10-QPeriod: Q1 FY2015

Diamondback Energy, Inc. Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 7, 2015For Securities:FANG

Summary

Diamondback Energy, Inc.'s (FANG) first-quarter 2015 report shows a significant increase in production volumes, up 126% year-over-year, reaching 30,636 BOE/d. This growth was primarily driven by acquisitions and increased drilling activity. Despite a substantial decrease in average realized prices for oil, natural gas, and NGLs due to falling commodity prices, total revenues only saw a modest 3% increase, reaching $101.4 million. This resilience in revenue was largely due to the significant increase in production volumes, which offset the price declines. The company's financial position remains robust, with total assets of approximately $3.1 billion and a strong liquidity position, bolstered by a $2 billion credit facility. Management is focused on maximizing return on capital and managing debt, with a strategic outlook on growing reserves and production through development and acquisitions.

Financial Highlights

39 data points
Beta

Net Income

$5.85M

EPS (Diluted)

$0.10

Total Assets

$3.09B

Cash & Equivalents

$31.64M

Free Cash Flow

$99.14M

Financial Statements
Beta
SG&A Expenses$8.24M
Operating Expenses$99.96M
Operating Income$1.44M
Interest Expense$10.50M
Net Income$5.85M
EPS (Basic)$0.10
EPS (Diluted)$0.10
Shares Outstanding (Basic)58.39M
Shares Outstanding (Diluted)58.63M

Key Highlights

  • 1Production increased significantly by 126% year-over-year to 30,636 BOE/d, driven by acquisitions and increased drilling.
  • 2Total revenues grew by 3% to $101.4 million, despite a substantial decrease in average realized commodity prices.
  • 3The company acquired or entered into agreements to acquire approximately 15,940 gross (11,948 net) acres in the Midland Basin for approximately $437.8 million.
  • 4Operating expenses, particularly Lease Operating Expenses (LOE) and Depreciation, Depletion, and Amortization (DD&A), increased significantly due to higher production and new wells.
  • 5Net income attributable to Diamondback Energy, Inc. decreased to $5.8 million ($0.10 per diluted share) from $23.6 million ($0.48 per diluted share) in the prior year quarter, reflecting lower commodity prices and higher operating costs.
  • 6The company had $161.6 million in outstanding borrowings under its $2.0 billion credit facility as of March 31, 2015, with $338.4 million available.
  • 7Capital expenditures for the quarter were $151.4 million, primarily for drilling and completion activities.

Frequently Asked Questions

Diamondback Energy saw a substantial increase in production, with average daily production rising by 126% to 30,636 BOE/d in Q1 2015 compared to 13,552 BOE/d in Q1 2014. This significant volume growth helped offset a sharp decline in commodity prices, resulting in a modest 3% increase in total revenues to $101.4 million from $98.0 million in the prior year period.

Diamondback's strategy remains focused on the acquisition, development, exploration, and exploitation of oil and natural gas reserves in the Permian Basin. The company acquired or agreed to acquire approximately 15,940 gross acres in the Midland Basin during Q1 2015 for approximately $437.8 million. They are targeting oil-weighted reserves and plan to grow production through development drilling and further acquisitions.

As of March 31, 2015, Diamondback reported total assets of approximately $3.1 billion and total liabilities of approximately $0.976 billion. The company has a $2.0 billion revolving credit facility, with $161.6 million drawn and $338.4 million available for borrowing. Management believes cash flow from operations and available credit are sufficient to fund operations through year-end 2015, but notes that future growth is dependent on capital resources.

Commodity price volatility had a significant impact. While average realized prices for oil, natural gas, and NGLs decreased substantially (e.g., oil prices fell from $93.53/Bbl in Q1 2014 to $43.59/Bbl in Q1 2015), the increased production volumes largely compensated for the price declines, leading to a slight revenue increase. The company utilizes price swap derivatives to mitigate some of this price volatility, which resulted in a net gain of $18.4 million on derivative instruments for the quarter.