U.S. energy operator Diamondback Energy FANG reported fourth-quarter 2024 adjusted earnings per share of $3.64, which beat the Zacks Consensus Estimate of $3.26 on strong production and lower costs.

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However, the company’s bottom line fell sharply from the year-ago adjusted profit of $4.74. The underperformance primarily reflects a fall in overall realization.

Meanwhile, revenues of $3.7 billion rose 67% from the year-ago quarter’s sales and outperformed the Zacks Consensus Estimate by 9.2%.

FANG repurchased $402 million of shares in the fourth quarter and a further $210 million worth of shares in the current quarter. The company’s board of directors also declared a quarterly cash dividend of $1 per share — up 11% sequentially — to its common shareholders of record on Feb. 21. The payout will be made on March 13.

Production & Realized Prices

FANG’s production of oil and natural gas averaged 883,424 barrels of oil equivalent per day (BOE/d), comprising 54% oil. The figure was up 91% from the year-ago quarter and beat our estimate of 845,967.5 BOE/d. While crude and natural gas output increased 74% and 112% year over year, respectively, natural gas liquids volumes surged 118%.

The average realized oil price during the most recent quarter was $69.48 per barrel, 9% lower than the year-ago realization of $76.42 but ahead of our projection of $62.66. Meanwhile, the average realized natural gas price plunged to 48 cents per thousand cubic feet (Mcf) from $1.29 in the year-ago period but came well above our estimate of 6 cents. Overall, the upstream oil and gas company fetched $42.71 per barrel compared with $50.87 a year ago.

Costs & Financial Position

Diamondback’s fourth-quarter cash operating cost was $10.30 per barrel of oil equivalent (BOE) compared with $10.83 in the prior-year quarter and our projection of $11.55. The drop in costs compared to the year-ago period reflected a decrease in lease operating expenses to $5.67 per BOE from $5.97 in the fourth quarter of 2023. Further, FANG’s gathering, processing and transportation expenses fell 36.1% year over year to $1.17 per BOE, though cash G&A expenses rose in the fourth quarter of 2024 to 69 cents per BOE from 59 cents during the corresponding period of 2023. Moreover, production and ad valorem taxes rose 13.5% year over year to $2.77 per BOE.

Diamondback logged $933 million in capital expenditure — spending $834 million on drilling and completion, $93 million on infrastructure and environment, and $6 million on midstream. The company booked $1.4 billion in free cash flow in the fourth quarter. 

As of Dec. 31, the Permian-focused operator had approximately $161 million in cash and cash equivalents and $12.1 billion in long-term debt, representing a debt-to-capitalization of 30.6%.

Guidance

Diamondback Energy’s latest guidance takes into account the Endeavor merger, which was completed on Sept. 10. last year and the pending acquisition of Double Eagle from April 1, 2025 onward. FANG looks to pump around 883,000-909,000 BOE/d of hydrocarbon in 2025. Of this, oil volumes are likely to be between 485,000 and 498,000 barrels per day. This Zacks Rank #3 (Hold) company also forecast a capital spending budget between $3.8 billion and $4.2 billion. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Key E&P Earnings

While we have discussed Diamondback Energy’s fourth-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.

ConocoPhillips COP, one of the world’s largest independent oil and gas producers, reported fourth-quarter 2024 adjusted earnings per share of $1.98, which beat the Zacks Consensus Estimate of $1.89. The outperformance can be attributed to higher oil equivalent production volumes, partly offset by decreased realized oil prices.

As of Dec. 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. The company had a total long-term debt of $23.3 billion and a short-term debt of $1.04 billion as of the same date. Capital expenditure and investments totaled $3.3 billion. Net cash provided by operating activities was $4.5 billion.

Natural gas producer EQT Corporation EQT reported earnings from continuing operations of 69 cents per share, which beat the Zacks Consensus Estimate of 50 cents. The better-than-expected quarterly earnings were driven by higher sales volume, increased average realized prices and lower total operating expenses.

EQT’s sales volume increased to 605 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s level of 564 Bcfe. The reported figure also beat our estimate of 597 Bcfe. Natural gas sales volume was 565.8 Bcf, up from 532.8 Bcf in the year-ago quarter. The figure also beat our estimate of 561.8 Bcf.

Magnolia Oil & Gas MGY, another U.S. energy operator, reported fourth-quarter 2024 reported a fourth-quarter 2024 net profit of 49 cents per share, which beat the Zacks Consensus Estimate of 46 cents. This outperformance can be attributed to a healthy increase in production volumes. In the quarter under review, the company recorded $222.6 million in net cash from operating activities and achieved a free cash flow of $90.3 million.

The average daily total output of 93,096 BOE/d increased from the year-ago quarter’s 85,414 BOE/d. However, the figure slightly beat our estimate of 93,000 BOE/d. Oil and gas production increased 9% year over year. As of Dec. 31, Magnolia had cash and cash equivalents of $260 million and long-term debt of $392.5 million. The total debt-to-total capital was 16.6%.

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