10-QPeriod: Q2 FY2015

Diamondback Energy, Inc. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 10, 2015For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) reported its second-quarter 2015 financial results, highlighting significant operational growth alongside a substantial non-cash impairment charge. The company's production increased significantly year-over-year, driven by recent acquisitions and increased drilling activity in the Permian Basin. Despite the revenue growth from higher volumes, lower commodity prices negatively impacted overall revenues, leading to a net loss for the quarter and the first half of the year. A key development during the quarter was the recording of a $323.5 million pre-tax non-cash impairment of oil and gas properties due to the sharp decline in oil prices. This significantly impacted profitability, resulting in a reported net loss of $211.35 million for the three months ended June 30, 2015. Financially, the company maintained liquidity through a combination of operating cash flows, borrowings under its credit facility, and proceeds from recent equity offerings, with significant capital expenditures directed towards property acquisitions and development drilling.

Financial Highlights

39 data points
Beta

Net Income

-$212.29M

EPS (Diluted)

$-3.45

Total Assets

$3.17B

Cash & Equivalents

$44.68M

Free Cash Flow

$100.64M

Financial Statements
Beta
SG&A Expenses$7.68M
Operating Expenses$418.18M
Operating Income-$299.12M
Interest Expense$10.27M
Net Income-$212.29M
EPS (Basic)$-3.45
EPS (Diluted)$-3.45
Shares Outstanding (Basic)61.47M
Shares Outstanding (Diluted)61.47M

Key Highlights

  • 1Recorded a $323.5 million non-cash impairment of oil and gas properties due to declining commodity prices.
  • 2Average daily production increased by 68% year-over-year for both the three and six-month periods ending June 30, 2015.
  • 3Total revenues decreased by 6% ($7.9 million) for the quarter, primarily due to lower average sales prices, despite higher production volumes.
  • 4Secured approximately $435.4 million in acquisitions of approximately 11,864 net acres in the Midland Basin.
  • 5Increased borrowings under its revolving credit facility to $268 million as of June 30, 2015, with $232 million remaining available.
  • 6Net cash provided by operating activities increased to $199.8 million for the first six months of 2015, up from $159.7 million in the prior year period.
  • 7Common stock issuances in January and May 2015 generated approximately $119.4 million and $333.6 million in net proceeds, respectively.

Frequently Asked Questions

The primary driver of the significant net loss was a $323.5 million pre-tax non-cash impairment charge for oil and gas properties. This charge was necessitated by the substantial decline in oil prices observed since mid-2014.

Diamondback Energy experienced substantial production growth, with average daily production increasing by 68% for both the three and six-month periods ending June 30, 2015, compared to the prior year. However, despite this volume increase, total revenues decreased by 6% for the quarter due to significantly lower average commodity prices.

The company maintained adequate liquidity through operating cash flows, borrowings under its revolving credit facility, and proceeds from recent equity offerings. Capital expenditures were primarily directed towards property acquisitions and development drilling, with capital resources being closely monitored and adjusted based on market conditions and operational results.

The company's strategy involves the acquisition and development of unconventional, onshore oil and natural gas reserves in the Permian Basin. They focus on identified drilling locations and acquisitions that align with their strategic and financial objectives, aiming for oil-weighted reserves. Recent acquisitions have focused on acreage prospective for horizontal drilling in key formations within the Permian Basin.