Diamondback Energy, Inc. Announces Third Quarter 2024 Financial and Operating Results
THIRD QUARTER 2024 HIGHLIGHTS
- As previously announced, closed merger with
Endeavor Energy Resources, L.P. ("Endeavor") onSeptember 10, 2024 - Average production of 321.1 MBO/d (571.1 MBOE/d)
- Net cash provided by operating activities of
$1.2 billion ; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of$1.4 billion - Cash capital expenditures of
$688 million - Free Cash Flow (as defined and reconciled below) of
$708 million ; Adjusted Free Cash Flow (as defined and reconciled below) of$1.0 billion - Declared Q3 2024 base cash dividend of
$0.90 per share payable onNovember 21, 2024 ; implies a 2.0% annualized yield based onNovember 1, 2024 closing share price of$175.81 - Repurchased 2,919,763 shares of common stock in Q3 2024 for
$515 million , excluding excise tax (at a weighted average price of$176.40 per share); repurchased 1,029,191 shares of common stock to date in Q4 2024 for$185 million , excluding excise tax (at a weighted average price of$180.13 per share) - Total Q3 2024 return of capital of
$780 million ; represents ~78% of Adjusted Free Cash Flow (as defined and reconciled below) from stock repurchases and the declared Q3 2024 base dividend - As previously announced, Board approved a
$2.0 billion increase to share repurchase authorization to$6.0 billion from$4.0 billion previously
TRP ENERGY (“TRP”) TRADE
- On
November 3 rd, Diamondback and TRP entered into a definitive agreement under which Diamondback will trade certainDelaware Basin assets and pay approximately $238 million in cash to TRP in exchange for TRP’sMidland Basin assets - TRP’s
Midland Basin assets are made up of ~15,000 net acres acrossUpton andReagan counties and consist of 55 remaining undeveloped operated locations, the majority of which immediately compete for capital - The asset also includes 18 Drilled Uncompleted Wells ("DUCs") which provide for additional capital allocation flexibility
- The trade is expected to be accretive to both Cash Flow and Free Cash Flow per share and enhances Diamondback's near-term oil production profile
- Expected to close in
December 2024 , subject to customary regulatory approvals and closing conditions Jefferies LLC is serving as financial advisor to Diamondback.Kirkland & Ellis LLP is serving as legal advisor to Diamondback.J.P. Morgan Securities LLC , Moelis & Company andRBC Capital Markets are acting as financial advisors to TRP.Clifford Chance US LLP is serving as legal advisor to TRP.
OPERATIONS UPDATE
The tables below provide a summary of operating activity for the third quarter of 2024.
Total Activity (Gross Operated): | |||||
Number of Wells Drilled |
Number of Wells Completed |
||||
71 | 87 | ||||
5 | 8 | ||||
Total | 76 | 95 |
Total Activity (Net Operated): | |||||
Number of Wells Drilled(1) |
Number of Wells Completed(1) |
||||
67 | 95 | ||||
4 | 7 | ||||
Total | 71 | 102 | |||
(1) Includes two additional net wells drilled and nine additional net wells completed, respectively, from interests acquired in the Endeavor Acquisition during the first six months of 2024. | |||||
During the third quarter of 2024, Diamondback drilled 71 gross wells in the
For the first nine months of 2024, Diamondback drilled 211 gross wells in the
FINANCIAL UPDATE
Diamondback's third quarter 2024 net income was
Third quarter 2024 net cash provided by operating activities was
During the third quarter of 2024, Diamondback spent
Third quarter 2024 Consolidated Adjusted EBITDA (as defined and reconciled below) was
Diamondback's third quarter 2024 Free Cash Flow (as defined and reconciled below) was $708 million. Adjusted Free Cash Flow (as reconciled and defined below) for the third quarter was
Third quarter 2024 average unhedged realized prices were
Diamondback's cash operating costs for the third quarter of 2024 were
As of
DIVIDEND DECLARATIONS
Diamondback announced today that the Company's Board of Directors declared a base cash dividend of
Future base and variable dividends remain subject to review and approval at the discretion of the Company's Board of Directors.
COMMON STOCK REPURCHASE PROGRAM
During the third quarter of 2024, Diamondback repurchased ~2.9 million shares of common stock at an average share price of
UPDATED 2024 GUIDANCE
Below is Diamondback's guidance for the full year 2024, which includes fourth quarter production, unit costs and capital guidance. The Company's production and capital guidance for the full year 2024 has been updated to give effect to the Endeavor merger, which was completed on
2024 Guidance | 2024 Guidance | |
2024 Net production - MBOE/d | 587 - 590 (from 462 - 470) | 48.75 - 49.25 |
2024 Oil production - MBO/d | 335 - 337 (from 273 - 276) | 27.00 - 27.25 |
Q4 2024 Oil production - MBO/d (total - MBOE/d) | 470 - 475 (840 - 850) | 29.25 - 29.75 (52.50 - 53.00) |
Q4 2024 Unit costs ($/BOE) | ||
Lease operating expenses, including workovers | ||
G&A | ||
Cash G&A | ||
Non-cash equity-based compensation | ||
DD&A | ||
Interest expense (net of interest income) | ||
Gathering, processing and transportation | ||
Production and ad valorem taxes (% of revenue) | ~7% | |
Corporate tax rate (% of pre-tax income) | 23% | |
Cash tax rate (% of pre-tax income) | 15% - 18% | |
Cash taxes ($ - million) | ||
Capital Budget ($ - million) | ||
2024 Total capital expenditures | ||
Q4 2024 Capital expenditures | ||
Q4 2024 Gross horizontal wells drilled (net) | 105 - 125 (100 - 118) | |
Q4 2024 Gross horizontal wells completed (net) | 110 - 130 (102 - 120) | |
CONFERENCE CALL
Diamondback will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2024 on
About
Diamondback is an independent oil and natural gas company headquartered in
Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Diamondback’s: future performance; business strategy; future operations (including drilling plans and capital plans); estimates and projections of revenues, losses, costs, expenses, returns, cash flow, and financial position; reserve estimates and its ability to replace or increase reserves; anticipated benefits or other effects of strategic transactions (including the recently completed Endeavor merger and other acquisitions or divestitures); and plans and objectives of management (including plans for future cash flow from operations and for executing environmental strategies) are forward-looking statements. When used in this news release, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to Diamondback are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although Diamondback believes that the expectations and assumptions reflected in its forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond Diamondback’s control. Accordingly, forward-looking statements are not guarantees of future performance and Diamondback’s actual outcomes could differ materially from what Diamondback has expressed in its forward-looking statements.
Factors that could cause the outcomes to differ materially include (but are not limited to) the following: changes in supply and demand levels for oil, natural gas, and natural gas liquids, and the resulting impact on the price for those commodities; the impact of public health crises, including epidemic or pandemic diseases and any related company or government policies or actions; actions taken by the members of
In light of these factors, the events anticipated by Diamondback’s forward-looking statements may not occur at the time anticipated or at all. Moreover, Diamondback operates in a very competitive and rapidly changing environment and new risks emerge from time to time. Diamondback cannot predict all risks, nor can it assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements it may make. Accordingly, you should not place undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this letter or, if earlier, as of the date they were made. Diamondback does not intend to, and disclaims any obligation to, update or revise any forward-looking statements unless required by applicable law.
Condensed Consolidated Balance Sheets | |||||||
(unaudited, in millions, except share amounts) | |||||||
2024 | 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents ( |
$ | 370 | $ | 582 | |||
Restricted cash | 3 | 3 | |||||
Accounts receivable: | |||||||
Joint interest and other, net | 233 | 192 | |||||
Oil and natural gas sales, net ( |
1,197 | 654 | |||||
Inventories | 126 | 63 | |||||
Derivative instruments | 42 | 17 | |||||
Prepaid expenses and other current assets | 51 | 110 | |||||
Total current assets | 2,022 | 1,621 | |||||
Property and equipment: | |||||||
Oil and natural gas properties, full cost method of accounting ( |
79,718 | 42,430 | |||||
Other property, equipment and land | 1,417 | 673 | |||||
Accumulated depletion, depreciation, amortization and impairment ( |
(18,082 | ) | (16,429 | ) | |||
Property and equipment, net | 63,053 | 26,674 | |||||
Funds held in escrow | 43 | — | |||||
Equity method investments | 377 | 529 | |||||
Derivative instruments | 38 | 1 | |||||
Deferred income taxes, net | 62 | 45 | |||||
Investment in real estate, net | 81 | 84 | |||||
Other assets | 71 | 47 | |||||
Total assets | $ | 65,747 | $ | 29,001 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable - trade | $ | 198 | $ | 261 | |||
Accrued capital expenditures | 641 | 493 | |||||
Current maturities of long-term debt | 1,000 | — | |||||
Other accrued liabilities | 857 | 475 | |||||
Revenues and royalties payable | 1,444 | 764 | |||||
Derivative instruments | 34 | 86 | |||||
Income taxes payable | 289 | 29 | |||||
Total current liabilities | 4,463 | 2,108 | |||||
Long-term debt ( |
11,923 | 6,641 | |||||
Derivative instruments | 79 | 122 | |||||
Asset retirement obligations | 493 | 239 | |||||
Deferred income taxes | 9,952 | 2,449 | |||||
Other long-term liabilities | 18 | 12 | |||||
Total liabilities | 26,928 | 11,571 | |||||
Stockholders’ equity: | |||||||
Common stock, |
3 | 2 | |||||
Additional paid-in capital | 34,007 | 14,142 | |||||
Retained earnings (accumulated deficit) | 3,427 | 2,489 | |||||
Accumulated other comprehensive income (loss) | (8 | ) | (8 | ) | |||
37,429 | 16,625 | ||||||
Non-controlling interest | 1,390 | 805 | |||||
Total equity | 38,819 | 17,430 | |||||
Total liabilities and stockholders' equity | $ | 65,747 | $ | 29,001 |
Condensed Consolidated Statements of Operations | |||||||||||||||
(unaudited, $ in millions except per share data, shares in thousands) | |||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Revenues: | |||||||||||||||
Oil, natural gas and natural gas liquid sales | $ | 2,354 | $ | 2,265 | $ | 6,629 | $ | 6,063 | |||||||
Sales of purchased oil | 282 | 59 | 698 | 59 | |||||||||||
Other operating income | 9 | 16 | 28 | 62 | |||||||||||
Total revenues | 2,645 | 2,340 | 7,355 | 6,184 | |||||||||||
Costs and expenses: | |||||||||||||||
Lease operating expenses | 316 | 226 | 825 | 618 | |||||||||||
Production and ad valorem taxes | 153 | 118 | 413 | 421 | |||||||||||
Gathering, processing and transportation | 102 | 73 | 261 | 209 | |||||||||||
Purchased oil expense | 280 | 59 | 696 | 59 | |||||||||||
Depreciation, depletion, amortization and accretion | 742 | 442 | 1,694 | 1,277 | |||||||||||
General and administrative expenses | 49 | 34 | 141 | 111 | |||||||||||
Merger and integration expense | 258 | 1 | 273 | 11 | |||||||||||
Other operating expenses | 35 | 47 | 68 | 113 | |||||||||||
Total costs and expenses | 1,935 | 1,000 | 4,371 | 2,819 | |||||||||||
Income (loss) from operations | 710 | 1,340 | 2,984 | 3,365 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (18 | ) | (37 | ) | (101 | ) | (130 | ) | |||||||
Other income (expense), net | 89 | 33 | 87 | 61 | |||||||||||
Gain (loss) on derivative instruments, net | 131 | (76 | ) | 101 | (358 | ) | |||||||||
Gain (loss) on extinguishment of debt | — | — | 2 | (4 | ) | ||||||||||
Income (loss) from equity investments, net | 6 | 9 | 23 | 39 | |||||||||||
Total other income (expense), net | 208 | (71 | ) | 112 | (392 | ) | |||||||||
Income (loss) before income taxes | 918 | 1,269 | 3,096 | 2,973 | |||||||||||
Provision for (benefit from) income taxes | 210 | 276 | 685 | 648 | |||||||||||
Net income (loss) | 708 | 993 | 2,411 | 2,325 | |||||||||||
Net income (loss) attributable to non-controlling interest | 49 | 78 | 147 | 142 | |||||||||||
Net income (loss) attributable to |
$ | 659 | $ | 915 | $ | 2,264 | $ | 2,183 | |||||||
Earnings (loss) per common share: | |||||||||||||||
Basic | $ | 3.19 | $ | 5.07 | $ | 12.00 | $ | 12.01 | |||||||
Diluted | $ | 3.19 | $ | 5.07 | $ | 12.00 | $ | 12.01 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 204,730 | 178,872 | 187,253 | 180,400 | |||||||||||
Diluted | 204,730 | 178,872 | 187,253 | 180,400 |
Condensed Consolidated Statements of Cash Flows | |||||||||||||||
(unaudited, in millions) | |||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 708 | $ | 993 | $ | 2,411 | $ | 2,325 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
Provision for (benefit from) deferred income taxes | 51 | 10 | 180 | 185 | |||||||||||
Depreciation, depletion, amortization and accretion | 742 | 442 | 1,694 | 1,277 | |||||||||||
(Gain) loss on extinguishment of debt | — | — | (2 | ) | 4 | ||||||||||
(Gain) loss on derivative instruments, net | (131 | ) | 76 | (101 | ) | 358 | |||||||||
Cash received (paid) on settlement of derivative instruments | (4 | ) | (24 | ) | (36 | ) | (62 | ) | |||||||
(Income) loss from equity investment, net | (6 | ) | (9 | ) | (23 | ) | (39 | ) | |||||||
Equity-based compensation expense | 16 | 13 | 49 | 40 | |||||||||||
Other | 20 | 3 | 77 | (23 | ) | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 106 | (256 | ) | 61 | (218 | ) | |||||||||
Income tax receivable | — | 103 | 12 | 267 | |||||||||||
Prepaid expenses and other current assets | (11 | ) | (8 | ) | 78 | 5 | |||||||||
Accounts payable and accrued liabilities | (395 | ) | (28 | ) | (490 | ) | 46 | ||||||||
Income taxes payable | (36 | ) | 23 | (51 | ) | 4 | |||||||||
Revenues and royalties payable | 95 | 53 | 109 | 139 | |||||||||||
Other | 54 | (33 | ) | 104 | (12 | ) | |||||||||
Net cash provided by (used in) operating activities | 1,209 | 1,358 | 4,072 | 4,296 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Drilling, completions, infrastructure and midstream additions to oil and natural gas properties | (688 | ) | (684 | ) | (1,934 | ) | (2,052 | ) | |||||||
Property acquisitions | (7,791 | ) | (168 | ) | (7,994 | ) | (1,193 | ) | |||||||
Proceeds from sale of assets | 207 | 868 | 459 | 1,400 | |||||||||||
Other | 106 | (1 | ) | 103 | (14 | ) | |||||||||
Net cash provided by (used in) investing activities | (8,166 | ) | 15 | (9,366 | ) | (1,859 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds under term loan agreement | 1,000 | — | 1,000 | — | |||||||||||
Proceeds from borrowings under credit facilities | 1,011 | 1,015 | 1,185 | 4,466 | |||||||||||
Repayments under credit facilities | (1,073 | ) | (1,332 | ) | (1,333 | ) | (4,368 | ) | |||||||
Proceeds from senior notes | — | — | 5,500 | — | |||||||||||
Repayment of senior notes | — | — | (25 | ) | (134 | ) | |||||||||
Repurchased shares under buyback program | (515 | ) | (56 | ) | (557 | ) | (709 | ) | |||||||
Repurchased shares/units under Viper's buyback program | — | (10 | ) | — | (67 | ) | |||||||||
Proceeds from partial sale of investment in |
— | — | 451 | — | |||||||||||
Net proceeds from Viper's issuance of common stock | 476 | — | 476 | — | |||||||||||
Dividends paid to stockholders | (416 | ) | (149 | ) | (1,316 | ) | (841 | ) | |||||||
Dividends/distributions to non-controlling interest | (59 | ) | (25 | ) | (157 | ) | (84 | ) | |||||||
Other | (5 | ) | (7 | ) | (142 | ) | (34 | ) | |||||||
Net cash provided by (used in) financing activities | 419 | (564 | ) | 5,082 | (1,771 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (6,538 | ) | 809 | (212 | ) | 666 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 6,911 | 21 | 585 | 164 | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 373 | $ | 830 | $ | 373 | $ | 830 |
Selected Operating Data | |||||||||||
(unaudited) | |||||||||||
Three Months Ended | |||||||||||
Production Data: | |||||||||||
Oil (MBbls) | 29,537 | 25,129 | 24,482 | ||||||||
Natural gas (MMcf) | 66,519 | 51,310 | 49,423 | ||||||||
Natural gas liquids (MBbls) | 11,918 | 9,514 | 8,943 | ||||||||
Combined volumes (MBOE)(1) | 52,541 | 43,195 | 41,662 | ||||||||
Daily oil volumes (BO/d) | 321,054 | 276,143 | 266,109 | ||||||||
Daily combined volumes (BOE/d) | 571,098 | 474,670 | 452,848 | ||||||||
Average Prices: | |||||||||||
Oil ($ per Bbl) | $ | 73.13 | $ | 79.51 | $ | 81.57 | |||||
Natural gas ($ per Mcf) | $ | (0.26 | ) | $ | 0.10 | $ | 1.62 | ||||
Natural gas liquids ($ per Bbl) | $ | 17.70 | $ | 17.97 | $ | 21.02 | |||||
Combined ($ per BOE) | $ | 44.80 | $ | 50.33 | $ | 54.37 | |||||
Oil, hedged ($ per Bbl)(2) | $ | 72.32 | $ | 78.55 | $ | 80.51 | |||||
Natural gas, hedged ($ per Mcf)(2) | $ | 0.60 | $ | 1.03 | $ | 1.62 | |||||
Natural gas liquids, hedged ($ per Bbl)(2) | $ | 17.70 | $ | 17.97 | $ | 21.02 | |||||
Average price, hedged ($ per BOE)(2) | $ | 45.43 | $ | 50.89 | $ | 53.74 | |||||
Average Costs per BOE: | |||||||||||
Lease operating expenses | $ | 6.01 | $ | 5.88 | $ | 5.42 | |||||
Production and ad valorem taxes | 2.91 | 3.26 | 2.83 | ||||||||
Gathering, processing and transportation expense | 1.94 | 1.90 | 1.75 | ||||||||
General and administrative - cash component | 0.63 | 0.63 | 0.51 | ||||||||
Total operating expense - cash | $ | 11.49 | $ | 11.67 | $ | 10.51 | |||||
General and administrative - non-cash component | $ | 0.30 | $ | 0.44 | $ | 0.31 | |||||
Depreciation, depletion, amortization and accretion per BOE | $ | 14.12 | $ | 11.18 | $ | 10.61 | |||||
Interest expense, net | $ | 0.34 | $ | 1.02 | $ | 0.89 |
(1) Bbl equivalents are calculated using a conversion rate of six Mcf per one Bbl.
(2) Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting. Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts.
NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as net income (loss) attributable to
The following tables present a reconciliation of the GAAP financial measure of net income (loss) attributable to
Reconciliation of Net Income (Loss) to Adjusted EBITDA | |||||||||||
(unaudited, in millions) | |||||||||||
Three Months Ended | |||||||||||
Net income (loss) attributable to |
$ | 659 | $ | 837 | $ | 915 | |||||
Net income (loss) attributable to non-controlling interest | 49 | 57 | 78 | ||||||||
Net income (loss) | 708 | 894 | 993 | ||||||||
Non-cash (gain) loss on derivative instruments, net | (135 | ) | (46 | ) | 52 | ||||||
Interest expense, net | 18 | 44 | 37 | ||||||||
Depreciation, depletion, amortization and accretion | 742 | 483 | 442 | ||||||||
Depreciation and interest expense related to equity method investments | 15 | 23 | 18 | ||||||||
Non-cash equity-based compensation expense | 24 | 26 | 21 | ||||||||
Capitalized equity-based compensation expense | (8 | ) | (7 | ) | (8 | ) | |||||
Merger and integration expenses | 258 | 3 | 1 | ||||||||
Other non-cash transactions | (72 | ) | 6 | (12 | ) | ||||||
Provision for (benefit from) income taxes | 210 | 252 | 276 | ||||||||
Consolidated Adjusted EBITDA | 1,760 | 1,678 | 1,820 | ||||||||
Less: Adjustment for non-controlling interest | 104 | 103 | 78 | ||||||||
Adjusted EBITDA attributable to |
$ | 1,656 | $ | 1,575 | $ | 1,742 |
ADJUSTED NET INCOME
Adjusted net income is a non-GAAP financial measure equal to net income (loss) attributable to
The following table presents a reconciliation of the GAAP financial measure of net income (loss) attributable to
Adjusted Net Income | |||||||
(unaudited, $ in millions except per share data, shares in thousands) | |||||||
Three Months Ended |
|||||||
Amounts | Amounts Per Diluted Share |
||||||
Net income (loss) attributable to |
$ | 659 | $ | 3.19 | |||
Net income (loss) attributable to non-controlling interest | 49 | 0.24 | |||||
Net income (loss)(1) | 708 | 3.43 | |||||
Non-cash (gain) loss on derivative instruments, net | (135 | ) | (0.66 | ) | |||
Merger and integration expense | 258 | 1.26 | |||||
Other non-cash transactions | (72 | ) | (0.35 | ) | |||
Adjusted net income excluding above items(1) | 759 | 3.68 | |||||
Income tax adjustment for above items | (12 | ) | (0.06 | ) | |||
Adjusted net income(1) | 747 | 3.62 | |||||
Less: Adjusted net income attributable to non-controlling interest | 49 | 0.24 | |||||
Adjusted net income attributable to |
$ | 698 | $ | 3.38 | |||
Weighted average common shares outstanding: | |||||||
Basic | 204,730 | ||||||
Diluted | 204,730 |
(1) The Company’s earnings (loss) per diluted share amount has been computed using the two-class method in accordance with GAAP. The two-class method is an earnings allocation which reflects the respective ownership among holders of common stock and participating securities. Diluted earnings per share using the two-class method is calculated as (i) net income attributable to
OPERATING CASH FLOW BEFORE WORKING CAPITAL CHANGES AND FREE CASH FLOW
Operating cash flow before working capital changes, which is a non-GAAP financial measure, represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The Company believes operating cash flow before working capital changes is a useful measure of an oil and natural gas company’s ability to generate cash used to fund exploration, development and acquisition activities and service debt or pay dividends. The Company also uses this measure because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements that the Company may not control and may not relate to the period in which the operating activities occurred. This allows the Company to compare its operating performance with that of other companies without regard to financing methods and capital structure.
Free Cash Flow, which is a non-GAAP financial measure, is cash flow from operating activities before changes in working capital in excess of cash capital expenditures. The Company believes that Free Cash Flow is useful to investors as it provides measures to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis as adjusted for non-recurring tax impacts from divestitures, merger and integration expenses, the early termination of derivative contracts and settlements of treasury locks. These measures should not be considered as an alternative to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance. The Company's computation of Free Cash Flow may not be comparable to other similarly titled measures of other companies. The Company uses Free Cash Flow to reduce debt, as well as return capital to stockholders as determined by the Board of Directors.
The following tables present a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP measure of operating cash flow before working capital changes and to the non-GAAP measure of Free Cash Flow:
Operating Cash Flow Before Working Capital Changes and Free Cash Flow | |||||||||||||||
(unaudited, in millions) | |||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net cash provided by operating activities | $ | 1,209 | $ | 1,358 | $ | 4,072 | $ | 4,296 | |||||||
Less: Changes in cash due to changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 106 | (256 | ) | 61 | (218 | ) | |||||||||
Income tax receivable | — | 103 | 12 | 267 | |||||||||||
Prepaid expenses and other current assets | (11 | ) | (8 | ) | 78 | 5 | |||||||||
Accounts payable and accrued liabilities | (395 | ) | (28 | ) | (490 | ) | 46 | ||||||||
Income taxes payable | (36 | ) | 23 | (51 | ) | 4 | |||||||||
Revenues and royalties payable | 95 | 53 | 109 | 139 | |||||||||||
Other | 54 | (33 | ) | 104 | (12 | ) | |||||||||
Total working capital changes | (187 | ) | (146 | ) | (177 | ) | 231 | ||||||||
Operating cash flow before working capital changes | 1,396 | 1,504 | 4,249 | 4,065 | |||||||||||
Drilling, completions, infrastructure and midstream additions to oil and natural gas properties | (688 | ) | (684 | ) | (1,934 | ) | (2,052 | ) | |||||||
Total Cash CAPEX | (688 | ) | (684 | ) | (1,934 | ) | (2,052 | ) | |||||||
Free Cash Flow | 708 | 820 | 2,315 | 2,013 | |||||||||||
Tax impact from divestitures(1) | — | 64 | — | 64 | |||||||||||
Merger and integration expenses | 258 | — | 273 | — | |||||||||||
Early termination of derivatives | 37 | — | 37 | — | |||||||||||
— | — | 25 | — | ||||||||||||
Adjusted Free Cash Flow | $ | 1,003 | $ | 884 | $ | 2,650 | $ | 2,077 |
(1) Includes the tax impact for the disposal of certain
NET DEBT
The Company defines the non-GAAP measure of net debt as total debt (excluding debt issuance costs, discounts, premiums and unamortized basis adjustments) less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Company believes this metric is useful to analysts and investors in determining the Company's leverage position because the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt.
Net Debt | |||||||||||||||||||||||
(unaudited, in millions) | |||||||||||||||||||||||
2024 |
Net Q3 Principal Borrowings/ (Repayments) |
2024 |
2024 |
2023 |
2023 |
||||||||||||||||||
(in millions) | |||||||||||||||||||||||
$ | 12,284 | $ | 1,115 | $ | 11,169 | $ | 5,669 | $ | 5,697 | $ | 5,697 | ||||||||||||
830 | (177 | ) | 1,007 | 1,103 | 1,093 | 680 | |||||||||||||||||
Total debt | 13,114 | $ | 938 | 12,176 | 6,772 | 6,790 | 6,377 | ||||||||||||||||
Cash and cash equivalents | (370 | ) | (6,908 | ) | (896 | ) | (582 | ) | (827 | ) | |||||||||||||
Net debt | $ | 12,744 | $ | 5,268 | $ | 5,876 | $ | 6,208 | $ | 5,550 |
(1) Excludes debt issuance costs, discounts, premiums and unamortized basis adjustments.
DERIVATIVES
As of
Crude Oil (Bbls/day, $/Bbl) | |||||||||||
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | FY2026 | ||||||
Long Puts - Crude Brent Oil | 82,000 | 52,000 | 33,000 | 10,000 | — | — | |||||
Long Put Price ($/Bbl) | — | — | |||||||||
Deferred Premium ($/Bbl) | — | — | |||||||||
Long Puts - WTI (Magellan East Houston) | 35,000 | 58,000 | 46,000 | 22,000 | — | — | |||||
Long Put Price ($/Bbl) | — | — | |||||||||
Deferred Premium ($/Bbl) | — | — | |||||||||
Long Puts - WTI ( |
125,000 | 138,000 | 109,000 | 38,000 | — | — | |||||
Long Put Price ($/Bbl) | — | — | |||||||||
Deferred Premium ($/Bbl) | — | — | |||||||||
Costless Collars - WTI ( |
46,000 | 13,000 | — | — | — | — | |||||
Long Put Price ($/Bbl) | — | — | — | — | |||||||
— | — | — | — | ||||||||
Basis Swaps - WTI ( |
43,000 | 58,000 | 45,000 | 45,000 | 45,000 | — | |||||
— | |||||||||||
Roll Swaps - WTI |
40,000 | — | — | — | — | — | |||||
— | — | — | — | — |
Natural Gas (Mmbtu/day, $/Mmbtu) | |||||||||||
Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | FY 2026 | ||||||
Costless Collars - |
398,261 | 690,000 | 630,000 | 630,000 | 630,000 | 80,000 | |||||
Long Put Price ($/Mmbtu) | |||||||||||
Ceiling Price ($/Mmbtu) | |||||||||||
Natural Gas Swaps - |
13,370 | — | — | — | — | — | |||||
— | — | — | — | — | |||||||
Natural Gas Basis Swaps - |
471,630 | 650,000 | 590,000 | 590,000 | 590,000 | 10,000 | |||||
Investor Contact:
+1 432.221.7467
alawlis@diamondbackenergy.com
Source: Diamondback Energy, Inc.