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Diamondback (FANG) Q4 Earnings Beat Estimates on Strong Output
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U.S. energy operator Diamondback Energy (FANG - Free Report) reported fourth-quarter 2023 adjusted earnings per share of $4.74, beating the Zacks Consensus Estimate of $4.61. The outperformance primarily reflects strong production.
However, the bottom line declined from the year-ago adjusted figure of $5.29 due to a drop in overall realization and higher costs.
Meanwhile, revenues of $2.2 billion rose 9.8% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by $81 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 90 cents per share to its common shareholders of record on Mar 5. The payout will be made on Mar 12. In addition to the regular dividend, FANG declared a special dividend of $2.18 per share.
The company also executed $129 million of share repurchases during the fourth quarter of 2023 at $148.15 apiece.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 462,565 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 18.2% from the year-ago quarter and surpassed our estimate of 459,267.1 BOE/d. While crude and natural gas output increased 20.8% and 12.2% year over year, respectively, natural gas liquids volumes rose 17% from the fourth quarter of 2022.
The average realized oil price during the most recent quarter was $76.42 per barrel, 4.9% lower than the year-ago realization of $80.37 but ahead of our projection of $74.13. Meanwhile, the average realized natural gas price plunged to $1.29 per thousand cubic feet (Mcf) from $3.20 in the year-ago period and came below our estimate of $1.47. Overall, the upstream oil and gas company fetched $50.87 per barrel compared with $55.76 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.83 per barrel of oil equivalent (BOE) compared to $10.16 in the prior-year quarter and our projection of $11.93. The rise in costs reflected an increase in lease operating expenses to $5.97 per BOE from $4.47 in the fourth quarter of 2022. On a somewhat positive note, FANG’s production taxes decreased 24.2% year over year to $2.44 per BOE, while gathering and transportation expenses edged down in the fourth quarter of 2023 to $1.83 per BOE from $1.86 during the corresponding period of 2022.
Diamondback spent $649 million in capital expenditure — $603 million on drilling and completion, $31 million on infrastructure, environment and $15 million on midstream. The company booked $910 million in free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $582 million in cash and cash equivalents, and $6.6 billion in long-term debt, representing a debt-to-capitalization of 27.6%.
Guidance
In 2024, FANG said it looks to pump around 458,000-466,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be between 270,000 and 275,000 barrels per day. The Zacks Rank #3 (Hold) company forecast a capital spending budget between $2.3 billion and $2.55 billion.
While we have discussed Marathon Oil’s fourth-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
One of the world’s largest independent oil and gas producers, ConocoPhillips (COP - Free Report) , reported fourth-quarter 2023 adjusted earnings per share of $2.40, beating the Zacks Consensus Estimate of $2.08. The bottom line, however, declined from the prior-year quarter’s $2.71 per share. ConocoPhillips’ higher oil equivalent production volumes — up 8.2% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.
As of Dec 31, 2023, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.9 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $5.3 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported fourth-quarter 2023 adjusted earnings from continuing operations of 48 cents per share, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s adjusted earnings of 42 cents. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 564 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 458.6 Bcfe.
EQT’s adjusted operating cash flow was $774.6 million in the quarter, up from $621.8 million a year ago. Free cash flow in the quarter was $236 million, up from $225.5 million. Total capital expenditure for the company amounted to $538.5 million, up from $398.1 million a year ago. As of Dec 31, 2023, EQT had $81 million in cash and cash equivalents. Net debt was $5.7 billion.
Another U.S. energy operator, APA Corporation (APA - Free Report) , reported fourth-quarter 2023 adjusted earnings of $1.15 per share, missing the Zacks Consensus Estimate of $1.38 and declining from the year-ago adjusted figure of $1.48. APA’s underperformance primarily reflects lower oil and natural gas prices, partly offset by strong production.
During the quarter under review, APA generated $1 billion of cash from operating activities while it incurred $520 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1 billion. It also registered a free cash flow of $292 million, though it fell from $360 million a year ago. As of Dec 31, APA had approximately $87 million in cash and cash equivalents and $5.2 billion in long-term debt. The company’s debt-to-capitalization ratio was 66.1.
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Diamondback (FANG) Q4 Earnings Beat Estimates on Strong Output
U.S. energy operator Diamondback Energy (FANG - Free Report) reported fourth-quarter 2023 adjusted earnings per share of $4.74, beating the Zacks Consensus Estimate of $4.61. The outperformance primarily reflects strong production.
However, the bottom line declined from the year-ago adjusted figure of $5.29 due to a drop in overall realization and higher costs.
Meanwhile, revenues of $2.2 billion rose 9.8% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by $81 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 90 cents per share to its common shareholders of record on Mar 5. The payout will be made on Mar 12. In addition to the regular dividend, FANG declared a special dividend of $2.18 per share.
The company also executed $129 million of share repurchases during the fourth quarter of 2023 at $148.15 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 462,565 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 18.2% from the year-ago quarter and surpassed our estimate of 459,267.1 BOE/d. While crude and natural gas output increased 20.8% and 12.2% year over year, respectively, natural gas liquids volumes rose 17% from the fourth quarter of 2022.
The average realized oil price during the most recent quarter was $76.42 per barrel, 4.9% lower than the year-ago realization of $80.37 but ahead of our projection of $74.13. Meanwhile, the average realized natural gas price plunged to $1.29 per thousand cubic feet (Mcf) from $3.20 in the year-ago period and came below our estimate of $1.47. Overall, the upstream oil and gas company fetched $50.87 per barrel compared with $55.76 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.83 per barrel of oil equivalent (BOE) compared to $10.16 in the prior-year quarter and our projection of $11.93. The rise in costs reflected an increase in lease operating expenses to $5.97 per BOE from $4.47 in the fourth quarter of 2022. On a somewhat positive note, FANG’s production taxes decreased 24.2% year over year to $2.44 per BOE, while gathering and transportation expenses edged down in the fourth quarter of 2023 to $1.83 per BOE from $1.86 during the corresponding period of 2022.
Diamondback spent $649 million in capital expenditure — $603 million on drilling and completion, $31 million on infrastructure, environment and $15 million on midstream. The company booked $910 million in free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $582 million in cash and cash equivalents, and $6.6 billion in long-term debt, representing a debt-to-capitalization of 27.6%.
Guidance
In 2024, FANG said it looks to pump around 458,000-466,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be between 270,000 and 275,000 barrels per day. The Zacks Rank #3 (Hold) company forecast a capital spending budget between $2.3 billion and $2.55 billion.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Some Key E&P Earnings
While we have discussed Marathon Oil’s fourth-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
One of the world’s largest independent oil and gas producers, ConocoPhillips (COP - Free Report) , reported fourth-quarter 2023 adjusted earnings per share of $2.40, beating the Zacks Consensus Estimate of $2.08. The bottom line, however, declined from the prior-year quarter’s $2.71 per share. ConocoPhillips’ higher oil equivalent production volumes — up 8.2% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.
As of Dec 31, 2023, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.9 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $5.3 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported fourth-quarter 2023 adjusted earnings from continuing operations of 48 cents per share, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s adjusted earnings of 42 cents. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 564 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 458.6 Bcfe.
EQT’s adjusted operating cash flow was $774.6 million in the quarter, up from $621.8 million a year ago. Free cash flow in the quarter was $236 million, up from $225.5 million. Total capital expenditure for the company amounted to $538.5 million, up from $398.1 million a year ago. As of Dec 31, 2023, EQT had $81 million in cash and cash equivalents. Net debt was $5.7 billion.
Another U.S. energy operator, APA Corporation (APA - Free Report) , reported fourth-quarter 2023 adjusted earnings of $1.15 per share, missing the Zacks Consensus Estimate of $1.38 and declining from the year-ago adjusted figure of $1.48. APA’s underperformance primarily reflects lower oil and natural gas prices, partly offset by strong production.
During the quarter under review, APA generated $1 billion of cash from operating activities while it incurred $520 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $1 billion. It also registered a free cash flow of $292 million, though it fell from $360 million a year ago. As of Dec 31, APA had approximately $87 million in cash and cash equivalents and $5.2 billion in long-term debt. The company’s debt-to-capitalization ratio was 66.1.