Energy Stock Diamondback Energy Tops Earnings Outlook, Returns Millions to Shareholders

Energy reserve Diamondback Energy ( FANG ) beat earnings estimates and matched sales views on Monday, as the oil producer returned nearly $900 million to shareholders while output was largely flat in the third quarter. Warren Buffett stocks Occidental Petroleum (OXY) will report third-quarter earnings on Tuesday. Diamondback Energy stock fell overnight after FANG and OXY stocks advanced slightly in Monday’s session.


Energy Stocks: Diamondback Energy Earnings

Estimates: The Street predicts Diamondback Energy’s earnings will rise 119% to $6.45 per share. Analysts had expected revenue to rise 26% to $2.4 billion in the third quarter. Capital expenditures were forecast to be $492 million, up 5% from last quarter and 26% from last year.

Results: Diamondback Energy reported EPS up 120% to $6.48. Revenue in the third quarter was $2.4 billion, up 26% from last year. The company has capital expenditures of $491 million, which is slightly below views.

Diamondback Energy also reported returning $874 million to shareholders through share buybacks and dividends. That’s about 75% of the company’s free cash flow of $1.16 billion in the third quarter.

Diamondback Energy produced 390,630 barrels of oil equivalent per day in the third quarter, up 2% from the second quarter and down 3% from a year ago.

“We have focused on controlling costs, working to reduce inflationary pressures related to the changing components of our cost structure through improved operating methods,” CEO Travis Stice said in a statement Monday.

FANG fund

Shares of Diamondback Energy traded down 1.3% to 163.49 in late Monday’s trading. According to MarketSmith analysis, the FANG shares missed the official buy point by 162.34 points. But it is 18% above the 50-day moving average. Shares are up 47% since hitting 110.97 on September 26.

The Midland, Texas-based energy company primarily produces oil, but also has significant natural gas operations. Earnings per share rose 194% to $7.07 in the second quarter. Revenue rose 59% to $2.7 billion. Capital expenditures on operational and non-operational drilling totaled $468 million in the second quarter.

Well completion services, materials and labor are increasingly expensive and difficult to obtain, and much of the drilling has gone to simply maintaining production levels. Rising oil prices have made keeping production stable a winning strategy. Analysts forecast Diamondback’s earnings to rise 126% to $25.50 a share in 2022 on sales growth of 41% to $9.6 billion.

Shale energy stock Diamondback Energy ranks ninth in the oil and gas-US exploration and production industry group. FANG stocks have a perfect Composite Rating of 99. The stock has a Relative Strength Rating of 96, an exclusive IBD Stock Check measure of share price action. The EPS rating is 95.

Energy Resources And The Oil And Gas Market

The financial report comes as President Joe Biden has criticized oil producers and oil prices have rebounded.

Biden called on companies to pay higher taxes to lower fuel costs for consumers. The president also said on Friday that he plans to speak directly with oil companies soon.

U.S. crude oil futures fell 0.7% on Monday, hovering around prices not seen since late August at $91.93 a barrel. Prices rose nearly 9% in October, the first monthly advance since May. A 2 million bpd cut in output from the Organization of the Petroleum Exporting Countries and its key allies, including Russia, known as OPEC+, has been officially in effect since November.

Meanwhile, US natural gas prices rose 4.6% on Monday to $7.06 per million British thermal units. US natural gas futures are up nearly 53% year-to-date. However, they are about 40% off their 14-year highs hit in August.

Oil Companies prefer buybacks over production

The financial outlook from Diamondback Energy and Occidental Petroleum comes after several energy stocks reported earnings last week.

Devon Energy (DVN) reported a 96% jump in third-quarter EPS to $2.18, and a 20% increase in sales to $4.15 billion. Energy reserve Marathon oil (MRO) beat earnings and sales views and Marathon Petroleum (MPC) reported a 969% jump in earnings to $7.81 per share. A week ago, Pioneer Natural Resources ( PXD ) beat earnings estimates but missed revenue.

Occidental Oil Earnings

Estimates: Wall Street forecasts Occidental Petroleum’s earnings per share of $2.48, a 185% gain, and 34% growth on revenue of $9.1 billion, according to FactSet. Analysts expect capital spending to rise 100% from a year ago to $1.2 billion.

Results: Check after the market closes on Tuesday.

Occidental Petroleum shares rose 3.7% to 75.95 on Monday. OXY shares recently cleared a cup buy point with a handle at 72.14. According to MarketSmith analysis, the buying range extends to 75.75. The OXY stock is currently outperforming the S&P 500, with its RS line at a three-year high.

But OXY stock is more than 10% above its 50-day line.

Houston-based Occidental Petroleum’s business exposure is primarily oil, natural gas liquids and natural gas. It also has a petrochemicals segment that has performed well in recent quarters.

OXY beat estimates with record second-quarter profit on Aug. 2. West’s earnings rose 888% to $3.16 per share. Revenue rose 81% to $10.7 billion. This was primarily due to higher oil prices as oil production remained in line with guidance.

Is OXY Stock a Buy or a Sell Right Now?

Billionaire investor Warren Buffett has been on a buying spree of OXY stock this year. Berkshire Hathaway (BRKA) has been adding more than 20 million shares to its portfolio since July. Berkshire Hathaway increased its stake in OXY to about 21%, according to SEC filings, guaranteeing its holdings above 25%.

Occidental Petroleum ranks fifth in the oil and gas international exploration and production industry group. OXY shares have a perfect Composite Rating of 99. OXY has a Relative Strength Rating of 98. The energy stock has an EPS rating of 80.

Follow Kit Norton on Twitter @KitNorton for more coverage.


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