The impact of Winter Storm Uri on Diamondback Energy Inc.’s Permian basin operations for first-quarter 2021 is expected to be “significant,” said Chief Executive Officer Travis Stice—roughly 4-5 days of total net production—but the adversity is expected to be overcome for full year 2021, he said.
Diamondback expects to drill 180-200 gross (156-172 net) wells and complete 215-235 gross (197-215 net) wells with an average lateral length of 10,100 ft in 2021 and reach full year 2021 oil production of 178,000-185,000 b/d of oil (308,000-325,000 boe/d). Full-year 2021 cash CAPEX of $1.35-1.55 billion is expected.
The guidance gives effect to the pending acquisition of assets from Guidon Operating LLC, expected to close Feb. 26, but does not consider the impact of the pending all-stock acquisition of QEP Resources (OGJ Online, Dec. 23, 2020). A QEP stockholder meeting is scheduled for Mar. 16 to vote on the merger. An updated guidance will be provided following the deal’s expected close following the vote.
Prior to the storms, the company expected first-quarter 2021 production guidance to equal its fourth-quarter 2020 guidance of 170,000-175,000 b/d of oil without giving effect to 1 month of Guidon production of 12,000 b/d of oil.
Fourth-quarter 2020 average production was 175,800 b/d of oil (299,000 boe/d), with average daily oil production up 3% over third-quarter 2020.
During the fourth quarter of 2020, Diamondback drilled 19 gross horizontal wells in the Midland basin and six gross horizontal wells in the Delaware basin. The company turned 24 operated horizontal wells to production in the Midland basin and 11 operated horizontal wells to production in the Delaware basin. The average lateral length for the wells completed during quarter was 13,034 ft. Operated completions during the quarter consisted of 20 Wolfcamp A wells, eight Lower Spraberry wells, five Wolfcamp B wells, one Jo Mill well, and one Third Bone Spring well.
The company generated fourth-quarter 2020 cash flow from operating activities of $403 million, cash capital expenditures of $226 million, and activity-based capital expenditures incurred of $200 million.
Diamondback's fourth-quarter 2020 net loss was $739 million. Adjusted net income was $130 million. Fourth quarter 2020 net loss includes a non-cash impairment charge of $1.02 billion as a result of the lower SEC Pricing because of the sharp decline in commodity prices.
During the quarter, the company spent $197 million on drilling and completion, $7 million on midstream, $12 million on infrastructure, and $10 million on non-operated properties, for total capital cash expenditures of $226 million.
Full-year 2020 average production was 180,800 b/d of oil (300,300 boe/d). For the full year, the company drilled 208 gross horizontal wells and turned 171 operated horizontal wells to production. The average lateral length for wells completed during the year was 10,585 ft, and consisted of 87 Wolfcamp A wells, 25 Lower Spraberry wells, 21 Wolfcamp B wells, 17 Middle Spraberry wells, 11 Second Bone Spring wells, six Third Bone Spring wells, and four Jo Mill wells.
For full-year 2020, cash flow from operating activities was $2.1 billion. Full-year 2020 cash capital expenditures were $1.86 billion, while full-year 2020 activity-based capital expenditures incurred were $1.40 billion. For the year, the company spent $1.55 billion on drilling and completion, $140 million on midstream, $108 million on infrastructure, and $58 million on non-operated properties, for total capital cash expenditures of $1.86 billion. Exploration and development costs in 2020 were $1.479 billion.
For full-year 2020, the company flared 2.0% of gross production, down 64% year over year.