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Diamondback & Unit Viper Energy Posts Robust Q4 Volumes

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Diamondback Energy, Inc. (FANG - Free Report) issued a comprehensive update on fourth-quarter 2019 and full-year results, pertaining to its production and subsidiary, Viper Energy Partners LP (VNOM - Free Report) .

Let’s delve deeper.

Production Details of Diamondback

Diamondback’s fourth-quarter average daily production surged almost 65% to 301.3 million barrels of oil equivalent per day (MBOE/d) from 182.8 MBOE/d in the corresponding period of last year. The released figure even surpassed the Zacks Consensus Estimate of 295.6 MBOE/D. Of the total output, 65% comprised oil while the rest consisted of natural gas and natural gas liquids. In the fourth quarter, the company recovered from its third-quarter offset frac interference setback with the expected revival of field-level production in Howard County.

This Midland-based company’s 2019 average daily production rose 27% to 283 MBOE/D from 221.1 MBOE/D in 2018 with oil volumes expanding 26% year over year. 

The 2018 buyouts of Energen Corp. and Ajax Resources helped Diamondback transform into one of the leading Permian Basin oil producers, thereby achieving year-over-year production growth. Additionally, this strategic acquisition is expected to draw significant commercial, financial and operational synergies owing to addition of its asset, systems and staff to the company’s portfolio. The deal is expected to reap benefits worth around $3 billion. It further aims to reduce costs through economies of scale.

 

Production Details of Viper Energy

Viper Energy, an affiliate of Diamondback, reported fourth-quarter 2019 average daily production of 26.1 MBOE/d (comprising 63.2% oil), reflecting a 29% climb from the year-ago figure of 20.2 MBOE/d.

Viper’s remarkable fourth-quarter production result was attributable to the outperformance of Diamondback-operated properties. Moreover, it brought five wells online during the fourth quarter, which it drilled in Spanish Trail wherein Viper holds net royalty of 25%, on average.

This limited partner has mineral interest in prolific oil-rich shale plays like the Eagle Ford and Permian Basin. Its 2019 average daily production is realized at 21.5 MBOE/D (containing 65% oil) compared with 17.3 MBOE/D a year ago.

Diamondback will keep bracing its growth trajectory on Viper’s assets as a sizeable fragment of Diamondback’s projected 2020 completions will be the well drillings on Viper’s acreage.

Conclusion

As far as concentrating on the present year goes, Diamondback seems well-prepared to realize its earlier-announced goal of attaining 10-15% year-over-year oil growth while simultaneously generating a healthy free cash flow at current commodity prices.

The company is an independent oil and gas exploration & production player, focusing on the Permian Basin primarily wherein it covers almost 394,000 net acres. It is scheduled to announce fourth-quarter and full-year earnings on Feb 18. The Zacks Consensus Estimate for the quarterly earnings of $1.79 is indicative of a 48% jump from the figure reported in the same period last year.

Zacks Rank & Key Picks

Diamondback carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners (BPMP - Free Report) and TC Energy Corporation (TRP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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