10-KPeriod: FY2016

Diamondback Energy, Inc. Annual Report, Year Ended Dec 31, 2016

Filed February 15, 2017For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) reported its 2016 annual results, highlighting a significant increase in production and a strategic focus on the Permian Basin. Despite a challenging commodity price environment in 2016, the company demonstrated operational efficiency and a conservative balance sheet. Key to its strategy is the aggressive development of its extensive acreage in the Permian Basin, particularly targeting the Wolfcamp and Spraberry formations. The company also announced a significant pending acquisition of assets in Pecos and Reeves counties, Texas, which is expected to further bolster its growth and production. Looking ahead to 2017, Diamondback plans to maintain its operational momentum with an increased rig count, contingent on market conditions. The company's financial position remains supported by its revolving credit facility, and it continues to prioritize capital efficiency and financial discipline.

Financial Highlights

43 data points
Beta

Revenue

$527.11M

Net Income

-$165.03M

-31.3% Net Margin

EPS (Diluted)

$-2.20

Total Assets

$5.35B

Cash & Equivalents

$1.67B

Free Cash Flow

$332.08M

Financial Statements
Beta
Revenue$527.11M
SG&A Expenses$42.62M
Operating Expenses$595.72M
Operating Income-$68.62M
Interest Expense$41.07M
Net Income-$165.03M
EPS (Basic)$-2.20
EPS (Diluted)$-2.20
Shares Outstanding (Basic)75.08M
Shares Outstanding (Diluted)75.08M

Key Highlights

  • 1Diamondback Energy holds approximately 105,894 net acres in the Permian Basin, a highly productive oil and gas region.
  • 2The company's production mix is heavily weighted towards oil (approximately 73% in 2016), aligning with its oil-weighted reserve strategy.
  • 3Diamondback has identified a substantial inventory of 1,802 net potential horizontal drilling locations, indicating a long-term development runway.
  • 4The company is executing a significant acquisition of Brigham Resources for $1.62 billion in cash and stock, expected to close in early 2017, significantly expanding its acreage and production.
  • 5Diamondback's operational efficiency is evident in reduced drilling times and costs, with plans to operate 6-10 rigs in 2017.
  • 6In 2016, the company reported a net loss of $165 million, impacted by impairments and lower commodity prices, but showed strong revenue growth driven by increased production.
  • 7The company has a conservative financial strategy, with substantial availability under its revolving credit facility.

Frequently Asked Questions

Diamondback Energy's core focus is the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin of West Texas and New Mexico. They specifically target horizontal development in formations like the Wolfcamp, Spraberry, and Bone Spring.

In 2016, Diamondback Energy experienced a net loss of $165 million, which was influenced by impairments and lower commodity prices. However, total revenues increased to $527 million, driven by a 30% increase in average daily production, showcasing strong operational execution despite market challenges.

For 2017, Diamondback Energy plans to increase its operational activity by operating between six and ten drilling rigs, contingent on market conditions. The company will focus on developing its Permian Basin acreage and integrating the recently announced acquisition of Brigham Resources, aiming for continued production and reserve growth.

Diamondback Energy aims to maintain a conservative financial position. As of December 31, 2016, the company had $1.1 billion in long-term debt and significant availability under its revolving credit facility ($500 million). Growth is primarily funded through operations, equity offerings, and debt financing, with the pending Brigham acquisition being financed through a combination of equity offerings, senior notes, and cash on hand.