Diamondback Energy (FANG) Q2 Results - Aug 4

[dan_s]

Financial results are close to my forecast. I will update my forecast/valuation models for FANG and VNOM tomorrow.


SECOND QUARTER 2025 AND RECENT HIGHLIGHTS

Average oil production of 495.7 MBO/d (919.9 MBOE/d) < Beat my oil production forecast of 491,175 bpd.
Net cash provided by operating activities of $1.7 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $2.1 billion < In line with my forecast.
Cash capital expenditures of $864 million
Free Cash Flow (as defined and reconciled below) of $1.2 billion; Adjusted Free Cash Flow (as defined and reconciled below) of $1.3 billion
Declared Q2 2025 base cash dividend of $1.00 per share payable on August 21, 2025; implies a 2.7% annualized yield based on August 1, 2025 closing share price of $146.14
Repurchased 2,991,653 shares of common stock in Q2 2025 for $398 million excluding excise tax (at a weighted average price of $133.15 per share); repurchased 1,669,115 shares of common stock to date in Q3 2025 for $238 million excluding excise tax (at a weighted average price of $142.45 per share)
Total Q2 2025 return of capital of $691 million; represents ~52% of Adjusted Free Cash Flow (as defined and reconciled below) from stock repurchases and the declared Q2 2025 base dividend
Repurchased $252 million in aggregate principal amount across Diamondback's Senior notes due 2031, 2051, 2052 and 2054 at a weighted average price of 76.8% of par (~$196 million)
On July 31st, the Company's Board of Directors approved a $2.0 billion increase to the share repurchase authorization to $8.0 billion from $6.0 billion previously, leaving approximately $3.5 billion of current availability for future repurchases

UPDATED 2025 GUIDANCE HIGHLIGHTS

Narrowing full year oil production guidance to 485 - 492 MBO/d and increasing annual BOE guidance by 2% to 890 - 910 MBOE/d
Lowering full year cash capital expenditures to $3.4 - $3.6 billion; $100 million (3%) below prior midpoint and down $500 million (13%) from original full year 2025 guidance midpoint
Implies full year 2025 oil production per million dollars of cash capital expenditures ("MBO per $MM of CAPEX") of 50.9, ~14% better than original guidance
The Company expects to drill 425 - 450 gross (395 - 418 net) wells and complete between 490 - 515 gross (458 - 482 net) wells with an average lateral length of approximately 11,500 feet in 2025
Q3 2025 oil production guidance of 485 - 495 MBO/d (890 - 920 MBOE/d)
Q3 2025 cash capital expenditures guidance of $750 - $850 million