Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the
“Company”) today announced financial and operating results for the
first quarter ended March 31, 2019.
HIGHLIGHTS
- Q1 2019 net income of $10 million, or $0.06 per diluted share;
adjusted net income (as defined and reconciled below) of $229
million, or $1.39 per diluted share
- Q1 2019 Consolidated Adjusted EBITDA (as defined and reconciled
below) of $675 million
- Q1 2019 production of 262.6 Mboe/d (68% oil), up 44% over Q4
2018 and 156% year over year
- First quarter capital expenditures of $627 million; turned 82
wells to production
- Declared Q1 2019 cash dividend of $0.1875 per share payable on
June 4, 2019; implies a 0.7% annualized yield based on the May 6,
2019 share closing price of $100.70
- Signed definitive agreements to divest conventional and
non-core Permian assets acquired from Energen for $322 million;
assets being sold have estimated full year 2019 net production of
~6,500 boe/d
- Updated full year 2019 production guidance of 272.0 - 287.0
Mboe/d (68% - 70% oil) after giving effect to the divested
production from the non-core asset sales closing by July 1,
2019
- Company expects unhedged oil price realizations between ~90-95%
of WTI for the remainder of 2019, based on existing firm
transportation agreements and current commodity prices
- Board of Directors has approved an up to $2.0 billion capital
return program through December 31, 2020, to begin in Q2 2019
through a stock repurchase program
"After closing the Energen acquisition in the
fourth quarter of 2018, we ensured that Diamondback get off to
a fast start in 2019 and showcase the strength of our operations
organization and low-cost structure on a larger scale. During
the first quarter of 2019, we successfully integrated the addition
of almost 300 employees and displayed our best in class execution
metrics on a larger capital plan. During the quarter, we
drilled almost twice as much lateral footage in the Midland Basin
as the fourth quarter of 2018 at 15% lower cost per lateral foot,
while completing 50 wells at an average per well cost 9% cheaper
than the average cost of 20 wells completed in the fourth quarter
of 2018. In the Delaware Basin, we are now completing over
50% more lateral footage per day compared to the first quarter of
2018, and overall well costs continue to trend down year over
year," stated Travis Stice, Chief Executive Officer of
Diamondback.
Mr. Stice continued, “We navigated a $30 drop in
fourth quarter oil prices by immediately cutting activity to start
2019 while still growing production over 5% from our December 2018
exit rate of approximately 250 Mboe/d. Additionally,
Diamondback executed on our “grow and prune” strategy introduced at
the time of the Energen acquisition by announcing $322 million of
conventional and non-core asset divestitures, which will both lower
our cost structure and consolidate our Tier 1 acreage."
CAPITAL RETURN PROGRAM
In addition to the previously announced
quarterly dividend, the Company today announced that its Board of
Directors has approved an expansion of the Company's capital return
program, with the implementation of a stock repurchase program to
acquire up to $2.0 billion of its outstanding common stock.
Mr. Stice continued, “As a result of our
maturing business and multi-year free cash flow outlook, which has
accelerated due to the increase in oil prices and our anticipated
oil realization improvement, Diamondback is expanding our capital
return program, with up to $2.0 billion of stock repurchases to be
executed through the end of 2020. We anticipate this program
will primarily be funded by current and future free cash flow, but
also expect to use some of our anticipated cash proceeds from asset
sales, our midstream business and our mineral business; all of
which we expect will generate substantial cash to Diamondback this
year."
"While the consistent growth of our dividend
remains our primary return of capital objective, this repurchase
program represents the next step in our total return strategy, and
signifies Diamondback's evolution from a small cap producer to the
large cap Permian pure-play we are today. Our capital
allocation philosophy is grounded on achieving above average year
over year growth, supporting a growing dividend, reducing debt
consistently and continuing to replace and maintain a deep
inventory of Tier 1 acreage, with excess free cash flow to be
returned to stockholders. This program is initially targeted
toward a stock repurchase program due to our view that buying our
stock currently represents substantial value, but we will consider
other forms of capital return in the future if we determine them to
be effective methods of driving stockholder value."
"To summarize, our free cash flow and related
return of capital program are the direct result of the business
plan we have been executing since 2015. Assuming $55/Bbl WTI,
Diamondback expects to generate over $750 million of free cash flow
in 2020 and growing for the foreseeable future. We intend to
return the majority of this free cash flow to stockholders in the
form of our dividend or other components of our capital return
program."
The repurchase program is authorized to extend
through December 31, 2020 and the Company intends to purchase stock
under the repurchase program opportunistically with funds from cash
generated from operations and liquidity events such as the sale of
assets. This repurchase program may be suspended from time to
time, modified, extended or discontinued by the Board of Directors
at any time. Purchases under the repurchase program may be
made from time to time in open market or privately negotiated
transactions in compliance with Rule 10b-18 under the Securities
Exchange Act of 1934, as amended, and will be subject to market
conditions, applicable legal requirements, contractual obligations
and other factors. Any stock purchased as part of this
program will be retired and made available for future issuances by
the Company.
NON-CORE ASSET DIVESTITURES
- Divesting 103,423 net acres, consisting of conventional assets
in the Central Basin Platform, Eastern Shelf in West Texas and the
Northwest Shelf in New Mexico acquired in the Energen acquisition;
executing on "grow and prune" strategy presented in the acquisition
announcement
- Also divesting 6,589 net acres of non-core Southern Midland
Basin acreage in Crockett and Reagan counties with minimal
associated production
- Combined gross purchase price of $322 million, subject to
certain closing adjustments; net proceeds expected to be applied
towards debt reduction and returned to stockholders as part of
announced stock repurchase program
- Assets being sold have estimated net production of ~6,500 boe/d
for the full year 2019 from over 3,000 producing wells
- Upon completion, corporate lease operating expense ("LOE") is
expected to be reduced by approximately $0.50/boe for the second
half of 2019
- Both transactions expected to close by July 1, 2019, subject to
continued diligence and closing conditions
RBC Richardson Barr is acting as exclusive
financial advisor to Diamondback for the sale of the Central Basin
Platform and Akin Gump Strauss Hauer & Feld LLP is acting as
legal advisor to Diamondback.
OPERATIONS UPDATE
Diamondback’s Q1 2019 production was 262.6
Mboe/d (68% oil), up 156% year over year from 102.6 Mboe/d in Q1
2018, and up 44% quarter over quarter from 182.8 Mboe/d in Q4
2018.
During the first quarter of 2019, Diamondback
drilled 83 gross horizontal wells and turned 82 operated horizontal
wells to production. The average lateral length for the wells
completed during the first quarter was 9,630 feet. Operated
completions during the first quarter consisted of 39 Wolfcamp A
wells, 23 Lower Spraberry wells, 12 Wolfcamp B wells, four Third
Bone Springs wells, two Second Bone Springs wells and two Middle
Spraberry wells.
In the Southern Delaware Basin, as part of
its joint venture with Carlyle, Diamondback recently began operated
development on its San Pedro Ranch acreage in the Southeast portion
of its Pecos County acreage position. The Company recently
completed two Wolfcamp A wells with an average lateral length of
7,611 feet. These wells commenced production with an average
peak 30-day 2-stream initial production ("IP") rate of 197
boe/d per 1,000 feet (79% oil).
Also in Pecos County, Diamondback continues to
have strong performance from operated completions targeting the
Second Bone Spring. Most recently, the Company completed the
Page Royalty State 31-32 B 2SB well with a 10,207 foot lateral, and
a peak 30-day flowing IP rate of 182 boe/d per 1,000 feet (91%
oil).
In the Northern Delaware Basin, Diamondback
recently completed a two-well pad targeting the Wolfcamp A and the
Wolfcamp B with an average lateral length of 9,752 feet. The
Wolfcamp A well, the Deguello 54-7-2 A 601H, had a peak 30-day
flowing IP rate of 298 boe/d per 1,000 feet (69% oil) with the
Wolfcamp B well producing 149 boe/d per 1,000 feet (67% oil) over
the same period.
FINANCIAL HIGHLIGHTS
Diamondback's first quarter 2019 net income was
$10 million, or $0.06 per diluted share. Adjusted net income
(a non-GAAP financial measure as defined and reconciled below) was
$229 million, or $1.39 per diluted share.
First quarter 2019 Adjusted EBITDA (as defined
and reconciled below) was $651 million, up 91% from $341 million in
Q1 2018.
First quarter 2019 average realized prices were
$46.12 per barrel of oil, $1.32 per Mcf of natural gas and $18.00
per barrel of natural gas liquids, resulting in a total equivalent
unhedged price of $35.63/boe. As previously indicated,
Diamondback expects realized prices to improve through the
remainder of 2019 and 2020 as fixed differential contracts roll off
and convert to our commitments on the EPIC and Gray Oak pipelines
or move to the current Midland market price. Based on current
market differentials and estimated in-basin gathering costs,
Diamondback expects to realize ~90-95% of WTI for the remainder of
2019 and ~100% of WTI in 2020, all including the effect of current
basis hedges, firm transportation agreements and in-basin gathering
costs.
Diamondback's cash operating costs for the first
quarter of 2019 were $8.00 per boe, including LOE of $4.61 per boe,
cash G&A expenses of $0.55 per boe and taxes and transportation
of $2.84 per boe.
As of March 31, 2019, Diamondback had $116
million in standalone cash and approximately $1.9 billion of
outstanding borrowings under its revolving credit facility.
During the first quarter of 2019, Diamondback
spent $533 million on drilling, completion and non-operated
properties, $36 million on infrastructure and $58 million on
midstream.
DIVIDEND DECLARATION
Diamondback announced today that the Company's
Board of Directors declared a cash dividend for the first quarter
of 18.75 cents per common share payable on June 4, 2019, to
stockholders of record at the close of business on May 28,
2019.
FULL YEAR 2019 GUIDANCE
Giving effect to the announced asset divestitures expected to
close by July 1, 2019, the Company expects full year production to
be between 272.0 and 287.0 Mboe/d. Additionally, Diamondback
is lowering full year 2019 guidance for LOE to $4.25 - $4.75 per
boe from $4.50 - $5.00 per boe previously due to the anticipated
sale of the Central Basin Platform assets expected to close by July
1, 2019. Diamondback is also increasing average lateral
length completed for the year by 100 feet to 9,500 feet and is
lowering Midland Basin well costs to $740 to $780 per completed
lateral foot from $770 to $800 per completed lateral foot
previously. Finally, Diamondback is lowering midstream
service expense (net of revenue) to $0 to $10 million from $35
million to $45 million.
|
2019 Guidance |
|
|
Diamondback Energy, Inc. |
Viper Energy Partners LP |
|
|
|
Total Net Production –
MBoe/d |
272.0 - 287.0 |
20.0 - 23.0 |
Oil Production - % of Net
Production |
68% - 70% |
67% - 71% |
|
|
|
Unit costs ($/boe) |
|
|
Lease operating expenses,
including workovers(a) |
$4.25 - $4.75 |
|
Gathering &
Transportation |
$0.40 - $0.70 |
|
G&A |
|
|
Cash G&A |
Under $1.00 |
Under $1.00 |
Non-cash equity-based compensation |
$0.75 - $1.50 |
$0.40 - $0.65 |
Depletion |
$13.00 - $15.00 |
$9.00 - $10.50 |
Interest expense (net of
interest income) |
$1.00 - $1.50 |
|
|
|
|
Midstream service expense (net
of revenue; $MM) |
$0 - $10 |
|
Depreciation ($MM) |
$48 - $52 |
|
Production and ad valorem
taxes (% of revenue)(b) |
7.0% |
7.0% |
Corporate tax rate (% of
pre-tax income) |
23% |
|
|
|
|
Gross horizontal D,C&E/Ft.
- Midland Basin |
$740 - $780 |
|
Gross horizontal D,C&E/Ft.
- Delaware Basin |
$1,075 - $1,150 |
|
Horizontal wells completed
(net) |
290 - 320 (255 - 280) |
|
Average lateral length
(Ft.) |
9,500 |
|
|
|
|
Capital Budget ($ -
million) |
|
|
Horizontal drilling and
completion |
$2,300 - $2,550 |
|
Midstream (ex. long-haul
pipeline investments) |
$225 - $250 |
|
Infrastructure |
$175 - $200 |
|
2019 Capital Spend |
$2,700 - $3,000 |
|
(a) Includes approximately $0.25/boe attributable to
Central Basin Platform assets.(b) Includes production taxes of
4.6% for crude oil and 7.5% for natural gas and NGLs and ad valorem
taxes.
CONFERENCE CALL
Diamondback will host a conference call and
webcast for investors and analysts to discuss its results for the
first quarter of 2019 on Wednesday, May 8,
2019 at 9:00 a.m. CT. Participants should call
(877) 440-7573 (United States/Canada) or (253) 237-1144
(International) and use the confirmation code 5853419. A
telephonic replay will be available from 12:00 p.m.
CT on Wednesday, May 8, 2019 through Wednesday, May
15, 2019 at 12:00 p.m. CT. To access the replay,
call (855) 859-2056 (United States/Canada) or
(404) 537-3406 (International) and enter confirmation code
5853419. A live broadcast of the earnings conference call
will also be available via the internet
at www.diamondbackenergy.com under the “Investor
Relations” section of the site. A replay will also be
available on the website following the call.
About Diamondback Energy, Inc.
Diamondback is an independent oil and natural
gas company headquartered in Midland, Texas focused on the
acquisition, development, exploration and exploitation of
unconventional, onshore oil and natural gas reserves in the Permian
Basin in West Texas.For more information, please visit
www.diamondbackenergy.com.
Forward Looking Statements
This news release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than historical
facts, that address activities that Diamondback assumes, plans,
expects, believes, intends or anticipates (and other similar
expressions) will, should or may occur in the future are
forward-looking statements. The forward-looking statements
are based on management’s current beliefs, based on currently
available information, as to the outcome and timing of future
events, including proposed sales of assets. These
forward-looking statements involve certain risks and uncertainties
that could cause the results to differ materially from those
expected by the management of Diamondback. Information
concerning these risks and other factors can be found in
Diamondback’s filings with the Securities and Exchange Commission,
including its Forms 10-K, 10-Q and 8-K, which can be obtained free
of charge on the Securities and Exchange Commission’s web site at
http://www.sec.gov. Diamondback undertakes no obligation to update
or revise any forward-looking statement.
Diamondback Energy, Inc. |
Consolidated Balance Sheets |
(unaudited, in millions, except share
amounts) |
|
|
|
|
March 31, |
December 31, |
|
2019 |
2018 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ |
126 |
|
$ |
215 |
|
Accounts receivable: |
|
|
Joint interest and other, net |
107 |
|
96 |
|
Oil and natural gas sales |
356 |
|
296 |
|
Inventories |
39 |
|
37 |
|
Derivative instruments |
5 |
|
231 |
|
Prepaid expenses and other |
60 |
|
50 |
|
Total current assets |
693 |
|
925 |
|
Property and equipment: |
|
|
Oil and natural gas properties, full cost method of accounting
($9,646 million and $9,670 million excluded from amortization at
March 31, 2019 and December 31, 2018, respectively) |
23,229 |
|
22,299 |
|
Midstream assets |
762 |
|
700 |
|
Other property, equipment and land |
151 |
|
147 |
|
Accumulated depletion, depreciation, amortization and
impairment |
(3,095 |
) |
(2,774 |
) |
Net property and equipment |
21,047 |
|
20,372 |
|
Equity method investment |
150 |
|
1 |
|
Deferred tax asset |
150 |
|
97 |
|
Investment in real estate,
net |
114 |
|
116 |
|
Other assets |
88 |
|
85 |
|
Total assets |
$ |
22,242 |
|
$ |
21,596 |
|
Liabilities and Stockholders’ Equity |
|
|
Current liabilities: |
|
|
Accounts payable-trade |
$ |
180 |
|
$ |
128 |
|
Accrued capital expenditures |
485 |
|
495 |
|
Other accrued liabilities |
217 |
|
253 |
|
Revenues and royalties payable |
151 |
|
143 |
|
Derivative instruments |
58 |
|
— |
|
Total current liabilities |
1,091 |
|
1,019 |
|
Long-term debt |
4,670 |
|
4,464 |
|
Derivative instruments |
16 |
|
15 |
|
Asset retirement
obligations |
140 |
|
136 |
|
Deferred income taxes |
1,802 |
|
1,785 |
|
Other long-term
liabilities |
9 |
|
10 |
|
Total liabilities |
7,728 |
|
7,429 |
|
Commitments and
contingencies |
|
|
Stockholders’ equity: |
|
|
Common stock, $0.01 par value, 200,000,000 shares authorized,
164,615,642 issued and outstanding at March 31, 2019; 200,000,000
shares authorized, 164,273,447 issued and outstanding at December
31, 2018 |
2 |
|
2 |
|
Additional paid-in capital |
13,019 |
|
12,936 |
|
Retained earnings |
752 |
|
762 |
|
Total Diamondback Energy, Inc. stockholders’ equity |
13,773 |
|
13,700 |
|
Non-controlling interest |
741 |
|
467 |
|
Total equity |
14,514 |
|
14,167 |
|
Total liabilities and equity |
$ |
22,242 |
|
$ |
21,596 |
|
Diamondback Energy, Inc. |
Consolidated Statements of Operations |
(unaudited, $ in millions except per share data, shares in
thousands) |
|
|
|
|
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Revenues: |
|
|
|
Oil, natural gas and natural gas liquids |
$ |
842 |
|
|
$ |
466 |
|
Lease bonus |
1 |
|
|
— |
|
Midstream services |
19 |
|
|
11 |
|
Other operating income |
2 |
|
|
2 |
|
Total revenues |
864 |
|
|
479 |
|
Operating
expenses: |
|
|
|
Lease operating expenses |
109 |
|
|
37 |
|
Production and ad valorem taxes |
55 |
|
|
27 |
|
Gathering and transportation |
12 |
|
|
4 |
|
Midstream services |
17 |
|
|
11 |
|
Depreciation, depletion and amortization |
322 |
|
|
115 |
|
General and administrative expenses |
27 |
|
|
16 |
|
Asset retirement obligation accretion |
2 |
|
|
1 |
|
Other operating expense |
1 |
|
|
1 |
|
Total expenses |
545 |
|
|
212 |
|
Income from operations |
319 |
|
|
267 |
|
Other income
(expense): |
|
|
|
Interest expense, net |
(46 |
) |
|
(14 |
) |
Other income, net |
1 |
|
|
3 |
|
Loss on derivative instruments, net |
(268 |
) |
|
(32 |
) |
Gain on revaluation of investment |
4 |
|
|
1 |
|
Total other expense, net |
(309 |
) |
|
(42 |
) |
Income before income
taxes |
10 |
|
|
225 |
|
Provision for (benefit from)
income taxes |
(33 |
) |
|
47 |
|
Net
income |
43 |
|
|
178 |
|
Net income attributable to
non-controlling interest |
33 |
|
|
15 |
|
Net income
attributable to Diamondback Energy, Inc. |
$ |
10 |
|
|
$ |
163 |
|
|
|
|
|
Earnings per common
share: |
|
|
|
Basic |
$ |
0.06 |
|
|
$ |
1.65 |
|
Diluted |
$ |
0.06 |
|
|
$ |
1.65 |
|
Weighted average
common shares outstanding: |
|
|
|
Basic |
164,852 |
|
|
98,555 |
|
Diluted |
165,061 |
|
|
98,769 |
|
Dividends declared per share |
0.1875 |
|
|
0.125 |
|
Diamondback Energy, Inc. |
Consolidated Statements of Cash Flows |
(unaudited, in millions) |
|
|
|
|
Three Months Ended March 31, |
|
2019 |
2018 |
|
|
|
Cash flows from operating
activities: |
|
|
Net income |
$ |
43 |
|
$ |
178 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
Provision for (benefit from) deferred income taxes |
(33 |
) |
47 |
|
Asset retirement obligation accretion |
2 |
|
1 |
|
Depreciation, depletion and amortization |
322 |
|
115 |
|
Amortization of debt issuance costs |
1 |
|
1 |
|
Change in fair value of derivative instruments |
285 |
|
— |
|
Income from equity investment |
— |
|
(2 |
) |
Gain on revaluation of investment |
(4 |
) |
(1 |
) |
Equity-based compensation expense |
14 |
|
7 |
|
Changes in operating assets and liabilities: |
|
|
Accounts receivable |
(63 |
) |
6 |
|
Inventories |
(4 |
) |
(13 |
) |
Prepaid expenses and other |
(9 |
) |
(7 |
) |
Accounts payable and accrued liabilities |
(190 |
) |
(17 |
) |
Accrued interest |
5 |
|
11 |
|
Revenues and royalties payable |
8 |
|
13 |
|
Net cash provided by operating
activities |
377 |
|
339 |
|
Cash flows from investing
activities: |
|
|
Additions to oil and natural gas properties |
(569 |
) |
(280 |
) |
Additions to midstream assets |
(58 |
) |
(38 |
) |
Purchase of other property, equipment and land |
(4 |
) |
(2 |
) |
Acquisition of leasehold interests |
(75 |
) |
(16 |
) |
Acquisition of mineral interests |
(82 |
) |
(150 |
) |
Investment in real estate |
— |
|
(110 |
) |
Funds held in escrow |
— |
|
11 |
|
Equity investments |
(149 |
) |
— |
|
Net cash used in investing
activities |
(937 |
) |
(585 |
) |
Cash flows from financing
activities: |
|
|
Proceeds from borrowings under credit facility |
484 |
|
224 |
|
Repayment under credit facility |
(314 |
) |
(308 |
) |
Proceeds from senior notes |
— |
|
312 |
|
Proceeds from joint venture |
23 |
|
— |
|
Debt issuance costs |
(3 |
) |
(3 |
) |
Proceeds from public offerings |
341 |
|
— |
|
Repurchased shares for tax withholdings |
(13 |
) |
— |
|
Dividends to stockholders |
(21 |
) |
— |
|
Distributions to non-controlling interest |
(26 |
) |
(19 |
) |
Net cash provided by financing
activities |
471 |
|
206 |
|
Net decrease in cash and cash
equivalents |
(89 |
) |
(40 |
) |
Cash and cash equivalents at
beginning of period |
215 |
|
112 |
|
Cash and cash equivalents at
end of period |
$ |
126 |
|
$ |
72 |
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
Interest paid, net of capitalized interest |
$ |
17 |
|
$ |
4 |
|
Supplemental
disclosure of non-cash transactions: |
|
|
Change in accrued capital expenditures |
$ |
(10 |
) |
$ |
41 |
|
Capitalized stock-based compensation |
$ |
6 |
|
$ |
3 |
|
Asset retirement obligations acquired |
$ |
3 |
|
$ |
— |
|
Diamondback Energy, Inc. |
Selected Operating Data |
(unaudited) |
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
|
Three Months Ended December 31, 2018 |
|
Three Months Ended March 31, 2018 |
Production
Data: |
|
|
|
|
|
Oil (MBbl) |
16,115 |
|
|
11,968 |
|
|
6,800 |
|
Natural gas (MMcf) |
21,684 |
|
|
12,952 |
|
|
6,546 |
|
Natural gas liquids (MBbls) |
3,908 |
|
|
2,689 |
|
|
1,344 |
|
Oil Equivalents (MBOE)(1)(2) |
23,637 |
|
|
16,816 |
|
|
9,235 |
|
Average daily production (BOE/d)(2) |
262,633 |
|
|
182,785 |
|
|
102,607 |
|
% Oil |
68 |
% |
|
71 |
% |
|
74 |
% |
|
|
|
|
|
|
Average sales
prices: |
|
|
|
|
|
Oil, realized ($/Bbl) |
$ |
46.12 |
|
|
$ |
45.51 |
|
|
$ |
61.64 |
|
Natural gas realized ($/Mcf) |
$ |
1.32 |
|
|
$ |
1.62 |
|
|
$ |
2.18 |
|
Natural gas liquids ($/Bbl) |
$ |
18.00 |
|
|
$ |
21.10 |
|
|
$ |
24.57 |
|
Average price realized ($/BOE) |
$ |
35.63 |
|
|
$ |
37.01 |
|
|
$ |
50.52 |
|
Oil, hedged ($/Bbl)(3) |
$ |
46.92 |
|
|
$ |
45.31 |
|
|
$ |
56.80 |
|
Natural gas, hedged ($ per MMbtu)(3) |
$ |
1.49 |
|
|
$ |
1.44 |
|
|
$ |
2.27 |
|
Natural gas liquids, hedged ($ per Bbl)(1) |
$ |
18.19 |
|
|
$ |
21.09 |
|
|
$ |
24.57 |
|
Average price, hedged ($/BOE)(3) |
$ |
36.38 |
|
|
$ |
36.72 |
|
|
$ |
47.02 |
|
|
|
|
|
|
|
Average Costs per
BOE: |
|
|
|
|
|
Lease operating expense |
$ |
4.61 |
|
|
$ |
4.51 |
|
|
$ |
4.04 |
|
Production and ad valorem taxes |
2.33 |
|
|
2.36 |
|
|
2.96 |
|
Gathering and transportation expense |
0.51 |
|
|
0.56 |
|
|
0.42 |
|
General and administrative - cash component |
0.55 |
|
|
0.67 |
|
|
0.96 |
|
Total operating expense - cash |
$ |
8.00 |
|
|
$ |
8.10 |
|
|
$ |
8.38 |
|
|
|
|
|
|
|
General and administrative - non-cash component |
$ |
0.59 |
|
|
$ |
0.49 |
|
|
$ |
0.81 |
|
Depreciation, depletion and amortization |
$ |
13.62 |
|
|
$ |
13.77 |
|
|
$ |
12.48 |
|
Interest expense, net |
$ |
1.95 |
|
|
$ |
2.26 |
|
|
$ |
1.48 |
|
Merger and integration expense |
$ |
— |
|
|
$ |
2.19 |
|
|
$ |
— |
|
- Bbl equivalents are calculated using a conversion rate of six
Mcf per one Bbl.
- The volumes presented are based on actual results and are not
calculated using the rounded numbers in the table above.
- Hedged prices reflect the effect of our commodity derivative
transactions on our average sales prices. Our calculation of such
effects includes realized gains and losses on cash settlements for
commodity derivatives, which we do not designate for hedge
accounting.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is a supplemental non-GAAP
financial measure that is used by management and external users of
our financial statements, such as industry analysts, investors,
lenders and rating agencies. The Company defines Adjusted EBITDA as
net income plus non-cash (gain) loss on derivative instruments,
net, interest expense, net, depreciation, depletion and
amortization, non-cash equity-based compensation expense,
capitalized equity-based compensation expense, asset retirement
obligation accretion expense, (gain) loss on revaluation of
investment, merger and integration expense and income tax (benefit)
provision. Adjusted EBITDA is not a measure of net income as
determined by United States’ generally accepted accounting
principles ("GAAP"). Management believes Adjusted EBITDA is useful
because it allows it to more effectively evaluate the Company’s
operating performance and compare the results of its operations
from period to period without regard to its financing methods or
capital structure. The Company adds the items listed above to net
income in arriving at Adjusted EBITDA because these amounts can
vary substantially from company to company within its industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP or as an indicator of the Company’s
operating performance or liquidity. Certain items excluded from
Adjusted EBITDA are significant components in understanding and
assessing a company’s financial performance, such as a company’s
cost of capital and tax structure, as well as the historic costs of
depreciable assets, none of which are components of Adjusted
EBITDA. Adjusted net income is a non-GAAP financial measure equal
to net income attributable to Diamondback Energy, Inc. plus
non-cash loss on derivative instruments, gain on revaluation of
investment and related income tax adjustments. The Company’s
computations of Adjusted EBITDA and adjusted net income may not be
comparable to other similarly titled measures of other companies or
to such measure in our credit facility or any of our other
contracts.
The following tables present a reconciliation of
the non-GAAP financial measure of Adjusted EBITDA to the GAAP
financial measure of net income (loss).
Diamondback Energy, Inc. |
Reconciliation of Adjusted EBITDA to Net
Income |
(unaudited, in millions) |
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 |
|
Three Months Ended December 31, 2018 |
|
Three Months Ended March 31, 2018 |
Net income |
$ |
43 |
|
|
$ |
306 |
|
|
$ |
178 |
|
Non-cash loss (gain) on
derivative instruments, net |
285 |
|
|
(245 |
) |
|
— |
|
Interest expense, net |
46 |
|
|
38 |
|
|
14 |
|
Depreciation, depletion and
amortization |
322 |
|
|
232 |
|
|
115 |
|
Non-cash equity-based
compensation expense |
20 |
|
|
11 |
|
|
10 |
|
Capitalized equity-based
compensation expense |
(6 |
) |
|
(3 |
) |
|
(2 |
) |
Asset retirement obligation
accretion expense |
2 |
|
|
1 |
|
|
1 |
|
Gain (loss) on revaluation of
investment |
(4 |
) |
|
6 |
|
|
(1 |
) |
Merger and integration
expense |
— |
|
|
36 |
|
|
— |
|
Income tax (benefit)
provision |
(33 |
) |
|
85 |
|
|
47 |
|
Consolidated Adjusted
EBITDA |
$ |
675 |
|
|
$ |
467 |
|
|
$ |
362 |
|
Adjustment for non-controlling
interest |
(24 |
) |
|
(11 |
) |
|
(21 |
) |
Adjusted EBITDA attributable
to Diamondback Energy, Inc. |
$ |
651 |
|
|
$ |
456 |
|
|
$ |
341 |
|
|
|
|
|
|
|
Adjusted EBITDA per
common share: |
|
|
|
|
|
Basic |
$ |
3.95 |
|
|
$ |
3.73 |
|
|
$ |
3.46 |
|
Diluted |
$ |
3.94 |
|
|
$ |
3.72 |
|
|
$ |
3.45 |
|
Weighted average
common shares outstanding: |
|
|
|
|
|
Basic |
164,852 |
|
|
122,510 |
|
|
98,555 |
|
Diluted |
165,061 |
|
|
122,739 |
|
|
98,769 |
|
Adjusted net income is a performance measure
used by management to evaluate performance, prior to non-cash loss
on derivative instruments, gain on revaluation of investment, and
related income tax adjustments.
The following table presents a reconciliation of adjusted net
income to net income:
Diamondback Energy, Inc. |
Adjusted Net Income |
(unaudited, in thousands, except share amounts and per
share data) |
|
|
|
Three Months Ended March 31, 2019 |
|
Pre-Tax Amounts |
|
Amounts Per Share |
Net income attributable to
Diamondback Energy, Inc. |
$ |
10 |
|
|
$ |
0.06 |
|
Non-cash loss on derivative
instruments |
285 |
|
|
1.73 |
|
Loss on revaluation of
investments |
(4 |
) |
|
(0.02 |
) |
Adjusted income excluding
above items |
291 |
|
|
1.76 |
|
Income tax adjustment for
above items |
(62 |
) |
|
(0.38 |
) |
Adjusted net income |
$ |
229 |
|
|
$ |
1.39 |
|
Derivatives
As of the filing date, the Company had the
following outstanding derivative contracts. The Company’s
derivative contracts are based upon reported settlement prices on
commodity exchanges, with crude oil derivative settlements based on
New York Mercantile Exchange West Texas Intermediate pricing and
Crude Oil Brent and with natural gas derivative settlements based
on the New York Mercantile Exchange Henry Hub pricing. When
aggregating multiple contracts, the weighted average contract price
is disclosed.
|
Crude Oil (Bbls/day, $/Bbl) |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
|
Q1 2020 |
|
Q2 2020 |
|
Q3 2020 |
|
Q4 2020 |
Swaps - West
Texas Intermediate (Cushing) |
28,725 |
|
|
30,457 |
|
|
29,457 |
|
|
7,000 |
|
|
7,000 |
|
|
7,000 |
|
|
7,000 |
|
$ |
61.09 |
|
|
$ |
61.09 |
|
|
$ |
61.21 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
Swaps - West
Texas Intermediate (Magellan East Houston) |
4,000 |
|
|
8,000 |
|
|
8,000 |
|
|
4,000 |
|
|
4,000 |
|
|
4,000 |
|
|
4,000 |
|
$ |
74.64 |
|
|
$ |
66.76 |
|
|
$ |
65.01 |
|
|
$ |
64.38 |
|
|
$ |
64.38 |
|
|
$ |
64.38 |
|
|
$ |
64.38 |
|
Swaps -
Crude Brent Oil |
5,000 |
|
|
7,000 |
|
|
7,000 |
|
|
4,000 |
|
|
4,000 |
|
|
4,000 |
|
|
4,000 |
|
$ |
67.41 |
|
|
$ |
67.86 |
|
|
$ |
67.71 |
|
|
$ |
66.24 |
|
|
$ |
66.24 |
|
|
$ |
66.24 |
|
|
$ |
66.24 |
|
Basis
Swaps |
51,495 |
|
|
45,000 |
|
|
45,000 |
|
|
41,538 |
|
|
41,538 |
|
|
41,087 |
|
|
41,087 |
|
$ |
(5.25 |
) |
|
$ |
(5.52 |
) |
|
$ |
(5.52 |
) |
|
$ |
(1.21 |
) |
|
$ |
(1.21 |
) |
|
$ |
(1.21 |
) |
|
$ |
(1.21 |
) |
Three-Way
Collar Short Put - West Texas Intermediate (Cushing) |
25,824 |
|
|
15,652 |
|
|
15,652 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
$ |
39.45 |
|
|
$ |
35.94 |
|
|
$ |
35.94 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
Three-Way
Collar Floor - West Texas Intermediate (Cushing) |
25,824 |
|
|
15,652 |
|
|
15,652 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
$ |
49.45 |
|
|
$ |
45.94 |
|
|
$ |
45.94 |
|
|
$ |
55.00 |
|
|
$ |
55.00 |
|
|
$ |
55.00 |
|
|
$ |
55.00 |
|
Three-Way
Collar Ceiling - West Texas Intermediate (Cushing) |
25,824 |
|
|
15,652 |
|
|
15,652 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
|
8,000 |
|
$ |
64.77 |
|
|
$ |
61.65 |
|
|
$ |
61.65 |
|
|
$ |
67.00 |
|
|
$ |
67.00 |
|
|
$ |
67.00 |
|
|
$ |
67.00 |
|
Three-Way
Collar Short Put - West Texas Intermediate (Magellan East
Houston) |
4,000 |
|
|
5,000 |
|
|
5,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
$ |
57.50 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
Three-Way
Collar Floor - West Texas Intermediate (Magellan East
Houston) |
4,000 |
|
|
5,000 |
|
|
5,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
$ |
67.50 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
|
$ |
60.00 |
|
Three-Way
Collar Ceiling - West Texas Intermediate (Magellan East
Houston) |
4,000 |
|
|
5,000 |
|
|
5,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
|
14,000 |
|
$ |
77.68 |
|
|
$ |
66.10 |
|
|
$ |
66.10 |
|
|
$ |
68.61 |
|
|
$ |
68.61 |
|
|
$ |
68.61 |
|
|
$ |
68.61 |
|
Three-Way
Collar Short Put - Crude Brent Oil |
8,000 |
|
|
8,000 |
|
|
6,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
$ |
55.00 |
|
|
$ |
52.50 |
|
|
$ |
51.67 |
|
|
$ |
50.63 |
|
|
$ |
50.63 |
|
|
$ |
50.63 |
|
|
$ |
50.63 |
|
Three-Way
Collar Floor - Crude Brent Oil |
8,000 |
|
|
8,000 |
|
|
6,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
$ |
65.00 |
|
|
$ |
62.50 |
|
|
$ |
61.67 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
|
$ |
60.63 |
|
Three-Way
Collar Ceiling - Crude Brent Oil |
8,000 |
|
|
8,000 |
|
|
6,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
|
16,000 |
|
$ |
81.25 |
|
|
$ |
78.88 |
|
|
$ |
78.47 |
|
|
$ |
74.74 |
|
|
$ |
74.74 |
|
|
$ |
74.74 |
|
|
$ |
74.74 |
|
|
Natural Gas (Mmbtu/day, $/Mmbtu) |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
Natural Gas
Swaps - Henry Hub |
70,000 |
|
|
70,000 |
|
|
70,000 |
|
$ |
3.06 |
|
|
$ |
3.06 |
|
|
$ |
3.06 |
|
Natural Gas
Basis Swaps - Waha Hub |
70,000 |
|
|
70,000 |
|
|
70,000 |
|
$ |
(1.56 |
) |
|
$ |
(1.56 |
) |
|
$ |
(1.56 |
) |
|
Natural Gas Liquids (Bbls/day, $/Bbl) |
|
Q2 2019 |
|
Q3 2019 |
|
Q4 2019 |
Natural Gas
Liquid Swaps - Mont Belvieu |
7,582 |
|
|
7,500 |
|
|
7,500 |
|
$ |
27.30 |
|
|
$ |
27.30 |
|
|
$ |
27.30 |
|
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@diamondbackenergy.com
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