Diamondback Energy ( FANG Quick Quote FANG - Free Report) , the U.S. energy explorer, reported second-quarter 2022 adjusted earnings per share of $7.07, beating the Zacks Consensus Estimate of $6.66, significantly more than the year-earlier period’s profit of $2.40.
The outperformance can be attributed to higher energy prices in the second quarter, which led to higher oil, natural gas and natural gas liquid sales. Diamondback’s average second-quarter output came in at 380,451 barrels of oil equivalent per day (BOE/d), ahead of the consensus mark of 374,210 BOE/d.
Revenues of $2.77 billion outpaced the Zacks Consensus Estimate by approximately 10.4% and surged 64.7% from the year-ago quarter’s sales of $1.68 billion.
In good news for investors, FANG raised its regular quarterly dividend payout by 7.1% to 75 cents a share and also declared a variable dividend of $2.30. The payout will be made on Aug 23. The company’s board approved a $2-billion increase in its share repurchase authorization, augmenting total authorized common stock repurchases to $4 billion.
Production & Realized Prices
Diamondback’s production of oil and natural gas averaged 380,451 BOE/d, which comprised about 58.1% oil. The figure fell 5.2% from the year-ago quarter but surpassed the Zacks Consensus Estimate of 374,210 BOE/d. While the crude output was down 8.8% year over year, natural gas volumes fell by about 3.6% year over year.
The average realized oil price in the second quarter was $108.8 per barrel, 72.1% higher than the year-ago realization of $63.22 and also more than the consensus mark of $106. Meanwhile, the average realized natural gas price jumped to $6.15 per thousand cubic feet from $2.40 in the year-ago period and beat the Zacks Consensus Estimate of $5.53. Overall, the company fetched $79.49 per barrel compared with $45.63 a year ago.
Costs & Financial Position
Diamondback’s second-quarter cash operating cost was $12.24 per barrel of oil equivalent (BOE), up 31.1% from the prior-year quarter. Lease operating expenses were $4.59 per BOE compared with $4.30 in the second quarter of 2021. FANG’s production taxes rose 79% year over year to $5.14 per BOE. Gathering and transportation expenses increased in the second quarter of 2022 to $1.76 per BOE from $1.53 in the second quarter of 2021.
Diamondback spent $468 million on capital expenditure, $407 million on drilling and completion, $38 million on infrastructure and $23 million on midstream. The company booked $1.3 billion of free cash flows in the second quarter.
As of Jun 30, the Permian-focused operator had approximately $43 million in cash and cash equivalents and $5.4 billion in long-term debt, representing a debt-to-capitalization of 27.3%.
For 2022, Diamondback increased its total net production guidance to the range of 374,000-380,000 BOE/d from the earlier range of 369,000-376,000 BOE/d and also augmented its oil volumes guidance in the 220,000-222,000 barrels per day band. The company forecast the capital spending budget between $1.82 billion and $1.9 billion. In the third quarter of 2022, the company expects capital spending between $470 and $510 million.
FANG maintained its expected cash tax rate to 10-15% of the pre-tax income.
Zacks Rank & Stocks to Consider
Diamondback currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include
RPC ( RES Quick Quote RES - Free Report) , Equinor ( EQNR Quick Quote EQNR - Free Report) and Delek US Holdings ( DK Quick Quote DK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RPC’s 2022 earnings is pegged at 55 cents per share, up 1,733% from the year-ago earnings of 3 cents.
RPC beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 80%.
The Zacks Consensus Estimate for Equinor’s 2022 earnings stands at $6.15 per share, up about 99.7% from the year-ago earnings of $3.08.
Equinor beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 7.3%.
The Zacks Consensus Estimate for Delek’s 2022 earnings has been revised upward by about 93.4% over the past 60 days from $3.97 to $7.68 per share.
The Zacks Consensus Estimate for DK’s 2022 earnings stands at $7.68 per share, up about 353.5% from the year-ago loss of $3.03.