MIDLAND, Texas, May 07, 2019 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the first quarter ended March 31, 2019.
HIGHLIGHTS
Q1 2019 net income of $10 million, or $0.06 per diluted share; adjusted net income (as defined and reconciled below) of $229 million, or $1.39 per diluted share < Adjusted Net Income compares to my forecast of $225.3 million, $1.35/share.
Q1 2019 Consolidated Adjusted EBITDA (as defined and reconciled below) of $675 million
Q1 2019 production of 262.6 Mboe/d (68% oil), up 44% over Q4 2018 and 156% year over year < Compares to my forecast of 265,000 Boepd (68.6% crude oil).
First quarter capital expenditures of $627 million; turned 82 wells to production
Declared Q1 2019 cash dividend of $0.1875 per share payable on June 4, 2019; implies a 0.7% annualized yield based on the May 6, 2019 share closing price of $100.70
Signed definitive agreements to divest conventional and non-core Permian assets acquired from Energen for $322 million; assets being sold have estimated full year 2019 net production of ~6,500 boe/d
Updated full year 2019 production guidance of 272.0 - 287.0 Mboe/d (68% - 70% oil) after giving effect to the divested production from the non-core asset sales closing by July 1, 2019
Company expects unhedged oil price realizations between ~90-95% of WTI for the remainder of 2019, based on existing firm transportation agreements and current commodity prices
Board of Directors has approved an up to $2.0 billion capital return program through December 31, 2020, to begin in Q2 2019 through a stock repurchase program
"After closing the Energen acquisition in the fourth quarter of 2018, we ensured that Diamondback get off to a fast start in 2019 and showcase the strength of our operations organization and low-cost structure on a larger scale. During the first quarter of 2019, we successfully integrated the addition of almost 300 employees and displayed our best in class execution metrics on a larger capital plan. During the quarter, we drilled almost twice as much lateral footage in the Midland Basin as the fourth quarter of 2018 at 15% lower cost per lateral foot, while completing 50 wells at an average per well cost 9% cheaper than the average cost of 20 wells completed in the fourth quarter of 2018. In the Delaware Basin, we are now completing over 50% more lateral footage per day compared to the first quarter of 2018, and overall well costs continue to trend down year over year," stated Travis Stice, Chief Executive Officer of Diamondback.
Mr. Stice continued, “We navigated a $30 drop in fourth quarter oil prices by immediately cutting activity to start 2019 while still growing production over 5% from our December 2018 exit rate of approximately 250 Mboe/d. Additionally, Diamondback executed on our “grow and prune” strategy introduced at the time of the Energen acquisition by announcing $322 million of conventional and non-core asset divestitures, which will both lower our cost structure and consolidate our Tier 1 acreage."
Diamondback Energy (FANG) Q1 Results - May 8
Diamondback Energy (FANG) Q1 Results - May 8
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Diamondback Energy (FANG) Q1 Results - May 8
This will increase my valuation of FANG:
CAPITAL RETURN PROGRAM
In addition to the previously announced quarterly dividend, the Company today announced that its Board of Directors has approved an expansion of the Company's capital return program, with the implementation of a stock repurchase program to acquire up to $2.0 billion of its outstanding common stock.
Mr. Stice continued, “As a result of our maturing business and multi-year free cash flow outlook, which has accelerated due to the increase in oil prices and our anticipated oil realization improvement, Diamondback is expanding our capital return program, with up to $2.0 billion of stock repurchases to be executed through the end of 2020. We anticipate this program will primarily be funded by current and future free cash flow, but also expect to use some of our anticipated cash proceeds from asset sales, our midstream business and our mineral business; all of which we expect will generate substantial cash to Diamondback this year."
"While the consistent growth of our dividend remains our primary return of capital objective, this repurchase program represents the next step in our total return strategy, and signifies Diamondback's evolution from a small cap producer to the large cap Permian pure-play we are today. Our capital allocation philosophy is grounded on achieving above average year over year growth, supporting a growing dividend, reducing debt consistently and continuing to replace and maintain a deep inventory of Tier 1 acreage, with excess free cash flow to be returned to stockholders. This program is initially targeted toward a stock repurchase program due to our view that buying our stock currently represents substantial value, but we will consider other forms of capital return in the future if we determine them to be effective methods of driving stockholder value."
"To summarize, our free cash flow and related return of capital program are the direct result of the business plan we have been executing since 2015. Assuming $55/Bbl WTI, Diamondback expects to generate over $750 million of free cash flow in 2020 and growing for the foreseeable future. We intend to return the majority of this free cash flow to stockholders in the form of our dividend or other components of our capital return program."
The repurchase program is authorized to extend through December 31, 2020 and the Company intends to purchase stock under the repurchase program opportunistically with funds from cash generated from operations and liquidity events such as the sale of assets. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time. Purchases under the repurchase program may be made from time to time in open market or privately negotiated 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, contractual obligations and other factors. Any stock purchased as part of this program will be retired and made available for future issuances by the Company.
CAPITAL RETURN PROGRAM
In addition to the previously announced quarterly dividend, the Company today announced that its Board of Directors has approved an expansion of the Company's capital return program, with the implementation of a stock repurchase program to acquire up to $2.0 billion of its outstanding common stock.
Mr. Stice continued, “As a result of our maturing business and multi-year free cash flow outlook, which has accelerated due to the increase in oil prices and our anticipated oil realization improvement, Diamondback is expanding our capital return program, with up to $2.0 billion of stock repurchases to be executed through the end of 2020. We anticipate this program will primarily be funded by current and future free cash flow, but also expect to use some of our anticipated cash proceeds from asset sales, our midstream business and our mineral business; all of which we expect will generate substantial cash to Diamondback this year."
"While the consistent growth of our dividend remains our primary return of capital objective, this repurchase program represents the next step in our total return strategy, and signifies Diamondback's evolution from a small cap producer to the large cap Permian pure-play we are today. Our capital allocation philosophy is grounded on achieving above average year over year growth, supporting a growing dividend, reducing debt consistently and continuing to replace and maintain a deep inventory of Tier 1 acreage, with excess free cash flow to be returned to stockholders. This program is initially targeted toward a stock repurchase program due to our view that buying our stock currently represents substantial value, but we will consider other forms of capital return in the future if we determine them to be effective methods of driving stockholder value."
"To summarize, our free cash flow and related return of capital program are the direct result of the business plan we have been executing since 2015. Assuming $55/Bbl WTI, Diamondback expects to generate over $750 million of free cash flow in 2020 and growing for the foreseeable future. We intend to return the majority of this free cash flow to stockholders in the form of our dividend or other components of our capital return program."
The repurchase program is authorized to extend through December 31, 2020 and the Company intends to purchase stock under the repurchase program opportunistically with funds from cash generated from operations and liquidity events such as the sale of assets. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time. Purchases under the repurchase program may be made from time to time in open market or privately negotiated 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, contractual obligations and other factors. Any stock purchased as part of this program will be retired and made available for future issuances by the Company.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Diamondback Energy (FANG) Q1 Results - May 8
Derrick Whitfield at Stifel Diamondback Energy, Inc. (FANG, $98.23, Buy; Target $180.00)
Management initiates $2B repurchase program, sending a strong message to investors on its
valuation and capital discipline. We view the release as positive.
The positives include: i) expanding the capital return program to include a $2B
repurchase program, ii) slight production beat on lower than expected capex, and
iii) better than expected D&C savings in both the Midland and Delaware Basins.
The only negative was lower than expected EBITDA as a result of realized prices
below expectations. We caution investors that realizations are projected to improve
throughout 2019 and 2020 as contracts expire.
Net-net, we expect a positive reaction from the market
to the new capital return program and the company's capital-efficient execution. The
share repurchase program, in our assessment, is a clear indication of management's
view on FANG's current valuation and its appetite to pursue additional M&A. While we
would argue management has an exceptional M&A track record, we believe capital
discipline trumps all in the sector as nearly every transaction has been sold over the
last two years.
Management initiates $2B repurchase program, sending a strong message to investors on its
valuation and capital discipline. We view the release as positive.
The positives include: i) expanding the capital return program to include a $2B
repurchase program, ii) slight production beat on lower than expected capex, and
iii) better than expected D&C savings in both the Midland and Delaware Basins.
The only negative was lower than expected EBITDA as a result of realized prices
below expectations. We caution investors that realizations are projected to improve
throughout 2019 and 2020 as contracts expire.
Net-net, we expect a positive reaction from the market
to the new capital return program and the company's capital-efficient execution. The
share repurchase program, in our assessment, is a clear indication of management's
view on FANG's current valuation and its appetite to pursue additional M&A. While we
would argue management has an exceptional M&A track record, we believe capital
discipline trumps all in the sector as nearly every transaction has been sold over the
last two years.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group