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Diamondback (FANG) Q1 Earnings Beat Estimates as Output Jumps
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U.S. energy operator Diamondback Energy (FANG - Free Report) reported first-quarter 2024 adjusted earnings per share of $4.50, which beat the Zacks Consensus Estimate of $4.29 and came ahead of the year-ago adjusted figure of $4.10. The outperformance primarily reflects stronger production and a drop in overall realization.
Meanwhile, revenues of $2.2 billion rose 15.7% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by $137 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 May 15. The payout will be made on May 22. In addition to the regular dividend, FANG declared a special dividend of $1.07 per share.
The company also executed $42 million of share repurchases during the first quarter of 2024 at $149.50 apiece.
Diamondback Energy, Inc. Price, Consensus and EPS Surprise
FANG’s production of oil and natural gas averaged 461,110 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 8.5% from the year-ago quarter but marginally missed our estimate of 461,375.1 BOE/d. While crude and natural gas output increased 8.7% and 5.6% year over year, respectively, natural gas liquids volumes rose 10.7%.
The average realized oil price during the most recent quarter was $75.06 per barrel, 2.7% higher than the year-ago realization of $73.11 and ahead of our projection of $70.81. Meanwhile, the average realized natural gas price plunged to 99 cents per thousand cubic feet (Mcf) from $1.46 in the year-ago period and came below our estimate of $1.39. Overall, the upstream oil and gas company fetched $50.07 per barrel compared with $49.72 a year ago.
Costs & Financial Position
Diamondback’s first-quarter cash operating cost was $11.52 per barrel of oil equivalent (BOE) compared with $11.61 in the prior-year quarter and our projection of $11.46. The drop in costs compared to the year-ago period reflected a steep decrease in production and ad valorem taxes to $2.84 per BOE from $4.05 in the first quarter of 2023. On a somewhat bearish note, FANG’s lease operating expenses increased 21.1% year over year to $6.08 per BOE, while gathering and transportation expenses rose in the first quarter of 2024 to $1.84 per BOE from $1.78 during the corresponding period of 2023.
Diamondback spent $609 million in capital expenditure — $580 million on drilling and completion, $25 million on infrastructure, environment and $4 million on midstream. The company booked $791 million in free cash flow in the first quarter.
As of Mar 31, the Permian-focused operator had approximately $896 million in cash and cash equivalents and $6.6 billion in long-term debt, representing a debt-to-capitalization of 26.9%.
Guidance
FANG reiterated that it looks to pump around 458,000-466,000 BOE/d of hydrocarbon in 2024. Of this, oil volumes are likely to be between 270,000 and 275,000 barrels per day. This Zacks Rank #2 (Buy) company also stuck to its forecast of a capital spending budget between $2.3 billion and $2.55 billion.
While we have discussed Diamondback Energy’s first-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported first-quarter 2024 adjusted earnings per share of $2.03, beating the Zacks Consensus Estimate of $1.99. The bottom line, however, declined from the prior-year quarter’s $2.38 per share. ConocoPhillips’ higher oil equivalent production volumes — up 6.1% 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 Mar 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.3 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 $4.9 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported first-quarter 2024 adjusted earnings from continuing operations of 82 cents per share, which beat the Zacks Consensus Estimate of 65 cents. However, the bottom line decreased from the year-ago quarter’s reported figure of $1.70. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 534 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 459 Bcfe.
EQT’s adjusted operating cash flow was $950.5 million in the quarter, down from $1.2 billion a year ago. Free cash flow in the quarter was $401.6 million, compared with $773.6 million in the first quarter of 2023. Total capital expenditure for the company amounted to $549 million, rising from $464 million a year ago. As of Mar 31, 2024, EQT had $648 million in cash and cash equivalents. Net debt was $4.9 billion.
Marathon Oil Corporation (MRO - Free Report) , another U.S. energy operator, reported first-quarter 2024 adjusted net income per share of 55 cents, beating the Zacks Consensus Estimate of 52 cents. The outperformance reflects higher domestic liquid prices. However, MRO’s bottom line fell from the year-ago adjusted profit of 67 cents due to weaker production numbers.
Marathon Oil spent $603 million in capital and exploratory expenditures during the quarter and raked in $239 million in adjusted free cash flow. The company also executed $285 million in share repurchases during the period. As of Mar 31, 2024, MRO had cash and cash equivalents worth $49 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.1.
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Diamondback (FANG) Q1 Earnings Beat Estimates as Output Jumps
U.S. energy operator Diamondback Energy (FANG - Free Report) reported first-quarter 2024 adjusted earnings per share of $4.50, which beat the Zacks Consensus Estimate of $4.29 and came ahead of the year-ago adjusted figure of $4.10. The outperformance primarily reflects stronger production and a drop in overall realization.
Meanwhile, revenues of $2.2 billion rose 15.7% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by $137 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 May 15. The payout will be made on May 22. In addition to the regular dividend, FANG declared a special dividend of $1.07 per share.
The company also executed $42 million of share repurchases during the first quarter of 2024 at $149.50 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 461,110 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 8.5% from the year-ago quarter but marginally missed our estimate of 461,375.1 BOE/d. While crude and natural gas output increased 8.7% and 5.6% year over year, respectively, natural gas liquids volumes rose 10.7%.
The average realized oil price during the most recent quarter was $75.06 per barrel, 2.7% higher than the year-ago realization of $73.11 and ahead of our projection of $70.81. Meanwhile, the average realized natural gas price plunged to 99 cents per thousand cubic feet (Mcf) from $1.46 in the year-ago period and came below our estimate of $1.39. Overall, the upstream oil and gas company fetched $50.07 per barrel compared with $49.72 a year ago.
Costs & Financial Position
Diamondback’s first-quarter cash operating cost was $11.52 per barrel of oil equivalent (BOE) compared with $11.61 in the prior-year quarter and our projection of $11.46. The drop in costs compared to the year-ago period reflected a steep decrease in production and ad valorem taxes to $2.84 per BOE from $4.05 in the first quarter of 2023. On a somewhat bearish note, FANG’s lease operating expenses increased 21.1% year over year to $6.08 per BOE, while gathering and transportation expenses rose in the first quarter of 2024 to $1.84 per BOE from $1.78 during the corresponding period of 2023.
Diamondback spent $609 million in capital expenditure — $580 million on drilling and completion, $25 million on infrastructure, environment and $4 million on midstream. The company booked $791 million in free cash flow in the first quarter.
As of Mar 31, the Permian-focused operator had approximately $896 million in cash and cash equivalents and $6.6 billion in long-term debt, representing a debt-to-capitalization of 26.9%.
Guidance
FANG reiterated that it looks to pump around 458,000-466,000 BOE/d of hydrocarbon in 2024. Of this, oil volumes are likely to be between 270,000 and 275,000 barrels per day. This Zacks Rank #2 (Buy) company also stuck to its forecast of a capital spending budget between $2.3 billion and $2.55 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Key E&P Earnings
While we have discussed Diamondback Energy’s first-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported first-quarter 2024 adjusted earnings per share of $2.03, beating the Zacks Consensus Estimate of $1.99. The bottom line, however, declined from the prior-year quarter’s $2.38 per share. ConocoPhillips’ higher oil equivalent production volumes — up 6.1% 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 Mar 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.3 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 $4.9 billion.
Natural gas producer EQT Corporation (EQT - Free Report) reported first-quarter 2024 adjusted earnings from continuing operations of 82 cents per share, which beat the Zacks Consensus Estimate of 65 cents. However, the bottom line decreased from the year-ago quarter’s reported figure of $1.70. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 534 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 459 Bcfe.
EQT’s adjusted operating cash flow was $950.5 million in the quarter, down from $1.2 billion a year ago. Free cash flow in the quarter was $401.6 million, compared with $773.6 million in the first quarter of 2023. Total capital expenditure for the company amounted to $549 million, rising from $464 million a year ago. As of Mar 31, 2024, EQT had $648 million in cash and cash equivalents. Net debt was $4.9 billion.
Marathon Oil Corporation (MRO - Free Report) , another U.S. energy operator, reported first-quarter 2024 adjusted net income per share of 55 cents, beating the Zacks Consensus Estimate of 52 cents. The outperformance reflects higher domestic liquid prices. However, MRO’s bottom line fell from the year-ago adjusted profit of 67 cents due to weaker production numbers.
Marathon Oil spent $603 million in capital and exploratory expenditures during the quarter and raked in $239 million in adjusted free cash flow. The company also executed $285 million in share repurchases during the period. As of Mar 31, 2024, MRO had cash and cash equivalents worth $49 million and long-term debt of $4.6 billion. The debt-to-capitalization ratio of the company was 29.1.