Shale producer Diamondback Energy (FANG) fell short of earnings estimates late Wednesday and bought more Permian Basin assets, while subsidiary Viper Energy Partners (VNOM) crushed views. Occidental Petroleum (OXY) also reported mixed results.
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Diamondback Earnings
Estimates: 17% increase in EPS to $1.64 and a 77% jump in revenue to $477 million.
Results: EPS of $1.59 on revenue of $526.3 million. Production jumped 46% to 112,600 barrels of oil equivalent per day. Average realized prices were $50.26 per boe, down 1% from Q1.
Outlook: Full-year production is now seen at 115,000-119,000 boe per day, up 4% at the midpoint from prior guidance. Management also narrowed full-year capital spending guidance to $1.4 billion-$1.5 billion from $1.3 billion-$1.5 billion previously.
Diamondback also agreed to acquire all leasehold interests and related assets of Ajax Resources for $900 million in cash and 2.58 million shares of common stock. The deal gives Diamondback 25,493 net leasehold acres in the Northern Midland Basin.
"I am extremely pleased with our organization's continued ability to deliver on securing firm takeaway out of the Permian as we look to maximize our exposure to international pricing. Diamondback's oil marketing strategy in the near term is to secure firm transportation at fixed discounts to Gulf Coast pricing while not compromising realizations over the long term," said CEO Travis Stice in a statement.
Stock: Diamondback fell 1.7% late. Shares closed down 0.7% at 133.79. Diamondback is forming a cup with handle base with a 138.35 buy point.
Viper Energy Earnings
Estimates: EPS climbing 65% to 38 cents with total operating income jumping 86.5% to $69 million.
Results: EPS of $1.35 on total operating income of $75.41 million. Total production rose 56% year-over-year to 16,323 barrels per day. Its aggregated realized price of oil, natural gas and natural liquids was during Q2 was $50.10 per boe vs. $49.09 in Q1.
Outlook: Viper now sees Q3 and Q4 production of 17,500 to 19,000 bpd. The company raised its full year production outlook to 16,500- 17,000 bpd, up 5% from its previous outlook.
Stock: Viper jumped 6% late. Shares finished 1.7% lower at 35.94.
Occidental Earnings
Estimates: EPS soaring 733% $1.25 on a 11% increase in revenue to $4 billion.
Results: EPS of $1.10 on revenue $4.13 billion. Total production grew 6.3% from a year ago to 639,000 boe per day. Permian resources production jumped46% to 201,000 boe per day.
"With the early completion of our low oil price breakeven plan, outperformance across all three business segments and the expected sale of non-core domestic midstream assets, our priority is to use free cash flow to generate the greatest shareholder return," said CEO Vicki Hollub in a release. "We remain committed to our dividend growth, have resumed our share repurchase program and are investing in our high-return Permian assets."
Stock: Oxy fell 2.7% late. Shares edged down 0.9% to end at 81.20 on the stock market today.
On Tuesday, the EIA lowered its 2019 outlook on U.S. production to 11.7 million barrels per day from 11.8 million bpd. Output this year is seen at 10.7 million bpd down from 10.79 million bpd in last month's outlook.
Earlier Wednesday, the Energy Information Administration reported weekly U.S. oil inventories fell by 1.4 million barrels while gasoline stockpiles fell by 2.9 million barrels. Analysts surveyed by S&P Global Platts expect a 3.7 million-barrel decline.
Late Tuesday, the American Petroleum Institute, an industry group, reported a 6 million-barrel drop in crude supplies.
U.S. crude production fell to 10.8 million barrels per day from 10.9 million barrels in the week prior, EIA said.
U.S. crude tumbled 3.2% to settle at $66.94 a barrel. Brent fell 3.1% to $72.73. China announced a 25% tariff on $16 billion worth of U.S. goods including crude. Chinese crude imports in July rose to 8.48 million bpd vs. 8.36 million in June according to General Administration of Customs data, but were still the third-lowest for the year.
Markets are also trying to weigh the effects of the Iran sanctions on the oil supply.
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The post Diamondback Energy Buys Permian Acres As Earnings Miss; Viper Crushes appeared first on Investor's Business Daily.
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