|Bid||43.50 x 1400|
|Ask||44.10 x 800|
|Day's range||43.38 - 46.12|
|52-week range||14.55 - 111.84|
|Beta (5Y monthly)||2.25|
|PE ratio (TTM)||N/A|
|Earnings date||04 Aug 2020 - 10 Aug 2020|
|Forward dividend & yield||1.50 (3.49%)|
|Ex-dividend date||13 May 2020|
|1y target est||53.05|
Today we'll take a closer look at Diamondback Energy, Inc. (NASDAQ:FANG) from a dividend investor's perspective...
The herd trade has seized oil as hedge funds pile into the market to try and gain from its upside momentum, even without a fresh driver for prices. A day after rallying 5% on positive crude stockpiles data that was offset by a surprise rise in gasoline inventories, U.S. crude’s West Texas Intermediate benchmark was up again, this time without a new catalyst. Brent, the London-traded global benchmark for oil, rose 16 cents, or 0.5%, at $35.91.
(Bloomberg Opinion) -- Almost a month after its plunge into minus-land, oil is on a tear. Or not. It depends which oil price you’re watching. The front-month Nymex oil future — for June, currently — has surged by more than 50% so far this month and now trades close to $30 a barrel. Peer further out, though, and the landscape looks a lot flatter.The rally in the June contract (along with swaps for the balance of the year) owes much to relativism: Once you’ve seen negative prices, how much worse can it get? But it also reflects real signs of recovery in oil demand as Covid-19 lockdowns begin to ease and cuts to supply accelerate.As you might expect, exploration and production stocks have hitched a ride. The frackers haven’t matched the best-performing sector in the S&P 1500 Supercomposite over the past month: Home Furnishing Retail (which, let’s face it, makes a ton of sense). But they are in the top five. That's where those long-dated oil prices become relevant.Some E&P companies, such as Permian player Diamondback Energy Inc., have talked of pumping again once oil gets back above $30 a barrel. We’re nearly there already. Yet the lack of enthusiasm in the far end of the futures curve reads like a big Stop sign.Futures prices aren’t forecasts of where oil will trade; they’re just how producers (and some users) of oil hedge their price exposure while speculators bet on where it’s going. And while optimism on recovery has taken hold in near-dated oil — which is where speculative money has tended to congregate — there are plenty of reasons for caution further out. These range from the dreaded “second wave” of Covid-19 to more mundane considerations. Two of the latter concern the glut of oil inventory that is still growing and the less-tangible glut of spare capacity that is also growing as companies and countries curb oil output.Consider the latest International Energy Agency forecasts, released earlier this week. These added to the market’s optimism as the IEA revised its forecast for the drop in oil demand this year from an unprecedented 9.3 million barrels a day to a still-unprecedented 8.6 million. Even so, the IEA’s numbers imply almost 1.7 billion excess barrels having flowed into storage by the end of June, of which just over 1 billion will flow back out by year-end. To give a sense of what the remaining 630 million barrels sloshing around means, it would be enough to replace OPEC-member Nigeria’s output for an entire year.And bear in mind two things about that forecast: First, it assumes demand strengthens consistently through the rest of 2020. Second, it relies on supply continuing to drop year-over-year into the fourth quarter.In other words, a lot has to go right in a year where, thus far, a lot has gone wrong. And that’s just to limit the glut of inventory.This is what those subdued futures beyond 2020 are telling us. Even if a second wave of Covid-19 is avoided, the lingering economic damage and build-up in oil inventory will still signal fewer, rather than more, new barrels are required. The curve itself enforces this. Most frackers rely on hedging to finance their drilling programs, but it’s hard to ramp up when you can only lock in prices that start with a three.As it is, the scars of April’s plunge may limit the speculative flows that take the other side of hedging trades, making them costlier (see this). Moreover, for the glut of inventories to drain, the curve must flip from sloping upward — today’s “contango,” to use the industry term — to sloping downward. “Backwardation,” whereby future prices slope down from today’s, makes it uneconomic to store barrels, and that’s when tanks drain.So if, as the IEA expects, the glut is due to begin shrinking this summer, then near-term futures must rally further relative to long-dated oil. In the past five years, that has only tended to happen when near-dated oil has been priced around $55-60 a barrel, according to a report from BofA Securities published Friday. Before you start dreaming of oil doubling by July, think about the wider environment and those flat 2021 prices. As BofA’s analysts write, it’s more likely that any flip to backwardation this year will happen at a lower level.That still implies oil getting into the $40s soon. But for frackers, it also implies resisting that siren song, weak as it sounds compared to pre-Covid times. Don’t forget this all coincided with a breakdown of cooperation between Saudi Arabia and Russia. While they are cutting now to prop up prices, they aren’t likely to tolerate the sight of U.S. producers getting back to work (they tried that already in recent years). While they await recovery in demand, their spare capacity should suppress long-dated futures, thereby allowing the inventory glut to start draining at a level where many frackers can’t justifiably hedge. Getting back to work in the Permian would kill the rally supposedly encouraging that. The message from the curve to America’s oil producers is this: Enjoy the rally, but retrenchment and restructuring remain unavoidable.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of hard-hit oil and gas exploration and production companies (E&Ps) Callon Petroleum (NYSE: CPE), Diamondback Energy (NASDAQ: FANG), and EOG Resources (NYSE: EOG) soared in April, according to data provided by S&P Global Market Intelligence. EOG's shares were up 32.3%, Diamondback's shares jumped 66.2%, and Callon's shares rocketed up 71.5% during the month. Year to date, EOG shares are down 38.3%, Diamondback's shares are down 54.4%, and Callon's stock has fallen a jaw-dropping 83.3%.
(Bloomberg Opinion) -- Amid a historic oil crash, frackers are ditching rigs at a rapid pace. The number of operating horizontal rigs stood at 338 on Friday. That’s down more than half since February, though still above the trough in early 2016. So, churlish as it may seem, it must be asked: Why is anyone still drilling shale right now?Speaking on an earnings call a month after petitioning the Texas Railroad Commission to impose supply cuts, Matt Gallagher, CEO of Parsley Energy Inc., summed up the situation facing frackers:Currently, the world does not need more of our product, and we only get one chance to produce this precious resource for our stakeholders.The commission didn’t organize shut-ins of wells. So Parsley, taking its cue from prices instead, is just shutting in some of its own anyway. It has also suspended drilling and completing new wells.The economics of each well — and the companies that own them — differ enormously. But grab an envelope and imagine a well tapping one million barrels of oil equivalent, 75% of it crude oil, the rest natural gas. Benchmark prices: $30 oil and $2.50 gas, translating to, say, $27 and $2 at the wellhead. That implies total revenue from those resources of $23.3 million. Royalties and severance taxes take about $7 million of that; operating expenses and overhead take another $7 million(1). That leaves $9.3 million versus the $9 million spent drilling and completing the well upfront. Factor in time value of money, and that well is seriously underwater.Besides the back-of-crumpled-envelope quality of that calculation, there are other reasons a producer might keep drilling anyway. Rigs are often contracted for months at a time; for example, Helmerich & Payne Inc., a leading provider, reported roughly a third of its U.S. onshore rig fleet operated under fixed-term contracts at the end of March. Contracted pipeline space, too, must be paid for whether or not barrels flow through it. Taking a company’s activity down to zero is also traumatic for workers and, like a shut-in well, makes it harder to eventually crank back up. Hedges, meanwhile, shield against low spot prices and represent oil and gas contracted for delivery.Then again, hedges could be settled for cash; it’s not like anyone is screaming for more of the actual stuff these days. Rig and pipeline contracts can also be renegotiated (an order from the Texas Railroad Commission could have helped on that front, but still). And the difficulty of going into hibernation must be set against the implacable demands of low oil prices.On that note, another rationale for continuing to drill is an expectation of oil and gas prices recovering reasonably soon. Parsley and some other shale operators, such as Diamondback Energy Inc. (which is reducing but not suspending drilling), have indicated they could increase activity again if oil gets back above $30 a barrel (it was trading around $25 Monday morning). Because shale output is very front-loaded, movements in near-term prices matter a lot. For instance, using my basic example above, while the economics don’t work at flat $30 oil, assuming oil rises to $40 in year two and then $50 from year three would generate a low positive return. Those prices actually lag the consensus forecast, which averages $46 for 2021.On the other hand, that consensus stood at $58 only two months ago, so it’s fair to say expectations can change in the middle of an unprecedented oil shock. The current list of unknowns encompasses how quickly people resume something like normality even after lockdowns ease; whether Covid-19 inflicts a second wave; how long the glut of oil inventory building now lasts; and how quickly Saudi Arabia and Russia resume a market-share strategy.The rational thing to do is to wait for higher prices — indeed, conserving barrels, rather than pushing them into a glutted market, is a prerequisite for those higher prices. As EOG Resources Inc. said Friday, oil kept underground is “low-cost storage.”E&P companies carrying more debt (and there are more than a few) may be stuck on the treadmill. Covenants demand cash flow today even if that means destroying value over time. But this is a reminder of why the industry finds itself vulnerable in the first place: managing to production rather than value, and thereby dragging down prices by putting more sub-economic oil onto the market. The Saudi-Russian spat in early March was a warning the market won’t just absorb that from here on. Breaking the existing shale model, and redirecting cash away from wells toward creditors and shareholders, must be one outcome from all this.On that front, it’s worth noting the E&P sector now offers a higher dividend yield than the broader market for only the second time this decade.E&P stocks traded at a premium on yield because they weren’t valued on yield. Unlike the majors and refiners, frackers were owned for growth and a bet on oil prices. That rationale was fraying even before Covid-19, but is especially out of favor now. The yield spread to the market needs to widen, not just to compete against both other oil stocks and other sectors. It would also be a tangible sign of fewer dollars heading into drilling. Like Gallagher said, the world doesn’t need any more of the industry’s “product” right now. That includes investors.(1) Assumes royalties of 25% and severance taxes of 4.6% for oil and 7.5% for natural gas. G&A expenses of $2 per barrel of oil equivalent and $5 of other operating expenses.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In this article we will quickly re-cap the broker forecasts for Diamondback Energy Inc (NSQ:FANG). The Diamondback Energy Inc (NSQ:FANG) share price has risen8230;
(Bloomberg) -- Shale drillers are signaling they’ll throw off restraints on oil production if crude reaches $30 a barrel, an ominous portent for a global industry still drowning in a supply glut.The about-face is stunning for a sector scorched by the once-unthinkable twin disasters of a worldwide pandemic that slashed demand and negative crude prices. The historic market collapse prompted production shut-ins globally, but the retrenchment has been particularly acute in the U.S. as storage tanks approach full capacity and refiners scale back oil processing.For OPEC, Russia and other international producers, the implications are dire. It took years of painful output caps to tame a pernicious oversupply that gutted crude prices, starving national budgets of sorely needed cash all the while. Just as the uptrend gained momentum, Covid-19 strangled the world’s biggest economies, paralyzing energy demand and erasing all price gains.“Shale producers are nimble -- they can add rigs quickly and bring a well online in three months or less when the time is right,” said Bernadette Johnson, vice president of strategic analytics at Enverus, a data and research firm. “There will still be more painful announcements, but we are seeing the bottom.”Diamondback Energy Inc., one of the most prominent shale specialists in the Permian Basin, sees a crude price in the high $20s-a-barrel or low $30s as a trigger to revive curtailed output and consider reactivating idled frackers. Right now, the explorer is in the process of halting as much as 15% of supplies and sending home almost all its fracking crews.Parsley Energy Inc., which has idled one-fourth of its production and suspended all drilling and fracking, cited $30 as the critical price point. Centennial Resource Development Inc. hinted that $24 or $25 may be enough to prompt the driller to reverse at least some of its 40% output cut, though Chief Executive Officer Sean Smith declined to provide a specific trigger price.“There’s a lot of factors that weigh into that, but you’ve got to have prices in the high-20s or low-30s before we kind of signal going back to work in an aggressive or even in a non-aggressive way,” Diamondback CEO Travis Stice said during a conference call with analysts Tuesday. “As we evolve as an industry into this new world order, I think it’s going to look a lot different than what we’ve historically been accustomed to.”New GushersIt’s not just so-called independent drillers that are prepared to discard production restraints when prices strengthen. Exxon Mobil Corp.’s strategy for curtailing supply while prices are low has been to turn off its newest, most prolific shale wells -- precisely so that crude can be reserved in the ground and unleashed as soon as markets recover. Unlike its rivals, though, the supermajor hasn’t disclosed any of its internal price levers.Across the U.S. and Canada, explorers are expected to turn off 3.5 million to 4.5 million barrels of daily crude output this month, including about 1 million in the Permian region, according to pipeline giant Plains All American Pipeline LP.The curtailments have been so steep and swift that they derailed a movement in Texas to impose output limits for the first time in half a century. The proposal, which would have penalized drillers $1,000 a barrel for exceeding quotas, was abandoned by the Texas Railroad Commission on Tuesday, in part because so many wells already have been shut in.Benchmark U.S. crude futures soared 56% in the past week and were hovering just below $24 a barrel at 10:22 a.m. on the New York Mercantile Exchange on Wednesday. Less than three weeks ago, the price dipped to minus $40.32 and even now remain more than 60% below the 2020 peak of $65.65 touched in early January.Market Disruptor“Prices have been below break-even for so long that it only made sense to stop drilling and shut in active wells,” said Christiane Baumeister, an associate professor of economics who specializes in the shale industry at the University of Notre Dame. “Those were the first logical steps to cutting production.”The shale sector is in a unique position to upset global supply and demand because the nature of the geology allows wells to be turned off and on in very short order. Whereas an old-style, conventional well can require months of careful handling and manipulation to bring back into service, shale wells in places like West Texas and North Dakota can be back online in as little as a week.Parsley, which stood out among shale peers for being one of the few publicly traded explorers to support the ill-fated Texas quotas, said it would need one to two weeks to return wells to previous output levels.“This is a choice,” CEO Matt Gallagher said during a conference call. “Currently the world does not need more of our product.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Image source: The Motley Fool. Diamondback Energy Inc (NASDAQ: FANG)Q1 2020 Earnings CallMay 5, 2020, 10:00 a.m. ETContents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: OperatorGood day, ladies and gentlemen, and welcome to the Diamondback Energy First Quarter 2020 Earnings Conference Call.
(Bloomberg) -- Oil’s recovery from last month’s epic plunge accelerated as production cuts start to whittle down a supply glut and more economies ease their coronavirus lockdowns.Futures rose for a fifth day, surging 20% in New York Tuesday to close above $24 -- its highest price in almost a month -- while Brent topped $30 a barrel during the session for the first time since April 15.As OPEC+ producers begin to cut output as part of an historic agreement, U.S. explorers are shutting in production in the country’s biggest shale fields. Diamondback Energy Inc., Parsley Energy Inc. and Centennial Resource Development Inc. on Monday became the latest Permian Basin producer to say they were dialing back.“The primary issue is that there is less fear of a storage crisis, and there is also an anticipation that production is going to start to fall pretty quickly,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC.The American crude benchmark has more than doubled from an intraday low near $10 a barrel last week. The discount on crude for June delivery relative to July, a structure known as contango, tightened to its narrowest in more than a month, indicating that concerns about oversupply may be easing.Prices were little changed after an American Petroleum Institute report showed that U.S. crude stockpiles rose 8.44 million barrels last week, compared with 9.98 million barrels the week prior, according to people familiar. Supplies in Cushing, Oklahoma, rose by 2.68 million barrels, according to the report.Morgan Stanley says the supply glut has probably hit its apex, though the market will likely remain oversupplied for several weeks. Inventories in China appeared to have peaked, according to satellite data, and the U.S., Russia and Brazil are showing signs of a rebound in driving.There are also early signs that the plunge in fuel consumption caused by the spread of the coronavirus might have bottomed out in some markets, prompting U.S. President Donald Trump to tweet on Tuesday: “Oil prices moving up nicely as demand begins again!”“Certainly some of the restarts globally are helping,” said Andrew Lebow, senior partner at Commodity Research Group. “We’ll be well below where demand should be this time of year, but nevertheless, for the time being, the worst on the demand side has probably passed.”However, a substantial glut of crude remains, with supplies from the Middle East soaring to their highest level since at least January 2017 last month.Saudi Arabia, Iraq, Kuwait and the United Arab Emirates, which account for about 70% of OPEC’s production, shipped a combined average of 18.9 million barrels a day of crude and condensate in April, tanker-tracking data compiled by Bloomberg show. That’s 2 million barrels a day more than revised March levels.View the latest market-moving news and analytics surrounding volatile crude prices from Bloomberg hereFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A pair of prominent shale producers said all they need is oil around $30 a barrel to consider bringing back curtailed crude output and fracking new wells.Diamondback Energy Inc. is curbing production this month by 10% to 15% and sending home most of its fracking crews for the whole quarter. The Midland, Texas-based company expects to end this year with more than 150 wells that were drilled but never fracked as U.S. producers avoid pumping oil into a vastly oversupplied market. Parsley Energy Inc., meanwhile, has curtailed a quarter of its output and temporarily abandoned its five-rig, two-frack crew program.The historic rout in crude prices amid the Covid-19 pandemic has spurred an unprecedented retreat from shale exploration. Producers from Chevron Corp. and Exxon Mobil Corp. to mom-and-pop drillers are curbing output as the world runs out of places to store additional oil supply.Benchmark U.S. crude futures rose 20% to $24.34 a barrel at 1:20 p.m. on the New York Mercantile Exchange, little more than two weeks before a precipitous collapse into negative territory. Still, they remain more than 60% below the 2020 peak of $65.65 touched in early January. When asked what oil price Diamondback needs before it turns the spigot back on, Chief Executive Officer Travis Stice said the company’s first priority would be restarting production that was choked back. Then, Diamondback would consider bringing back frack crews to tap supplies from wells that were drilled but never completed.“There’s a lot of factors that weigh into that, but you’ve got to have prices in the high-20s or low-30s before we kind of signal going back to work in an aggressive or even in a non-aggressive way,” Stice said on a call Tuesday. “As we evolve as an industry into this new world order, I think it’s going to look a lot different than what we’ve historically been accustomed to.”Parsley said it would need one to two weeks to turn its wells back on to their previous level of output. The company cited roughly $30 a barrel as the base case for running four to five drilling rigs and one to two frack crews, according to its earnings presentation. The Austin, Texas-based driller is waiting for the volatility of oil supply and demand to die down, executives told analysts and investors Tuesday on a conference call.“This is a choice,” CEO Matt Gallagher said. “Currently the world does not need more of our product.”At most, Parsley said it would maintain the roughly 25% curtailment level for June, if it has to.Shale wells peak early and decline so quickly that new ones are constantly needed to maintain output. Stice declined to say what price the company would need to actually grow output on a quarter-by-quarter basis.“If you look at some of the prices that we got in 2019, that certainly is a signal that you can get more aggressive on the growth,” he said. “But I think we’ve got to be pretty careful on being too prescriptive on what exact price signals are going to look like before you get back to growing again.”(Adds details on Parsley starting in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- On the same day OPEC-style oil quotas in Texas were pronounced dead on arrival, shale drillers disclosed more supply cuts in response to the crude market collapse.Diamondback Energy Inc., Parsley Energy Inc. and Centennial Resource Development Inc. on Monday became the latest Permian Basin shale explorers to say they were curbing output. A pandemic-fueled crash in oil prices has been so severe that producers have moved beyond laying down drilling rigs to shutting in existing output.Midland, Texas-based Diamondback is dialing back 10%-15% of its May production, the company said in an earnings statement after the market closed. Parsley said it’s suspending all drilling and fracking work and is curtailing up to 23,000 barrels a day of production this month.Centennial, which started as a blank-check company backed by private equity firm Riverstone Holdings LLC, is shutting in up to 40% of output this month while also suspending all drilling and fracking activities and cutting its workforce. Its shares plunged as much as 47% to 55 cents in after-hours trading.The decision to curtail output comes as Texas decides against state-mandated quotas, which companies including Diamondback had been ardently opposed to. Earlier on Monday, the Texas Railroad commissioner who had been most in favor of such cuts said that plan was “dead.”Diamondback Chief Executive Officer Travis Stice called the proposal a “distraction” in the company’s statement. “Diamondback is choosing to curtail production in May because of economics, which should be the baseline for decisions on whether or not to produce barrels,” he said.Exxon Mobil Corp., Chevron Corp. and ConocoPhillips plan to curb as much as 660,000 barrels a day of combined American output by the end of June. Permian Basin producer Concho Resources Inc. has shut in about 4% to 5% of total output and warned last week that it will likely be forced to curtail even more.As of April 24, American producers had already cut 1 million barrels a day of output, down from a record 13.1 million at the end of February, according to the latest weekly data from the Energy Information Administration.Diamondback, which also suspended its buyback program, said it’s currently running 14 rigs but would reduce the number to eight by the start of the third quarter. The company will average “less than one” fracking crew in this quarter, according to the statement.Centennial said in a separate federal filing that if the shut-ins are prolonged, the productivity of the wells could be materially hurt when it goes to turn them back on. The company might not be able to renew some leases, reducing its reserves.All three companies also booked non-cash impairment charges over the first quarter, which they attributed to a drop in commodity prices. Diamondback wrote down about $1 billion in the value of oil and gas properties, Parsley recognized a $4.4 billion charge and Centennial disclosed a $611.3 million impairment.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Diamondback (FANG) delivered earnings and revenue surprises of 9.85% and -5.80%, respectively, for the quarter ended March 2020. Do the numbers hold clues to what lies ahead for the stock?
Diamondback (FANG) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Investors need to pay close attention to Diamondback Energy (FANG) stock based on the movements in the options market lately.
The Zacks Analyst Blog Highlights: ExxonMobil, Diamondback Energy, Concho Resources, Occidental and Whiting Petroleum
The analysts covering Diamondback Energy, Inc. (NASDAQ:FANG) delivered a dose of negativity to shareholders today, by...