Diamondback Energy (FANG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $837 million, or $4.66 per diluted share, with adjusted net income of $813 million, reflecting strong operational and financial performance in the Permian Basin.

• Achieved significant operational efficiencies, increasing drilling to 26 wells per rig per year and over 100 completions per crew annually, supporting higher production and free cash flow.

• Free Cash Flow reached $816 million in Q2 2024, with $421 million (52% of FCF) returned to shareholders via dividends; no share repurchases in Q2, with $1.6 billion remaining on the buyback program.

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

• Asset sales and organic free cash flow have generated nearly $1 billion, accelerating deleveraging ahead of the Endeavor deal.

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 in Q2 2024; cash capital expenditures totaled $637 million.

• 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; capital budget narrowed to $2.35–$2.45 billion.

• Q3 2024 oil production guidance: 271–275 MBO/d; cash CAPEX guidance: $570–$610 million.

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

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

• Committed to returning at least 50% of free cash flow to shareholders via dividends and buybacks.