Diamondback Energy Tops Earnings Views, Brings Investors $874 Million

Diamondback Energy Tops Earnings Views, Brings Investors $874 Million

Energy stock Diamondback Energy (FANG) beat earnings estimates and matched sales on Monday as the oil producer returned nearly $900 million to shareholders while production remained virtually flat in the third quarter. Warren Buffett Stock western oil (OXY) will release its third-quarter results on Tuesday. Diamondback Energy stock fell slightly overnight after FANG and OXY stock edged higher in Monday’s session.




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Energy Stocks: Benefits of Diamondback Energy

Estimates: The Street expects Diamondback Energy’s earnings to climb 119% to $6.45 per share. Analysts had expected revenue to rise 26% to $2.4 billion in the third quarter. Capital expenditure is expected to be $492 million, up 5% from last quarter and 26% from a year ago.

Results: Diamondback Energy announced a 120% EPS increase to $6.48. Third-quarter revenue was $2.4 billion, up 26% from a year ago. The company had $491 million in capital expenditures, just below views.

Diamondback Energy also said it returned $874 million to its shareholders by repurchasing shares and dividends. That’s about 75% of the company’s $1.16 billion free cash flow in the third quarter.

Diamondback Energy produced 390,630 barrels of oil equivalent per day in Q3, up 2% from Q2 and down 3% from a year ago.

“We have been focused on cost control, working to mitigate inflationary pressures associated with the variable components of our cost structure through improved operating techniques,” CEO Travis Stice said in a statement Monday.

FANG stock

Diamondback Energy stock fell slightly on Monday evening, after rising 1.3% to 163.49 during the trading day. FANG stock moved above an official buy point of 162.34 from a cup base pattern, according to MarketSmith analysis. But that’s 18% above the 50-day moving average. Shares have jumped 47% since hitting a recent low of 110.97 on September 26.

The Midland, Texas-based energy company primarily produces oil, but also has significant natural gas operations. In the second quarter, earnings per share rose 194% to $7.07. Revenue soared 59% to $2.7 billion. Capital expenditures for operational and non-operational drilling in the second quarter were $468 million.

Well completion services, materials and labor are increasingly expensive and difficult to obtain, and much of the drilling has simply been done to keep production levels steady. Soaring oil prices have made maintaining production a winning strategy. Analysts expect Diamondback’s earnings for all of 2022 to rise 126% to $25.50 per share on a 41% increase in sales to $9.6 billion.

Diamondback Energy shale energy stock is the ninth largest oil and gas exploration and production industry group in the United States. FANG stock has a perfect composite rating of 99. The stock has a relative strength rating of 96, an IBD Stock Checkup exclusive gauge for stock price movement. The EPS score is 95.

Energy stocks and the oil and gas market

The financial report comes as President Joe Biden has stepped up criticism of oil producers, but also as oil prices rise again.

Biden called on businesses to pay higher taxes to reduce fuel costs for consumers. The president also said on Friday that he planned to speak directly with the oil companies soon.

U.S. crude oil futures fell 0.7% on Monday to $91.93 a barrel, hovering around prices not seen since late August. Prices rose nearly 9% in October, the first monthly advance since May. In early November, the 2 million barrels per day production cut by the Organization of the Petroleum Exporting Countries and its major allies including Russia, known as OPEC+, officially took effect.

Meanwhile, US natural gas prices jumped 4.6% on Monday to $7.06 per million British thermal units. US natural gas futures are up about 53% year-to-date. However, they are about 40% off the 14-year highs reached in August.


Oil companies prioritize buybacks over production gains


The financial notices from Diamondback Energy and Occidental Petroleum come after a number of energy stocks reported earnings last week.

Devon Energy (DVN) reported third-quarter EPS up 96% to $2.18 and sales up 20% to $4.15 billion. Energy stock Marathon oil (MRO) at the top of revenue and sales views, and Marathon Oil (MPC) reported earnings exploding 969% to $7.81 per share. The previous week, Pioneer of natural resources (PXD) beat earnings estimates but missed revenue.

Occidental Petroleum Profits

Estimates: Wall Street expects Occidental Petroleum earnings per share of $2.48, a gain of 185%, and revenue of $9.1 billion, an increase of 34%, according to FactSet. Analysts expect capital expenditures of $1.2 billion, up 100% from a year ago.

Results: Check Tuesday after market close.

Occidental Petroleum shares rose 3.7% to 75.95 on Monday. OXY shares recently crossed a buy point of 72.14. The buy range extends up to 75.75, according to analysis by MarketSmith. OXY stock is currently outperforming the S&P 500, with its RS line at its highest level in three years.

But OXY stock is more than 10% above its 50-day line.

Houston-based Occidental Petroleum’s trade exposure is primarily oil, natural gas liquids and natural gas. It also has a petrochemical segment which has performed well in recent quarters.

OXY beat estimates with record second-quarter earnings on Aug. 2. Occidental’s earnings jumped 888% to $3.16 per share. Revenue increased 81% to $10.7 billion. This was mainly due to higher oil prices as oil production volumes remained in line with forecasts.


Is OXY stock a buy or sell right now?


Billionaire investor Warren Buffett has been on an OXY stock buying spree this year, with his Berkshire Hathaway (BRKA) adding more than 20 million shares to its portfolio since July. Berkshire Hathaway increased its stake in OXY to about 21%, according to SEC filings, with mandates to raise its stakes above 25%.

Occidental Petroleum ranks fifth in the Oil & Gas-International Exploration and Production industry group. OXY stock has a perfect composite rating of 99. OXY has a Stellar Relative Strength rating of 98. Energy stock has an EPS rating of 80.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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