10-KPeriod: FY2014

Diamondback Energy, Inc. Annual Report, Year Ended Dec 31, 2014

Filed February 20, 2015For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) presented its 2014 annual report, highlighting substantial growth and a strong operational focus on the Permian Basin. The company significantly expanded its acreage position through strategic acquisitions, more than quadrupling its net acreage from its initial 2007 acquisition to approximately 85,369 net acres by year-end 2014. This expansion was supported by robust capital expenditures, including significant investments in leasehold and mineral rights. Financially, Diamondback demonstrated strong revenue growth, driven by a substantial increase in production volumes, particularly oil. The company's strategic focus on horizontal drilling and efficient development in the highly prospective Wolfberry play continues to drive reserve growth and operational improvements. Despite volatile commodity prices, the company managed its costs effectively and maintained financial flexibility through its credit facility, positioning itself for continued development and potential future acquisitions in a key North American oil play.

Financial Highlights

39 data points
Beta

Net Income

$193.75M

EPS (Diluted)

$3.64

Total Assets

$3.10B

Cash & Equivalents

$30.18M

Free Cash Flow

$356.39M

Financial Statements
Beta
SG&A Expenses$21.27M
Operating Expenses$283.05M
Operating Income$212.67M
Interest Expense$34.52M
Net Income$193.75M
EPS (Basic)$3.67
EPS (Diluted)$3.64
Shares Outstanding (Basic)52.83M
Shares Outstanding (Diluted)53.30M

Key Highlights

  • 1Substantial Acreage Growth: Expanded net acreage in the Permian Basin to approximately 85,369 acres by year-end 2014 through acquisitions.
  • 2Significant Production Increase: Average daily production grew by 166% to 19,474 BOE/d in 2014 compared to 2013.
  • 3Focus on Horizontal Drilling: Continued investment in horizontal drilling techniques to maximize hydrocarbon recovery and improve efficiency.
  • 4Viper Energy Partners LP IPO: Successfully completed the initial public offering of Viper Energy Partners LP, enhancing financial flexibility.
  • 5Robust Capital Expenditures: Significant investments in leasehold and mineral rights acquisitions ($845.8 million in 2014) and drilling and infrastructure ($499.8 million in 2014).
  • 6Oil-Weighted Production: Production remained heavily weighted towards oil (76% in 2014), aligning with favorable market dynamics for crude.
  • 7Strong Reserve Growth: Proved reserves increased significantly, reaching over 112.8 million BOE by year-end 2014, with a growing proportion of proved undeveloped reserves.

Frequently Asked Questions

Diamondback Energy's primary focus is on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. Their strategy involves growing production and reserves through active development drilling, enhancing hydrocarbon recovery via horizontal drilling and increased well density, leveraging their Permian Basin expertise, pursuing strategic acquisitions, and maintaining financial flexibility.

In 2014, Diamondback significantly expanded its operational footprint by acquiring approximately 81,195 additional net acres, bringing its total Permian Basin acreage to about 85,369 net acres. This expansion, coupled with increased drilling activity, led to a substantial increase in production, with average daily production growing by 166% to 19,474 BOE/d compared to the previous year.

Diamondback reported capital expenditures of approximately $1.4 billion in 2014, allocated towards acquisitions and development drilling. The company finances its activities through a combination of cash flow from operations, borrowings under its revolving credit facility, and proceeds from equity offerings. The company also established Viper Energy Partners LP, a publicly traded partnership, to further enhance its financial flexibility.

For 2014, Diamondback reported total revenues of $495.7 million and income from operations of $212.7 million. Lease operating expenses (LOE) per BOE remained stable despite increased activity. Depreciation, Depletion, and Amortization (DD&A) expense increased significantly due to higher production and reserve additions. The company's production is heavily oil-weighted (76% oil in 2014), making its revenues sensitive to oil prices.