Summary
Diamondback Energy, Inc. (FANG) reported strong performance in the first quarter of 2018, driven by significant increases in production volumes and favorable commodity prices. Total revenues more than doubled year-over-year, primarily due to a 66.5% increase in average daily production (BOE/d) to 102,607. This growth was supported by robust drilling activity, with 41 gross (36 net) wells drilled and 35 gross (30 net) wells brought online during the quarter across their core Permian Basin acreage in both the Midland and Delaware Basins. The company maintained its focus on operational efficiency and a conservative balance sheet, demonstrating improved cash operating margins. While operating expenses increased with higher production, lease operating expenses per BOE decreased. Diamondback also highlighted a significant transaction involving Viper Energy Partners, Inc. (a variable interest entity), where it transitioned Viper's tax status to a taxable entity. This restructuring is expected to provide strategic and financial benefits without being taxable to Diamondback. The company's liquidity remains strong, supported by operating cash flows and a revolving credit facility, with plans to fund its substantial 2018 capital budget through existing resources.
Financial Highlights
41 data points| Revenue | $479.00M |
| SG&A Expenses | $16.00M |
| Operating Expenses | $212.00M |
| Operating Income | $267.00M |
| Net Income | $163.00M |
| EPS (Basic) | $1.65 |
| EPS (Diluted) | $1.65 |
| Shares Outstanding (Basic) | 98.56M |
| Shares Outstanding (Diluted) | 98.77M |
Key Highlights
- 1Total revenues surged by 101% to $466.8 million in Q1 2018, driven by a 66.5% increase in average daily production (BOE/d) to 102,607 compared to Q1 2017.
- 2Drilling activity intensified with 41 gross (36 net) wells drilled and 35 gross (30 net) wells brought online in Q1 2018, focused on the Wolfcamp and Spraberry formations in the Midland Basin and Wolfcamp and Bone Spring in the Delaware Basin.
- 3Lease operating expenses per BOE decreased to $4.04 in Q1 2018 from $4.80 in Q1 2017, reflecting improved operational efficiencies despite higher overall production.
- 4The company completed a significant tax status change for its Viper Energy Partners (VIE), transitioning it to a taxable entity, which is expected to offer strategic and financial advantages.
- 5Net cash provided by operating activities more than doubled to $339.4 million in Q1 2018, demonstrating strong cash generation from increased production and higher commodity prices.
- 6Despite a substantial 2018 capital budget ($1.3-$1.5 billion), the company believes its cash flow from operations, cash on hand, and revolving credit facility are sufficient to fund operations through year-end 2018.
- 7The company's revolving credit facility borrowing base was recommended to be increased to $2.0 billion from $1.8 billion as of March 31, 2018, indicating strong reserve-based lending capacity.