Executives of Diamondback Energy Inc., Midland, have raised their full-year production guidance after a stronger-than-expected third quarter. Looking to 2024, they are preliminarily forecasting “a similar level of activity to this year.”
Diamondback’s total production during the 3 months ended Sept. 30 averaged about 452,800 boe/d, up about 3,000 boe/d from second-quarter 2023 and a little more than 2% higher than the midpoint of the guidance chairman and chief executive officer Travis Stice and his team gave in August. For the fourth quarter, Diamondback’s leaders are looking to nudge production a bit higher still to a range of 455,000-460,000 boe/d.
In a letter to shareholders, Stice said his team’s early plans for 2024 foresee little change from Diamondback’s current production and development pace. Capital spending of roughly $630 million this quarter “should be a reasonable representative baseline for our 2024 plan assuming current commodity prices” and let Diamondback continue to grow its production at a low-single-digit pace. The company is on pace to drill 340-350 wells this year, up slightly from the summer forecast.
Looking ahead to 2024, president and chief financial officer Kaes Van’t Hof said capex will continue to focus heavily on Martin County in the Midland basin. Testing activity, he added, will include work in the Wolfcamp D and Upper Spraberry formations, where Van’t Hof said Diamondback has lately run some successful tests.
“Part of our culture is when something works, we implement it very, very quickly,” Van’t Hof said on a Nov. 7 conference call with analysts about plans to expand work in those areas. “We see the shallower development picking up the pace in the northern Midland basin, particularly that northwest Martin County area.”
Diamondback posted a third-quarter net profit of $993 million on total revenues of $2.34 billion, down from $1.27 billion and $2.44 billion, respectively, in the same period of 2022. The company’s average combined price/boe was $54.37 versus $67.25 a year earlier and $46.31 in the second quarter.
Regarding the broader oil and gas industry conversation about mergers and acquisitions, Stice and Van’t Hof said they intend for Diamondback to continue to be a buyer of assets it can then exploit more efficiently. Diamondback has in the past year acquired FireBird Energy and Lario Permian.
“This remains our core competency as we believe the low-cost operator in a commodity-based business ‘wins.’” Stice wrote in his letter. “We expect Diamondback to remain a consolidator in the future, and our underwriting criteria have not changed.”
On the flip side, Diamondback also has brought in about $1.7 billion in 2023 from the sale of some assets—well above executives’ $1 billion target from early this year—and Van’t Hof noted on the conference call that, at the right price, “there may come a time” when the company also unloads its operations in the Delaware basin. Those assets comprise about 8% of Diamond’s portfolio.
Shares of Diamondback (Ticker: FANG) were down slightly to $159.44 in midday trading Nov. 7, a day when energy stocks were broadly trending lower. Over the past 6 months, shares have climbed nearly 20%, growing the company’s market capitalization to more than $28 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.