• Diamondback Energy, Inc. Announces Third Quarter 2022 Financial and Operating Results

    来源: Nasdaq GlobeNewswire / 07 11月 2022 16:01:01   America/New_York

    MIDLAND, Texas, Nov. 07, 2022 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback” or the “Company”) today announced financial and operating results for the third quarter ended September 30, 2022.

    THIRD QUARTER 2022 HIGHLIGHTS

    • Average production of 224.3 MBO/d (390.6 MBOE/d)
    • Cash flow from operating activities of $1.93 billion; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $1.65 billion
    • Cash capital expenditures of $491 million
    • Free Cash Flow (as defined and reconciled below) of $1.16 billion
    • Declared Q3 2022 base cash dividend of $0.75 per share payable on November 25, 2022; implies a 1.9% annualized yield based on November 4, 2022 closing share price of $161.37
    • Declared a variable cash dividend of $1.51 per share payable on November 25, 2022; total base-plus-variable dividend of $2.26 per share implies a 5.6% annualized yield based on November 4, 2022 closing share price of $161.37
    • Repurchased 3,922,418 shares of common stock in Q3 2022 for $472 million (at a weighted average price of $120.50/share)
    • Total Q3 2022 return of capital of $874 million from stock repurchases and the declared base-plus-variable dividend; represents ~75% of Q3 2022 Free Cash Flow (as defined and reconciled below)
    • As previously announced, completed Rattler Midstream LP ("Rattler") buy-in transaction on August 24, 2022

    RECENT HIGHLIGHTS

    • Completed divestiture of non-core Delaware Basin acreage for net proceeds of $155 million; divested assets included approximately 3,250 net acres, with net production of approximately 550 BO/d (800 BOE/d)
    • In conjunction with its previously announced target of at least $500 million of non-core asset sales by year-end 2023, Diamondback expects to use net proceeds from this transaction towards debt reduction
    • Previously announced acquisition of leasehold interest and related assets from FireBird Energy LLC ("FireBird") for $775 million in cash and 5.86 million shares; transaction expected to close on November 30, 2022, subject to certain closing conditions and adjustments
    • Previously announced target to reduce Scope 1+2 GHG intensity by at least 50% from 2020 levels by 2030

    “The third quarter was another solid quarter for Diamondback. We focused on cost control, working to mitigate inflationary pressures associated with the variable components of our cost structure through improved operational techniques. By doing so, we continue to be the leader in low-cost operations, maximizing returns for our stockholders. Our high cash margins and best-in-class well costs contributed to nearly $1.2 billion of Free Cash Flow, of which approximately $874 million, or ~75%, is being returned to our stockholders through $472 million in share repurchases and approximately $402 million in total dividends,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback.

    Mr. Stice continued, “Earlier this month, we announced our pending acquisition of the assets of FireBird Energy for $775 million in cash and 5.86 million of shares of Diamondback common stock. We expect this asset to compete for capital right away following closing and provide over a decade of high-quality inventory in the Midland Basin. At the same time, the transaction is expected to immediately increase per share returns to our stockholders and improve the duration of the Company’s cash return profile. In conjunction with this pending acquisition, we announced a target to sell at least $500 million of non-core assets, which includes the $155 million non-core asset sale we announced today, ensuring we maintain our investment grade balance sheet and improve our overall financial position.”

    OPERATIONS UPDATE

    The tables below provide a summary of operating activity for the third quarter of 2022.

     Total Activity (Gross Operated):    
      Number of Wells Drilled Number of Wells Completed 
     Midland Basin48 42 
     Delaware Basin11 21 
     Total59 63 


     Total Activity (Net Operated):    
      Number of Wells Drilled Number of Wells Completed 
     Midland Basin44 40 
     Delaware Basin10 20 
     Total54 60 

    During the third quarter of 2022, Diamondback drilled 48 gross horizontal wells in the Midland Basin and 11 gross horizontal wells in the Delaware Basin. The Company turned 42 operated horizontal wells to production in the Midland Basin and 21 operated horizontal wells to production in the Delaware Basin. The average lateral length for the wells completed during the third quarter was 11,289 feet. Operated completions during the third quarter consisted of 26 Wolfcamp A wells, 16 Lower Spraberry wells, 13 Wolfcamp B wells, three Second Bone Spring wells, two Third Bone Spring wells, two Jo Mill wells and one Middle Spraberry well.

    Through the third quarter of 2022, Diamondback has drilled 138 gross horizontal wells in the Midland Basin and 34 gross horizontal wells in the Delaware Basin. The Company has turned 152 operated horizontal wells to production in the Midland Basin and 42 operated horizontal wells to production in the Delaware Basin. The average lateral length for wells completed during the first nine months of 2022 was 10,439 feet, and consisted of 61 Wolfcamp A wells, 50 Lower Spraberry wells, 32 Wolfcamp B wells, 21 Jo Mill wells, 15 Middle Spraberry wells, 11 Second Bone Spring wells, three Third Bone Spring wells and one Barnett well.

    FINANCIAL UPDATE

    Diamondback's third quarter 2022 net income was $1.18 billion, or $6.72 per diluted share. Adjusted net income (as defined and reconciled below) was $1.14 billion, or $6.48 per diluted share.

    Third quarter 2022 cash flow from operating activities was $1.93 billion. Through the first nine months of 2022, Diamondback's cash flow from operating activities was $4.88 billion.

    During the third quarter of 2022, Diamondback spent $422 million on operated and non-operated drilling and completions, $42 million on infrastructure and environmental and $27 million on midstream, for total cash capital expenditures of $491 million. Activity-based capital expenditures for the third quarter of 2022 were approximately $579 million. During the first nine months of 2022, Diamondback has spent $1.20 billion on operated and non-operated drilling and completions, $124 million on infrastructure and environmental and $69 million on midstream, for total cash capital expenditures of $1.40 billion.

    Third quarter 2022 Consolidated Adjusted EBITDA (as defined and reconciled below) was $1.91 billion. Adjusted EBITDA net of non-controlling interest (as defined and reconciled below) was $1.86 billion.

    Diamondback's third quarter 2022 Free Cash Flow (as defined and reconciled below) was $1.16 billion. Through September 30, 2022, Diamondback's Free Cash Flow (as defined and reconciled below) was $3.46 billion.

    Third quarter 2022 average unhedged realized prices were $89.79 per barrel of oil, $6.46 per Mcf of natural gas and $34.96 per barrel of natural gas liquids ("NGLs"), resulting in a total equivalent unhedged realized price of $67.25 per BOE.

    Diamondback's cash operating costs for the third quarter of 2022 were $11.97 per BOE, including lease operating expenses ("LOE") of $5.09 per BOE, cash general and administrative ("G&A") expenses of $0.56 per BOE, production and ad valorem taxes of $4.34 per BOE and gathering and transportation expenses of $1.98 per BOE.

    As of September 30, 2022, Diamondback had $15 million in standalone cash and $235 million of borrowings outstanding under its revolving credit facility, with approximately $1.36 billion available for future borrowing under the facility and approximately $1.38 billion of total liquidity.

    DIVIDEND DECLARATIONS

    Diamondback announced today that the Company's Board of Directors declared a base cash dividend of $0.75 per common share for the third quarter of 2022 payable on November 25, 2022, to stockholders of record at the close of business on November 17, 2022.

    The Company's Board of Directors also declared a variable cash dividend of $1.51 per common share for the third quarter of 2022 payable on November 25, 2022, to stockholders of record at the close of business on November 17, 2022.

    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

    On September 15, 2021 the Board of Directors of Diamondback authorized the Company to acquire up to $2.00 billion of common stock. On July 28, 2022, Diamondback's Board of Directors approved increasing total authorized common stock repurchases to $4.00 billion. During the third quarter of 2022, Diamondback repurchased 3,922,418 shares of common stock at an average share price of $120.50 for a total cost of approximately $472 million. To date, Diamondback has repurchased 10,518,556 shares of common stock at an average share price of $115.81 for a total cost of approximately $1.22 billion. Diamondback intends to purchase common stock under the common stock repurchase program opportunistically with cash on hand, free cash flow from operations and proceeds from potential liquidity events such as the sale of assets. This repurchase program has no time limit and may be suspended from time to time, modified, extended or discontinued by the Board at any time. Purchases under the repurchase program may be made from time to time in privately negotiated transactions or open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will be subject to market conditions, applicable legal requirements and other factors. Any common stock purchased as part of this program will be retired.

    SENIOR NOTES OFFERING

    On October 28, 2022 Diamondback completed the previously announced $1.1 billion public senior notes offering and used a portion of the net proceeds from this offering to redeem in full $500 million aggregate principal amount of Rattler's senior notes that remained outstanding following the Rattler buy-in transaction, with the remaining net proceeds to be used for general corporate purposes, including the funding of a portion of the cash consideration for the pending FireBird acquisition.

    FULL YEAR 2022 GUIDANCE

    Below is Diamondback's guidance for the full year 2022, which includes fourth quarter production, cash tax and capital guidance. This guidance has been updated to give effect to the estimated fourth quarter contribution related to the pending FireBird acquisition, which is expected to close on November 30, 2022.

     2022 Guidance2022 Guidance
     Diamondback Energy, Inc.Viper Energy Partners LP
       
    Net production - MBOE/d385 - 38633.25 - 33.75
    Oil production - MBO/d223 - 22419.25 - 19.50
    Q4 2022 oil production - MBO/d (total - MBOE/d)224 - 228 (386 - 393) 
    FireBird Q4 2022 contribution - MBO/d (MBOE/d)5.7 (7.4) 
       
    Unit costs ($/BOE)  
    Lease operating expenses, including workovers$4.50 - $5.00 
    G&A  
    Cash G&A$0.65 - $0.80$0.50 - $0.60
    Non-cash equity-based compensation$0.40 - $0.50$0.10 - $0.20
    DD&A$8.75 - $9.75$9.75 - $10.75
    Interest expense (net of interest income)$1.10 - $1.30$3.25 - $3.75
    Gathering and transportation$1.80 - $1.90 
       
    Production and ad valorem taxes (% of revenue)(a)~7%7%
    Corporate tax rate (% of pre-tax income)23% 
    Cash tax rate (% of pre-tax income)10% - 15%11% - 16%
    Q4 2022 Cash taxes ($ - million)$145 - $175$2 - $5
       
    Capital Budget ($ - million)  
    Drilling, completion, capital workovers, and non-operated properties$1,700 - $1,715 
    Midstream (ex. equity method investments)~$85 
    Infrastructure and environmental~$150 
    2022 Capital expenditures (FireBird portion)$1,935 - $1,950 ($30 - $45) 
    Q4 2022 Capital expenditures (FireBird portion)$540 - $555 ($30 - $45) 
       
    Gross horizontal wells drilled (net)(b)~260 (~240) 
    Gross horizontal wells completed (net)(b)~275 (~253) 
    Average lateral length (Ft.)~10,200' 
    FY 2022 Midland Basin well costs per lateral foot (current)~$580 ($620) 
    FY 2022 Delaware Basin well costs per lateral foot (current)~$780 ($850) 
    Midland Basin net lateral feet (%)~80% 
    Delaware Basin net lateral feet (%)~20% 

    (a)   Includes production taxes of 4.6% for crude oil and 7.5% for natural gas and NGLs and ad valorem taxes.
    (b)   Includes six drilled and seven completed wells from the pending FireBird acquisition assuming a November 30, 2022 closing date.

    CONFERENCE CALL

    Diamondback will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2022 on Tuesday, November 8, 2022 at 8:00 a.m. CT. Access to the live audio-only webcast, and replay which will be available following the call, may be found here. The live webcast of the earnings conference call will also be available via Diamondback’s website at www.diamondbackenergy.com under the “Investor Relations” section of the site.

    About Diamondback Energy, Inc.

    Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. For more information, please visit www.diamondbackenergy.com.

    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 of strategic transactions (including acquisitions and 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 such as the COVID-19 pandemic, and any related company or government policies or actions; actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments, including any impact of the ongoing war in Ukraine on the global energy markets and geopolitical stability; concerns over a potential economic slowdown or recession; inflationary pressures; rising interest rates and their impact on the cost of capital; regional supply and demand factors, including delays, curtailment delays or interruptions of production, or governmental orders, rules or regulations that impose production limits; federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations; transition risks relating to climate change and the risks and other factors disclosed in Diamondback’s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the Securities and Exchange Commission’s web site at http://www.sec.gov.

    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 made in this news release. All forward-looking statements speak only as of the date of this news release 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.


    Diamondback Energy, Inc.
    Condensed Consolidated Balance Sheets
    (unaudited, in millions, except share amounts)
        
     September 30, December 31,
      2022   2021 
    Assets   
    Current assets:   
    Cash and cash equivalents$27  $654 
    Restricted cash 7   18 
    Accounts receivable:   
    Joint interest and other, net 115   72 
    Oil and natural gas sales, net 669   598 
    Inventories 59   62 
    Derivative instruments 98   13 
    Income tax receivable 2   1 
    Prepaid expenses and other current assets 54   28 
    Total current assets 1,031   1,446 
    Property and equipment:   
    Oil and natural gas properties, full cost method of accounting ($8,386 million and $8,496 million
    excluded from amortization at September 30, 2022 and December 31, 2021, respectively)
     35,019   32,914 
    Other property, equipment and land 1,371   1,250 
    Accumulated depletion, depreciation, amortization and impairment (14,487)  (13,545)
    Property and equipment, net 21,903   20,619 
    Funds held in escrow 5   12 
    Equity method investments 674   613 
    Derivative instruments 11   4 
    Deferred income taxes, net 74   40 
    Investment in real estate, net 87   88 
    Other assets 58   76 
    Total assets$23,843  $22,898 
    Liabilities and Stockholders’ Equity   
    Current liabilities:   
    Accounts payable - trade$139  $36 
    Accrued capital expenditures 371   295 
    Current maturities of long-term debt 10   45 
    Other accrued liabilities 403   419 
    Revenues and royalties payable 634   452 
    Derivative instruments 90   174 
    Income taxes payable 31   17 
    Total current liabilities 1,678   1,438 
    Long-term debt 5,347   6,642 
    Derivative instruments 184   29 
    Asset retirement obligations 325   166 
    Deferred income taxes 1,737   1,338 
    Other long-term liabilities 14   40 
    Total liabilities 9,285   9,653 
    Stockholders’ equity:   
    Common stock, $0.01 par value; 400,000,000 shares authorized; 175,631,465 and 177,551,347
    shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
     2   2 
    Additional paid-in capital 13,646   14,084 
    Retained earnings (accumulated deficit) 195   (1,998)
    Total Diamondback Energy, Inc. stockholders’ equity 13,843   12,088 
    Non-controlling interest 715   1,157 
    Total equity 14,558   13,245 
    Total liabilities and equity$23,843  $22,898 


    Diamondback Energy, Inc.
    Condensed Consolidated Statements of Operations
    (unaudited, $ in millions except per share data, shares in thousands)
            
     Three Months Ended September 30, Nine Months Ended September 30,
      2022   2021   2022   2021 
    Revenues:       
    Oil, natural gas and natural gas liquid sales$2,417  $1,897  $7,558  $4,736 
    Other operating income 20   13   55   39 
    Total revenues 2,437   1,910   7,613   4,775 
    Costs and expenses:       
    Lease operating expenses 183   156   491   415 
    Production and ad valorem taxes 156   124   495   304 
    Gathering and transportation 71   67   191   154 
    Depreciation, depletion, amortization and accretion 336   341   979   955 
    General and administrative expenses 34   38   109   99 
    Merger and integration expense 11      11   77 
    Other operating expenses 32   20   85   81 
    Total costs and expenses 823   746   2,361   2,085 
    Income (loss) from operations 1,614   1,164   5,252   2,690 
    Other income (expense):       
    Interest expense, net (43)  (57)  (122)  (170)
    Other income (expense), net (5)  2   (3)  (4)
    Gain (loss) on derivative instruments, net (24)  (234)  (677)  (895)
    Gain (loss) on sale of equity method investments          23 
    Gain (loss) on extinguishment of debt (1)  (12)  (59)  (73)
    Income (loss) from equity investments 19   4   56   6 
    Total other income (expense), net (54)  (297)  (805)  (1,113)
    Income (loss) before income taxes 1,560   867   4,447   1,577 
    Provision for (benefit from) income taxes 290   193   913   352 
    Net income (loss)  1,270   674   3,534   1,225 
    Net income (loss) attributable to non-controlling interest 86   25   155   45 
    Net income (loss) attributable to Diamondback Energy, Inc.$1,184  $649  $3,379  $1,180 
            
    Earnings (loss) per common share:       
    Basic$6.72  $3.55  $18.99  $6.66 
    Diluted$6.72  $3.55  $18.99  $6.66 
    Weighted average common shares outstanding:       
    Basic 174,406   181,027   176,169   175,464 
    Diluted 174,408   181,027   176,171   175,464 
    Dividends declared per share$2.26  $0.50  $8.36  $1.35 


    Diamondback Energy, Inc.
    Consolidated Statements of Cash Flows
    (unaudited, in millions)
            
     Three Months Ended September 30, Nine Months Ended September 30,
      2022   2021   2022   2021 
    Cash flows from operating activities:       
    Net income (loss)$1,270  $674  $3,534  $1,225 
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:       
    Provision for (benefit from) deferred income taxes 102   193   375   348 
    Depreciation, depletion, amortization and accretion 336   341   979   955 
    (Gain) loss on extinguishment of debt 1   12   59   73 
    (Gain) loss on derivative instruments, net 24   234   677   895 
    Cash received (paid) on settlement of derivative instruments (96)  (363)  (816)  (847)
    (Income) loss from equity investment (19)  (4)  (56)  (6)
    Equity-based compensation expense 14   14   42   37 
    (Gain) loss on sale of equity method investments          (23)
    Other 21   30   57   45 
    Changes in operating assets and liabilities:       
    Accounts receivable 267   (135)  (113)  (307)
    Income tax receivable (2)  53   (1)  152 
    Prepaid expenses and other (31)  5   (16)  23 
    Accounts payable and accrued liabilities (8)  (13)  (29)  (39)
    Income tax payable 28      14    
    Revenues and royalties payable 19   157   182   257 
    Other (1)  1   (4)  (11)
    Net cash provided by (used in) operating activities 1,925   1,199   4,884   2,777 
    Cash flows from investing activities:       
    Drilling, completions and infrastructure additions to oil and natural gas properties (464)  (385)  (1,327)  (1,030)
    Additions to midstream assets (27)  (6)  (69)  (23)
    Property acquisitions (248)  (33)  (629)  (454)
    Proceeds from sale of assets 33   12   105   112 
    Funds held in escrow (6)  (1)  6   50 
    Other (8)  (12)  (38)  22 
    Net cash provided by (used in) investing activities (720)  (425)  (1,952)  (1,323)
    Cash flows from financing activities:       
    Proceeds from borrowings under credit facilities 2,521   98   4,100   759 
    Repayments under credit facilities (2,556)  (73)  (4,119)  (853)
    Proceeds from senior notes       750   2,200 
    Repayment of senior notes (45)  (433)  (1,910)  (2,540)
    Proceeds from (repayments to) joint venture (24)  (4)  (41)  (14)
    Premium on extinguishment of debt    (12)  (49)  (178)
    Repurchased shares under buyback program (472)  (22)  (782)  (22)
    Repurchased units under buyback program (51)  (27)  (122)  (63)
    Dividends to stockholders (526)  (81)  (1,174)  (221)
    Distributions to non-controlling interest (71)  (31)  (181)  (72)
    Financing portion of net cash received (paid) for derivative instruments    (34)     25 
    Other (6)  (10)  (42)  (42)
    Net cash provided by (used in) financing activities (1,230)  (629)  (3,570)  (1,021)
    Net increase (decrease) in cash and cash equivalents (25)  145   (638)  433 
    Cash, cash equivalents and restricted cash at beginning of period 59   396   672   108 
    Cash, cash equivalents and restricted cash at end of period$34  $541  $34  $541 


    Diamondback Energy, Inc.
    Selected Operating Data
    (unaudited)
          
     Three Months Ended
    September 30, 2022
     Three Months Ended
    June 30, 2022
     Three Months Ended
    September 30, 2021
    Production Data:     
    Oil (MBbls) 20,638  20,120  22,058
    Natural gas (MMcf) 45,799  42,912  45,571
    Natural gas liquids (MBbls) 7,667  7,349  7,540
    Combined volumes (MBOE)(1) 35,938  34,621  37,193
          
    Daily oil volumes (BO/d) 224,326  221,099  239,761
    Daily combined volumes (BOE/d) 390,630  380,451  404,274
          
    Average Prices:     
    Oil ($ per Bbl)$89.79 $108.80 $68.27
    Natural gas ($ per Mcf)$6.46 $6.15 $3.34
    Natural gas liquids ($ per Bbl)$34.96 $40.69 $31.70
    Combined ($ per BOE)$67.25 $79.49 $51.00
          
    Oil, hedged ($ per Bbl)(2) $87.41 $97.32 $53.81
    Natural gas, hedged ($ per Mcf)(2)$5.50 $4.40 $2.04
    Natural gas liquids, hedged ($ per Bbl)(2)$34.96 $40.69 $31.30
    Average price, hedged ($ per BOE)(2) $64.67 $70.65 $40.76
          
    Average Costs per BOE:     
    Lease operating expenses$5.09 $4.59 $4.19
    Production and ad valorem taxes 4.34  5.14  3.33
    Gathering and transportation expense 1.98  1.76  1.80
    General and administrative - cash component 0.56  0.75  0.65
    Total operating expense - cash$11.97 $12.24 $9.97
          
    General and administrative - non-cash component$0.39 $0.38 $0.37
    Depletion$8.79 $8.84 $8.71
    Interest expense, net$1.20 $1.13 $1.53

    (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 Diamondback Energy, Inc., plus net income (loss) attributable to non-controlling interest ("net income (loss)") before non-cash (gain) loss on derivative instruments, net, interest expense, net, depreciation, depletion, amortization and accretion, depreciation and interest expense related to equity method investments, impairment and abandonments related to equity method investments, (gain) loss on sale of equity method investments, (gain) loss on extinguishment of debt, non-cash equity-based compensation expense, capitalized equity-based compensation expense, merger and integration expense, other non-cash transactions and provision for (benefit from) income taxes, if any. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles ("GAAP"). Management believes Adjusted EBITDA is useful because the measure allows it to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company adds the items listed above to net income (loss) to determine Adjusted EBITDA because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. The Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts.

    The following tables present a reconciliation of the GAAP financial measure of net income (loss) attributable to Diamondback Energy, Inc. to the non-GAAP financial measure of Adjusted EBITDA:

    Diamondback Energy, Inc.
    Reconciliation of Net Income (Loss) to Adjusted EBITDA
    (unaudited, in millions)
          
     Three Months Ended
    September 30, 2022
     Three Months Ended
    June 30, 2022
     Three Months Ended
    September 30, 2021
    Net income (loss) attributable to Diamondback Energy, Inc.$1,184  $1,416  $649 
    Net income (loss) attributable to non-controlling interest 86   45   25 
    Net income (loss) 1,270   1,461   674 
    Non-cash (gain) loss on derivative instruments, net (72)  (199)  (163)
    Interest expense, net 43   39   57 
    Depreciation, depletion, amortization and accretion 336   330   341 
    Depreciation and interest expense related to equity method investments 17   16   9 
    Impairment and abandonments related to equity method investments    1   1 
    (Gain) loss on extinguishment of debt 1   4   12 
    Non-cash equity-based compensation expense 20   19   19 
    Capitalized equity-based compensation expense (6)  (6)  (5)
    Merger and integration expenses 11       
    Other non-cash transactions 1      (2)
    Provision for (benefit from) income taxes 290   402   193 
    Consolidated Adjusted EBITDA 1,911   2,067   1,136 
    Less: Adjustment for non-controlling interest 54   75   42 
    Adjusted EBITDA attributable to Diamondback Energy, Inc.$1,857  $1,992  $1,094 

    ADJUSTED NET INCOME

    Adjusted net income is a non-GAAP financial measure equal to net income (loss) attributable to Diamondback Energy, Inc. plus net income (loss) attributable to non-controlling interest ("net income (loss)") adjusted for non-cash (gain) loss on derivative instruments, net, (gain) loss on sale of property, plant and equipment, impairment and abandonments related to equity method investments, (gain) loss on extinguishment of debt, merger and integration expense; other non-cash transactions and related income tax adjustments, if any. The Company’s computation of adjusted net income may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Company's performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.

    The following table presents a reconciliation of the GAAP financial measure of net income (loss) attributable to Diamondback Energy, Inc. to the non-GAAP measure of adjusted net income:

    Diamondback Energy, Inc.
    Adjusted Net Income
    (unaudited, $ in millions except per share data, shares in thousands)
      
     Three Months Ended September 30, 2022
     Amounts Amounts Per
    Diluted Share
    Net income (loss) attributable to Diamondback Energy, Inc.(a)$1,184  $6.72 
    Net income (loss) attributable to non-controlling interest 86   0.49 
    Net income (loss)(a) 1,270   7.21 
    Non-cash (gain) loss on derivative instruments, net (72)  (0.41)
    (Gain) loss on extinguishment of debt 1   0.01 
    Merger and integration expense 11   0.06 
    Other non-cash transactions 1   0.01 
    Adjusted net income excluding above items(a) 1,211   6.88 
    Income tax adjustment for above items 11   0.06 
    Adjusted net income(a) 1,222   6.94 
    Less: Adjusted net income attributable to non-controlling interest 80   0.46 
    Adjusted net income attributable to Diamondback Energy, Inc.(a)$1,142  $6.48 
        
    Weighted average common shares outstanding:   
    Basic  174,406 
    Diluted  174,408 

    (a) 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 Diamondback Energy, Inc, (ii) plus the reallocation of $12 million in earnings attributable to participating securities, divided by (iii) diluted weighted average common shares outstanding.

    OPERATING CASH FLOW BEFORE WORKING CAPITAL CHANGES, FREE CASH FLOW AND ADJUSTED FREE CASH FLOW

    Operating cash flow before working capital changes, which is a non-GAAP financial measure representing 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 adjusted operating cash flow relates 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. Adjusted Free Cash Flow, which is a non-GAAP financial measure, is Free Cash Flow adjusted for early termination of commodity derivative contracts. The Company believes that Free Cash Flow and Adjusted Free Cash Flow are useful to investors as they provide 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 early settlements of commodity derivative contracts. 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 operating cash flow before working capital changes, Free Cash Flow and Adjusted 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 net cash provided by operating activities to operating cash flow before working capital changes and to Free Cash Flow:

    Diamondback Energy, Inc.
    Operating Cash Flow Before Working Capital Changes, Free Cash Flow and Adjusted Free Cash Flow
    (unaudited, in millions)
            
     Three Months Ended September 30, Nine Months Ended September 30,
      2022   2021   2022   2021 
    Net cash provided by operating activities$1,925  $1,199  $4,884  $2,777 
    Less: Changes in cash due to changes in operating assets and liabilities:       
    Accounts receivable 267   (135)  (113)  (307)
    Income tax receivable (2)  53   (1)  152 
    Prepaid expenses and other (31)  5   (16)  23 
    Accounts payable and accrued liabilities (8)  (13)  (29)  (39)
    Income tax payable 28      14    
    Revenues and royalties payable 19   157   182   257 
    Other (1)  1   (4)  (11)
    Total working capital changes 272   68   33   75 
    Operating cash flow before working capital changes 1,653   1,131   4,851   2,702 
    Drilling, completions and infrastructure additions to oil and natural gas properties (464)  (385)  (1,327)  (1,030)
    Additions to midstream assets (27)  (6)  (69)  (23)
    Total Cash CAPEX (491)  (391)  (1,396)  (1,053)
    Free Cash Flow 1,162   740   3,455   1,649 
    Early termination of derivatives 3      138    
    Adjusted Free Cash Flow$1,165  $740  $3,593  $1,649 

    NET DEBT

    The Company defines net debt as total debt 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.

     
    Diamondback Energy, Inc.
    Net Debt
    (unaudited, in millions)
     
     September 30, 2022  Net Q3 Principal
    Borrowings/
    (Repayments)
      June 30, 2022  March 31, 2022 December 31, 2021 September 30, 2021 
    Diamondback Energy, Inc.(a)$4,340  $134  $4,206  $4,533 $5,277 $5,938 
    Viper Energy Partners LP(a)675  (5) 680  728 784 572 
    Rattler Midstream LP(a)500  (232)  732  730 695 500 
    Total debt5,515  $(103)  5,618  5,991 6,756 7,010 
    Cash and cash equivalents(27)    (43) (149)(654)(457)
    Net debt$5,488     $5,575  $5,842 $6,102 $6,553 

    (a)  Excludes debt issuance costs, discounts, premiums and fair value hedges.

    DERIVATIVES

    As of November 4, 2022, the Company had the following outstanding consolidated derivative contracts, including derivative contracts at Viper Energy Partners LP. The Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent pricing and with natural gas derivative settlements based on the New York Mercantile Exchange Henry Hub pricing. When aggregating multiple contracts, the weighted average contract price is disclosed.

     Crude Oil (Bbls/day, $/Bbl)
     Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2024
    Costless Collars - WTI (Cushing) 4,000         
    Long Put Price ($/Bbl)$50.00         
    Ceiling Price ($/Bbl)$128.01         
    Costless Collars - WTI (Magellan East Houston) 7,000         
    Long Put Price ($/Bbl)$50.00         
    Ceiling Price ($/Bbl)$95.55         
    Costless Collars - Crude Brent Oil 15,000  6,000  6,000     
    Long Put Price ($/Bbl)$55.00 $60.00 $60.00     
    Ceiling Price ($/Bbl)$103.06 $114.57 $114.57     
    Long Puts - WTI (Cushing) 8,000  8,000       
    Long Put Price ($/Bbl)$55.00 $54.25       
    Deferred Premium ($/Bbl) $-1.54  $-1.90       
    Long Puts - WTI (Magellan East Houston) 20,000  28,000  14,000  2,000   
    Long Put Price ($/Bbl)$51.00 $53.93 $52.86 $55.00   
    Deferred Premium ($/Bbl) $-1.81  $-1.78  $-1.75  $-1.86   
    Long Puts - Crude Brent Oil 72,326  69,000  43,000  11,000   
    Long Put Price ($/Bbl)$51.20 $53.33 $52.79 $51.82   
    Deferred Premium ($/Bbl) $-1.78  $-1.74  $-1.80  $-1.92   
    Basis Swaps - WTI (Midland)

     10,000  24,000  24,000  24,000  24,000 
    $0.84 $0.90 $0.90 $0.90 $0.90 
    Basis Spread Puts - WTI (Cushing) / Brent 50,000         
    Spread Price ($/Bbl) $-10.40         
    Deferred Premium ($/Bbl) $-0.78         
    Roll Swaps - WTI

     55,000         
    $0.89         


     Natural Gas (Mmbtu/day, $/Mmbtu)
     Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2024
    Costless Collars - Henry Hub 380,000  370,000  330,000  310,000  310,000  
    Long Put Price ($/Mmbtu)$2.79 $3.14 $3.17 $3.18 $3.18  
    Ceiling Price ($/Mmbtu)$6.24 $9.28 $9.13 $9.22 $9.22  
    Natural Gas Basis Swaps - Waha Hub
     330,000  350,000  350,000  330,000  330,000  270,000
     $-0.68  $-1.20  $-1.20  $-1.24  $-1.24  $-1.17


    Investor Contact:
    Adam Lawlis
    +1 432.221.7467
    alawlis@diamondbackenergy.com


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