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Here's Why Diamondback (FANG) is Looking Up Post Q4 Earnings
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The stock of U.S. energy operator Diamondback Energy (FANG - Free Report) has gained 7.8% since its fourth-quarter earnings announcement on Feb 21. The positive response could be attributed to the company’s earnings beat and an increase in dividend.
What Did Diamondback Energy’s Earnings Unveil?
Diamondback Energy reported fourth-quarter 2022 adjusted earnings per share of $5.29, beating the Zacks Consensus Estimate of $5.20 and surging from the year-ago bottom line of $3.63 per share. The outperformance reflects higher-than-expected production.
Meanwhile, revenues of $2 billion managed to scrape past the year-ago quarter’s sales by $8 million but fell just short of the Zacks Consensus Estimate (by 0.1%) due to lower overall realization.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 80 cents per share to its common shareholders of record on Mar 3. The payout, up some 7% from the last one, will be made on Mar 10. In addition to the regular dividend, FANG declared a special dividend of $2.15 per share.
The company also executed $316 million of share repurchases during the fourth quarter of 2022 at $134.49 apiece.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 391,402 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure edged up 1.1% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 389,984 BOE/d. While crude and natural gas output were essentially flat year over year, natural gas liquids volumes increased 6.2% from the fourth quarter of 2021.
The average realized oil price during the most recent quarter was $80.37 per barrel, 7.9% higher than the year-ago realization of $74.50 but below the consensus mark of $83. Meanwhile, the average realized natural gas price fell to $3.20 per thousand cubic feet (Mcf) from $4.56 in the year-ago period and missed the Zacks Consensus Estimate of $3.85. Overall, the company fetched $55.76 per barrel compared with $56.47 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.16 per barrel of oil equivalent (BOE), literally unchanged from the prior-year quarter. Lease operating expense was $4.47 per BOE compared with $4.21 in the fourth quarter of 2021. FANG’s production taxes decreased 5.3% year over year to $3.22 per BOE. On the other hand, gathering and transportation expenses shot up in the fourth quarter of 2022 to $1.86 per BOE from $1.63 during the corresponding period of 2021.
Diamondback spent $542 million in capital expenditure — $482 million on drilling and completion, $45 million on infrastructure, environment and $15 million on midstream. The company booked $1.1 billion of free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $157 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 28.5%.
Guidance
In 2023, FANG said it looks to pump 430,000-440,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 256,000-262,000 barrels per day. The company forecast a capital spending budget between $2.5 billion and $2.7 billion. Finally, stressing its shareholder return program, Diamondback has committed to return at least 75% of the free cash flow through dividends and buybacks.
Zacks Rank & Stock Picks
Diamondback — a Permian Basin-focused upstream oil and gas company — carries a Zacks Rank #3 (Hold) at present.
Meanwhile, investors interested in the energy sector might look at operators like Murphy USA (MUSA - Free Report) , Valero Energy (VLO - Free Report) and Sunoco LP (SUN - Free Report) , each carrying a Zacks Rank #1 (Strong Buy) currently.
Murphy USA: Over the past 30 days, El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2023 improve 5.7%. MUSA, which enjoys an overall VGM Score of A, is valued at around $5.8 billion.
Murphy USA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 43.4%. MUSA has seen its shares gain 42% in a year.
Valero Energy: Valero Energy is valued at some $52.1 billion. The Zacks Consensus Estimate for VLO’s 2023 earnings has been revised 5.5% upward over the past 30 days.
Valero Energy, headquartered in San Antonio, TX, beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. VLO shares have gained 63.4% in a year.
Sunoco LP: SUN beat the Zacks Consensus Estimate for earnings twice in the trailing four quarters. Sunoco has a trailing four-quarter earnings surprise of 21.6%, on average.
Sunoco is valued at around $4.6 billion. SUN has seen its shares gain 5.6% in a year.
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Here's Why Diamondback (FANG) is Looking Up Post Q4 Earnings
The stock of U.S. energy operator Diamondback Energy (FANG - Free Report) has gained 7.8% since its fourth-quarter earnings announcement on Feb 21. The positive response could be attributed to the company’s earnings beat and an increase in dividend.
What Did Diamondback Energy’s Earnings Unveil?
Diamondback Energy reported fourth-quarter 2022 adjusted earnings per share of $5.29, beating the Zacks Consensus Estimate of $5.20 and surging from the year-ago bottom line of $3.63 per share. The outperformance reflects higher-than-expected production.
Meanwhile, revenues of $2 billion managed to scrape past the year-ago quarter’s sales by $8 million but fell just short of the Zacks Consensus Estimate (by 0.1%) due to lower overall realization.
In good news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 80 cents per share to its common shareholders of record on Mar 3. The payout, up some 7% from the last one, will be made on Mar 10. In addition to the regular dividend, FANG declared a special dividend of $2.15 per share.
The company also executed $316 million of share repurchases during the fourth quarter of 2022 at $134.49 apiece.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
Diamondback Energy, Inc. price-consensus-eps-surprise-chart | Diamondback Energy, Inc. Quote
Production & Realized Prices
FANG’s production of oil and natural gas averaged 391,402 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure edged up 1.1% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 389,984 BOE/d. While crude and natural gas output were essentially flat year over year, natural gas liquids volumes increased 6.2% from the fourth quarter of 2021.
The average realized oil price during the most recent quarter was $80.37 per barrel, 7.9% higher than the year-ago realization of $74.50 but below the consensus mark of $83. Meanwhile, the average realized natural gas price fell to $3.20 per thousand cubic feet (Mcf) from $4.56 in the year-ago period and missed the Zacks Consensus Estimate of $3.85. Overall, the company fetched $55.76 per barrel compared with $56.47 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.16 per barrel of oil equivalent (BOE), literally unchanged from the prior-year quarter. Lease operating expense was $4.47 per BOE compared with $4.21 in the fourth quarter of 2021. FANG’s production taxes decreased 5.3% year over year to $3.22 per BOE. On the other hand, gathering and transportation expenses shot up in the fourth quarter of 2022 to $1.86 per BOE from $1.63 during the corresponding period of 2021.
Diamondback spent $542 million in capital expenditure — $482 million on drilling and completion, $45 million on infrastructure, environment and $15 million on midstream. The company booked $1.1 billion of free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $157 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 28.5%.
Guidance
In 2023, FANG said it looks to pump 430,000-440,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 256,000-262,000 barrels per day. The company forecast a capital spending budget between $2.5 billion and $2.7 billion. Finally, stressing its shareholder return program, Diamondback has committed to return at least 75% of the free cash flow through dividends and buybacks.
Zacks Rank & Stock Picks
Diamondback — a Permian Basin-focused upstream oil and gas company — carries a Zacks Rank #3 (Hold) at present.
Meanwhile, investors interested in the energy sector might look at operators like Murphy USA (MUSA - Free Report) , Valero Energy (VLO - Free Report) and Sunoco LP (SUN - Free Report) , each carrying a Zacks Rank #1 (Strong Buy) currently.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA: Over the past 30 days, El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2023 improve 5.7%. MUSA, which enjoys an overall VGM Score of A, is valued at around $5.8 billion.
Murphy USA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 43.4%. MUSA has seen its shares gain 42% in a year.
Valero Energy: Valero Energy is valued at some $52.1 billion. The Zacks Consensus Estimate for VLO’s 2023 earnings has been revised 5.5% upward over the past 30 days.
Valero Energy, headquartered in San Antonio, TX, beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. VLO shares have gained 63.4% in a year.
Sunoco LP: SUN beat the Zacks Consensus Estimate for earnings twice in the trailing four quarters. Sunoco has a trailing four-quarter earnings surprise of 21.6%, on average.
Sunoco is valued at around $4.6 billion. SUN has seen its shares gain 5.6% in a year.