Diamondback Energy (FANG) Q4 Results - Feb 23

[dan_s]

Here are my "Quick Takes" on Q4 results:

FOURTH QUARTER 2025 HIGHLIGHTS

Average oil production of 512.8 MBO/d (969.1 MBOE/d) < Beat my production forecast of 950,000 Boepd, which included 507,300 bpd of crude oil.

Net cash provided by operating activities of $2.3 billion; Operating Cash Flow Before Working Capital Changes1 of $1.9 billion < Below my forecast of $2.1 million Adjusted Operating Cash Flow.

Diamondback reported a Net Loss for the quarter of $1,458 million, that included a non-cash impairment charge of $3,652 million. The after-hours dip in the share price is the typical knee jerk reaction. It is also a reminder to always focus on the company's free cash flow generation. Diamondbacks Adjusted Operating Cash Flow per share in Q4 was $6.83, which beat the TipRanks' consensus forecast of $6.64. Total CFPS for 2025 was $31.49.

Cash capital expenditures of $943 million < A bit higher than expected.

Free Cash Flow of $1.0 billion; Adjusted Free Cash Flow of $1.2 billion

Repurchased 2.90 million shares of common stock for approximately $434 million at a weighted average price of $149.50 per share excluding excise tax; includes $305 million for the repurchase of 2.00 million shares from SGF FANG Holdings, LP ("SGF")

Total return of capital of $734 million from stock repurchases and the declared Q4 2025 base dividend; represents 62% of Adjusted Free Cash Flow

Increased annual base dividend by 5% to $4.20 per share; declared Q4 2025 base cash dividend of $1.05 per share payable on March 12, 2026; implies a 2.4% annualized yield based on February 20, 2026 closing share price of $176.01 < If you are investing for dividends, VNOM is the better buy.

Repurchased $203 million in senior notes due 2051 & 2052 at 82.3% of par (~$167 million)

Redeemed $950 million of principal on $1.5 billion term loan due 2027 ($550 million currently outstanding)

Consolidated total debt and net debt as of December 31, 2025 of $14.7 billion and $14.6 billion, down 11% and 8% quarter over quarter, respectively < Steady debt reduction and stock buybacks continue to increase per share value.

FULL YEAR 2025 HIGHLIGHTS

Average production of 497.2 MBO/d (921.0 MBOE/d) < 5.1 MBOE/d over my forecast.

Net cash provided by operating activities of $8.8 billion; Operating Cash Flow Before Working Capital Changes of $9.1 billion < $0.1 billion lower than my forecast.

Cash capital expenditures of $3.5 billion

Free Cash Flow of $5.5 billion; Adjusted Free Cash Flow of $5.9 billion < This is a very profitable company.

Repurchased 13.84 million shares of common stock for $2.0 billion, at a weighted average price of $145.26 per share excluding excise tax

Total return of capital of $3.2 billion; represents 54% of Adjusted Free Cash Flow

Declared total base-plus-variable dividends of $4.05 per share

Generated $1.7 billion in cash proceeds from non-core asset sales < This is in addition to operating cash flow.

Proved reserves as of December 31, 2025 of 3,618 MMBOE (49% oil), up 2% year over year; proved developed producing ("PDP") reserves of 2,521 MMBOE (47% oil), up 6% year over year.

2026 GUIDANCE HIGHLIGHTS

Full year 2026 oil production guidance of 500 - 510 MBO/d (926 - 962 MBOE/d) < My forecast is based on 954 MBOE/d. Since Diamondback consistently beats their guidance, I will stay with that.

Full year 2026 cash capital expenditures guidance of $3.6 - $3.9 billion. Includes approximately $100 - $150 million of capital for exploratory development in the Barnett / Woodford and multiple tests to increase oil recoveries from the existing asset base. < Compares to $3.5 billion capex spent in 2025.

The Company expects to complete between 5.9 - 6.3 million net lateral feet in 2026

Q1 2026 oil production guidance of 502 - 512 MBO/d (930 - 966 MBOE/d)

Q1 2026 cash capital expenditures guidance of $900 million - $975 million