10-QPeriod: Q1 FY2020

Diamondback Energy, Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 8, 2020For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) reported a net loss of $272 million for the first quarter of 2020, a significant shift from a net income of $43 million in the prior year's quarter. This downturn was primarily driven by the severe decline in oil and natural gas prices experienced in Q1 2020, exacerbated by the COVID-19 pandemic and OPEC+ production decisions. This price collapse necessitated a substantial non-cash impairment charge of $1.0 billion related to oil and natural gas properties. Despite the challenging commodity price environment, the company demonstrated resilience by maintaining production levels, with oil production increasing by 12% year-over-year. FANG took proactive measures to mitigate the impact of low prices, including significantly reducing its capital budget, ceasing completion operations for a period, and implementing production curtailments. The company also highlighted strong liquidity, with approximately $1.8 billion available under its revolving credit facility and $0.1 billion in cash on hand as of March 31, 2020. Management believes these measures and liquidity position are sufficient to navigate the current market conditions through year-end 2020.

Financial Highlights

44 data points
Beta

Revenue

$899.00M

Net Income

-$272.00M

-30.3% Net Margin

EPS (Diluted)

$-1.72

Total Assets

$23.39B

Cash & Equivalents

$149.00M

Free Cash Flow

$849.00M

Financial Statements
Beta
Revenue$899.00M
SG&A Expenses$24.00M
Operating Expenses$1.70B
Operating Income-$802.00M
Net Income-$272.00M
EPS (Basic)$-1.72
EPS (Diluted)$-1.72
Shares Outstanding (Basic)158.29M
Shares Outstanding (Diluted)158.49M

Key Highlights

  • 1Reported a net loss of $272 million for Q1 2020, compared to a net income of $43 million in Q1 2019.
  • 2Recorded a significant non-cash impairment charge of $1.0 billion due to the sharp decline in commodity prices.
  • 3Oil production increased by 12% year-over-year in Q1 2020.
  • 4Proactively reduced the 2020 capital budget by over 40% and implemented production curtailments.
  • 5Maintained strong liquidity with $1.8 billion available under its revolving credit facility as of March 31, 2020.
  • 6Declared a quarterly dividend of $0.3750 per share, signaling continued commitment to shareholder returns despite market challenges.
  • 7Suspended its $2 billion stock repurchase program to preserve liquidity.

Frequently Asked Questions

The primary driver was the unprecedented decline in oil and natural gas prices in early March 2020, significantly impacted by the COVID-19 pandemic and OPEC+ actions. This led to a substantial net loss and a significant non-cash impairment charge.

Diamondback has implemented several measures, including significantly reducing its capital budget by over 40%, pausing completion operations, voluntarily curtailing production, and reducing operating costs. The company has also hedged a significant portion of its expected production for 2020 and 2021.

As of March 31, 2020, Diamondback had approximately $1.8 billion in availability under its revolving credit facility and $0.1 billion in cash on hand. The company believes this liquidity is sufficient to fund operations through the end of 2020.

Yes, due to the sharp decline in commodity prices, Diamondback recorded a non-cash ceiling test impairment charge of $1.0 billion for the three months ended March 31, 2020. This charge impacted earnings but not cash flow.