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Why Is Diamondback (FANG) Up 1.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have added about 1.6% 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 its most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q4 Earnings and Revenues Top Estimates
Diamondback Energy 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 5.17% due to these changes.
VGM Scores
At this time, Diamondback has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It comes with little surprise Diamondback has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Diamondback (FANG) Up 1.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have added about 1.6% 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 its most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q4 Earnings and Revenues Top Estimates
Diamondback Energy 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 5.17% due to these changes.
VGM Scores
At this time, Diamondback has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It comes with little surprise Diamondback has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.