Summary

• Diamondback Energy Inc. is an independent oil and gas producer company operates business focusing on the acquisition, development, exploration and unconventional, onshore oil and natural gas reserves in the Permian Basin in west Texas.
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• On December 31, 2022, the company experienced growth in sales, with total sales reaching $9,643 million. This marked an increase of $2,846 million or 41.88% compared to the sales figure of $6,797 million in 2021.
• Net profit of the company for the year 2022 was $4,386 million, representing an increase of $2,204 million compared to the net profit of $2,182 million in 2021.
• Moreover, the diluted earnings per share (EPS) for 2022 were reported as $24.61 which showed an increase of $12.37 compared to the diluted EPS of $12.24 in 2021.  

Brief Company Overview

Diamondback Energy Inc. (NASDAQ; FANG) is an independent oil and gas producer company located in Midland, Texas. The company was founded in 2007 by Travis Stice and W. Permian Resources. The company operates its business focusing on the acquisition, development, exploration and unconventional, onshore oil and natural gas reserves in the Permian Basin in west Texas. This major producing basin has an extensive production history, a favorable operating environment, mature infrastructure, long reserve life, multiple producing horizons, enhance recovery potential and a large number of operators. The company also owns, operates, develops, and acquires midstream infrastructure assets, including 770 miles of crude oil gathering pipelines, natural gas pipelines, and an integrated water system in the Midland Delaware basin of the Permian Basin. Diamondback Energy Inc. operates its business with two segments, the Upstream segment and the Midstream segment. The company founded headquarters in Midland, Texas. Mr. Travis D. Stice has served as the Chief Executive Officer of Diamondback Energy Inc. since January 2012. The company had 972 employees on December 31, 2022.

Financial overview

Q3 2023 Performance overview of Diamondback Energy Inc.

On November 6, 2023; The Company reported its third quarter financial and operating results ended September 30, 2023. Quarterly earnings per share (EPS) of $5.07, down 24.55% from 2022. All earnings per share figures refer to diluted EPS. Total revenue of $2,340 million was 3.98% lower than previous year. The company reported a net income of $915 million, or $5.07 per diluted share, and an average production of 266.1 MBO/d. The net cash provided by operating activities was $1400 million, with cash capital expenditures amounting to $684 million. The company reported a Free Cash Flow of $820 million and an Adjusted Free Cash Flow of $884 million. The company declared a Q3 2023 base cash dividend of $0.84 per share and a variable cash dividend of $2.53 per share, payable on November 24, 2023. This implies an 8.3% annualized yield based on the November 3, 2023 closing share price of $162.10. Third quarter operating income was $1,340 million a 16.18% decline year over year. Diamondback Energy gross profit for the quarter ending September 30, 2023 was $2,041 million a 6.5% decline year-over-year.

The Company's third quarter 2023 net interest expense was $41 million, compared with $43 million last year, reflecting a decrease in interest income, partially offset by higher debt levels and the impact of higher floating interest rates on interest rate swaps. The Company declared dividends per share $3.37 million in the third quarter, compared with $2.26 million last year, reflecting a 49.1% increase in the dividend per share.

Annual Performance Highlights

During the fiscal ended December 31, 2022, the company experienced growth in sales, with total sales reaching $9,643 million. This marked an increase of $2,846 million or 41.88% compared to the sales figure of $6,797 million in 2021. The company's gross profit for 2022 amounted to $8,733 million, reflecting a difference of $2,713 million or 45.1% from the gross profit of $6,020 million in the previous year, 2021. Additionally, the company's operating profit increased in 2022, totaling $6,508 million, which was higher by $2,507 million or 62.6% compared to the operating profit of $4,001 million in 2021. The net profit for the year 2022 was $4,386 million, representing an increase of $2,204 million compared to the net profit of $2,182 million in 2021. Moreover, the diluted earnings per share (EPS) for 2022 were reported as $24.61 which showed an increase of $12.37 compared to the diluted EPS of $12.24 in 2021. Current asset of the company was $1,392 million in 2022 and $1,446 million a year earlier. The total asset of the company was $26,209 million in 2022 and $22,898 million a year earlier. Current liabilities of the company were $1,716 million and $1,438 million a year earlier. In 2022, total liabilities of the company were $10,519 million and $9,653 million in 2021. 

Cash provided by operating activities in 2022 was $6,325 million. The primary sources of cash from operating activities were from higher operating income as well as effective working capital management, partially offset by interest payments. The primary sources of cash from operating activities were collections on accounts receivables, partially offset by interest payments. Net cash used in investing activities was $3,300 million compared to $1,500 million for the years ended December 31, 2022 and 2021, respectively. The majority net cash used for investing activities during the year ended December 31, 2022 was for the purchase and development of oil and natural gas properties and related assets, including the FireBird Acquisition.

Cash used in investing activities in 2022 was $3,330 million. The primary uses of cash from investing activities were of $1,854 million; partially offset by proceeds from the addition to midstream assets of $84 million. Cash used in financing activities in 2022 was $3,503 million.

Business Overview

Diamondback Energy Inc. involves in the exploration, development, and production of oil and natural gas in the United States. Some of the key activities of Diamondback Energy Inc. are:

Acquisition and Exploration: The company acquires and explores potential oil and natural gas assets in the Permian Basin region through geological surveys, seismic data analysis, and other exploration activities. Oil and gas are the primary resources as the company extracts oil and gas from various fields across the United States.

Drilling and Production: The company drills and conducts production operations to extract identified oil and natural gas resources. This involves drilling activities, installation of equipment and maintenance of wells and related infrastructure. In its drilling operations, including horizontal drilling and hydraulic fracturing the company utilizes advanced technologies and innovative techniques.

Outstanding Operational Efficiency: While reducing operational costs, the company ensures its cost-efficient and streamlined operations to enhance productivity. The company employs modern technological advancements, best-in-class production techniques, and data analytics to achieve top-notch performance in the oil exploration, production and development process.

Financial Management: The company manages its finances, which includes asset valuation, capital expenditures, revenue monitoring, and expense control. Also involves managing cash reserves, funding exploration and production, and analyzing financial performance.

Marketing and Distribution: Diamondback Energy Inc. markets the produced oil and natural gas resources to potential buyers and for transportation and delivery to end customers. This encompasses contracts negotiation, logistic management and financial transactions.

Regulatory Compliance: The company complies with local, state, and federal regulations regarding oil and natural gas exploration and production activities. This includes obtaining necessary permits, adhering to environmental and safety regulations, and meeting reporting and disclosure requirements.

Diamondback Energy Inc. performs its key activities together so that it can successfully operates and maintain its position as a leading independent oil and natural gas company in the Permian Basin region. Overall, the company is dedicated to ensuring customer satisfaction, maintaining optimal operational efficiency and maximizing investor returns as it strives towards being a sustainable and responsible player in the oil and gas sector.

Diamondback Energy Inc. (FANG) utilizes a multi-channel distribution system to reach their target market. These channels are:

Direct Sales: The company has a direct sales system to large companies and end-users. To provide technical support to clients and helps them in designing and implementing solutions for their specific needs.

Wholesale: The company also sells their products through wholesalers who purchase products in bulk and sell them further to retailers and end-users.

Retail: The company has a network of retrial stores that sell their products to end-users. The stores are strategically located in areas where there is high demand for their products.

E-commerce: The company also sells products through their E-commerce website. Customers can access a wide range of products, read reviews and place orders online.  

Distributors: The company has a network of distributors who sell their products to retailers and end-users. The distributors are responsible for delivering products to clients and they receive a commission on every sale they made.

The company believes that their multi-channel distribution system is crucial in helping them reach their target market effectively. Diamondback Energy Inc. is continuously looking for ways to improve their distribution channels to increase sales and customer satisfaction.

Company History

Diamondback Energy Inc. (NASDAQ; FANG) is an independent oil and gas producer company located in Midland, Texas. The company was founded in 2007 by Travis Stice and W. Permian Resources. The company started its business with the acquisition of 4,174 net acres in the Permian Basin. The company primarily focuses on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. In 2012, Diamondback Energy Inc. (FANG) went public on the NASDAQ stock exchange under the ticker symbol FANG. The company’s initial public offering (IPO) was priced at $17 million in net proceeds. At the time estimated total proven reserves of approximately 28,000 net acres in the Permian Basin, with estimated total proven reserves of approximately 19.4 million barrels of oil equivalent (BOE). In March 2017, the company acquired assets from Brigham Resources for $255 million. In October 2018, the company acquired the assets of Ajax Resources for $1.25 billion.  In November 2018, the company acquired Energen Corporation for approximately $920 million, adding approximately 180000 net acres in the Permian basin and increasing its estimated total proved reserved to approximately 992 million BOE. In February 2021, the company acquired leasehold interests and assets from Guidon Resources for $375 million in cash and 10.68 million shares. In 2020, the company produced an average of 287,200 BOE per day, with approximately 70% of production being crude oil. In March 2021, the company acquired QEP Resources and became one of the largest oil and natural gas producer in the Permian Basin over the year. A 2023 Bloomberg news story identified the company, as well as Permian Resources, as major contributors to the increase of flaring gas in the Permian oil field. At December 31, 2022, the company’s total acreage position in the Permian Basin was approximately 615,348 gross (508,767 net) acres, which consisted primarily of 371,915 gross (325,540 net) acres in the Midland Basin and 201,624 gross (150,719 net) acres in the Delaware Basin. As of December 31, 2022, the company’s estimated proved oil and natural gas reserves were 2,032,971 MBOE (which includes estimated reserves of 148,900 MBOE attributable to the mineral interests owned by Viper). Of these reserves, approximately 69% are classified as proved developed producing. Proved undeveloped, or PUD, reserves included in this estimate are from 703 gross (650 net) horizontal well locations in which the company has a working interest, and 15 horizontal wells in which it owns only a mineral interest through Viper. As of December 31, 2022, the company’s estimated proved reserves were approximately 53% oil, 23% natural gas and 24% natural gas liquids.