Texas-based Diamondback Energy Inc. has reported a net income of $556 million, or $3.05 per diluted share, for the second quarter, dropping 60 percent from its previous-year quarter net income of $1.4 billion, or $7.93 per diluted share.
Diamondback’s net cash from operating activities was $1.51 billion for the second quarter, down 11.3 percent from $1.7 billion in the same period in 2022. The company’s total revenue for the quarter was $1.92 billion, down 30.6 percent from $2.77 billion in the second quarter of 2022, according to the company’s earnings release Monday.
During the second quarter of 2023, Diamondback spent $635 million on operated and non-operated drilling and completions, $46 million on infrastructure and environment, and $30 million on midstream, for total cash capital expenditures of $711 million.
Diamondback drilled 86 gross wells in the Midland Basin and 12 gross wells in the Delaware Basin in the period. The company put 71 operated wells into production in the Midland Basin and 18 gross wells in the Delaware Basin with an average lateral length of 10,967 feet, according to the release.
Diamondback reported an average production of 263,143 barrels of oil per day (bopd) or 449,912 barrels of oil equivalent per day (boed) for the second quarter. The company produced 50.81 million cubic feet of natural gas and 8,528,000 barrels of natural gas liquids (NGLs) for the quarter, the release said.
In a letter to stockholders posted on the company website, Diamondback Chairman and CEO Travis Stice said that the second quarter was “characterized by volume outperformance, reduced operating and administrative expenses, decreased net debt, additional non-core divestitures and another increase to our base dividend”, adding that the company continues to “execute across all facets of our business model”.
“Diamondback continued to execute and exceed expectations in the second quarter, with both oil and total production above the high end of our second quarter guidance ranges. As a result of this year-to-date outperformance and our continued confidence in the forward outlook, we are increasing our full-year oil and total production estimates to the high end of their respective annual ranges”, Stice said.
The company raised the midpoint of its annual daily oil production to 261,000 bopd from 259,000 bopd, and the midpoint of annual total daily production to 440,000 boed from 435,000 boed.
“Oil production is expected to grow slightly in the second half of the year”, Stice added. “We anticipate we will continue to grow oil production organically at a low single-digit annual pace next year with a similar level of activity to this year. This is primarily a result of the quality of the acreage we are developing on a large scale in the Midland Basin, combined with a high mineral interest across the development plan.”
“Oil realizations increased quarter over quarter to 97 percent of West Texas Intermediate (WTI) pricing for the quarter. We still expect to realize at least 95 percent of WTI when WTI is at least $65 per barrel, with some quarters above that number. Gas and NGL realizations declined significantly quarter over quarter commensurate with the respective declines in each commodity”, Stice said.
Regarding future moves, Stice said, “We are not planning to increase our non-core asset sale target at this time, but still have significant value in our midstream assets and equity method investments that may be monetized at some point in the future.”
“We continue to develop our best assets in the core of the Permian Basin, are seeing costs come down in real-time and should see FCF [free cash flow] increase into the second half of the year and 2024 at current commodity prices”, Stice said.
In April, Bloomberg reported that Diamondback was looking to sell its non-core assets in the western Permian Basin to cash in on an increasingly active deal market in USA shale. The company is working with a financial adviser to seek a buyer for assets around Pecos County, Texas, according to the report.
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