Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the
“Company”) today announced financial and operating results for the
first quarter ended March 31, 2023.
FIRST QUARTER 2023
HIGHLIGHTS
- Average production of 251.4 MBO/d
(425.0 MBOE/d)
- Net cash provided by operating
activities of $1.43 billion; Operating Cash Flow Before Working
Capital Changes (as defined and reconciled below) of $1.30
billion
- Cash capital expenditures of $657
million
- Free Cash Flow (as defined and
reconciled below) of $646 million
- Declared Q1 2023 base cash dividend
of $0.80 per share and a variable cash dividend of $0.03 per share,
in each case payable on May 18, 2023; implies a 2.3%
annualized yield based on April 28, 2023 closing share price of
$142.20
- Repurchased 2,530,646 shares of
common stock in Q1 2023 for $332 million (at a weighted average
price of $131.34/share); repurchased 511,200 shares of common stock
to date in Q2 2023 for $72 million (at a weighted average price of
$141.77/share)
- Total Q1 2023 return of capital of
$485 million from stock repurchases and the declared
base-plus-variable dividend; represents ~75% of Q1 2023 Free Cash
Flow (as defined and reconciled below)
- As previously announced, closed
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
NON-CORE ASSET SALE UPDATE
- As previously announced, completed
divestiture of 10% equity ownership in the Gray Oak crude oil
pipeline
- Completed previously announced
divestiture of ~4,900 net acres in Ward and Winkler counties
- Completed previously announced
divestiture of ~19,000 net acres in Glasscock county
- Completed the divestiture of
certain royalty interests to Viper Energy Partners LP for
approximately $75 million, subject to customary closing
adjustments, in a drop down transaction ("Drop Down")
- Excluding the Drop Down, have
completed $773 million of gross proceeds in non-core asset sales
and are on track to meet or exceed our $1 billion target by year
end 2023
OPERATIONS UPDATE
The tables below provide a summary of operating
activity for the first quarter of 2023.
Total Activity (Gross Operated): |
|
|
|
|
Number of WellsDrilled |
|
Number of WellsCompleted |
Midland Basin |
70 |
|
69 |
Delaware Basin |
12 |
|
19 |
Total |
82 |
|
88 |
Total Activity (Net Operated): |
|
|
|
|
Number of WellsDrilled |
|
Number of WellsCompleted |
Midland Basin |
65 |
|
65 |
Delaware Basin |
11 |
|
18 |
Total |
76 |
|
83 |
During the first quarter of 2023, Diamondback
drilled 70 gross wells in the Midland Basin and 12 gross wells in
the Delaware Basin. The Company turned 69 operated wells to
production in the Midland Basin and 19 gross wells in the Delaware
Basin with an average lateral length of 10,829 feet. Operated
completions during the first quarter consisted of 23 Wolfcamp A
wells, 20 Lower Spraberry wells, 15 Wolfcamp B wells, 11 Jo Mill
wells, seven Third Bone Spring wells, six Second Bone Spring wells,
five Middle Spraberry wells and one Barnett well.
FINANCIAL UPDATE
Diamondback's first quarter 2023 net income was
$712 million, or $3.88 per diluted share. Adjusted net income (as
defined and reconciled below) was $751 million, or $4.10 per
diluted share.
First quarter 2023 net cash provided by
operating activities was $1.43 billion.
During the first quarter of 2023, Diamondback
spent $580 million on operated and non-operated drilling and
completions, $42 million on infrastructure and environmental and
$35 million on midstream, for total cash capital expenditures of
$657 million.
First quarter 2023 Consolidated Adjusted EBITDA
(as defined and reconciled below) was $1.49 billion. Adjusted
EBITDA net of non-controlling interest (as defined and reconciled
below) was $1.42 billion.
Diamondback's first quarter 2023 Free Cash Flow
(as defined and reconciled below) was $646 million.
First quarter 2023 average unhedged realized
prices were $73.11 per barrel of oil, $1.46 per Mcf of natural gas
and $23.16 per barrel of natural gas liquids ("NGLs"), resulting in
a total equivalent unhedged realized price of $49.72 per BOE.
Diamondback's cash operating costs for the first
quarter of 2023 were $11.61 per BOE, including lease operating
expenses ("LOE") of $5.02 per BOE, cash general and administrative
("G&A") expenses of $0.76 per BOE, production and ad valorem
taxes of $4.05 per BOE and gathering and transportation expenses of
$1.78 per BOE.
As of March 31, 2023, Diamondback had $37
million in standalone cash and $589 million of borrowings
outstanding under its revolving credit facility, with approximately
$1.01 billion available for future borrowing under the
facility and approximately $1.05 billion of total liquidity.
As of April 28, 2023, Diamondback had approximately $1.5 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 first quarter of 2023 payable on May 18,
2023, to stockholders of record at the close of business on
May 11, 2023.
The Company's Board of Directors also declared a
variable cash dividend of $0.03 per common share for the first
quarter of 2023 payable on May 18, 2023, to stockholders of
record at the close of business on May 11, 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
$2.0 billion of common stock. On July 28, 2022, Diamondback's
Board of Directors approved increasing total authorized common
stock repurchases to $4.0 billion. During the first quarter of
2023, Diamondback repurchased 2,530,646 shares of common stock at
an average share price of $131.34 for a total cost of approximately
$332 million. To date, Diamondback has repurchased 15,862,452
shares of common stock at an average share price of $121.85 for a
total cost of approximately $1.9 billion. Diamondback intends
to purchase common stock under the common stock repurchase program
opportunistically with cash on hand, free cash flow from operations
and proceeds from potential liquidity events such as the sale of
assets. This repurchase program has no time limit and may be
suspended from time to time, modified, extended or discontinued by
the Board at any time. Purchases under the repurchase program may
be made from time to time in privately negotiated transactions or
open market transactions in compliance with Rule 10b-18 under the
Securities Exchange Act of 1934, as amended, and will be subject to
market conditions, applicable legal requirements and other factors.
Any common stock purchased as part of this program will be
retired.
FULL YEAR 2023 GUIDANCE
Below is Diamondback's guidance for the full
year 2023, which includes second quarter production, cash tax and
capital guidance.
|
2023 Guidance |
2023 Guidance |
|
Diamondback Energy, Inc. |
Viper Energy Partners LP |
|
|
|
Net production - MBOE/d |
430 - 440 |
35.25 - 38.75 |
Oil production - MBO/d |
256 - 262 |
20.50 - 22.50 |
Q2 2023 oil production - MBO/d
(total - MBOE/d) |
258 - 261 (430 - 436) |
|
|
|
|
Unit costs ($/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 |
$3.00 - $3.50 |
Gathering and
transportation |
$1.80 - $2.00 |
|
|
|
|
Production and ad valorem
taxes (% of revenue) |
7% - 8% |
7% - 8% |
Corporate tax rate (% of
pre-tax income) |
23 |
% |
20% - 22% |
Cash tax rate (% of pre-tax
income) |
10% - 15% |
|
Q2 2023 Cash taxes ($ -
million) |
$140 - $180 |
$8.0 - $12.0 |
|
|
|
Capital Budget ($ -
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 |
|
Q2 2023 Capital
expenditures |
$675 - $725 |
|
|
|
|
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% |
|
CONFERENCE CALL
Diamondback will host a conference call and
webcast for investors and analysts to discuss its results for the
first quarter of 2023 on Tuesday, May 2, 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;
instability in the financial sector; 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. |
Condensed
Consolidated Balance Sheets |
(unaudited,
in millions, except share amounts) |
|
|
|
|
|
March
31, |
|
December
31, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
46 |
|
|
$ |
157 |
|
Restricted cash |
|
7 |
|
|
|
7 |
|
Accounts receivable: |
|
|
|
Joint interest and other, net |
|
148 |
|
|
|
104 |
|
Oil and natural gas sales, net |
|
606 |
|
|
|
618 |
|
Inventories |
|
69 |
|
|
|
67 |
|
Derivative instruments |
|
60 |
|
|
|
132 |
|
Income tax receivable |
|
188 |
|
|
|
284 |
|
Prepaid expenses and other current assets |
|
36 |
|
|
|
23 |
|
Total current assets |
|
1,160 |
|
|
|
1,392 |
|
Property and equipment: |
|
|
|
Oil and natural gas properties, full cost method of accounting
($8,711 million and $8,355 million excluded from amortization at
March 31, 2023 and December 31, 2022, respectively) |
|
39,321 |
|
|
|
37,122 |
|
Other property, equipment and land |
|
1,431 |
|
|
|
1,481 |
|
Accumulated depletion, depreciation, amortization and
impairment |
|
(15,238 |
) |
|
|
(14,844 |
) |
Property and equipment, net |
|
25,514 |
|
|
|
23,759 |
|
Funds held in escrow |
|
— |
|
|
|
119 |
|
Equity method investments |
|
573 |
|
|
|
566 |
|
Assets held for sale |
|
143 |
|
|
|
158 |
|
Derivative instruments |
|
8 |
|
|
|
23 |
|
Deferred income taxes, net |
|
62 |
|
|
|
64 |
|
Investment in real estate, net |
|
86 |
|
|
|
86 |
|
Other assets |
|
43 |
|
|
|
42 |
|
Total assets |
$ |
27,589 |
|
|
$ |
26,209 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable - trade |
$ |
241 |
|
|
$ |
127 |
|
Accrued capital expenditures |
|
466 |
|
|
|
480 |
|
Current maturities of long-term debt |
|
10 |
|
|
|
10 |
|
Other accrued liabilities |
|
350 |
|
|
|
399 |
|
Revenues and royalties payable |
|
716 |
|
|
|
619 |
|
Derivative instruments |
|
52 |
|
|
|
47 |
|
Income taxes payable |
|
51 |
|
|
|
34 |
|
Total current liabilities |
|
1,886 |
|
|
|
1,716 |
|
Long-term debt |
|
6,950 |
|
|
|
6,238 |
|
Derivative instruments |
|
150 |
|
|
|
148 |
|
Asset retirement obligations |
|
306 |
|
|
|
336 |
|
Deferred income taxes |
|
2,161 |
|
|
|
2,069 |
|
Other long-term liabilities |
|
13 |
|
|
|
12 |
|
Total liabilities |
|
11,466 |
|
|
|
10,519 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value; 400,000,000 shares authorized;
181,604,781 and 179,840,797 shares issued and outstanding at
March 31, 2023 and December 31, 2022, respectively |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
14,502 |
|
|
|
14,213 |
|
Retained earnings (accumulated deficit) |
|
967 |
|
|
|
801 |
|
Accumulated other comprehensive income (loss) |
|
(7 |
) |
|
|
(7 |
) |
Total Diamondback Energy, Inc. stockholders’ equity |
|
15,464 |
|
|
|
15,009 |
|
Non-controlling interest |
|
659 |
|
|
|
681 |
|
Total equity |
|
16,123 |
|
|
|
15,690 |
|
Total liabilities and equity |
$ |
27,589 |
|
|
$ |
26,209 |
|
Diamondback Energy, Inc. |
Condensed Consolidated Statements of
Operations |
(unaudited, $ in millions except per share data, shares in
thousands) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
Oil, natural gas and natural gas liquid sales |
$ |
1,902 |
|
|
$ |
2,389 |
|
Other operating income |
|
23 |
|
|
|
19 |
|
Total revenues |
|
1,925 |
|
|
|
2,408 |
|
Costs and
expenses: |
|
|
|
Lease operating expenses |
|
192 |
|
|
|
149 |
|
Production and ad valorem taxes |
|
155 |
|
|
|
161 |
|
Gathering and transportation |
|
68 |
|
|
|
59 |
|
Depreciation, depletion, amortization and accretion |
|
403 |
|
|
|
313 |
|
General and administrative expenses |
|
40 |
|
|
|
36 |
|
Merger and integration expense |
|
8 |
|
|
|
— |
|
Other operating expenses |
|
34 |
|
|
|
30 |
|
Total costs and expenses |
|
900 |
|
|
|
748 |
|
Income (loss) from
operations |
|
1,025 |
|
|
|
1,660 |
|
Other income
(expense): |
|
|
|
Interest expense, net |
|
(46 |
) |
|
|
(40 |
) |
Other income (expense), net |
|
53 |
|
|
|
1 |
|
Gain (loss) on derivative instruments, net |
|
(93 |
) |
|
|
(552 |
) |
Gain (loss) on extinguishment of debt |
|
— |
|
|
|
(54 |
) |
Income (loss) from equity investments |
|
14 |
|
|
|
9 |
|
Total other income (expense), net |
|
(72 |
) |
|
|
(636 |
) |
Income (loss) before
income taxes |
|
953 |
|
|
|
1,024 |
|
Provision for (benefit from)
income taxes |
|
207 |
|
|
|
221 |
|
Net income
(loss) |
|
746 |
|
|
|
803 |
|
Net income (loss) attributable
to non-controlling interest |
|
34 |
|
|
|
24 |
|
Net income (loss)
attributable to Diamondback Energy, Inc. |
$ |
712 |
|
|
$ |
779 |
|
|
|
|
|
Earnings (loss) per
common share: |
|
|
|
Basic |
$ |
3.88 |
|
|
$ |
4.35 |
|
Diluted |
$ |
3.88 |
|
|
$ |
4.35 |
|
Weighted average
common shares outstanding: |
|
|
|
Basic |
|
181,988 |
|
|
|
177,565 |
|
Diluted |
|
181,988 |
|
|
|
177,567 |
|
Dividends declared per
share |
$ |
0.83 |
|
|
$ |
3.05 |
|
Diamondback Energy, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(unaudited, in millions) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
Net income (loss) |
$ |
746 |
|
|
$ |
803 |
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
Provision for (benefit from) deferred income taxes |
|
97 |
|
|
|
89 |
|
Depreciation, depletion, amortization and accretion |
|
403 |
|
|
|
313 |
|
(Gain) loss on extinguishment of debt |
|
— |
|
|
|
54 |
|
(Gain) loss on derivative instruments, net |
|
93 |
|
|
|
552 |
|
Cash received (paid) on settlement of derivative instruments |
|
1 |
|
|
|
(420 |
) |
(Income) loss from equity investment |
|
(14 |
) |
|
|
(9 |
) |
Equity-based compensation expense |
|
11 |
|
|
|
15 |
|
Other |
|
(34 |
) |
|
|
14 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(36 |
) |
|
|
(403 |
) |
Income tax receivable |
|
95 |
|
|
|
1 |
|
Prepaid expenses and other |
|
— |
|
|
|
2 |
|
Accounts payable and accrued liabilities |
|
(26 |
) |
|
|
(13 |
) |
Income tax payable |
|
17 |
|
|
|
132 |
|
Revenues and royalties payable |
|
60 |
|
|
|
125 |
|
Other |
|
12 |
|
|
|
(3 |
) |
Net cash provided by (used in)
operating activities |
|
1,425 |
|
|
|
1,252 |
|
Cash flows from investing
activities: |
|
|
|
Drilling, completions and infrastructure additions to oil and
natural gas properties |
|
(622 |
) |
|
|
(418 |
) |
Additions to midstream assets |
|
(35 |
) |
|
|
(19 |
) |
Property acquisitions |
|
(880 |
) |
|
|
(284 |
) |
Proceeds from sale of assets |
|
264 |
|
|
|
35 |
|
Other |
|
(6 |
) |
|
|
(30 |
) |
Net cash provided by (used in)
investing activities |
|
(1,279 |
) |
|
|
(716 |
) |
Cash flows from financing
activities: |
|
|
|
Proceeds from borrowings under credit facilities |
|
1,696 |
|
|
|
79 |
|
Repayments under credit facilities |
|
(989 |
) |
|
|
(100 |
) |
Proceeds from senior notes |
|
— |
|
|
|
750 |
|
Repayment of senior notes |
|
— |
|
|
|
(1,500 |
) |
Proceeds from (repayments to) joint venture |
|
— |
|
|
|
5 |
|
Premium on extinguishment of debt |
|
— |
|
|
|
(47 |
) |
Repurchased shares under buyback program |
|
(332 |
) |
|
|
(7 |
) |
Repurchased units under buyback program |
|
(34 |
) |
|
|
(42 |
) |
Dividends paid to stockholders |
|
(542 |
) |
|
|
(107 |
) |
Distributions to non-controlling interest |
|
(34 |
) |
|
|
(47 |
) |
Other |
|
(22 |
) |
|
|
(25 |
) |
Net cash provided by (used in)
financing activities |
|
(257 |
) |
|
|
(1,041 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
(111 |
) |
|
|
(505 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
164 |
|
|
|
672 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
53 |
|
|
$ |
167 |
|
Diamondback Energy, Inc. |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months EndedMarch 31, 2023 |
|
Three Months EndedDecember 31, 2022 |
|
Three Months EndedMarch 31, 2022 |
Production
Data: |
|
|
|
|
|
Oil (MBbls) |
|
22,624 |
|
|
20,803 |
|
|
20,055 |
Natural gas (MMcf) |
|
47,388 |
|
|
45,020 |
|
|
42,645 |
Natural gas liquids (MBbls) |
|
7,730 |
|
|
7,703 |
|
|
7,161 |
Combined volumes (MBOE)(1) |
|
38,252 |
|
|
36,009 |
|
|
34,324 |
|
|
|
|
|
|
Daily oil volumes (BO/d) |
|
251,378 |
|
|
226,120 |
|
|
222,833 |
Daily combined volumes (BOE/d) |
|
425,022 |
|
|
391,402 |
|
|
381,378 |
|
|
|
|
|
|
Average
Prices: |
|
|
|
|
|
Oil ($ per Bbl) |
$ |
73.11 |
|
$ |
80.37 |
|
$ |
97.03 |
Natural gas ($ per Mcf) |
$ |
1.46 |
|
$ |
3.20 |
|
$ |
3.61 |
Natural gas liquids ($ per Bbl) |
$ |
23.16 |
|
$ |
24.93 |
|
$ |
40.36 |
Combined ($ per BOE) |
$ |
49.72 |
|
$ |
55.76 |
|
$ |
69.60 |
|
|
|
|
|
|
Oil, hedged ($ per Bbl)(2) |
$ |
72.05 |
|
$ |
79.08 |
|
$ |
83.47 |
Natural gas, hedged ($ per Mcf)(2) |
$ |
1.96 |
|
$ |
3.20 |
|
$ |
3.31 |
Natural gas liquids, hedged ($ per Bbl)(2) |
$ |
23.16 |
|
$ |
24.93 |
|
$ |
40.36 |
Average price, hedged ($ per BOE)(2) |
$ |
49.72 |
|
$ |
55.01 |
|
$ |
61.30 |
|
|
|
|
|
|
Average Costs per
BOE: |
|
|
|
|
|
Lease operating expenses |
$ |
5.02 |
|
$ |
4.47 |
|
$ |
4.34 |
Production and ad valorem taxes |
|
4.05 |
|
|
3.22 |
|
|
4.69 |
Gathering and transportation expense |
|
1.78 |
|
|
1.86 |
|
|
1.72 |
General and administrative - cash component |
|
0.76 |
|
|
0.61 |
|
|
0.61 |
Total operating expense - cash |
$ |
11.61 |
|
$ |
10.16 |
|
$ |
11.36 |
|
|
|
|
|
|
General and administrative - non-cash component |
$ |
0.29 |
|
$ |
0.36 |
|
$ |
0.44 |
Depletion |
$ |
9.96 |
|
$ |
9.50 |
|
$ |
8.33 |
Interest expense, net |
$ |
1.20 |
|
$ |
1.03 |
|
$ |
1.17 |
(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, (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 EndedMarch 31, 2023 |
|
Three Months EndedDecember 31, 2022 |
|
Three Months EndedMarch 31, 2022 |
Net income (loss) attributable to Diamondback Energy,
Inc. |
$ |
712 |
|
|
$ |
1,007 |
|
|
$ |
779 |
|
Net income (loss) attributable to non-controlling interest |
|
34 |
|
|
|
21 |
|
|
|
24 |
|
Net income
(loss) |
|
746 |
|
|
|
1,028 |
|
|
|
803 |
|
Non-cash (gain) loss on derivative instruments, net |
|
94 |
|
|
|
(125 |
) |
|
|
132 |
|
Interest expense, net |
|
46 |
|
|
|
37 |
|
|
|
40 |
|
Depreciation, depletion, amortization and accretion |
|
403 |
|
|
|
365 |
|
|
|
313 |
|
Depreciation and interest expense related to equity method
investments |
|
18 |
|
|
|
16 |
|
|
|
14 |
|
(Gain) loss on extinguishment of debt |
|
— |
|
|
|
40 |
|
|
|
54 |
|
Non-cash equity-based compensation expense |
|
16 |
|
|
|
18 |
|
|
|
19 |
|
Capitalized equity-based compensation expense |
|
(5 |
) |
|
|
(5 |
) |
|
|
(4 |
) |
Merger and integration expenses |
|
8 |
|
|
|
3 |
|
|
|
— |
|
Other non-cash transactions(1) |
|
(46 |
) |
|
|
1 |
|
|
|
8 |
|
Provision for (benefit from) income taxes |
|
207 |
|
|
|
261 |
|
|
|
221 |
|
Consolidated Adjusted
EBITDA |
|
1,487 |
|
|
|
1,639 |
|
|
|
1,600 |
|
Less: Adjustment for non-controlling interest |
|
67 |
|
|
|
33 |
|
|
|
49 |
|
Adjusted EBITDA
attributable to Diamondback Energy, Inc. |
$ |
1,420 |
|
|
$ |
1,606 |
|
|
$ |
1,551 |
|
(1) Includes a gain on sale of the Company's 10%
non-operating equity investment in Gray Oak of approximately
$53 million.
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 March 31, 2023 |
|
Amounts |
|
Amounts PerDiluted Share |
Net income (loss) attributable to Diamondback Energy,
Inc.(1) |
$ |
712 |
|
|
$ |
3.88 |
|
Net income (loss) attributable to non-controlling interest |
|
34 |
|
|
|
0.19 |
|
Net income
(loss)(1) |
|
746 |
|
|
|
4.07 |
|
Non-cash (gain) loss on derivative instruments, net |
|
94 |
|
|
|
0.52 |
|
Merger and integration expense |
|
8 |
|
|
|
0.04 |
|
Other non-cash transactions |
|
(46 |
) |
|
|
(0.25 |
) |
Adjusted net income excluding above items(1) |
|
802 |
|
|
|
4.38 |
|
Income tax adjustment for above items |
|
(12 |
) |
|
|
(0.07 |
) |
Adjusted net
income(1) |
|
790 |
|
|
|
4.31 |
|
Less: Adjusted net income attributable to non-controlling
interest |
|
39 |
|
|
|
0.21 |
|
Adjusted net income
attributable to Diamondback Energy,
Inc.(1) |
$ |
751 |
|
|
$ |
4.10 |
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
Basic |
|
|
181,988 |
|
Diluted |
|
|
181,988 |
|
(1) 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 $5 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 Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by
operating activities |
$ |
1,425 |
|
|
$ |
1,252 |
|
Less: Changes in cash due to
changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(36 |
) |
|
|
(403 |
) |
Income tax receivable |
|
95 |
|
|
|
1 |
|
Prepaid expenses and other |
|
— |
|
|
|
2 |
|
Accounts payable and accrued liabilities |
|
(26 |
) |
|
|
(13 |
) |
Income tax payable |
|
17 |
|
|
|
132 |
|
Revenues and royalties payable |
|
60 |
|
|
|
125 |
|
Other |
|
12 |
|
|
|
(3 |
) |
Total working capital
changes |
|
122 |
|
|
|
(159 |
) |
Operating cash flow
before working capital changes |
|
1,303 |
|
|
|
1,411 |
|
Drilling, completions and infrastructure additions to oil and
natural gas properties |
|
(622 |
) |
|
|
(418 |
) |
Additions to midstream assets |
|
(35 |
) |
|
|
(19 |
) |
Total Cash
CAPEX |
|
(657 |
) |
|
|
(437 |
) |
Free Cash
Flow |
|
646 |
|
|
|
974 |
|
Early termination of derivatives |
|
— |
|
|
|
135 |
|
Adjusted Free Cash
Flow |
$ |
646 |
|
|
$ |
1,109 |
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
Net
Q1PrincipalBorrowings/(Repayments) |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
(in millions) |
Diamondback Energy, Inc.(1) |
$ |
6,426 |
|
|
$ |
589 |
|
$ |
5,837 |
|
|
$ |
4,340 |
|
|
$ |
4,206 |
|
|
$ |
4,533 |
|
Viper Energy Partners
LP(1) |
|
700 |
|
|
|
118 |
|
|
582 |
|
|
|
675 |
|
|
|
680 |
|
|
|
728 |
|
Rattler Midstream LP(a) |
|
— |
|
|
|
— |
|
|
— |
|
|
|
500 |
|
|
|
732 |
|
|
|
730 |
|
Total
debt |
|
7,126 |
|
|
$ |
707 |
|
|
6,419 |
|
|
|
5,515 |
|
|
|
5,618 |
|
|
|
5,991 |
|
Cash and cash equivalents |
|
(46 |
) |
|
|
|
|
(157 |
) |
|
|
(27 |
) |
|
|
(43 |
) |
|
|
(149 |
) |
Net debt |
$ |
7,080 |
|
|
|
|
$ |
6,262 |
|
|
$ |
5,488 |
|
|
$ |
5,575 |
|
|
$ |
5,842 |
|
(1) Excludes debt issuance costs, discounts, premiums
and fair value hedges.
DERIVATIVES
As of April 28, 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, $/Bbl) |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
Q4 2024 |
Costless Collars - Crude Brent Oil |
|
6,000 |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
— |
Long Put Price ($/Bbl) |
$ |
60.00 |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
— |
Ceiling Price ($/Bbl) |
$ |
114.57 |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
— |
Long Puts - WTI (Cushing) |
|
12,000 |
|
|
12,000 |
|
|
8,000 |
|
|
— |
|
— |
|
— |
— |
Long Put Price ($/Bbl) |
$ |
55.00 |
|
$ |
55.00 |
|
$ |
55.00 |
|
|
— |
|
— |
|
— |
— |
Deferred Premium ($/Bbl) |
$ |
-1.82 |
|
$ |
-1.80 |
|
$ |
-1.89 |
|
|
— |
|
— |
|
— |
— |
Long Puts - WTI (Magellan East Houston) |
|
36,000 |
|
|
28,000 |
|
|
20,000 |
|
|
— |
|
— |
|
— |
— |
Long Put Price ($/Bbl) |
$ |
54.17 |
|
$ |
55.00 |
|
$ |
55.00 |
|
|
— |
|
— |
|
— |
— |
Deferred Premium ($/Bbl) |
$ |
-1.71 |
|
$ |
-1.65 |
|
$ |
-1.63 |
|
|
— |
|
— |
|
— |
— |
Long Puts - Crude Brent Oil |
|
99,000 |
|
|
97,000 |
|
|
68,000 |
|
|
16,000 |
|
— |
|
— |
— |
Long Put Price ($/Bbl) |
$ |
54.04 |
|
$ |
54.64 |
|
$ |
55.00 |
|
$ |
55.00 |
|
— |
|
— |
— |
Deferred Premium ($/Bbl) |
$ |
-1.68 |
|
$ |
-1.63 |
|
$ |
-1.54 |
|
$ |
-1.62 |
|
— |
|
— |
— |
Basis Swaps - WTI (Midland) |
|
24,000 |
|
|
24,000 |
|
|
24,000 |
|
|
— |
|
— |
|
— |
— |
$ |
0.90 |
|
$ |
0.90 |
|
$ |
0.90 |
|
|
— |
|
— |
|
— |
— |
|
Natural Gas (Mmbtu/day, $/Mmbtu) |
|
Q2 2023 |
|
Q3 2023 |
|
Q4 2023 |
|
Q1 2024 |
|
Q2 2024 |
|
Q3 2024 |
Q4 2024 |
Costless Collars - Henry Hub |
|
330,000 |
|
|
310,000 |
|
|
310,000 |
|
|
200,000 |
|
|
200,000 |
|
|
200,000 |
|
200,000 |
Long Put Price ($/Mmbtu) |
$ |
3.17 |
|
$ |
3.18 |
|
$ |
3.18 |
|
$ |
3.00 |
|
$ |
3.00 |
|
$ |
3.00 |
$ |
3.00 |
Ceiling Price ($/Mmbtu) |
$ |
9.13 |
|
$ |
9.22 |
|
$ |
9.22 |
|
$ |
8.42 |
|
$ |
8.42 |
|
$ |
8.42 |
$ |
8.42 |
Natural Gas Basis Swaps - Waha Hub |
|
350,000 |
|
|
330,000 |
|
|
330,000 |
|
|
380,000 |
|
|
380,000 |
|
|
380,000 |
|
380,000 |
$ |
-1.20 |
|
$ |
-1.24 |
|
$ |
-1.24 |
|
$ |
-1.18 |
|
$ |
-1.18 |
|
$ |
-1.18 |
$ |
-1.18 |
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@diamondbackenergy.com
Diamondback Energy (NASDAQ:FANG)
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Diamondback Energy (NASDAQ:FANG)
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