Diamondback Energy (FANG) has managed to stir up a storm among investors with its latest financial report, where third-quarter earnings beat estimates on the back of higher production, but revenue fell short, and the bottom line plunged from the prior year due to a drastic drop in overall realization.
In response to this, the company announced a special dividend of $2.53 per share, further aggravating those who were already rattled by the underperformance in revenue. On top of this, FANG’s board of directors declared a quarterly cash dividend of 84 cents per share, a move that has only added fuel to the fire.
While the company tried to appease investors by executing $56 million of share repurchases during the third quarter of 2023, the damage had already been done. The stock saw a sizable drop in price, leaving shareholders seething.
Production & Realized Prices
FANG managed to ramp up its production of oil and natural gas, but the average realized oil price experienced a significant decrease, leaving shareholders feeling the burn. The company fetched only $54.37 per barrel compared with $67.25 a year ago, adding insult to injury.
Costs & Financial Position
In light of the earnings report, although Diamondback’s third-quarter cash operating cost decreased, investors were not assuaged by the fact that the company now holds approximately $6.2 billion in long-term debt, representing a debt-to-capitalization of 26.8%.
Guidance
The company has managed to stoke the flames further, with its 2023 outlook for increased hydrocarbon production and a substantial capital spending budget. While this may seem like good news to some, others perceive it as an indicator of more turbulence ahead.
A Zacks Rank #3 (Hold) has only added to the turmoil, leaving investors feeling uncertain about Diamondback Energy’s future prospects.
Overall, Diamondback Energy (FANG) has left investors fuming and uncertain about the path ahead. As shareholders weigh their options, the company’s future remains uncertain, leaving a bitter taste in the mouths of those who once had high hopes for its performance.
