10-KPeriod: FY2012

Diamondback Energy, Inc. Annual Report, Year Ended Dec 31, 2012

Filed March 1, 2013For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) is presenting its first annual report as a publicly traded company following its Initial Public Offering (IPO) in October 2012. The company is an independent oil and natural gas company focused on the Permian Basin. A significant event during the reporting period was the acquisition of properties from Gulfport Energy Corporation in October 2012, which substantially increased its acreage and production. The company has elected not to use the extended transition period for new accounting standards available to emerging growth companies, indicating a commitment to full compliance. Despite a reported net loss in 2012, the company highlights strong growth in revenues and Adjusted EBITDA, driven by increased production volumes and strategic acquisitions. Investors should note that while the company is an 'emerging growth company,' which offers reduced disclosure requirements, Diamondback has chosen to adopt new accounting standards promptly. The company's financial performance shows a significant increase in revenues and operational scale following the Gulfport acquisition and its IPO. However, the company's financial results are subject to commodity price volatility and ongoing capital expenditure requirements to maintain and grow production. Diamondback does not currently pay dividends and intends to reinvest earnings for business development and growth.

Financial Highlights

37 data points
Beta

Net Income

-$36.52M

Total Assets

$606.70M

Cash & Equivalents

$26.36M

Free Cash Flow

$49.69M

Financial Statements
Beta
SG&A Expenses$9.18M
Operating Expenses$57.66M
Operating Income$17.31M
Interest Expense$3.61M
Net Income-$36.52M

Key Highlights

  • 1Diamondback Energy completed its Initial Public Offering (IPO) in October 2012, raising approximately $234.1 million in net proceeds.
  • 2Acquisition of oil and natural gas properties from Gulfport Energy Corporation in October 2012 significantly expanded the company's acreage and operational scale in the Permian Basin.
  • 3Revenues for the year ended December 31, 2012, increased by 57% to $74.96 million compared to $47.88 million in 2011, driven by higher production volumes.
  • 4Adjusted EBITDA, a non-GAAP measure, showed strong growth, increasing by 51% to $48.22 million in 2012 from $31.86 million in 2011.
  • 5The company reported a net loss of $36.52 million for 2012, a significant change from a net loss of $0.39 million in 2011, primarily due to a large income tax expense related to the IPO and the establishment of a deferred tax liability.
  • 6Diamondback's production increased significantly, with average daily production rising 78% to 2,946 BOE/d in 2012 from 1,658 BOE/d in 2011.
  • 7The company ended 2012 with no outstanding borrowings under its revolving credit facility, having repaid all amounts with IPO proceeds, though the facility provides significant borrowing capacity.

Frequently Asked Questions

Diamondback Energy is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional, long-life, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. Their activities are concentrated on formations like Clearfork, Spraberry, Wolfcamp, Cline, Strawn, and Atoka, often referred to as the Wolfberry play.

Following its IPO and the acquisition of Gulfport's Permian Basin assets in late 2012, Diamondback experienced a substantial increase in revenues, production volumes, and Adjusted EBITDA. While the company reported a net loss for the year, this was heavily influenced by a significant one-time income tax expense related to its corporate structure change and IPO. Operational growth metrics like production and revenue demonstrate a significant expansion in scale.

No, Diamondback Energy does not currently pay cash dividends and has not done so since its inception. The company's senior secured credit facility contains covenants that restrict dividend payments. Diamondback intends to retain all future earnings for the development and growth of its business and does not anticipate paying cash dividends in the foreseeable future.

Diamondback's strategy is to grow its reserves and production through development drilling, exploitation, and exploration activities on its substantial inventory of identified drilling locations. Additionally, the company actively seeks acquisitions that align with its strategic and financial objectives, with a particular focus on oil-weighted reserves. The company also outlines a significant capital expenditure budget for 2013 focused on drilling and infrastructure development.