Diamondback Energy (FANG) Q4 results - Feb 20

[dan_s]

FOURTH QUARTER 2023 HIGHLIGHTS

Average production of 273.1 MBO/d (462.6 MBOE/d) < This was previously announced. 16% year over year growth is very good.
Net cash provided by operating activities of $1.6 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $1.6 billion < Beat my forecast of $1.515 billion operating cash flow.
Cash capital expenditures of $649 million
Free Cash Flow (as defined and reconciled below) of $910 million < Outstanding!
Increased annual base dividend by 7% to $3.60 per share; declared Q4 2023 base cash dividend of $0.90 per share and a variable cash dividend of $2.18 per share, in each case payable on March 12, 2024; implies an 6.9% annualized yield based on February 16, 2024 closing share price of $179.42
Repurchased 872,667 shares of common stock in Q4 2023 for $129 million, excluding excise tax (at a weighted average price of $148.15/share); repurchased 279,266 shares of common stock to date in Q1 2024 for $42 million, excluding excise tax (at a weighted average price of $149.50/share)
Total Q4 2023 return of capital of $683 million; represents ~75% of Q4 2023 Free Cash Flow (as defined and reconciled below) from stock repurchases and the declared Q4 2023 base-plus-variable dividend < In 2024 Diamondback's return of capital program is being reduced to 50% of free cash flow because they are building cash balance for the Endeavor merger.

FULL YEAR 2023 HIGHLIGHTS

Average production of 263.5 MBO/d (447.7 MBOE/d)
Net cash provided by operating activities of $5.9 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $5.6 billion
Cash capital expenditures of $2.7 billion
Generated Free Cash Flow (as defined and reconciled below) of $2.9 billion
Declared total base-plus-variable dividends of $8.12 per share for the full year 2023
Repurchased 6,237,893 shares of common stock in 2023 for $838 million, excluding excise tax (at a weighted average price of $134.37/share)
Total full year 2023 return of capital of $2.3 billion from stock repurchases and declared base-plus-variable dividends; represents ~79% of FY 2023 Free Cash Flow (as defined and reconciled below)
Proved reserves as of December 31, 2023 of 2,178 MMBOE (1,144 MBO, 53% oil), up 7% year over year; proved developed producing ("PDP") reserves of 1,497 MMBOE (744 MBO, 50% oil, 69% of proved reserves), up 7% year over year

2024 GUIDANCE HIGHLIGHTS

Full year 2024 oil production guidance of 270 - 275 MBO/d (458 - 466 MBOE/d) < Merger with Endeavor will push total production over 810,000 Boepd (58% crude oil, 21% high value NGLs and 21% natural gas) in the 4th quarter.
Full year 2024 cash capital expenditures guidance of $2.30 - $2.55 billion
The Company expects to drill between 265 - 285 gross (244 - 263 net) wells and complete between 300 - 320 gross (273 - 291 net) wells with an average lateral length of approximately 11,500 feet in 2024
Q1 2024 oil production guidance of 270 - 274 MBO/d (458 - 464 MBOE/d)
Q1 2024 cash capital expenditures guidance of $580 - $620 million

[dan_s]

My updated valuation for FANG is $200/share.

TipRanks: "In the last 3 months, 19 ranked analysts set 12-month price targets for FANG. The average price target among the analysts is $187.05. 16 of the 19 analysts have updated their price targets since the merger with Endeavor was announced on February 12. Those 16 price targets range from $154 to $250." < Keep in mind that some analysts are extremely conservative in their forecasts pre-closing of significant mergers like this one.