Diamondback Energy Inc (FANG, Financial), an independent oil and gas producer operating exclusively in the Permian Basin, reported its Q2 2024 earnings, revealing a mixed performance against analyst estimates. The company, which reported net proven reserves of 2.2 billion barrels of oil equivalent at the end of 2023, averaged a net production of about 448,000 barrels per day last year.
Performance Highlights and Challenges
For the second quarter of 2024, Diamondback Energy Inc (FANG, Financial) reported an average production of 276.1 thousand barrels of oil per day (MBO/d) and 474.7 thousand barrels of oil equivalent per day (MBOE/d). The company generated net cash from operating activities amounting to $1.5 billion, with operating cash flow before working capital changes also at $1.5 billion. Cash capital expenditures for the quarter stood at $637 million, while free cash flow was reported at $816 million, and adjusted free cash flow at $841 million.
Despite these robust figures, the company faced challenges, including a lower-than-expected earnings per share (EPS) of $4.66, missing the analyst estimate of $4.55. However, revenue for the quarter came in at $2,483 million, surpassing the estimated $2,184.06 million.
Financial Achievements
Diamondback Energy Inc (FANG, Financial) declared a Q2 2024 base cash dividend of $0.90 per share and a variable cash dividend of $1.44 per share, payable on August 22, 2024. The total return of capital for the quarter was $421 million, representing approximately 52% of the free cash flow and 50% of the adjusted free cash flow.
In addition, the company completed a $95 million sale of non-operated properties in the Delaware Basin in June and received approximately $375 million in total consideration from the sale of its subsidiary WTG Midstream Holdings LLC in July.
Income Statement and Key Metrics
Diamondback Energy Inc (FANG, Financial) reported a net income of $837 million for Q2 2024, translating to $4.66 per diluted share. Adjusted net income was $813 million, or $4.52 per diluted share. The company's consolidated adjusted EBITDA for the quarter was $1.7 billion, with adjusted EBITDA net of non-controlling interest at $1.6 billion.
Key metrics from the income statement include:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $2,483 million | $1,919 million |
| Lease Operating Expenses | $254 million | $200 million |
| Net Income | $837 million | $556 million |
| EPS (Diluted) | $4.66 | $3.05 |
Balance Sheet and Cash Flow
As of June 30, 2024, Diamondback Energy Inc (FANG, Financial) had $6.9 billion in standalone cash, including $5.5 billion raised in its senior note offering in April 2024. The company reported no borrowings under its revolving credit facility, with approximately $1.6 billion available for future borrowings and total liquidity of approximately $8.5 billion. Consolidated total debt stood at $12.2 billion, with consolidated net debt at $5.3 billion.
Operational Update
During Q2 2024, Diamondback Energy Inc (FANG, Financial) drilled 71 gross wells in the Midland Basin and nine gross wells in the Delaware Basin. The company turned 79 operated wells to production in the Midland Basin and seven gross wells in the Delaware Basin, with an average lateral length of 11,203 feet.
Analysis and Outlook
Diamondback Energy Inc (FANG, Financial) continues to demonstrate strong operational performance and financial discipline, as evidenced by its robust cash flow and strategic asset sales. However, the miss on EPS highlights the challenges the company faces in managing costs and market volatility. The pending merger with Endeavor Energy Resources, L.P., expected to close in the third or fourth quarter of 2024, could provide additional growth opportunities and synergies.
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Explore the complete 8-K earnings release (here) from Diamondback Energy Inc for further details.
