Diamondback Energy Earnings: Here’s Why Investors are Selling Shares Now

Diamondback Energy Inc (NASDAQ:FANG) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.76%.

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Diamondback Energy Inc Earnings Cheat Sheet


Revenue: Rose 80.63% to $28.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: reported adjusted EPS income of $0.12 per share. By that measure, the company missed the mean analyst estimate of $0.17. It missed the average revenue estimate of $32.97 million.

Quoting Management: “During the first quarter of 2013, we continued to ramp production while executing on our initiatives to achieve best-in-basin margins. We are encouraged by the early success of our horizontal drilling program where we have averaged 24 hour IP rates from eight horizontal wells of 836 Boe/d (87% oil) with lateral lengths that average 4,945′. Each of these wells is performing at or above the type curve we predicted for these wells,” stated Travis Stice, Chief Executive Officer of Diamondback. Mr. Stice added, “Our operations team continues to improve performance by reducing cycle times and costs to a level we believe is among the best in the Midland Basin. Our Q1 2013 average well cost for short laterals was $6.0 million which is a 22% improvement over Q4 2012, and longer laterals averaged $7.8 million for Q1 2013 which is a 10% improvement over Q4 2012. Finally, we are starting to realize the benefits from our infrastructure investments, reducing our total LOE 20% from the previous quarter to $12.61 per Boe, for the first quarter of 2013 from $15.68 per Boe in the fourth quarter of 2012 on a pro forma basis.”

Key Stats (on next page)…

Revenue increased 8.61% from $26.61 million in the previous quarter. EPS decreased 33.33% from $0.18 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.27 and has not changed. For the current year, the average estimate has moved up from a profit of $1.19 to a profit of $1.25 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)