Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the
“Company”) today announced financial and operating results for the
fourth quarter and full year ended December 31, 2022.
FOURTH QUARTER 2022
HIGHLIGHTS
- Average production of 226.1 MBO/d
(391.4 MBOE/d)
- Net cash provided by operating
activities of $1.44 billion; Operating Cash Flow Before Working
Capital Changes (as defined and reconciled below) of $1.67
billion
- Cash capital expenditures of $542
million
- Free Cash Flow (as defined and
reconciled below) of $1.13 billion
- Increasing annual base dividend by
7% to $3.20 per share; declared Q4 2022 base cash dividend of $0.80
per share payable on March 10, 2023; implies a 2.4% annualized
yield based on February 17, 2023 closing share price of
$134.68
- Declared a variable cash dividend
of $2.15 per share payable on March 10, 2023; total
base-plus-variable dividend of $2.95 per share implies an 8.8%
annualized yield based on February 17, 2023 closing share price of
$134.68
- Repurchased 2,344,850 shares of
common stock in Q4 2022 for $316 million (at a weighted average
price of $134.49/share)
- Total Q4 2022 return of capital of
$861 million from stock repurchases and the declared
base-plus-variable dividend; represents ~76% of Q4 2022 Free Cash
Flow (as defined and reconciled below)
- Closed the previously announced
acquisition of all leasehold interests and related assets of
FireBird Energy LLC on November 30, 2022 and the previously
announced acquisition of all leasehold interest and related assets
of Lario Permian, LLC, a wholly owned subsidiary of Lario Oil &
Gas Company, and certain associated sellers, on January 31, 2023
(collectively, the "FireBird and Lario Acquisitions")
FULL YEAR 2022 HIGHLIGHTS
- Average production of 223.6 MBO/d
(386.0 MBOE/d)
- Net cash provided by operating
activities of $6.33 billion; Operating Cash Flow Before Working
Capital Changes (as defined and reconciled below) of $6.52
billion
- Cash capital expenditures of $1.94
billion
- Generated Free Cash Flow (as
defined and reconciled below) of $4.59 billion
- Declared total base-plus-variable
dividends of $11.31 per share for the full year 2022
- Repurchased 8,693,384 shares of
common stock in 2022 for $1.10 billion (at a weighted average price
of $126.19/share)
- Total full year 2022 return of
capital of $3.11 billion from stock repurchases and declared
base-plus-variable dividends; represents ~68% of FY 2022 Free Cash
Flow (as defined and reconciled below)
- Proved reserves as of December 31,
2022 of 2,033 MMBOE (1,070 MBO, 53% oil), up 14% year over year;
proved developed producing ("PDP") reserves of 1,404 MMBOE (700
MBO, 50% oil, 69% of proved reserves), up 17% year over year
2023 GUIDANCE HIGHLIGHTS
- Full year 2023 oil production
guidance of 256 - 262 MBO/d (430 - 440 MBOE/d)
- Full year 2023 cash CAPEX guidance
of $2.50 - $2.70 billion
- The Company expects to drill
between 325 and 345 gross (293 - 311 net) wells and complete
between 330 and 350 gross (297 - 315 net) wells with an average
lateral length of approximately 10,500 feet in 2023
- Q1 2023 oil production guidance of
248 - 252 MBO/d (415 - 422 MBOE/d)
- Q1 2023 cash CAPEX guidance of $625
- $675 million
NON-CORE ASSET SALE UPDATE
- Completed divestiture of 10% equity
ownership in the Gray Oak crude oil pipeline for gross proceeds of
$180 million in Q1 2023
- Signed definitive agreements to
divest ~19,000 net acres in Glasscock County and ~4,900 net acres
in Ward and Winkler counties for total consideration of $439
million, subject to certain closing adjustments; estimated loss of
2023 production of 2 MBO/d (7 MBOE/d) accounted for in full year
2023 guidance
- Over $750 million of completed and
pending asset sales since announcing initial target
- Increasing non-core asset sale
target to at least $1 billion by year-end 2023
“2022 was a record year for Diamondback. I am
proud of our team who, in the face of significant inflationary
headwinds, were able to execute our capital plan within our
original budget while beating volume expectations for the year. As
a result, Diamondback was able to generate nearly $4.6 billion of
Free Cash Flow and return approximately $3.1 billion of cash to our
stockholders through a combination of our growing base dividend,
variable dividend and share repurchase program. On top of that, we
added over 80,000 net acres and 500 locations through the FireBird
and Lario Acquisitions, extending our inventory runway while also
providing immediate cash flow accretion for our stockholders,”
stated Travis Stice, Chairman and Chief Executive Officer of
Diamondback.
Mr. Stice continued, “As we move into 2023, I am
confident in our ability to maintain our status as a best-in-class
operator. Our well results have steadily improved over the past
four years, and our capital costs and cash margins continue to be
among the best in the industry. This year, we expect to produce
approximately 260,000 barrels of oil per day while spending
approximately $2.6 billion in capex. We intend to continue to
return at least 75% of our Free Cash Flow to our stockholders and
we expect to further strengthen our investment grade balance sheet
by reducing debt through cash flow and our increased target of at
least $1 billion of non-core asset sales.”OPERATIONS
UPDATE
The tables below provide a summary of operating
activity for the fourth quarter of 2022.
|
Total Activity (Gross Operated): |
|
|
|
|
|
|
Number of Wells Drilled |
|
Number of WellsCompleted |
|
|
Midland Basin |
59 |
|
61 |
|
|
Delaware Basin |
9 |
|
— |
|
|
Total |
68 |
|
61 |
|
|
Total Activity (Net Operated): |
|
|
|
|
|
|
Number of Wells Drilled |
|
Number of Wells Completed |
|
|
Midland Basin |
54 |
|
55 |
|
|
Delaware Basin |
8 |
|
— |
|
|
Total |
62 |
|
55 |
|
|
|
|
|
|
|
During the fourth quarter of 2022, Diamondback
drilled 59 gross wells in the Midland Basin and nine gross wells in
the Delaware Basin. The Company turned 61 operated wells to
production in the Midland Basin with an average lateral length of
11,083 feet. Operated completions during the fourth quarter
consisted of 20 Lower Spraberry wells, 14 Wolfcamp B wells, 11 Jo
Mill wells, 10 Wolfcamp A wells and six Middle Spraberry wells.
For the full year ended December 31, 2022,
Diamondback drilled 197 gross wells in the Midland Basin and 43
gross wells in the Delaware Basin. The Company turned 213 operated
wells to production in the Midland Basin and 42 operated wells to
production in the Delaware Basin. The average lateral length for
wells completed during the full year was 10,593 feet, and consisted
of 71 Wolfcamp A wells, 70 Lower Spraberry wells, 46 Wolfcamp B
wells, 32 Jo Mill wells, 21 Middle Spraberry wells, 11 Second Bone
Spring wells, three Third Bone Spring wells and one Barnett
well.FINANCIAL UPDATE
Diamondback's fourth quarter 2022 net income was
$1.01 billion, or $5.62 per diluted share. Adjusted net income (as
defined and reconciled below) was $948 million, or $5.29 per
diluted share.
Fourth quarter 2022 net cash provided by
operating activities was $1.44 billion. Through the year ended
December 31, 2022, Diamondback's net cash provided by
operating activities was $6.33 billion.
During the fourth quarter of 2022, Diamondback
spent $482 million on operated and non-operated drilling and
completions, $45 million on infrastructure and environmental and
$15 million on midstream, for total cash capital expenditures of
$542 million. For the year ended December 31, 2022,
Diamondback spent $1.69 billion on operated and non-operated
drilling and completions, $169 million on infrastructure and
environmental and $84 million on midstream, for total cash
capital expenditures of $1.94 billion.
Fourth quarter 2022 Consolidated Adjusted EBITDA
(as defined and reconciled below) was $1.64 billion. Adjusted
EBITDA net of non-controlling interest (as defined and reconciled
below) was $1.61 billion.
Diamondback's fourth quarter 2022 Free Cash Flow
(as defined and reconciled below) was $1.13 billion. For the
year ended December 31, 2022, Diamondback's Free Cash Flow (as
defined and reconciled below) was $4.59 billion.
Fourth quarter 2022 average unhedged realized
prices were $80.37 per barrel of oil, $3.20 per Mcf of natural gas
and $24.93 per barrel of natural gas liquids ("NGLs"), resulting in
a total equivalent unhedged realized price of $55.76 per BOE.
Diamondback's cash operating costs for the
fourth quarter of 2022 were $10.16 per BOE, including lease
operating expenses ("LOE") of $4.47 per BOE, cash general and
administrative ("G&A") expenses of $0.61 per BOE, production
and ad valorem taxes of $3.22 per BOE and gathering and
transportation expenses of $1.86 per BOE.
As of December 31, 2022, Diamondback had
$139 million in standalone cash and no borrowings outstanding under
its revolving credit facility, with approximately
$1.60 billion available for future borrowing under the
facility and approximately $1.74 billion of total
liquidity.
DIVIDEND DECLARATIONS
Diamondback announced today that the Company's
Board of Directors declared a base cash dividend of $0.80 per
common share for the fourth quarter of 2022 payable on
March 10, 2023, to stockholders of record at the close of
business on March 3, 2023.
The Company's Board of Directors also declared a
variable cash dividend of $2.15 per common share for the fourth
quarter of 2022 payable on March 10, 2023, to stockholders of
record at the close of business on March 3, 2023.
Future base and variable dividends remain
subject to review and approval at the discretion of the Company's
Board of Directors.
COMMON STOCK REPURCHASE PROGRAM
On September 15, 2021 the Board of Directors of
Diamondback authorized the Company to acquire up to
$2.00 billion of common stock. On July 28, 2022, Diamondback's
Board of Directors approved increasing total authorized common
stock repurchases to $4.00 billion. During the fourth quarter
of 2022, Diamondback repurchased 2,344,850 shares of common stock
at an average share price of $134.49 for a total cost of
approximately $316 million. To date, Diamondback has repurchased
13,182,907 shares of common stock at an average share price of
$119.64 for a total cost of approximately $1.58 billion.
Diamondback intends to purchase common stock under the common stock
repurchase program opportunistically with cash on hand, free cash
flow from operations and proceeds from potential liquidity events
such as the sale of assets. This repurchase program has no time
limit and may be suspended from time to time, modified, extended or
discontinued by the Board at any time. Purchases under the
repurchase program may be made from time to time in privately
negotiated transactions or open market transactions in compliance
with Rule 10b-18 under the Securities Exchange Act of 1934, as
amended, and will be subject to market conditions, applicable legal
requirements and other factors. Any common stock purchased as part
of this program will be retired.
RESERVES
Estimates of Diamondback's proved reserves as of
December 31, 2022 were prepared by Diamondback's internal
reservoir engineers and audited by Ryder Scott Company, L.P., an
independent petroleum engineering firm. Reference prices of
$93.67 per barrel of oil and $6.36 per Mmbtu of natural gas were
used in accordance with applicable rules of the Securities and
Exchange Commission. Realized prices with applicable differentials
were $95.26 per barrel of oil, $5.59 per Mcf of natural gas and
$39.40 per barrel of natural gas liquids.
Proved reserves at year-end 2022 of 2,033 MMBOE
represent a 14% increase over year-end 2021 reserves. Proved
developed reserves increased by 17% to 1,404 MMBOE (69% of total
proved reserves) as of December 31, 2022, reflecting the
continued development of the Company's horizontal well inventory.
Proved undeveloped reserves ("PUD" or "PUDs") increased to 629
MMBOE, a 7% increase over year-end 2021, and are comprised of 718
locations, of which 90 are in the Delaware Basin. Crude oil
represents 53% of Diamondback's total proved reserves.
Net proved reserve additions of 385 MMBOE
resulted in a reserve replacement ratio of 273% (defined as the sum
of extensions and discoveries, revisions, purchases and
divestitures, divided by annual production). The organic
reserve replacement ratio was 233% (defined as the sum of
extensions and discoveries and revisions, divided by annual
production).
Extensions and discoveries of reserves were the
primary contributor to the increase in reserves totaling 334 MMBOE
followed by net purchases of reserves totaling 57 MMBOE, with
downward revisions of 7 MMBOE. PDP extensions accounted for
19% of the total increase in reserves. PDP extensions were the
result of 654 new wells in which the Company has an interest, and
PUD extensions were the result of 311 new locations in which the
Company has a working interest. Net purchases of reserves of
57 MMBOE were the net result of acquisitions of 68 MMBOE and
divestitures of 11 MMBOE. Downward revisions of 7 MMBOE were
primarily the result of PUD downgrades and 99 MMBOE were related to
changes in the corporate development plan, which were partially
offset by positive revisions of 92 MMBOE associated with higher
commodity prices.
The SEC PUD guidelines allow a company to book
PUD reserves associated with projects that are to occur within the
next five years. With its current development plan, the Company
expects to continue its strong PUD conversion ratio in 2023 by
converting an estimated 33% of its PUDs to a Proved Developed
category, and develop approximately 80% of the consolidated 2022
year-end PUD reserves by the end of 2025.
|
Oil (MBbls) |
|
Gas (MMcf) |
|
Liquids (MBbls) |
|
MBOE |
As of December 31, 2021 |
928,289 |
|
|
2,585,807 |
|
|
429,734 |
|
|
1,788,991 |
|
Extensions and
discoveries |
201,326 |
|
|
386,987 |
|
|
68,671 |
|
|
334,495 |
|
Revisions of previous
estimates |
(10,483 |
) |
|
2,827 |
|
|
3,228 |
|
|
(6,784 |
) |
Purchase of reserves in
place |
38,683 |
|
|
82,287 |
|
|
15,645 |
|
|
68,043 |
|
Divestitures |
(6,691 |
) |
|
(12,671 |
) |
|
(2,079 |
) |
|
(10,882 |
) |
Production |
(81,616 |
) |
|
(176,376 |
) |
|
(29,880 |
) |
|
(140,892 |
) |
As of December 31, 2022 |
1,069,508 |
|
|
2,868,861 |
|
|
485,319 |
|
|
2,032,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diamondback's exploration and development costs
in 2022 were $2.3 billion. PD F&D costs were $10.10/BOE. PD
F&D costs are defined as exploration and development costs,
excluding midstream, divided by the sum of reserves associated with
transfers from proved undeveloped reserves at year-end 2021
including any associated revisions in 2022 and extensions and
discoveries placed on production during 2021. Drill bit F&D
costs were $6.91/BOE including the effects of all revisions
including pricing revisions. Drill bit F&D costs are defined as
the exploration and development costs, excluding midstream, divided
by the sum of extensions, discoveries and revisions.
|
Year Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
(In millions) |
Acquisition costs: |
|
|
|
|
|
Proved properties |
$ |
778 |
|
$ |
2,805 |
|
$ |
13 |
Unproved properties |
|
1,536 |
|
|
1,829 |
|
|
106 |
Development costs |
|
566 |
|
|
516 |
|
|
381 |
Exploration costs |
|
1,698 |
|
|
1,223 |
|
|
1,098 |
Total |
$ |
4,578 |
|
$ |
6,373 |
|
$ |
1,598 |
|
|
|
|
|
|
|
|
|
FULL YEAR 2023 GUIDANCE
Below is Diamondback's guidance for the full
year 2023, which includes first quarter production, cash tax and
capital guidance. This guidance gives effect to the estimated
production contribution related to the Lario acquisition, which
closed on January 31, 2023.
|
2023 Guidance |
2023 Guidance |
|
Diamondback Energy, Inc. |
Viper Energy Partners LP |
|
|
|
Net production - MBOE/d |
430 - 440 |
34.50 - 38.00 |
Oil production - MBO/d |
256 - 262 |
20.00 - 22.00 |
Q1 2023 oil production - MBO/d
(total - MBOE/d) |
248 - 252 (415 - 422) |
|
|
|
|
Unit costs ($/BOE) |
|
|
Lease operating expenses,
including workovers |
$5.00 - $5.50 |
|
G&A |
|
|
Cash G&A |
$0.65 - $0.80 |
$0.60 - $0.80 |
Non-cash equity-based compensation |
$0.40 - $0.50 |
$0.10 - $0.20 |
DD&A |
$9.25 - $10.25 |
$9.75 - $10.75 |
Interest expense (net of
interest income) |
$1.30 - $1.40 |
$2.50 - $3.00 |
Gathering and
transportation |
$1.80 - $2.00 |
|
|
|
|
Production and ad valorem
taxes (% of revenue)(a) |
7% - 8% |
7% - 8% |
Corporate tax rate (% of pre-tax income) |
23% |
|
20% - 22% |
Cash tax rate (% of pre-tax
income) |
10% - 15% |
|
Q1 2023 Cash taxes ($ -
million) |
$145 - $165 |
$6.0 - $10.0 |
|
|
|
Capital Budget ($ -
million) |
|
|
Drilling, completion, capital
workovers, and non-operated properties |
$2,250 - $2,410 |
|
Midstream (ex. equity method
investments) |
$80 - $100 |
|
Infrastructure and
environmental |
$170 - $190 |
|
2023 Capital
expenditures |
$2,500 - $2,700 |
|
Q1 2023 Capital
expenditures |
$625 - $675 |
|
|
|
|
Gross horizontal wells drilled
(net) |
325 - 345 (293 - 311) |
|
Gross horizontal wells
completed (net) |
330 - 350 (297 - 315) |
|
Average lateral length
(Ft.) |
~10,500' |
|
FY 2023 Midland Basin well
costs per lateral foot |
$620 - $680 |
|
FY 2023 Delaware Basin well
costs per lateral foot |
$900 - $1,000 |
|
Midland Basin net lateral feet
(%) |
~85% |
|
Delaware Basin net lateral
feet (%) |
~15% |
|
|
|
|
(a) Includes production taxes of 4.6% for crude oil and
7.5% for natural gas and NGLs and ad valorem taxes.
CONFERENCE CALL
Diamondback will host a conference call and
webcast for investors and analysts to discuss its results for the
fourth quarter of 2022 on Wednesday, February 22, 2023 at 8:00 a.m.
CT. Access to the webcast, and replay which will be available
following the call, may be found here. The live webcast of the
earnings conference call will also be available via Diamondback’s
website at www.diamondbackenergy.com under the “Investor Relations”
section of the site.
About Diamondback Energy, Inc.
Diamondback is an independent oil and natural
gas company headquartered in Midland, Texas focused on the
acquisition, development, exploration and exploitation of
unconventional, onshore oil and natural gas reserves primarily in
the Permian Basin in West Texas. For more information, please visit
www.diamondbackenergy.com.
Forward-Looking Statements
This news release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
and Section 21E of the Exchange Act, which involve risks,
uncertainties, and assumptions. All statements, other than
statements of historical fact, including statements regarding
Diamondback’s: future performance; business strategy; future
operations (including drilling plans and capital plans); estimates
and projections of revenues, losses, costs, expenses, returns, cash
flow, and financial position; reserve estimates and its ability to
replace or increase reserves; anticipated benefits of strategic
transactions (including acquisitions and divestitures); and plans
and objectives of management (including plans for future cash flow
from operations and for executing environmental strategies) are
forward-looking statements. When used in this news release, the
words “aim,” “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,”
“may,” “model,” “outlook,” “plan,” “positioned,” “potential,”
“predict,” “project,” “seek,” “should,” “target,” “will,” “would,”
and similar expressions (including the negative of such terms) as
they relate to Diamondback are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. Although Diamondback believes that the
expectations and assumptions reflected in its forward-looking
statements are reasonable as and when made, they involve risks and
uncertainties that are difficult to predict and, in many cases,
beyond Diamondback’s control. Accordingly, forward-looking
statements are not guarantees of future performance and
Diamondback’s actual outcomes could differ materially from what
Diamondback has expressed in its forward-looking statements.
Factors that could cause the outcomes to differ
materially include (but are not limited to) the following: changes
in supply and demand levels for oil, natural gas, and natural gas
liquids, and the resulting impact on the price for those
commodities; the impact of public health crises, including epidemic
or pandemic diseases such as the COVID-19 pandemic, and any related
company or government policies or actions; actions taken by the
members of OPEC and Russia affecting the production and pricing of
oil, as well as other domestic and global political, economic, or
diplomatic developments, including any impact of the ongoing war in
Ukraine on the global energy markets and geopolitical stability;
concerns over a potential economic slowdown or recession;
inflationary pressures; rising interest rates and their impact on
the cost of capital; regional supply and demand factors, including
delays, curtailment delays or interruptions of production, or
governmental orders, rules or regulations that impose production
limits; federal and state legislative and regulatory initiatives
relating to hydraulic fracturing, including the effect of existing
and future laws and governmental regulations; physical and
transition risks relating to climate change and the risks and other
factors disclosed in Diamondback’s filings with the Securities and
Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which
can be obtained free of charge on the Securities and Exchange
Commission’s web site at http://www.sec.gov.
In light of these factors, the events
anticipated by Diamondback’s forward-looking statements may not
occur at the time anticipated or at all. Moreover, Diamondback
operates in a very competitive and rapidly changing environment and
new risks emerge from time to time. Diamondback cannot predict all
risks, nor can it assess the impact of all factors on its business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those anticipated by
any forward-looking statements it may make. Accordingly, you should
not place undue reliance on any forward-looking statements made in
this news release. All forward-looking statements speak only as of
the date of this news release or, if earlier, as of the date they
were made. Diamondback does not intend to, and disclaims any
obligation to, update or revise any forward-looking statements
unless required by applicable law.
Diamondback Energy, Inc. |
Consolidated Balance Sheets |
(unaudited, in millions, except share
amounts) |
|
|
|
|
|
December 31, |
|
December 31, |
|
2022 |
|
2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
157 |
|
|
$ |
654 |
|
Restricted cash |
|
7 |
|
|
|
18 |
|
Accounts receivable: |
|
|
|
Joint interest and other, net |
|
104 |
|
|
|
72 |
|
Oil and natural gas sales, net |
|
618 |
|
|
|
598 |
|
Inventories |
|
67 |
|
|
|
62 |
|
Derivative instruments |
|
132 |
|
|
|
13 |
|
Income tax receivable |
|
284 |
|
|
|
1 |
|
Prepaid expenses and other current assets |
|
23 |
|
|
|
28 |
|
Total current assets |
|
1,392 |
|
|
|
1,446 |
|
Property and equipment: |
|
|
|
Oil and natural gas properties, full cost method of accounting
($8,355 million and $8,496 million excluded from amortization at
December 31, 2022 and December 31, 2021,
respectively) |
|
37,122 |
|
|
|
32,914 |
|
Other property, equipment and land |
|
1,481 |
|
|
|
1,250 |
|
Accumulated depletion, depreciation, amortization and
impairment |
|
(14,844 |
) |
|
|
(13,545 |
) |
Property and equipment, net |
|
23,759 |
|
|
|
20,619 |
|
Funds held in escrow |
|
119 |
|
|
|
12 |
|
Equity method investments |
|
566 |
|
|
|
613 |
|
Assets held for sale |
|
158 |
|
|
|
— |
|
Derivative instruments |
|
23 |
|
|
|
4 |
|
Deferred income taxes,
net |
|
64 |
|
|
|
40 |
|
Investment in real estate,
net |
|
86 |
|
|
|
88 |
|
Other assets |
|
42 |
|
|
|
76 |
|
Total assets |
$ |
26,209 |
|
|
$ |
22,898 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable - trade |
$ |
127 |
|
|
$ |
36 |
|
Accrued capital expenditures |
|
480 |
|
|
|
295 |
|
Current maturities of long-term debt |
|
10 |
|
|
|
45 |
|
Other accrued liabilities |
|
399 |
|
|
|
419 |
|
Revenues and royalties payable |
|
619 |
|
|
|
452 |
|
Derivative instruments |
|
47 |
|
|
|
174 |
|
Income taxes payable |
|
34 |
|
|
|
17 |
|
Total current liabilities |
|
1,716 |
|
|
|
1,438 |
|
Long-term debt |
|
6,238 |
|
|
|
6,642 |
|
Derivative instruments |
|
148 |
|
|
|
29 |
|
Asset retirement
obligations |
|
336 |
|
|
|
166 |
|
Deferred income taxes |
|
2,069 |
|
|
|
1,338 |
|
Other long-term
liabilities |
|
12 |
|
|
|
40 |
|
Total liabilities |
|
10,519 |
|
|
|
9,653 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value; 400,000,000 shares authorized;
179,840,797 and 177,551,347 shares issued and outstanding at
December 31, 2022 and December 31, 2021,
respectively |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
14,213 |
|
|
|
14,084 |
|
Retained earnings (accumulated deficit) |
|
801 |
|
|
|
(1,998 |
) |
Accumulated other comprehensive income (loss) |
|
(7 |
) |
|
|
— |
|
Total Diamondback Energy, Inc. stockholders’ equity |
|
15,009 |
|
|
|
12,088 |
|
Non-controlling interest |
|
681 |
|
|
|
1,157 |
|
Total equity |
|
15,690 |
|
|
|
13,245 |
|
Total liabilities and equity |
$ |
26,209 |
|
|
$ |
22,898 |
|
Diamondback Energy, Inc. |
Condensed Consolidated Statements of
Operations |
(unaudited, $ in millions except per share data, shares in
thousands) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenues: |
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquid sales |
$ |
2,008 |
|
|
$ |
2,011 |
|
|
$ |
9,566 |
|
|
$ |
6,747 |
|
Other operating income |
|
22 |
|
|
|
11 |
|
|
|
77 |
|
|
|
50 |
|
Total revenues |
|
2,030 |
|
|
|
2,022 |
|
|
|
9,643 |
|
|
|
6,797 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Lease operating expenses |
|
161 |
|
|
|
150 |
|
|
|
652 |
|
|
|
565 |
|
Production and ad valorem taxes |
|
116 |
|
|
|
121 |
|
|
|
611 |
|
|
|
425 |
|
Gathering and transportation |
|
67 |
|
|
|
58 |
|
|
|
258 |
|
|
|
212 |
|
Depreciation, depletion, amortization and accretion |
|
365 |
|
|
|
320 |
|
|
|
1,344 |
|
|
|
1,275 |
|
General and administrative expenses |
|
35 |
|
|
|
47 |
|
|
|
144 |
|
|
|
146 |
|
Merger and integration expense |
|
3 |
|
|
|
1 |
|
|
|
14 |
|
|
|
78 |
|
Other operating expenses |
|
27 |
|
|
|
14 |
|
|
|
112 |
|
|
|
95 |
|
Total costs and expenses |
|
774 |
|
|
|
711 |
|
|
|
3,135 |
|
|
|
2,796 |
|
Income (loss) from
operations |
|
1,256 |
|
|
|
1,311 |
|
|
|
6,508 |
|
|
|
4,001 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest expense, net |
|
(37 |
) |
|
|
(29 |
) |
|
|
(159 |
) |
|
|
(199 |
) |
Other income (expense), net |
|
(2 |
) |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(10 |
) |
Gain (loss) on derivative instruments, net |
|
91 |
|
|
|
47 |
|
|
|
(586 |
) |
|
|
(848 |
) |
Gain (loss) on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23 |
|
Gain (loss) on extinguishment of debt |
|
(40 |
) |
|
|
(2 |
) |
|
|
(99 |
) |
|
|
(75 |
) |
Income (loss) from equity investments |
|
21 |
|
|
|
9 |
|
|
|
77 |
|
|
|
15 |
|
Total other income (expense), net |
|
33 |
|
|
|
19 |
|
|
|
(772 |
) |
|
|
(1,094 |
) |
Income (loss) before
income taxes |
|
1,289 |
|
|
|
1,330 |
|
|
|
5,736 |
|
|
|
2,907 |
|
Provision for (benefit from)
income taxes |
|
261 |
|
|
|
279 |
|
|
|
1,174 |
|
|
|
631 |
|
Net income
(loss) |
|
1,028 |
|
|
|
1,051 |
|
|
|
4,562 |
|
|
|
2,276 |
|
Net income (loss) attributable
to non-controlling interest |
|
21 |
|
|
|
49 |
|
|
|
176 |
|
|
|
94 |
|
Net income (loss)
attributable to Diamondback Energy, Inc. |
$ |
1,007 |
|
|
$ |
1,002 |
|
|
$ |
4,386 |
|
|
$ |
2,182 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
|
|
|
|
Basic |
$ |
5.62 |
|
|
$ |
5.50 |
|
|
$ |
24.61 |
|
|
$ |
12.24 |
|
Diluted |
$ |
5.62 |
|
|
$ |
5.50 |
|
|
$ |
24.61 |
|
|
$ |
12.24 |
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
177,640 |
|
|
|
180,143 |
|
|
|
176,539 |
|
|
|
176,643 |
|
Diluted |
|
177,640 |
|
|
|
180,144 |
|
|
|
176,539 |
|
|
|
176,643 |
|
Dividends declared per
share |
$ |
2.95 |
|
|
$ |
0.60 |
|
|
$ |
11.31 |
|
|
$ |
1.95 |
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
Net income (loss) attributable
to Diamondback Energy, Inc. |
$ |
1,007 |
|
|
$ |
1,002 |
|
|
$ |
4,386 |
|
|
$ |
2,182 |
|
Other comprehensive income
(loss), net of tax: |
|
|
|
|
|
|
|
Pension and postretirement benefit plans |
|
(7 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
Comprehensive income
(loss) attributable to Diamondback Energy, Inc |
$ |
1,000 |
|
|
$ |
1,002 |
|
|
$ |
4,379 |
|
|
$ |
2,182 |
|
Diamondback Energy, Inc. |
Consolidated Statements of Cash Flows |
(unaudited, in millions) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
1,028 |
|
|
$ |
1,051 |
|
|
$ |
4,562 |
|
|
$ |
2,276 |
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
Provision for (benefit from) deferred income taxes |
|
345 |
|
|
|
258 |
|
|
|
720 |
|
|
|
606 |
|
Depreciation, depletion, amortization and accretion |
|
365 |
|
|
|
320 |
|
|
|
1,344 |
|
|
|
1,275 |
|
(Gain) loss on extinguishment of debt |
|
40 |
|
|
|
2 |
|
|
|
99 |
|
|
|
75 |
|
(Gain) loss on derivative instruments, net |
|
(91 |
) |
|
|
(47 |
) |
|
|
586 |
|
|
|
848 |
|
Cash received (paid) on settlement of derivative instruments |
|
(34 |
) |
|
|
(400 |
) |
|
|
(850 |
) |
|
|
(1,247 |
) |
(Income) loss from equity investment |
|
(21 |
) |
|
|
(9 |
) |
|
|
(77 |
) |
|
|
(15 |
) |
Equity-based compensation expense |
|
13 |
|
|
|
14 |
|
|
|
55 |
|
|
|
51 |
|
(Gain) loss on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
Other |
|
28 |
|
|
|
17 |
|
|
|
85 |
|
|
|
62 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
66 |
|
|
|
111 |
|
|
|
(47 |
) |
|
|
(196 |
) |
Income tax receivable |
|
(282 |
) |
|
|
— |
|
|
|
(283 |
) |
|
|
152 |
|
Prepaid expenses and other |
|
37 |
|
|
|
(3 |
) |
|
|
21 |
|
|
|
20 |
|
Accounts payable and accrued liabilities |
|
(18 |
) |
|
|
(2 |
) |
|
|
(47 |
) |
|
|
(41 |
) |
Income tax payable |
|
3 |
|
|
|
— |
|
|
|
17 |
|
|
|
— |
|
Revenues and royalties payable |
|
(26 |
) |
|
|
(109 |
) |
|
|
156 |
|
|
|
148 |
|
Other |
|
(12 |
) |
|
|
(36 |
) |
|
|
(16 |
) |
|
|
(47 |
) |
Net cash provided by (used in)
operating activities |
|
1,441 |
|
|
|
1,167 |
|
|
|
6,325 |
|
|
|
3,944 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Drilling, completions and infrastructure additions to oil and
natural gas properties |
|
(527 |
) |
|
|
(427 |
) |
|
|
(1,854 |
) |
|
|
(1,457 |
) |
Additions to midstream assets |
|
(15 |
) |
|
|
(7 |
) |
|
|
(84 |
) |
|
|
(30 |
) |
Property acquisitions |
|
(938 |
) |
|
|
(373 |
) |
|
|
(1,567 |
) |
|
|
(827 |
) |
Funds held in escrow |
|
(114 |
) |
|
|
(10 |
) |
|
|
(108 |
) |
|
|
40 |
|
Proceeds from sale of assets |
|
222 |
|
|
|
708 |
|
|
|
327 |
|
|
|
820 |
|
Other |
|
(6 |
) |
|
|
(107 |
) |
|
|
(44 |
) |
|
|
(85 |
) |
Net cash provided by (used in)
investing activities |
|
(1,378 |
) |
|
|
(216 |
) |
|
|
(3,330 |
) |
|
|
(1,539 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Proceeds from borrowings under credit facilities |
|
1,104 |
|
|
|
554 |
|
|
|
5,204 |
|
|
|
1,313 |
|
Repayments under credit facilities |
|
(1,432 |
) |
|
|
(147 |
) |
|
|
(5,551 |
) |
|
|
(1,000 |
) |
Proceeds from senior notes |
|
1,750 |
|
|
|
— |
|
|
|
2,500 |
|
|
|
2,200 |
|
Repayment of senior notes |
|
(500 |
) |
|
|
(653 |
) |
|
|
(2,410 |
) |
|
|
(3,193 |
) |
Proceeds from (repayments to) joint venture |
|
(33 |
) |
|
|
(6 |
) |
|
|
(74 |
) |
|
|
(20 |
) |
Premium on extinguishment of debt |
|
(14 |
) |
|
|
— |
|
|
|
(63 |
) |
|
|
(178 |
) |
Repurchased shares under buyback program |
|
(316 |
) |
|
|
(409 |
) |
|
|
(1,098 |
) |
|
|
(431 |
) |
Repurchased units under buyback program |
|
(31 |
) |
|
|
(31 |
) |
|
|
(153 |
) |
|
|
(94 |
) |
Dividends paid to stockholders |
|
(398 |
) |
|
|
(91 |
) |
|
|
(1,572 |
) |
|
|
(312 |
) |
Distributions to non-controlling interest |
|
(36 |
) |
|
|
(40 |
) |
|
|
(217 |
) |
|
|
(112 |
) |
Financing portion of net cash received (paid) for derivative
instruments |
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
22 |
|
Other |
|
(27 |
) |
|
|
6 |
|
|
|
(69 |
) |
|
|
(36 |
) |
Net cash provided by (used in)
financing activities |
|
67 |
|
|
|
(820 |
) |
|
|
(3,503 |
) |
|
|
(1,841 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
130 |
|
|
|
131 |
|
|
|
(508 |
) |
|
|
564 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
34 |
|
|
|
541 |
|
|
|
672 |
|
|
|
108 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
164 |
|
|
$ |
672 |
|
|
$ |
164 |
|
|
$ |
672 |
|
Diamondback Energy, Inc. |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Production
Data: |
|
|
|
|
|
|
|
Oil (MBbls) |
|
20,803 |
|
|
20,819 |
|
|
81,616 |
|
|
81,522 |
Natural gas (MMcf) |
|
45,020 |
|
|
45,220 |
|
|
176,376 |
|
|
169,406 |
Natural gas liquids (MBbls) |
|
7,703 |
|
|
7,254 |
|
|
29,880 |
|
|
27,246 |
Combined volumes (MBOE)(1) |
|
36,009 |
|
|
35,610 |
|
|
140,892 |
|
|
137,002 |
|
|
|
|
|
|
|
|
Daily oil volumes (BO/d) |
|
226,120 |
|
|
226,293 |
|
|
223,605 |
|
|
223,348 |
Daily combined volumes (BOE/d) |
|
391,402 |
|
|
387,065 |
|
|
386,005 |
|
|
375,349 |
|
|
|
|
|
|
|
|
Average
Prices: |
|
|
|
|
|
|
|
Oil ($ per Bbl) |
$ |
80.37 |
|
$ |
74.50 |
|
$ |
93.85 |
|
$ |
66.19 |
Natural gas ($ per Mcf) |
$ |
3.20 |
|
$ |
4.56 |
|
$ |
4.86 |
|
$ |
3.36 |
Natural gas liquids ($ per Bbl) |
$ |
24.93 |
|
$ |
35.02 |
|
$ |
35.07 |
|
$ |
28.70 |
Combined ($ per BOE) |
$ |
55.76 |
|
$ |
56.47 |
|
$ |
67.90 |
|
$ |
49.25 |
|
|
|
|
|
|
|
|
Oil, hedged ($ per Bbl)(2) |
$ |
79.08 |
|
$ |
58.70 |
|
$ |
86.76 |
|
$ |
52.56 |
Natural gas, hedged ($ per Mcf)(2) |
$ |
3.20 |
|
$ |
3.12 |
|
$ |
4.12 |
|
$ |
2.39 |
Natural gas liquids, hedged ($ per Bbl)(2) |
$ |
24.93 |
|
$ |
34.46 |
|
$ |
35.07 |
|
$ |
28.33 |
Average price, hedged ($ per BOE)(2) |
$ |
55.01 |
|
$ |
45.30 |
|
$ |
62.85 |
|
$ |
39.87 |
|
|
|
|
|
|
|
|
Average Costs per
BOE: |
|
|
|
|
|
|
|
Lease operating expenses |
$ |
4.47 |
|
$ |
4.21 |
|
$ |
4.63 |
|
$ |
4.12 |
Production and ad valorem taxes |
|
3.22 |
|
|
3.40 |
|
|
4.34 |
|
|
3.10 |
Gathering and transportation expense |
|
1.86 |
|
|
1.63 |
|
|
1.83 |
|
|
1.55 |
General and administrative - cash component |
|
0.61 |
|
|
0.93 |
|
|
0.63 |
|
|
0.69 |
Total operating expense - cash |
$ |
10.16 |
|
$ |
10.17 |
|
$ |
11.43 |
|
$ |
9.46 |
|
|
|
|
|
|
|
|
General and administrative - non-cash component |
$ |
0.36 |
|
$ |
0.39 |
|
$ |
0.39 |
|
$ |
0.37 |
Depletion |
$ |
9.50 |
|
$ |
8.51 |
|
$ |
8.87 |
|
$ |
8.77 |
Interest expense, net |
$ |
1.03 |
|
$ |
0.81 |
|
$ |
1.13 |
|
$ |
1.45 |
(1) Bbl equivalents are calculated using a
conversion rate of six Mcf per one Bbl.(2) Hedged prices reflect
the effect of our commodity derivative transactions on our average
sales prices and include gains and losses on cash settlements for
matured commodity derivatives, which we do not designate for hedge
accounting. Hedged prices exclude gains or losses resulting from
the early settlement of commodity derivative contracts.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
Adjusted EBITDA is a supplemental non-GAAP
financial measure that is used by management and external users of
our financial statements, such as industry analysts, investors,
lenders and rating agencies. The Company defines Adjusted EBITDA as
net income (loss) attributable to Diamondback Energy, Inc., plus
net income (loss) attributable to non-controlling interest ("net
income (loss)") before non-cash (gain) loss on derivative
instruments, net, interest expense, net, depreciation, depletion,
amortization and accretion, depreciation and interest expense
related to equity method investments, impairment and abandonments
related to equity method investments, (gain) loss on sale of equity
method investments, (gain) loss on extinguishment of debt, non-cash
equity-based compensation expense, capitalized equity-based
compensation expense, merger and integration expense, other
non-cash transactions and provision for (benefit from) income
taxes, if any. Adjusted EBITDA is not a measure of net income as
determined by United States generally accepted accounting
principles ("GAAP"). Management believes Adjusted EBITDA is useful
because the measure allows it to more effectively evaluate the
Company’s operating performance and compare the results of its
operations from period to period without regard to its financing
methods or capital structure. The Company adds the items listed
above to net income (loss) to determine Adjusted EBITDA because
these amounts can vary substantially from company to company within
its industry depending upon accounting methods and book values of
assets, capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP or as an indicator of the Company’s
operating performance or liquidity. Certain items excluded from
Adjusted EBITDA are significant components in understanding and
assessing a company’s financial performance, such as a company’s
cost of capital and tax structure, as well as the historic costs of
depreciable assets. The Company’s computation of Adjusted EBITDA
may not be comparable to other similarly titled measures of other
companies or to such measure in our credit facility or any of our
other contracts.
The following tables present a reconciliation of
the GAAP financial measure of net income (loss) attributable to
Diamondback Energy, Inc. to the non-GAAP financial measure of
Adjusted EBITDA:
Diamondback Energy, Inc. |
Reconciliation of Net Income (Loss) to Adjusted
EBITDA |
(unaudited, in millions) |
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net income (loss) attributable to Diamondback Energy,
Inc. |
$ |
1,007 |
|
|
$ |
1,002 |
|
|
$ |
4,386 |
|
|
$ |
2,182 |
|
Net income (loss) attributable to non-controlling interest |
|
21 |
|
|
|
49 |
|
|
|
176 |
|
|
|
94 |
|
Net income
(loss) |
|
1,028 |
|
|
|
1,051 |
|
|
|
4,562 |
|
|
|
2,276 |
|
Non-cash (gain) loss on derivative instruments, net |
|
(125 |
) |
|
|
(450 |
) |
|
|
(264 |
) |
|
|
(377 |
) |
Interest expense, net |
|
37 |
|
|
|
29 |
|
|
|
159 |
|
|
|
199 |
|
Depreciation, depletion, amortization and accretion |
|
365 |
|
|
|
320 |
|
|
|
1,344 |
|
|
|
1,275 |
|
Depreciation and interest expense related to equity method
investments |
|
16 |
|
|
|
13 |
|
|
|
63 |
|
|
|
43 |
|
Impairment and abandonments related to equity method
investments |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
4 |
|
(Gain) loss on sale of equity method investments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23 |
) |
(Gain) loss on extinguishment of debt |
|
40 |
|
|
|
2 |
|
|
|
99 |
|
|
|
75 |
|
Non-cash equity-based compensation expense |
|
18 |
|
|
|
20 |
|
|
|
76 |
|
|
|
71 |
|
Capitalized equity-based compensation expense |
|
(5 |
) |
|
|
(6 |
) |
|
|
(21 |
) |
|
|
(20 |
) |
Merger and integration expenses |
|
3 |
|
|
|
1 |
|
|
|
14 |
|
|
|
78 |
|
Other non-cash transactions |
|
1 |
|
|
|
(3 |
) |
|
|
10 |
|
|
|
6 |
|
Provision for (benefit from) income taxes |
|
261 |
|
|
|
279 |
|
|
|
1,174 |
|
|
|
631 |
|
Consolidated Adjusted
EBITDA |
|
1,639 |
|
|
|
1,256 |
|
|
|
7,217 |
|
|
|
4,238 |
|
Less: Adjustment for non-controlling interest |
|
33 |
|
|
|
64 |
|
|
|
211 |
|
|
|
145 |
|
Adjusted EBITDA
attributable to Diamondback Energy, Inc. |
$ |
1,606 |
|
|
$ |
1,192 |
|
|
$ |
7,006 |
|
|
$ |
4,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME
Adjusted net income is a non-GAAP financial
measure equal to net income (loss) attributable to Diamondback
Energy, Inc. plus net income (loss) attributable to non-controlling
interest ("net income (loss)") adjusted for non-cash (gain) loss on
derivative instruments, net, (gain) loss on extinguishment of debt,
merger and integration expense; other non-cash transactions and
related income tax adjustments, if any. The Company’s computation
of adjusted net income may not be comparable to other similarly
titled measures of other companies or to such measure in our credit
facility or any of our other contracts. Management believes
adjusted net income helps investors in the oil and natural gas
industry to measure and compare the Company's performance to other
oil and natural gas companies by excluding from the calculation
items that can vary significantly from company to company depending
upon accounting methods, the book value of assets and other
non-operational factors.
The following table presents a reconciliation of
the GAAP financial measure of net income (loss) attributable to
Diamondback Energy, Inc. to the non-GAAP measure of adjusted net
income:
Diamondback Energy, Inc. |
Adjusted Net Income |
(unaudited, $ in millions except per share data, shares in
thousands) |
|
|
|
Three Months Ended December 31, 2022 |
|
Amounts |
|
Amounts PerDiluted Share |
Net income (loss) attributable to Diamondback Energy,
Inc.(a) |
$ |
1,007 |
|
|
$ |
5.62 |
|
Net income (loss) attributable to non-controlling interest |
|
21 |
|
|
|
0.12 |
|
Net income
(loss)(a) |
|
1,028 |
|
|
|
5.74 |
|
Non-cash (gain) loss on derivative instruments, net |
|
(125 |
) |
|
|
(0.70 |
) |
(Gain) loss on extinguishment of debt |
|
40 |
|
|
|
0.22 |
|
Merger and integration expense |
|
3 |
|
|
|
0.02 |
|
Other non-cash transactions |
|
1 |
|
|
|
0.01 |
|
Adjusted net income excluding above items(a) |
|
947 |
|
|
|
5.29 |
|
Income tax adjustment for above items |
|
22 |
|
|
|
0.12 |
|
Adjusted net
income(a) |
|
969 |
|
|
|
5.41 |
|
Less: Adjusted net income attributable to non-controlling
interest |
|
21 |
|
|
|
0.12 |
|
Adjusted net income
attributable to Diamondback Energy,
Inc.(a) |
$ |
948 |
|
|
$ |
5.29 |
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
Basic |
|
|
177,640 |
|
Diluted |
|
|
177,640 |
|
(a) The Company’s earnings (loss) per diluted
share amount has been computed using the two-class method in
accordance with GAAP. The two-class method is an earnings
allocation which reflects the respective ownership among holders of
common stock and participating securities. Diluted earnings per
share using the two-class method is calculated as (i) net income
attributable to Diamondback Energy, Inc, (ii) plus the reallocation
of $8 million in earnings attributable to participating securities,
divided by (iii) diluted weighted average common shares
outstanding.
OPERATING CASH FLOW BEFORE WORKING
CAPITAL CHANGES, FREE CASH FLOW AND ADJUSTED FREE CASH
FLOW
Operating cash flow before working capital
changes, which is a non-GAAP financial measure representing net
cash provided by operating activities as determined under GAAP
without regard to changes in operating assets and liabilities. The
Company believes operating cash flow before working capital changes
is a useful measure of an oil and natural gas company’s ability to
generate cash used to fund exploration, development and acquisition
activities and service debt or pay dividends. The Company also uses
this measure because adjusted operating cash flow relates to the
timing of cash receipts and disbursements that the Company may not
control and may not relate to the period in which the operating
activities occurred. This allows the Company to compare its
operating performance with that of other companies without regard
to financing methods and capital structure.
Free Cash Flow, which is a non-GAAP financial
measure, is cash flow from operating activities before changes in
working capital in excess of cash capital expenditures. Adjusted
Free Cash Flow, which is a non-GAAP financial measure, is Free Cash
Flow adjusted for early termination of commodity derivative
contracts. The Company believes that Free Cash Flow and Adjusted
Free Cash Flow are useful to investors as they provide measures to
compare both cash flow from operating activities and additions to
oil and natural gas properties across periods on a consistent basis
as adjusted for non-recurring early settlements of commodity
derivative contracts. These measures should not be considered as an
alternative to, or more meaningful than, net cash provided by
operating activities as an indicator of operating performance. The
Company's computation of operating cash flow before working capital
changes, Free Cash Flow and Adjusted Free Cash Flow may not be
comparable to other similarly titled measures of other companies.
The Company uses Free Cash Flow to reduce debt, as well as return
capital to stockholders as determined by the Board of
Directors.
The following tables present a reconciliation of
the GAAP financial measure of net cash provided by operating
activities to the non-GAAP measure of operating cash flow before
working capital changes and to the non-GAAP measure of Free Cash
Flow:
Diamondback Energy, Inc. |
Operating Cash Flow Before Working Capital Changes, Free
Cash Flow and Adjusted Free Cash Flow |
(unaudited, in millions) |
|
|
|
|
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net cash provided by operating activities |
$ |
1,441 |
|
|
$ |
1,167 |
|
|
$ |
6,325 |
|
|
$ |
3,944 |
|
Less: Changes in cash due to
changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
66 |
|
|
|
111 |
|
|
|
(47 |
) |
|
|
(196 |
) |
Income tax receivable |
|
(282 |
) |
|
|
— |
|
|
|
(283 |
) |
|
|
152 |
|
Prepaid expenses and other |
|
37 |
|
|
|
(3 |
) |
|
|
21 |
|
|
|
20 |
|
Accounts payable and accrued liabilities |
|
(18 |
) |
|
|
(2 |
) |
|
|
(47 |
) |
|
|
(41 |
) |
Income tax payable |
|
3 |
|
|
|
— |
|
|
|
17 |
|
|
|
— |
|
Revenues and royalties payable |
|
(26 |
) |
|
|
(109 |
) |
|
|
156 |
|
|
|
148 |
|
Other |
|
(12 |
) |
|
|
(36 |
) |
|
|
(16 |
) |
|
|
(47 |
) |
Total working capital
changes |
|
(232 |
) |
|
|
(39 |
) |
|
|
(199 |
) |
|
|
36 |
|
Operating cash flow
before working capital changes |
|
1,673 |
|
|
|
1,206 |
|
|
|
6,524 |
|
|
|
3,908 |
|
Drilling, completions and infrastructure additions to oil and
natural gas properties |
|
(527 |
) |
|
|
(427 |
) |
|
|
(1,854 |
) |
|
|
(1,457 |
) |
Additions to midstream assets |
|
(15 |
) |
|
|
(7 |
) |
|
|
(84 |
) |
|
|
(30 |
) |
Total Cash
CAPEX |
|
(542 |
) |
|
|
(434 |
) |
|
|
(1,938 |
) |
|
|
(1,487 |
) |
Free Cash
Flow |
|
1,131 |
|
|
|
772 |
|
|
|
4,586 |
|
|
|
2,421 |
|
Early termination of derivatives |
|
— |
|
|
|
— |
|
|
|
138 |
|
|
|
— |
|
Adjusted Free Cash
Flow |
$ |
1,131 |
|
|
$ |
772 |
|
|
$ |
4,724 |
|
|
$ |
2,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DEBT
The Company defines the non-GAAP measure of net
debt as total debt less cash and cash equivalents. Net debt should
not be considered an alternative to, or more meaningful than, total
debt, the most directly comparable GAAP measure. Management uses
net debt to determine the Company's outstanding debt obligations
that would not be readily satisfied by its cash and cash
equivalents on hand. The Company believes this metric is useful to
analysts and investors in determining the Company's leverage
position because the Company has the ability to, and may decide to,
use a portion of its cash and cash equivalents to reduce debt.
Diamondback Energy, Inc. |
Net Debt |
(unaudited, in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,2022 |
|
Net Q4Principal
Borrowings/(Repayments) |
|
September 30,2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
December 31,2021 |
|
(in millions) |
Diamondback Energy, Inc.(a) |
$ |
5,837 |
|
|
$ |
1,497 |
|
|
$ |
4,340 |
|
|
$ |
4,206 |
|
|
$ |
4,533 |
|
|
$ |
5,277 |
|
Viper Energy Partners
LP(a) |
|
582 |
|
|
|
(93 |
) |
|
|
675 |
|
|
|
680 |
|
|
|
728 |
|
|
|
784 |
|
Rattler Midstream LP(a) |
|
— |
|
|
|
(500 |
) |
|
|
500 |
|
|
|
732 |
|
|
|
730 |
|
|
|
695 |
|
Total
debt |
|
6,419 |
|
|
$ |
904 |
|
|
|
5,515 |
|
|
|
5,618 |
|
|
|
5,991 |
|
|
|
6,756 |
|
Cash and cash equivalents |
|
(157 |
) |
|
|
|
|
(27 |
) |
|
|
(43 |
) |
|
|
(149 |
) |
|
|
(654 |
) |
Net debt |
$ |
6,262 |
|
|
|
|
$ |
5,488 |
|
|
$ |
5,575 |
|
|
$ |
5,842 |
|
|
$ |
6,102 |
|
(a) Excludes debt issuance costs, discounts, premiums
and fair value hedges.
PV-10
PV-10 is the Company's estimate of the present
value of the future net revenues from proved oil and natural gas
reserves after deducting estimated production and ad valorem taxes,
future capital costs and operating expenses, but before deducting
any estimates of future income taxes. The estimated future net
revenues are discounted at an annual rate of 10% to determine their
"present value." The Company believes PV-10 to be an important
measure for evaluating the relative significance of its oil and
natural gas properties and that the presentation of the non-GAAP
financial measure of PV-10 provides useful information to investors
because it is widely used by professional analysts and investors in
evaluating oil and natural gas companies. Because there are many
unique factors that can impact an individual company when
estimating the amount of future income taxes to be paid, the
Company believes the use of a pre-tax measure is valuable for
evaluating the Company. The Company believes that PV-10 is a
financial measure routinely used and calculated similarly by other
companies in the oil and natural gas industry. The following table
reconciles PV-10 to the Company's standardized measure of
discounted future net cash flows, the most directly comparable
measure calculated and presented in accordance with GAAP. PV-10
should not be considered as an alternative to the standardized
measure as computed under GAAP.
(in
millions) |
December 31, 2022 |
Standardized measure of discounted future net cash flows after
tax |
$ |
35,699 |
Add: Present value of future
income tax discounted at 10% |
|
8,012 |
PV-10 |
$ |
43,711 |
|
|
|
DERIVATIVES
As of February 17, 2023, the Company had the
following outstanding consolidated derivative contracts, including
derivative contracts at Viper Energy Partners LP. The Company’s
derivative contracts are based upon reported settlement prices on
commodity exchanges, with crude oil derivative settlements based on
New York Mercantile Exchange West Texas Intermediate pricing and
Crude Oil Brent pricing and with natural gas derivative settlements
based on the New York Mercantile Exchange Henry Hub pricing. When
aggregating multiple contracts, the weighted average contract price
is disclosed.
|
Crude Oil (Bbls/day, $/Bbl) |
|
Q1 2023 |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
1H 2024 |
|
2H 2024 |
Costless Collars - Crude Brent Oil |
|
6,000 |
|
|
6,000 |
|
|
— |
|
|
— |
|
— |
|
— |
Long Put Price ($/Bbl) |
$60.00 |
|
$60.00 |
|
|
— |
|
|
— |
|
— |
|
— |
Ceiling Price ($/Bbl) |
$114.57 |
|
$114.57 |
|
|
— |
|
|
— |
|
— |
|
— |
Long Puts - WTI (Cushing) |
|
12,000 |
|
|
12,000 |
|
|
6,000 |
|
|
— |
|
— |
|
— |
Long Put Price ($/Bbl) |
$54.50 |
|
$55.00 |
|
$55.00 |
|
|
— |
|
— |
|
— |
Deferred Premium ($/Bbl) |
|
$-1.82 |
|
|
$-1.82 |
|
|
$-1.88 |
|
|
— |
|
— |
|
— |
Long Puts - WTI (Magellan East Houston) |
|
35,311 |
|
|
30,000 |
|
|
16,000 |
|
|
8,000 |
|
— |
|
— |
Long Put Price ($/Bbl) |
$54.15 |
|
$54.00 |
|
$55.00 |
|
$55.00 |
|
— |
|
— |
Deferred Premium ($/Bbl) |
|
$-1.75 |
|
|
$-1.74 |
|
|
$-1.76 |
|
|
$-1.81 |
|
— |
|
— |
Long Puts - Crude Brent Oil |
|
93,000 |
|
|
81,000 |
|
|
51,000 |
|
|
22,000 |
|
— |
|
— |
Long Put Price ($/Bbl) |
$53.76 |
|
$53.83 |
|
$54.31 |
|
$55.00 |
|
— |
|
— |
Deferred Premium ($/Bbl) |
|
$-1.76 |
|
|
$-1.77 |
|
|
$-1.77 |
|
|
$-1.66 |
|
— |
|
— |
Basis Swaps - WTI (Midland) |
|
24,000 |
|
|
24,000 |
|
|
24,000 |
|
|
24,000 |
|
— |
|
— |
$0.90 |
|
$0.90 |
|
$0.90 |
|
$0.90 |
|
— |
|
— |
|
Natural Gas (Mmbtu/day, $/Mmbtu) |
|
Q1 2023 |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
1H 2024 |
|
2H 2024 |
Costless Collars - Henry Hub |
|
370,000 |
|
|
330,000 |
|
|
310,000 |
|
|
310,000 |
|
|
200,000 |
|
|
200,000 |
Long Put Price ($/Mmbtu) |
$3.14 |
|
$3.17 |
|
$3.18 |
|
$3.18 |
|
$3.00 |
|
$3.00 |
Ceiling Price ($/Mmbtu) |
$9.28 |
|
$9.13 |
|
$9.22 |
|
$9.22 |
|
$8.42 |
|
$8.42 |
Natural Gas Basis Swaps - Waha Hub |
|
350,000 |
|
|
350,000 |
|
|
330,000 |
|
|
330,000 |
|
|
380,000 |
|
|
380,000 |
|
$-1.20 |
|
|
$-1.20 |
|
|
$-1.24 |
|
|
$-1.24 |
|
|
$-1.18 |
|
|
$-1.18 |
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@diamondbackenergy.com
Diamondback Energy (NASDAQ:FANG)
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