $1.93 due to weaker average oil price realization.
The company’s quarterly revenues of $769 million outperformed the Zacks Consensus Estimate of $765 million but fell 30.3% from the year-earlier figure of $1,104 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 299 MBOE/d, comprising 58.8% oil. The figure was down marginally from the year-ago quarter’s 301 MBOE/d but surpassed the Zacks Consensus Estimate of 291 MBOE/d. While oil output was down 9.8% year over year, natural gas volumes rose 20.6% year over year.
The average realized crude oil price in the fourth quarter was $38.64 per barrel, reflecting a 29.4% drop from the year-ago realization of $54.74. Overall, the company fetched $27.41 per barrel compared with $39.28 a year ago.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
Diamondback Energy, Inc. price-consensus-eps-surprise-chart | Diamondback Energy, Inc. Quote
Expenses & Financials
Fourth-quarter cash operating costs were $6.87 per barrel of oil equivalent (BOE), down 21.7% from the prior-year figure of $8.77. Diamondback’s lease operating expense (LOE) of $3.38 was down 25.2% year over year. Moreover, production taxes fell 30.5% from the prior-year quarter to $1.71 per BOE. However, gathering and transportation expenses were $1.27 per BOE, slightly higher than $1.25 in the fourth quarter of 2019.
Capital expenditure in the quarter totaled $226 million. The company shelled out $197 million on drilling and completion, and spent another $10 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $12 million and $7 million, respectively.
As of Dec 31, 2020, this Permian-focused operator had $104 million in cash and cash equivalents, and long-term debt of $5.62 billion, with a debt-to-capitalization of 39%.
Diamondback’s board of directors declared a quarterly dividend of 40 cents per share for the fourth quarter. The amount will be paid out on Mar 11, 2021, to its shareholders of record as of Mar 4. This projects the company’s annual dividend yield to be 2.3%.
Further, it generated free cash flow of $242 million in the fourth quarter.
Outlook
Diamondback expects average daily oil production of 308-325 MBOE/d (above the 2020 level of 300 MBOE/d) for 2021, with an estimated capital spend between $1.35 billion and $1.55 billion. Further, this Midland, TX-headquartered company plans to complete 197-215 net wells, with an average lateral length of nearly 10,100 feet in 2021.
Diamondback also set predictions for 2021 LOE and G&A units, estimating the two to be $3.9-$4.30 per BOE and 45-55 cents, respectively.
The company also announced the 2021 low-carbon emissions target and commits to reduce its Scope 1 greenhouse gases and methane intensity by 50% and 70%, respectively, from 2019 levels by 2024. Notably, Diamondback unveiled the "Net Zero Now" initiative, which implies that every hydrocarbon molecule produced by the company is expected to be produced with zero net Scope 1 emissions. Notably, the initiative has been effective since Jan 1, 2021.
Zacks Rank & Stocks to Consider
Diamondback currently has a Zacks Rank #2 (Buy).
Some better-ranked players in the energy space are Royal Dutch Shell Plc , Eni SPA (E - Free Report) and TOTAL SE , each carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shell’s bottom line for 2021 is expected to grow 19.2% year over year.
Eni’s bottom line for 2021 is expected to rise 65.3% year over year.
TOTAL’s bottom line for 2021 is expected to surge 14% year over year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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