MIDLAND, Texas, Nov. 06, 2023 (GLOBE NEWSWIRE) — Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the third quarter ended September 30, 2023.
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THIRD QUARTER 2023 HIGHLIGHTS
- Average production of 266.1 MBO/d (452.8 MBOE/d)
- Net cash provided by operating activities of $1.4 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $1.5 billion
- Cash capital expenditures of $684 million
- Free Cash Flow (as defined and reconciled below) of $820 million; Adjusted Free Cash Flow (as defined and reconciled below) of $884 million
- Declared Q3 2023 base cash dividend of $0.84 per share and a variable cash dividend of $2.53 per share, in each case payable on November 24, 2023; implies an 8.3% annualized yield based on November 3, 2023 closing share price of $162.10
- Repurchased 406,700 shares of common stock in Q3 2023 for $56 million (at a weighted average price of $136.59/share); repurchased 217,900 shares of common stock to date in Q4 2023 for $32 million, excluding excise tax (at a weighted average price of $146.97/share)
- Total Q3 2023 return of capital of $663 million; represents ~81% of Q3 2023 Free Cash Flow and 75% of Adjusted Free Cash Flow from stock repurchases and the declared Q3 2023 base-plus-variable dividend
- As previously announced, completed joint venture transaction with Five Point Energy LLC, forming Deep Blue Midland Basin LLC (“Deep Blue”), contributing certain Midland Basin water assets for gross proceeds of $516 million and 30% equity ownership in the new joint venture entity
- In September, completed divestiture of Delaware Basin oil gathering assets for gross proceeds of $75 million
- Since initiating our non-core asset sale program, have closed transactions with $1.7 billion of gross proceeds, exceeding our year-end 2023 target of $1.0 billion
- Ended Q3 2023 with consolidated total debt of $6.4 billion and consolidated net debt (as defined and reconciled below) of $5.6 billion, down from $6.7 billion as of the end of Q2 2023
OPERATIONS UPDATE
The tables below provide a summary of operating activity for the third quarter of 2023.
During the third quarter of 2023, Diamondback drilled 79 gross wells in the Midland Basin and seven gross wells in the Delaware Basin. The Company turned 73 operated wells to production in the Midland Basin and one gross well in the Delaware Basin with an average lateral length of 11,864 feet. Operated completions during the third quarter consisted of 25 Lower Spraberry wells, 20 Wolfcamp A wells, 11 Jo Mill wells, eight Wolfcamp B wells, seven Middle Spraberry wells, one Third Bone Spring well, one Upper Spraberry well and one Barnett well.
For the first nine months of 2023, Diamondback drilled 235 gross wells in the Midland Basin and 31 gross wells in the Delaware Basin. The Company turned 213 operated wells to production in the Midland Basin and 38 operated wells to production in the Delaware Basin. The average lateral length for wells completed during the first nine months of 2023 was 11,184 feet, and consisted of 69 Lower Spraberry wells, 64 Wolfcamp A wells, 41 Wolfcamp B wells, 32 Jo Mill wells, 18 Middle Spraberry wells, 15 Third Bone Spring wells, eight Second Bone Spring wells, two Upper Spraberry wells and two Barnett wells.
FINANCIAL UPDATE
Diamondback’s third quarter 2023 net income was $915 million, or $5.07 per diluted share. Adjusted net income (as defined and reconciled below) was $990 million, or $5.49 per diluted share.
Third quarter 2023 net cash provided by operating activities was $1.4 billion. Through the first nine months of 2023, Diamondback’s net cash provided by operating activities was $4.3 billion.
During the third quarter of 2023, Diamondback spent $611 million on operated and non-operated drilling and completions, $34 million on infrastructure and environmental and $39 million on midstream, for total cash capital expenditures of $684 million for the quarter. During the first nine months of 2023, Diamondback has spent $1.8 billion on operated and non-operated drilling and completions, $122 million on infrastructure and environmental and $104 million on midstream, for total cash capital expenditures of $2.1 billion.
Third quarter 2023 Consolidated Adjusted EBITDA (as defined and reconciled below) was $1.8 billion. Adjusted EBITDA net of non-controlling interest (as defined and reconciled below) was $1.7 billion.
Diamondback’s third quarter 2023 Free Cash Flow (as defined and reconciled below) was $820 million. Adjusted Free Cash Flow (as defined and reconciled below) was $884 million. Through September 30, 2023, Diamondback’s Free Cash Flow was $2.0 billion, with $2.1 billion of Adjusted Free Cash Flow over the same period.
Third quarter 2023 average unhedged realized prices were $81.57 per barrel of oil, $1.62 per Mcf of natural gas and $21.02 per barrel of natural gas liquids (“NGLs”), resulting in a total equivalent unhedged realized price of $54.37 per BOE.
Diamondback’s cash operating costs for the third quarter of 2023 were $10.51 per BOE, including lease operating expenses (“LOE”) of $5.42 per BOE, cash general and administrative (“G&A”) expenses of $0.51 per BOE, production and ad valorem taxes of $2.83 per BOE and gathering and transportation expenses of $1.75 per BOE.
As of September 30, 2023, Diamondback had $680 million in standalone cash and no borrowings under its revolving credit facility, with approximately $1.6 billion available for future borrowing under the facility and approximately $2.3 billion of total liquidity. As of September 30, 2023, the Company had consolidated total debt of $6.4 billion and consolidated net debt of $5.6 billion, down from consolidated total debt and net debt of $6.7 billion as of June 30, 2023.
DIVIDEND DECLARATIONS
Diamondback announced today that the Company’s Board of Directors declared a base cash dividend of $0.84 per common share for the third quarter of 2023 payable on November 24, 2023, to stockholders of record at the close of business on November 16, 2023.
The Company’s Board of Directors also declared a variable cash dividend of $2.53 per common share for the third quarter of 2023 payable on November 24, 2023, to stockholders of record at the close of business on November 16, 2023.
Future base and variable dividends remain subject to review and approval at the discretion of the Company’s Board of Directors.
COMMON STOCK REPURCHASE PROGRAM
During the third quarter of 2023, Diamondback repurchased 406,700 shares of common stock at an average share price of $136.59 for a total cost of approximately $56 million, excluding excise tax. To date, Diamondback has repurchased 18,403,732 shares of common stock at an average share price of $123.28 for a total cost of approximately $2.3 billion and has approximately $1.7 billion remaining on its current share buyback authorization. Diamondback intends to continue to purchase common stock under the common stock repurchase program opportunistically with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. This repurchase program has no time limit and may be suspended from time to time, modified, extended or discontinued by the Board at any time. Purchases under the repurchase program may be made from time to time in privately negotiated transactions, or in open market 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 and other factors. Any common stock purchased as part of this program will be retired.
FULL YEAR 2023 GUIDANCE
Below is Diamondback’s guidance for the full year 2023, which includes fourth quarter production, cash tax and capital guidance. The Company is raising both total and net oil production for the full year 2023 due to production outperformance year-to-date as well as narrowing unit costs, capital expenditures and activity levels.
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