Diamondback Energy, Inc. Announces Third Quarter 2020 Financial and Operating Results
Diamondback Energy (NASDAQ: FANG) reported third-quarter 2020 results, highlighting a cash flow from operating activities of $542 million and a free cash flow of $153 million. The company maintained cash operating costs at $7.61 per BOE and declared a dividend of $0.375 per share, reflecting a 5.8% annualized yield. Despite a net loss of $1,113 million, an adjusted net income of $98 million was achieved. The company improved efficiency, achieving a 74% reduction in flaring year-over-year. Diamondback ended the quarter with a net cash position of $68 million and no outstanding borrowings.
- Generated cash flow from operating activities of $542 million.
- Achieved a free cash flow of $153 million.
- Declared a cash dividend of $0.375 per share, implying a 5.8% yield.
- Reduced cash operating costs to $7.61 per BOE.
- Maintained a net cash position of $68 million with no borrowings.
- Flared only 0.5% of net production, a 74% decrease year-over-year.
- Reported a net loss of $1,113 million, or $7.05 per diluted share.
- Included a non-cash impairment charge of $1,451 million due to lower commodity prices.
MIDLAND, Texas, Nov. 02, 2020 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the third quarter ended September 30, 2020.
THIRD QUARTER 2020 HIGHLIGHTS
- Generated third quarter cash flow from operating activities of
$542 million . Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) was$434 million - Generated third quarter Free Cash Flow (as defined and reconciled below) of
$153 million - Q3 2020 cash operating costs of
$7.61 per BOE; including cash general and administrative ("G&A") expenses of$0.42 per BOE and lease operating expenses ("LOE") of$3.86 per BOE - Declared Q3 2020 cash dividend of
$0.37 5 per share payable on November 19, 2020; implies a5.8% annualized yield based on the October 30, 2020 share closing price of$25.96 - Ended the third quarter with a net cash position of
$68 million and had no borrowings outstanding on Diamondback's credit facility. Standalone liquidity of$2,068 million as of September 30, 2020 - Repurchased all
$10 million in principal amount of the outstanding 2027 Energen Resources Corporation7.35% Medium Term Notes - Lowering LOE and G&A unit guidance by a combined
$0.40 per BOE at the midpoint of each full year 2020 guidance range, implying estimate of total cash cost savings of over$43 million for the full year 2020 - Current drilling and completion costs in the Midland Basin are ~
$450 per lateral foot, with an estimated additional$60 t o$80 of equip cost per lateral foot - Current drilling and completion costs in the Delaware Basin are between
$600 and$700 per lateral foot, with an estimated additional$100 t o$150 of equip costs per lateral foot - Completed an average of over 3,300 lateral feet per day per completion crew in the Midland Basin using Simul-Frac technology during the quarter
- Flared
0.5% of net production in the third quarter, down74% year over year. For the first nine months of 2020, flared0.9% of net production, down54% year over year - Recycled
25.1% of water used for completion operations in the third quarter, up24% year over year. For the first nine months of 2020, recycled21.4% of water used for completion operations, up53% year over year
PREVIOUSLY ANNOUNCED THIRD QUARTER 2020 HIGHLIGHTS
- Q3 2020 average production of 170.0 MBO/d (287.3 MBOE/d)
- Q3 2020 cash capital expenditures of
$281 million ; Q3 2020 activity-based capital expenditures incurred of approximately$206 million - Q3 2020 average realized hedged prices of
$38.17 per barrel of oil,$12.09 per barrel of natural gas liquids and$0.95 per Mcf of natural gas, resulting in a total equivalent price of$26.22 per BOE - Q3 2020 average unhedged realized prices of
$38.75 per barrel of oil,$12.09 per barrel of natural gas liquids and$1.11 per Mcf of natural gas, resulting in a total equivalent price of$26.75 per BOE - Drilled 32 gross operated horizontal wells and turned 41 wells to production in the third quarter
“Diamondback continued our trend of cost reductions in the third quarter, with LOE and G&A remaining near all-time lows and capital costs per lateral foot continuing to decline to new records. Our drilling and completion operations continue to become more efficient, and we are beginning to see the benefits from high-grading our development program after the downturn began earlier this year. We are on track to meet our fourth quarter average production target of between 170,000 and 175,000 barrels of oil per day and expect this to be the baseline for our development plan in 2021. We expect to execute on this maintenance capital plan with
Mr. Stice continued, “We still firmly believe that the concept of production growth should not be considered until commodity prices recover and global inventories return to normalized levels, and any form of material production growth will only magnify the issues our industry is fighting today. Therefore, Diamondback's investment framework and capital allocation philosophy at current oil prices remain very simple and have not changed: protect our base dividend, spend maintenance capital to hold oil production flat, and use excess Free Cash Flow to pay down debt. We operate in a cyclical business, and while this downturn has been as severe as any in industry history, Diamondback has the size, scale, balance sheet, asset quality and cost structure to weather a prolonged downturn and thrive in the inevitable upcycle.”
Mr. Stice continued, "Diamondback is committed to environmental stewardship and delivering best-in-class performance in reducing our carbon footprint. While owning and operating assets that are positioned on the low end of the global oil cost of supply curve is most important to our stockholders, we recognize it is also important to own and operate assets that are also positioned on the low end of the greenhouse gas emissions cost of supply curve. Diamondback supports public policies that eliminate routine flaring as long as those policies protect the safety of our operations and consider flaring contributions from all segments of the oil and gas industry. Upstream and midstream operators must continue to work together to address the flaring issue for our industry. Flaring was responsible for over
OPERATIONS UPDATE
The tables below provide a summary of operational activity for the third quarter 2020.
| Total Activity (Gross Operated): | |||||
| Area | Number of Wells Drilled | Number of Wells Completed | |||
| Midland Basin | 22 | 25 | |||
| Delaware Basin | 10 | 16 | |||
| Total | 32 | 41 | |||
| Total Activity (Net Operated): | |||||
| Area | Number of Wells Drilled | Number of Wells Completed | |||
| Midland Basin | 20 | 25 | |||
| Delaware Basin | 10 | 16 | |||
| Total | 30 | 41 | |||
During the third quarter of 2020, Diamondback drilled 22 gross horizontal wells in the Midland Basin and ten gross horizontal wells in the Delaware Basin. The Company turned 25 operated horizontal wells to production in the Midland Basin and 16 operated horizontal wells to production in the Delaware Basin. The average lateral length for the wells completed during the third quarter was 9,881 feet. Operated completions during the third quarter consisted of 16 Wolfcamp A wells, nine Middle Spraberry wells, six Lower Spraberry wells, five Wolfcamp B wells and five Second Bone Spring wells.
During the nine months ended September 30, 2020, the Company drilled 183 gross horizontal wells and turned 136 operated horizontal wells to production. The average lateral length for wells completed during the first nine months of 2020 was 9,955 feet, and consisted of 67 Wolfcamp A wells, 17 Lower Spraberry wells, 17 Middle Spraberry wells, 16 Wolfcamp B wells, 11 Second Bone Spring wells, five Third Bone Spring wells and three Jo Mill wells.
FINANCIAL UPDATE
Diamondback's third quarter 2020 net loss was
Third quarter 2020 Consolidated Adjusted EBITDA (as defined and reconciled below) was
Third quarter 2020 average unhedged realized prices were
Diamondback's cash operating costs for the third quarter of 2020 were
As of September 30, 2020, Diamondback had
During the third quarter of 2020, Diamondback spent
DIVIDEND DECLARATION
Diamondback announced today that the Company's Board of Directors declared a cash dividend of
FULL YEAR 2020 GUIDANCE
Below is Diamondback's guidance for the full year 2020. Diamondback lowered its full year 2020 guidance for LOE to between
| 2020 Guidance | 2020 Guidance | ||
| Diamondback Energy, Inc. | Viper Energy Partners LP | ||
| Total net production – MBOE/d | 290.0 - 305.0 | 26.00 - 26.50 | |
| Oil production – MBO/d | 178.0 - 182.0 | 15.75 - 16.00 | |
| Unit costs ($/BOE) | |||
| Lease operating expenses, including workovers | |||
| G&A | |||
| Cash G&A | |||
| Non-cash equity-based compensation | |||
| D,D&A | |||
| Interest expense (net of interest income) | |||
| Gathering and Transportation | |||
| Production and ad valorem taxes (% of revenue)(a) | |||
| Corporate tax rate (% of pre-tax income) | 23 | % | |
| Gross horizontal wells completed (net) | 170 - 200 (153 - 180) | ||
| Average lateral length (Ft.) | ~10,000' | ||
| Midland Basin net lateral feet (%) | ~ | ||
| Delaware Basin net lateral feet (%) | ~ | ||
| Capital Budget ($ - million) | |||
| Horizontal drilling and completion | |||
| Midstream (ex. long-haul pipeline investments) | |||
| Infrastructure | | ||
| 2020 Capital Spend | |||
(a) Includes production taxes of
CONFERENCE CALL
Diamondback will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2020 on Tuesday, November 3, 2020 at 8:00 a.m. CT. Participants should call (877) 440-7573 (United States/Canada) or (253) 237-1144 (International) and use the confirmation code 2493666. A telephonic replay will be available from 11:00 a.m. CT on Tuesday, November 3, 2020 through Tuesday, November 10, 2020 at 11:00 a.m. CT. To access the replay, call (855) 859-2056 (United States/Canada) or (404) 537-3406 (International) and enter confirmation code 2493666. A live broadcast of the earnings conference call will also be available via the internet at www.diamondbackenergy.com under the “Investor Relations” section of the site. A replay will also be available on the website following the call.
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 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 the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, that address activities that Diamondback assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events, including the current adverse industry and macroeconomic conditions, depressed commodity prices, production levels, any potential regulatory actions that impose production limits in the Permian Basin, the impact and duration of the ongoing COVID-19 pandemic, acquisitions and sales of assets, future dividends, production, drilling and capital expenditure plans, impact of impairment charges and effects of hedging arrangements. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Diamondback. Information concerning these risks and other factors can be found in Diamondback’s filings with the Securities and Exchange Commission ("SEC"), including its reports on Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the SEC’s web site at http://www.sec.gov. Diamondback undertakes no obligation to update or revise any forward-looking statement.
| Diamondback Energy, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (unaudited, in millions, except share amounts) | ||||||||
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 92 | $ | 123 | ||||
| Restricted cash | 7 | 5 | ||||||
| Accounts receivable: | ||||||||
| Joint interest and other, net | 67 | 186 | ||||||
| Oil and natural gas sales, net | 224 | 429 | ||||||
| Inventories | 33 | 37 | ||||||
| Derivative instruments | 15 | 46 | ||||||
| Income tax receivable | 100 | 19 | ||||||
| Prepaid expenses and other current assets | 20 | 24 | ||||||
| Total current assets | 558 | 869 | ||||||
| Property and equipment: | ||||||||
| Oil and natural gas properties, full cost method of accounting ( excluded from amortization at September 30, 2020 and December 31, 2019, respectively) | 27,305 | 25,782 | ||||||
| Midstream assets | 1,026 | 931 | ||||||
| Other property, equipment and land | 135 | 125 | ||||||
| Accumulated depletion, depreciation, amortization and impairment | (11,031 | ) | (5,003 | ) | ||||
| Property and equipment, net | 17,435 | 21,835 | ||||||
| Equity method investments | 532 | 479 | ||||||
| Derivative instruments | — | 7 | ||||||
| Deferred tax assets, net | 75 | 142 | ||||||
| Investment in real estate, net | 104 | 109 | ||||||
| Other assets | 56 | 90 | ||||||
| Total assets | $ | 18,760 | $ | 23,531 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable - trade | $ | 95 | $ | 179 | ||||
| Accrued capital expenditures | 309 | 475 | ||||||
| Current maturities of long-term debt | 191 | — | ||||||
| Other accrued liabilities | 329 | 304 | ||||||
| Revenues and royalties payable | 219 | 278 | ||||||
| Derivative instruments | 86 | 27 | ||||||
| Total current liabilities | 1,229 | 1,263 | ||||||
| Long-term debt | 5,656 | 5,371 | ||||||
| Derivative instruments | 108 | — | ||||||
| Asset retirement obligations | 112 | 94 | ||||||
| Deferred income taxes | 978 | 1,886 | ||||||
| Other long-term liabilities | 8 | 11 | ||||||
| Total liabilities | 8,091 | 8,625 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, | 2 | 2 | ||||||
| Additional paid-in capital | 12,615 | 12,357 | ||||||
| Retained earnings (accumulated deficit) | (3,065 | ) | 890 | |||||
| Total Diamondback Energy, Inc. stockholders’ equity | 9,552 | 13,249 | ||||||
| Non-controlling interest | 1,117 | 1,657 | ||||||
| Total equity | 10,669 | 14,906 | ||||||
| Total liabilities and equity | $ | 18,760 | $ | 23,531 | ||||
| Diamondback Energy, Inc. | |||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||
| (unaudited, $ in millions except per share data, shares in thousands) | |||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Revenues: | |||||||||||||||||||
| Oil, natural gas and natural gas liquid sales | $ | 707 | $ | 956 | $ | 2,002 | $ | 2,798 | |||||||||||
| Lease bonus | — | 1 | — | 4 | |||||||||||||||
| Midstream services | 12 | 16 | 37 | 51 | |||||||||||||||
| Other operating income | 1 | 2 | 5 | 7 | |||||||||||||||
| Total revenues | 720 | 975 | 2,044 | 2,860 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||
| Lease operating expenses | 102 | 128 | 332 | 364 | |||||||||||||||
| Production and ad valorem taxes | 55 | 61 | 148 | 180 | |||||||||||||||
| Gathering and transportation | 33 | 25 | 105 | 54 | |||||||||||||||
| Midstream services | 26 | 26 | 81 | 60 | |||||||||||||||
| Depreciation, depletion and amortization | 286 | 365 | 1,036 | 1,046 | |||||||||||||||
| Impairment of oil and natural gas properties | 1,451 | — | 4,999 | — | |||||||||||||||
| General and administrative expenses | 20 | 19 | 64 | 68 | |||||||||||||||
| Asset retirement obligation accretion | 2 | 1 | 5 | 6 | |||||||||||||||
| Other operating expense | 1 | 1 | 4 | 3 | |||||||||||||||
| Total costs and expenses | 1,976 | 626 | 6,774 | 1,781 | |||||||||||||||
| Income (loss) from operations | (1,256 | ) | 349 | (4,730 | ) | 1,079 | |||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest expense, net | (53 | ) | (38 | ) | (147 | ) | (133 | ) | |||||||||||
| Other income, net | — | 2 | 1 | 5 |
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FAQ
What were Diamondback Energy's financial results for Q3 2020?
Diamondback reported a net loss of $1,113 million but an adjusted net income of $98 million.
How much cash flow from operations did Diamondback generate in Q3 2020?
Diamondback generated $542 million in cash flow from operating activities.
What is the cash dividend declared by Diamondback for Q3 2020?
Diamondback declared a cash dividend of $0.375 per share.
What are the key operational highlights of Diamondback in Q3 2020?
The company flared only 0.5% of net production and reduced cash operating costs to $7.61 per BOE.
What is the stock symbol for Diamondback Energy?
The stock symbol for Diamondback Energy is FANG.
Diamondback Energy, Inc.
NASDAQ:FANGFANG RankingsFANG Latest NewsFANG Stock Data
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59.24%
2.07%
Oil & Gas E&P
Crude Petroleum & Natural Gas
United States of America
MIDLAND
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