Diamondback Energy (FANG)
Posted: Wed Aug 03, 2016 2:09 pm
Diamondback's Q2 results came in slightly below my forecast, but they increased full year production guidance. I am updating my forecast model now. - Dan
Diamondback Energy, Inc. Announces Second Quarter 2016 Financial and Operating Results
MIDLAND, Texas, Aug. 02, 2016 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ:FANG) ("Diamondback" or the "Company") today announced financial and operating results for the second quarter ended June 30, 2016.
HIGHLIGHTS
•As previously announced, Diamondback has increased its 2016 production guidance to a range of 38.0 to 40.0 Mboe/d, up from 34.0 to 38.0 Mboe/d, as a result of increased drilling and completion activity. The Company has also lowered its full year 2016 LOE guidance range to $5.50 to $6.25 per boe from a prior range of $5.50 to $6.50 per boe.
•In July 2016, Diamondback announced its agreement to acquire assets in the Southern Delaware Basin for an aggregate purchase price of $560 million, subject to certain adjustments. These assets include 19,180 net surface acres primarily in Reeves and Ward counties with approximately 1,000 boe/d of net production and 2.2 MMboe of estimated net proved developed reserves. The Company estimates there are 290 net potential horizontal drilling locations across four zones with an average lateral length of approximately 9,500 feet. This transaction is expected to close in September 2016, subject to completion of due diligence and satisfaction of closing conditions.
•Diamondback continues to have encouraging results across its asset base. During the second quarter of 2016, the Company completed its first three-well pad in Howard County targeting the Lower Spraberry, Wolfcamp A and Wolfcamp B with an average lateral length of 7,273 feet. The Phillips-Hodnett Unit 1WA and Phillips-Hodnett 1WB achieved respective peak 30-day 2-stream initial production ("IP") rates of 1,374 boe/d (89% oil) and 1,225 boe/d (83% oil) while the Lower Spraberry well is still cleaning up and has not yet reached peak production.
•Diamondback continues to decrease drilling times, costs, and achieve new Company records: ◦Leading-edge Midland Basin costs to drill, complete and equip wells are currently below $6.0 million for a 10,000 foot lateral well and below $5.0 million for a 7,500 foot lateral well.
◦During the second quarter of 2016, Diamondback drilled a 10,000 foot lateral well in Andrews County and a 10,500 foot lateral well in Glasscock County in less than nine days each from spud to total depth ("TD"), a new record for the Company.
◦Diamondback drilled a 10,800 foot lateral well in Spanish Trail in less than 11 days from spud to TD, a new record for the Company in Midland County.
"Our strong well performance during the second quarter reflects our ability to exceed production expectations despite a reduced completion pace for the bulk of the first half of 2016. We added a fourth rig in early July, and continue to evaluate adding a fifth rig if commodity prices strengthen. We anticipate closing the Southern Delaware Basin acquisition next month and are excited to start developing the asset late this year," stated Travis Stice, Chief Executive Officer of Diamondback.
Mr. Stice continued, "Early Howard County rates confirm the productivity of this core area, and Glasscock County wells on average continue to track a 1,000 Mboe type curve. As we continue our accelerated completion activity during the second half of the year, we expect to exit 2016 in a position to achieve double-digit production growth in 2017 within cash flow assuming $55 per barrel."
OPERATIONAL HIGHLIGHTS
As previously announced, Diamondback's Q2 2016 production was 36.8 Mboe/d, up 23% from 30.0 Mboe/d in Q2 2015.
In Howard County, Diamondback expects to begin frac operations on an additional three-well pad targeting the Lower Spraberry, Wolfcamp A and Wolfcamp B this month. The Company also recently completed three wells in northwest Martin County and two wells in Glasscock County that are currently flowing back.
Diamondback is currently operating four horizontal rigs and running two completion crews to work through its current inventory of approximately 20 drilled but uncompleted wells ("DUCs"). Production response from the increased activity is expected to begin during the second half of 2016 with the majority of the DUCs completed by the end of 2016.
Diamondback drilled 15 gross horizontal wells and completed 11 operated horizontal wells in the second quarter of 2016. Operated completions consisted of seven Lower Spraberry wells, three Wolfcamp A wells and one Wolfcamp B well.
FINANCIAL HIGHLIGHTS
During the second quarter of 2016, Diamondback incurred an impairment charge of $168 million as a result of depressed commodity prices. The Company recorded a net loss of $155 million for the quarter.
Diamondback's second quarter 2016 adjusted net income attributable to Diamondback Energy, Inc. (a non-GAAP financial measure as defined and reconciled below) was $19 million, or $0.26 per share.
Second quarter 2016 Adjusted EBITDA (as defined and reconciled below) was $78 million and second quarter 2016 revenues were $112 million.
As of June 30, 2016, Diamondback had $219 million in cash and an undrawn credit facility. In connection with its Spring 2016 redetermination, Diamondback's lenders approved a $700 million borrowing base under this credit facility; however, the Company has again elected to limit the lenders' aggregate commitment to $500 million.
During the second quarter of 2016, capital spent on drilling and completion was approximately $55 million, infrastructure was $6 million and non-operated properties was $4 million. Additionally, Diamondback spent $10 million on acquisitions during the second quarter of 2016.
FULL YEAR 2016 GUIDANCE
Below is Diamondback's full year 2016 guidance, which has been updated to account for decreased 2016 depletion and amortization expense ("DD&A") to a range of $11.00 to $13.00 per boe, down from the prior range of $13.00 to $15.00 per boe. As previously announced, the Company has increased its 2016 production guidance to a range of 38.0 to 40.0 Mboe/d, up from 34.0 to 38.0 Mboe/d, as a result of increased drilling and completion activity. The Company also has lowered its full year 2016 LOE guidance range to $5.50 to $6.25 per boe from a prior range of $5.50 to $6.50 per boe.
Diamondback Energy, Inc. Announces Second Quarter 2016 Financial and Operating Results
MIDLAND, Texas, Aug. 02, 2016 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ:FANG) ("Diamondback" or the "Company") today announced financial and operating results for the second quarter ended June 30, 2016.
HIGHLIGHTS
•As previously announced, Diamondback has increased its 2016 production guidance to a range of 38.0 to 40.0 Mboe/d, up from 34.0 to 38.0 Mboe/d, as a result of increased drilling and completion activity. The Company has also lowered its full year 2016 LOE guidance range to $5.50 to $6.25 per boe from a prior range of $5.50 to $6.50 per boe.
•In July 2016, Diamondback announced its agreement to acquire assets in the Southern Delaware Basin for an aggregate purchase price of $560 million, subject to certain adjustments. These assets include 19,180 net surface acres primarily in Reeves and Ward counties with approximately 1,000 boe/d of net production and 2.2 MMboe of estimated net proved developed reserves. The Company estimates there are 290 net potential horizontal drilling locations across four zones with an average lateral length of approximately 9,500 feet. This transaction is expected to close in September 2016, subject to completion of due diligence and satisfaction of closing conditions.
•Diamondback continues to have encouraging results across its asset base. During the second quarter of 2016, the Company completed its first three-well pad in Howard County targeting the Lower Spraberry, Wolfcamp A and Wolfcamp B with an average lateral length of 7,273 feet. The Phillips-Hodnett Unit 1WA and Phillips-Hodnett 1WB achieved respective peak 30-day 2-stream initial production ("IP") rates of 1,374 boe/d (89% oil) and 1,225 boe/d (83% oil) while the Lower Spraberry well is still cleaning up and has not yet reached peak production.
•Diamondback continues to decrease drilling times, costs, and achieve new Company records: ◦Leading-edge Midland Basin costs to drill, complete and equip wells are currently below $6.0 million for a 10,000 foot lateral well and below $5.0 million for a 7,500 foot lateral well.
◦During the second quarter of 2016, Diamondback drilled a 10,000 foot lateral well in Andrews County and a 10,500 foot lateral well in Glasscock County in less than nine days each from spud to total depth ("TD"), a new record for the Company.
◦Diamondback drilled a 10,800 foot lateral well in Spanish Trail in less than 11 days from spud to TD, a new record for the Company in Midland County.
"Our strong well performance during the second quarter reflects our ability to exceed production expectations despite a reduced completion pace for the bulk of the first half of 2016. We added a fourth rig in early July, and continue to evaluate adding a fifth rig if commodity prices strengthen. We anticipate closing the Southern Delaware Basin acquisition next month and are excited to start developing the asset late this year," stated Travis Stice, Chief Executive Officer of Diamondback.
Mr. Stice continued, "Early Howard County rates confirm the productivity of this core area, and Glasscock County wells on average continue to track a 1,000 Mboe type curve. As we continue our accelerated completion activity during the second half of the year, we expect to exit 2016 in a position to achieve double-digit production growth in 2017 within cash flow assuming $55 per barrel."
OPERATIONAL HIGHLIGHTS
As previously announced, Diamondback's Q2 2016 production was 36.8 Mboe/d, up 23% from 30.0 Mboe/d in Q2 2015.
In Howard County, Diamondback expects to begin frac operations on an additional three-well pad targeting the Lower Spraberry, Wolfcamp A and Wolfcamp B this month. The Company also recently completed three wells in northwest Martin County and two wells in Glasscock County that are currently flowing back.
Diamondback is currently operating four horizontal rigs and running two completion crews to work through its current inventory of approximately 20 drilled but uncompleted wells ("DUCs"). Production response from the increased activity is expected to begin during the second half of 2016 with the majority of the DUCs completed by the end of 2016.
Diamondback drilled 15 gross horizontal wells and completed 11 operated horizontal wells in the second quarter of 2016. Operated completions consisted of seven Lower Spraberry wells, three Wolfcamp A wells and one Wolfcamp B well.
FINANCIAL HIGHLIGHTS
During the second quarter of 2016, Diamondback incurred an impairment charge of $168 million as a result of depressed commodity prices. The Company recorded a net loss of $155 million for the quarter.
Diamondback's second quarter 2016 adjusted net income attributable to Diamondback Energy, Inc. (a non-GAAP financial measure as defined and reconciled below) was $19 million, or $0.26 per share.
Second quarter 2016 Adjusted EBITDA (as defined and reconciled below) was $78 million and second quarter 2016 revenues were $112 million.
As of June 30, 2016, Diamondback had $219 million in cash and an undrawn credit facility. In connection with its Spring 2016 redetermination, Diamondback's lenders approved a $700 million borrowing base under this credit facility; however, the Company has again elected to limit the lenders' aggregate commitment to $500 million.
During the second quarter of 2016, capital spent on drilling and completion was approximately $55 million, infrastructure was $6 million and non-operated properties was $4 million. Additionally, Diamondback spent $10 million on acquisitions during the second quarter of 2016.
FULL YEAR 2016 GUIDANCE
Below is Diamondback's full year 2016 guidance, which has been updated to account for decreased 2016 depletion and amortization expense ("DD&A") to a range of $11.00 to $13.00 per boe, down from the prior range of $13.00 to $15.00 per boe. As previously announced, the Company has increased its 2016 production guidance to a range of 38.0 to 40.0 Mboe/d, up from 34.0 to 38.0 Mboe/d, as a result of increased drilling and completion activity. The Company also has lowered its full year 2016 LOE guidance range to $5.50 to $6.25 per boe from a prior range of $5.50 to $6.50 per boe.