Diamondback Energy (FANG) Q1 Results

[dan_s]

Diamondbacks Q1 production compares to my forecast of 57.0 Mboe/day. Note that cash operating expenses are under $10/Boe.

HIGHLIGHTS

> Q1 2017 production of 61.6 Mboe/d (75% oil), up 19% over Q4 2016 with 13% quarterly organic growth
> Q1 2017 cash operating costs of $9.31/boe, including LOE of $4.80/boe and cash G&A of $1.20/boe
> Estimated Q1 2017 Midland Basin drill, complete and equip cost per completed lateral foot of $622, down 5% quarter over quarter
> Operating eight horizontal rigs and three dedicated frac crews
> Closed Brigham Resources acquisition on February 28th for $2.55 billion, increasing Diamondback's total leasehold to approximately 189,000 net surface acres in the Permian Basin
> First ReWard Wolfcamp A well commenced with peak 15-day flowing 2-stream initial production ("IP") rate of 210 boe/d per 1,000' (88% oil)
> Two Lower Wolfcamp A completions on recently acquired acreage with average 30-day flowing IP rates of 158 boe/d per 1,000' (89% oil) per well; recently completed Upper Wolfcamp A well commenced with peak 24-hour IP rate of 243 boe/d per 1,000' (85% oil)

“Diamondback's strong first quarter performance reflects our continued dedication to best-in-class execution and low cost operations, a theme we believe will be prevalent in 2017 as our industry returns to growth. After successfully closing our acquisition of Brigham in the first quarter, we have an asset base and organization capable of delivering multi-year industry leading growth while maintaining a fortress balance sheet," stated Travis Stice, Chief Executive Officer of Diamondback.

Mr. Stice continued, “Early performance from our first operated completions in the Southern Delaware Basin confirm the productivity of our two newest core areas. The Wolfcamp A single-well economics on our acreage in the Southern Delaware Basin are comparable to our Lower Spraberry economics in the Northern Midland Basin. We are eager to provide additional results from the Southern Delaware Basin throughout this year as we drill, land and complete wells applying our best practices and cost control."

OPERATIONAL HIGHLIGHTS

Diamondback’s Q1 2017 production was 61.6 Mboe/d (75% oil), up 61% year over year from 38.3 Mboe/d in Q1 2016, and up 19% quarter over quarter from 51.9 Mboe/d in Q4 2016. Excluding the effect of production acquired in the Brigham acquisition, organic production growth was up 13% quarter over quarter.

During the first quarter of 2017, Diamondback averaged six operated rigs, drilled 28 gross horizontal wells and turned 26 operated horizontal wells to production. Operated completions consisted of 17 Lower Spraberry wells, six Wolfcamp A wells and three Wolfcamp B wells. In March 2017, Diamondback added a seventh operated horizontal rig, which began development in the Southern Delaware Basin. In April 2017, the Company added an eighth operated rig, which began development in the Midland Basin. Diamondback plans to move this rig to Pecos County in the coming weeks and operate five rigs in the Midland Basin and three rigs in the Southern Delaware Basin.

Diamondback continues to decrease drilling times, lower costs and achieve new Company records. During the first quarter of 2017, Diamondback drilled a 9,500 foot lateral well in Midland County in 14.2 days from spud to total depth, a new record for the Company. Diamondback also drilled three 7,500 foot lateral wells in Howard County in less than 40 days from spud of the first well to rig release of the third well, a new record for the Company in Howard County.