MIDLAND, Texas, Nov. 01, 2021 (GLOBE NEWSWIRE) — Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the third quarter ended September 30, 2021.
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THIRD QUARTER 2021 HIGHLIGHTS
- Q3 2021 average production of 239.8 MBO/d (404.3 MBOE/d)
- Q3 2021 Permian Basin production of 223.0 MBO/d (374.3 MBOE/d)
- Q3 2021 cash flow from operating activities of $1,199 million; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $1,131 million
- Q3 2021 cash capital expenditures of $391 million; Q3 2021 activity-based capital expenditures incurred of approximately $430 million
- Q3 2021 Free Cash Flow (as defined and reconciled below) of $740 million
- Closed previously announced full redemption of $432 million remaining aggregate principal amount of 5.375% bonds due 2025
- Announced commitment to return 50% of Free Cash Flow to stockholders beginning in Q4 2021; Board authorized $2 billion share repurchase program as part of this commitment
- Repurchased 268,291 shares of common stock at an average price of $82.02 during the third quarter of 2021
- Flared 0.8% (1.6% including QEP) of gross natural gas production in the third quarter of 2021; 0.9% (1.6% including QEP) in the first nine months of 2021
- Increasing annual dividend by 11.1% to $2.00 per share; declared Q3 2021 cash dividend of $0.50 per share payable on November 18, 2021; implies a 1.9% annualized yield based on the October 29, 2021 share closing price of $107.19
- Closed previously announced divestiture of Williston Basin assets on October 21, 2021; net cash proceeds of $586 million after closing price adjustments
- Closed previously announced full redemption of $650 million aggregate principal amount of 0.9% bonds due 2023
- Agreed to drop down transaction (“Drop Down”) of water midstream assets to subsidiary Rattler Midstream LP (NASDAQ:RTLR) (“Rattler”) for gross consideration of $160 million, subject to certain closing adjustments; expected to close in Q4 2021
- Closed sale of Mustang Springs Gas Gathering assets for net consideration of approximately $54 million, after certain post-closing adjustments
- Full year 2021 oil production guidance of 222 – 223 MBO/d (370 – 372 MBOE/d), up from 219 – 222 MBO/d (363 – 370 MBOE/d) previously, after giving effect for Q4 2021 Williston Basin production through October 21, 2021
- Lowering full year 2021 cash CAPEX guidance to $1.49 – $1.53 billion, down 4% at the midpoint from $1.525 – $1.625 billion previously
- Initiating Q4 2021 oil production guidance of 221 – 225 MBO/d (368 – 375 MBOE/d); includes ~3 MBO/d (~5 MBOE/d) of estimated net Q4 2021 Williston Basin production
- Initiating Q4 2021 Permian Basin oil production guidance of 218 – 222 MBO/d (363 – 370 MBOE/d)
- Initiating Q4 2021 cash CAPEX guidance of $435 – $475 million
- Diamondback believes it can maintain Q4 2021 Permian Basin oil production through full year 2022 assuming Q4 2021’s run rate CAPEX spend
“Diamondback continued building on its execution track record in the third quarter, generating a record $740 million of Free Cash Flow while keeping capital costs under control. Efficiency gains, particularly in the Midland Basin drilling and completion programs, have mitigated the inflationary pressures seen on well costs and have led to our second decrease in capital guidance this year, now down 10% from guidance presented in April 2021. Through the third quarter of 2021, Diamondback has generated $1.65 billion of Free Cash Flow, and we have used this Free Cash Flow to reduce our gross debt by $1.3 billion and increase our dividend for the third time this year, now up 33% from a year ago,” stated Travis Stice, Chief Executive Officer of Diamondback.
Mr. Stice continued, “In addition, we are well-positioned to deliver on the enhanced return of capital program we recently outlined, where we expect to distribute 50% of quarterly Free Cash Flow beginning with the fourth quarter’s performance. This program consists of our sustainable and growing base dividend, which is well protected below $40 oil, and a combination of share repurchases and variable dividends which will be used interchangeably depending on which method presents the best return to our stockholders.”
Mr. Stice continued, “As we move into 2022, we are still seeing excess oil supply and varying demand recovery profiles across the globe. As such, we remain committed to capital discipline and our plan to return excess Free Cash Flow to our stockholders. Therefore, we are committing to maintaining our fourth quarter 2021 Permian oil volumes throughout next year and we believe this can be accomplished by spending the amount of capital implied by our fourth quarter 2021 guidance run-rate. This capital range accounts for the inflationary pressures we have seen so far this year and anticipate next year. By keeping our oil production flat in 2022, we expect to be in a position to maximize Free Cash Flow, grow our dividend, further pay down debt and overall return more capital to stockholders.”
During the third quarter of 2021, Diamondback drilled 47 gross horizontal wells in the Midland Basin and 11 gross horizontal wells in the Delaware Basin. The Company turned 63 operated horizontal wells to production in the Midland Basin and 10 operated horizontal wells to production in the Delaware Basin. The average lateral length for the wells completed during the third quarter was 11,225 feet. Operated completions during the third quarter consisted of 23 Wolfcamp A wells, 21 Lower Spraberry wells, 10 Middle Spraberry wells, eight Jo Mill wells, four Wolfcamp B wells, four Dean wells, two Second Bone Spring wells and one Third Bone Spring well.
In the first nine months of 2021, Diamondback drilled 135 gross horizontal wells in the Midland Basin and 28 gross horizontal wells in the Delaware Basin. The Company turned 152 operated horizontal wells to production in the Midland Basin, 49 operated horizontal wells in the Delaware Basin and four operated horizontal wells in the Williston Basin. The average lateral length for wells completed during the first nine months of 2021 was 10,906 feet, and consisted of 61 Wolfcamp A wells, 50 Lower Spraberry wells, 25 Middle Spraberry wells, 21 Jo Mill wells, 17 Wolfcamp B wells, 10 Second Bone Spring wells, nine Third Bone Spring wells, seven Dean wells, two Bakken wells, two Three Forks wells and one Barnett well.
Diamondback’s third quarter 2021 net income was $649 million, or $3.56 per diluted share. Adjusted net income (a non-GAAP financial measure as defined and reconciled below) was $536 million, or $2.94 per diluted share.
Third quarter 2021 Consolidated Adjusted EBITDA (as defined and reconciled below) was $1,136 million. Adjusted EBITDA net of non-controlling interest was $1,094 million.
Third quarter 2021 average unhedged realized prices were $68.27 per barrel of oil, $3.34 per Mcf of natural gas and $31.70 per barrel of natural gas liquids (“NGLs”), resulting in a total equivalent unhedged price of $51.00 per BOE.
Diamondback’s cash operating costs for the third quarter of 2021 were $9.97 per BOE, including lease operating expenses (“LOE”) of $4.19 per BOE, cash general and administrative (“G&A”) expenses of $0.65 per BOE, production and ad valorem taxes of $3.33 per BOE and gathering and transportation expenses of $1.80 per BOE.
As of September 30, 2021, Diamondback had $402 million in standalone cash and no borrowings outstanding under its revolving credit facility, with approximately $1.6 billion available for future borrowing under the facility and $2.0 billion of total liquidity.
During the third quarter of 2021, Diamondback spent $345 million on drilling and completion, $6 million on midstream, $21 million on infrastructure and $19 million on non-operated properties, for total cash capital expenditures of $391 million. During the first nine months of 2021, Diamondback has spent $948 million on drilling and completions, $23 million on midstream, $43 million on infrastructure and $39 million on non-operated properties, for total cash capital expenditures of $1,053 million.