Diamondback Energy (FANG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income reached $837 million, or $4.66 per diluted share, with strong operational execution and average production of 276.1 MBO/d (474.7 MBOE/d); 80 gross wells drilled and 86 completed, primarily in the Midland Basin.

• Free Cash Flow was $816 million, with $421 million (52% of FCF) returned to shareholders via dividends; no share repurchases in Q2, leaving $1.6 billion available under the buyback program.

• Pending Endeavor merger, approved by shareholders, will create a leading Permian pure-play with 831,000 net acres and 816 Mboe/d of net production; expected to close in Q3 or Q4 2024.

• Achieved significant operational efficiencies, increasing drilling and completion rates, supporting raised production guidance and lower CapEx.

• Maintains a disciplined capital allocation strategy with a sustainable and growing base dividend, opportunistic share repurchases, and variable dividends.

Financial highlights

• Q2 2024 revenues were $2.48 billion, up from $1.92 billion in Q2 2023; net income attributable to Diamondback was $837 million, up from $556 million year-over-year.

• Operating cash flow before working capital changes was $1.5 billion; cash capital expenditures totaled $637 million, with a reinvestment rate of 44%.

• Net debt decreased to $5.27 billion as of June 30, 2024, with total liquidity of $8.5 billion and net debt/LTM Adjusted EBITDA improved to 0.77x.

• Declared a base dividend of $0.90/share and a variable dividend of $1.44/share for Q2 2024.

• Q2 2024 average unhedged realized prices: $79.51/bbl oil, $0.10/Mcf gas, $17.97/bbl NGLs; total equivalent unhedged realized price $50.33/BOE.

Outlook and guidance

• Raised 2024 production guidance midpoints: net production 462–470 MBOE/d, oil production 273–276 MBO/d; Q3 2024 oil production guidance: 271–275 MBO/d.

• 2024 capital budget (excluding Endeavor): $2.35–$2.45 billion, with lower midpoint due to cost control and efficiency gains.

• Expects to complete 310–330 gross wells in 2024 with an average lateral length of ~11,800 ft.

• Pro forma 2025 guidance for Endeavor assets is $4.1–$4.4 billion, with expectations to run 18–20 rigs and 4–5 simul-frac crews.

• Long-term focus on leveraging downhole sensing technology for further drilling and completion productivity improvements.