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Diamondback's (FANG) Q4 Earnings Beat on Strong Production

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Diamondback Energy, Inc. (FANG - Free Report) reported strong fourth-quarter 2019 results. Better-than-expected production led to this outperformance. Precisely, overall volume came in at 301.3 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 299.6 MBOE/d.

The company’s adjusted net income per share of $1.93 outpaced the Zacks Consensus Estimate of $1.8 and also increased 59.5% from the year-ago figure of $1.21.

Further, this Permian pure play’s total revenues of $1,104 million came ahead of the Zacks Consensus Estimate of $1,088 million and even soared nearly 74.4% from the year-earlier figure of $633 million.

Dividend Hike by Twofold

Diamondback’s board of directors announced a 100% hike in quarterly dividend to 37.5 cents per share from the previous rate of 18.8 cents. The new quarterly dividend will be paid out on Mar 10, 2020 to its shareholders of record as of Mar 3, 2020. The current annual dividend yield of the company is 2%.

Production & Realized Prices

The 2018 buyouts of Energen Corporation and Ajax Resources helped Diamondback transform into one of the leading Permian Basin oil producers. Production of oil and natural gas averaged 301.3 MBOE/d comprising 65% oil. The figure jumped 64.8% from the year-ago quarter and also marginally surpassed the Zacks Consensus Estimate of 299.6 MBOE/d. While oil production surged 49.8% year over year, natural gas volumes more than doubled.

The average realized crude oil price in the fourth quarter was $54.74 per barrel, reflecting a 20.28% rise from the year-ago realization of $45.51. Overall, the company fetched $39.28 per barrel compared with $37.01 a year ago.

Diamondback Energy, Inc. Price, Consensus and EPS Surprise

Diamondback Energy, Inc. Price, Consensus and EPS Surprise

Diamondback Energy, Inc. price-consensus-eps-surprise-chart | Diamondback Energy, Inc. Quote

Expenses & Financials

Fourth-quarter cash operating cost was $8.77 per barrel of oil equivalent (BOE), up 8.3% from the prior-year figure of $8.10 per BOE. Diamondback’s cash G&A expense was 73 cents, higher than 49 cents in the fourth quarter of 2018. Moreover, lease operating expense of $4.52 was slightly up year over year. Meanwhile, production taxes rose nearly 4.2% from the prior-year quarter to $2.46 per BOE.

Capital expenditure in the quarter totalled $748 million. The company shelled out $652 million on drilling and completion and spent another $23 million on non-operated properties. Plus, infrastructure and midstream budget amounted to $73 million.

As of Dec 31, 2019, this Permian-focused operator had $123-million in cash and cash equivalents, and long-term debt of $5.4 billion. The debt-to-capital ratio of the Zacks Rank #3 (Hold) company was 28.8%.

Guidance

Diamondback projects 2020 average daily production of 310-325 MBOE/d. Its average daily oil production is estimated between 205 MBO/d and 215 MBO/d with expected capital spend of $2.8-$3 billion.

Zacks Rank & Key Picks

Diamondback has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Concho Resources Inc. (CXO - Free Report) , Devon Energy Corporation (DVN - Free Report) and California Resources Corporation (CRC - Free Report) , each sporting 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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