How is Diamondback returning capital to shareholders?

Diamondback is returning capital to shareholders through two primary methods: a regular cash dividend and a substantial stock repurchase program. The company declared a quarterly dividend of $0.1875 per share for the first quarter of 2019. Additionally, its board approved a new stock repurchase program authorizing the acquisition of up to $2 billion of outstanding common stock through December 31, 2020, which is intended to be funded by free cash flow and asset sales.

What is the impact of the Energen acquisition on current operations and strategy?

The Energen acquisition continues to significantly influence Diamondback's operations and strategy. It is a major contributor to the substantial increase in production volumes observed in Q1 2019. Strategically, Diamondback is actively divesting non-core conventional assets acquired from Energen for $322 million, indicating a focus on optimizing its Permian Basin portfolio post-acquisition. Increased lease operating expenses and depreciation, depletion, and amortization also reflect the impact of this integration.

What is Diamondback's outlook on commodity prices and hedging strategy?

Diamondback's revenue is sensitive to commodity price volatility, particularly oil prices. For the first quarter of 2019, average realized prices were lower than in Q1 2018. The company utilizes derivative instruments to mitigate price volatility, though these are not designated for hedge accounting, leading to volatility in the 'Gain (loss) on derivative instruments' line item. Diamondback expects improved realized pricing in the latter half of 2019 as fixed differential contracts roll off and anticipates realizing approximately 88-92% of WTI for the remainder of 2019 and 100% in 2020.

FANG 10-Q Quarterly Report Q1 FY2019 — Revenue, Net Income, EPS

Q: What were the main drivers of Diamondback's revenue growth in the first quarter of 2019?

The significant increase in revenue, up 81% year-over-year to $842 million, was primarily driven by a substantial rise in production volumes. Average daily production increased by 156% to 262,633 BOE/d, fueled by increased drilling activity and the integration of assets acquired from Energen. While production volumes grew significantly, average sales prices for oil, natural gas, and natural gas liquids were lower compared to the prior year's first quarter.

Summary

Diamondback Energy, Inc. (FANG) reported strong operational and financial performance for the first quarter of 2019, building on the significant growth from the Energen acquisition. Total revenues surged by 81% year-over-year to $842 million, primarily driven by a 156% increase in average daily production to 262,633 BOE/d. This substantial production growth was fueled by increased drilling activity and the integration of acquired assets. Despite lower average realized commodity prices, particularly for oil, the company demonstrated robust operational execution. Financially, Diamondback announced a new $2 billion stock repurchase program through December 31, 2020, alongside a quarterly dividend of $0.1875 per share, highlighting a commitment to returning capital to shareholders. The company is also strategically divesting certain non-core conventional assets for $322 million, aiming to streamline its portfolio. Diamondback's liquidity remains strong, supported by its revolving credit facility and operating cash flows, which were sufficient to fund its significant capital expenditures for development and acquisitions.

Financial Highlights

42 data points

Beta

Revenue

$864.00M

Net Income

$10.00M

0.0% Net Margin

EPS (Diluted)

$0.06

Total Assets

$23.53B

Cash & Equivalents

$149.00M

Free Cash Flow

$377.00M

Financial Statements

Beta

Revenue	$864.00M
SG&A Expenses	$27.00M
Operating Expenses	$545.00M
Operating Income	$319.00M
Net Income	$10.00M
EPS (Basic)	$0.06
EPS (Diluted)	$0.06
Shares Outstanding (Basic)	164.85M
Shares Outstanding (Diluted)	165.06M

Key Highlights

1Total revenues increased by 81% to $842 million for Q1 2019 compared to Q1 2018, driven by a 156% increase in average daily production to 262,633 BOE/d.
2The company declared a first quarter 2019 cash dividend of $0.1875 per share, demonstrating a commitment to shareholder returns.
3A new stock repurchase program of up to $2 billion was approved, to be executed through December 31, 2020, funded by free cash flow and asset sales.
4Diamondback is divesting certain conventional and non-core Permian assets acquired from Energen for $322 million, expected to close by July 1, 2019.
5Total operating expenses per BOE decreased slightly to $16.16 in Q1 2019 from $14.77 in Q1 2018, despite higher overall expenses, reflecting increased production scale.
6Net cash provided by operating activities increased by 11% to $377 million in Q1 2019 from $339 million in Q1 2018.
7Capital expenditures in Q1 2019 were $937 million, primarily focused on drilling and completion activities, with a 2019 capital budget of $2.7 billion to $3.0 billion.

Diamondback Energy, Inc. Quarterly Report for Q1 Ended Mar 31, 2019

Summary

Financial Highlights

Key Highlights

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