Diamondback Energy: Not Much Of A Slowdown In 2016
Richard Zeits • 12 Comments
Richard Zeits • 12 Comments
Fri, Oct. 21, 8:51 AM
- Diamondback Energy (NASDAQ:FANG) announces that it has commenced a cash tender offer to purchase any and all of its 7.625% Senior Notes due 2021. As of October 20, 2016, Diamondback had $450M aggregate principal amount of the notes outstanding.
- Holders of notes will receive total cash consideration of $1,059.69 per $1,000 principal amount of notes, plus any accrued and unpaid interest up to, but not including, the settlement date, which is expected to occur on October 28, 2016.
- Source: Press Release
Tue, Oct. 18, 3:49 PM
- SM Energy (SM +1.5%) surged to a 52-week high at the open before pulling back following news of its purchase of 35.7K acres in the Midland Basin in west Texas for $1.1B in cash and 13.4M shares valued at ~$500M.
- SM expects to use the proceeds from a $785M sale of property and other assets in the Williston Basin to Oasis Petroleum, also announced today, to pay for the bulk of its cash outlay for the deal.
- “Our Permian growth rate will be huge, higher than our more highly valued competitors,” SM CEO and President Jay Ottoson says without naming the competitors, but the company’s slide presentation lists Diamondback Energy (FANG -0.5%), Callon Petroleum (CPE -0.1%), Parsley Energy (PE -0.5%) and RSP Permian (RSPP -1.1%) as its top peers in the area.
- CapitalOne upgrades SM to Overweight from Equal Weight with a $50 price target, lifted from $46, as it estimates SM paid ~$42K/acre for the acreage when backing out 2.4M boe/day production from the total $1.6B purchase price.
- Williams Capital considers SM its top pick in the sector, saying the deal gives it "the scale to command an improved valuation and trade more like a Permian Basin company, especially when considering its execution of selling non-core assets."
Thu, Oct. 13, 4:47 PM
- RSP Permian (NYSE:RSPP) -5.8% AH after agreeing to acquire Silver Hill Energy Partners and Silver Hill E&P II for $1.25B in cash and 31M common shares of its common stock, implying a total purchase price of ~$2.4B.
- RSPP says the deal is a unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin with 41K net surface acres, which creates substantial scale with combined current production of ~50K boe/day, 100K-plus net surface acres, 500K-plus net effective horizontal acres, and 3,600 net drilling locations with substantial additional upside.
- To help fund the deal, RSPP launches a 20M-share public offering, with an underwriters option to purchase up to an additional 3M common shares.
- Silver Hill reportedly had attracted interest from the likes of Diamondback Energy (NASDAQ:FANG), Noble Energy (NYSE:NBL), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY).
Mon, Oct. 10, 6:18 PM
- Diamondback Energy (NASDAQ:FANG) surged more than 11% today to a new all-time high after raising its production guidance and saying it is no longer pursuing an acquisition.
- FANG also said it is now operating four rigs with a fifth rig to be added in the coming weeks and a sixth rig to be added early next year, and that it had reduced its operating expenses through continued cost cutting and improvements in efficiency.
- SanTrust analysts say FANG does not need a deal for now given the company's strong inventory base, and that "investors lose sight that Diamondback is one of few E&Ps that can grow 30%-plus Y/Y next year while spending within cash flow" at today’s strip prices.
- Williams Capital raises its FANG price target to $112 from $105 on the updated guidance but, seeing greater upside elsewhere in the sector, keeps a Hold rating on the stock.
Mon, Oct. 10, 2:02 PM
Mon, Oct. 10, 8:27 AM
- Diamondback Energy (NASDAQ:FANG) +4% premarket after raising its 2016 production guidance, offering preliminary 2017 production guidance and saying it is no longer pursuing talks on an acquisition.
- FANG says it is increasing its 2016 production guidance to 41K-42K boe/day, +6% from the midpoint of its July guidance range of 38K-40K boe/day, citing continued strong well performance, and plans to complete 65-70 gross horizontal wells this year; 2016 capex guidance is unchanged at $350M-$425M.
- FANG's preliminary FY 2017 production guidance is 52K-58K boe/day, with the midpoint more than 30% higher than the midpoint of updated 2016 production guidance.
- Average daily production during Q3 was 44.9K boe/day (73% oil), +22% from Q2's 36.8K boe/day.
- FANG also confirms it had been in talks for an acquisition but that it is no longer actively pursuing further negotiations; earlier reports had said FANG was near a deal to buy Silver Hill Energy Partners.
Fri, Sep. 30, 6:22 PM
- Diamondback Energy (NASDAQ:FANG) is close to a deal to buy privately held Silver Hill Energy Partners in a deal that could fetch ~$2.5B, WSJ reports.
- FANG would be the winner of an auction that reportedly attracted interest from Noble Energy (NYSE:NBL), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY), in the latest rush to grab drilling land in west Texas' Permian Basin.
- A deal could be announced as soon as next week, according to the WSJ report.
Tue, Sep. 6, 2:48 PM
- EOG Resources (EOG +6.7%) surges more than 6%, as analysts say its $2.5B acquisition of Yates Petroleum strengthens its Permian Basin presence at an inexpensive price.
- Tudor Pickering & Holt analysts say EOG is paying $7K-$8K/acre for the Delaware Basin properties, assuming a value on proven reserves that are producing and still being developed of ~$800M for the 29.6M boe/day EOG said it is picking up (48% oil).
- Simmons analyst Pearce Hammond calculates that the deal comes in well below some recent transactions in the play, including Diamondback Energy's (FANG +0.1%) $560M purchase of Luxe Energy, which he says came in at $26K-$27K/acre.
- Cowen analysts say EOG is paying less than $1M per new premium location, and the deal is $2/share accretive to net asset value just on initial locations.
Mon, Aug. 29, 6:25 PM
- Williams Capital believes oil industry fundamentals are solid despite current commodity price levels but is cautious overall and advises investors not to chase the recent run at current valuations.
- However, the firm recommends select underappreciated companies with lower expectations and re-rating potential, and thinks companies situated in core resource plays that can demonstrate further capital efficiency improvements with catalysts will continue to garner top valuations and M&A premiums.
- Two of Williams' favorites are SM Energy (NYSE:SM), which the firm says remains one of the cheapest names in the sector with a solid balance sheet and assets as well as a conservative management team, and Newfield Exploration (NYSE:NFX), which Williams sees thriving through the current downturn given its strong balance sheet, ample financial liquidity and strong hedge book.
- Also initiated with Buy ratings: Cabot Oil & Gas (NYSE:COG), Energen (NYSE:EGN), Gulfport Energy (NASDAQ:GPOR), Oasis Petroleum (NYSE:OAS), PDC Energy (NASDAQ:PDCE), Pioneer Natural Resources (NYSE:PXD).
- Driven largely by valuation, Williams assigns Hold ratings on Diamondback Energy (NASDAQ:FANG), Gastar Exploration (NYSEMKT:GST), Laredo Petroleum (NYSE:LPI), Parsley Energy (NYSE:PE), Rice Energy (NYSE:RICE) and Cimarex Energy (NYSE:XEC).
Mon, Aug. 8, 11:57 AM
- SM Energy’s (SM +7.2%) $980M purchase of drilling rights in the Permian Basin shows that producers are willing to pay a premium for access to one of the few spots where oil exploration still turns a profit, Bloomberg reports.
- SM will pay the equivalent of $39.5K/acre for drilling rights across 24,783 acres in the Permian Basin, will ahead of the $25K-$35K that acreage in the Permian’s Midland Basin section had been fetching as recently as May and almost doubling SM's holdings in the region.
- Other Permian producers also are trading higher, including: PXD +2.2%, CXO +1.8%, XEC +2.1%, CWEI +6.1%, APA +3.8%, FANG +2.1%, PE +1.2%, QEP +3.6%, RSPP +2.4%, APC +2.6%, DVN +3.7%, MTDR +2.3%.
Wed, Aug. 3, 3:28 PM
- The Permian energy producers remain "the envy" of their non-Permian peers following Q2 earnings beats (I, II) from Concho Resources (CXO +3.4%) and Diamondback Energy (FANG +1.8%), Deutsche Bank analysts say.
- Advantaged with solid balance sheets, strong margins, capital market access, improving well productivity and persistent pressure on costs, the Permian players are "visibly turning operating leverage into momentum," the firm writes.
- Q2 marked the second straight quarter that XCO reported a "beat-and-raise" set of results, with volumes, cash costs and cash flow all beating expectations while guiding full-year volumes higher and costs lower; CXO has now raised the midpoint of volume guidance from -2.5% Y/Y to +1% Y/Y in the last six months from an unchanged ~$1.2B budget, which Deutsche Bank says shows the strength of CXO’s asset base that continues to churn out strong results.
- FANG’s Q2 offered few financial surprises but finally delivered the first set of strong results from Howard county, with two wells registering average IP30s of ~1,300 boe/day; as the northern Midland basin has received increased industry attention, the firm says the results and FANG’s next set of Howard wells and northwest Martin county should be closely watched.
Tue, Aug. 2, 4:18 PM
Mon, Aug. 1, 5:35 PM
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Fri, Jul. 15, 3:30 PM
- Diamondback Energy's (FANG -1.8%) stock price target is raised to a Street-high $110 from $100 at Wunderlich after the company's recent positive developments in terms of its operations, financials and acquisitive plans.
- Wunderlich says FANG already has showed world class execution in the Midland Basin and believes the entrance into the Delaware Basin bodes well not only for the company in terms of increased potential, but also affirms that the "other" side of the Permian competes for capital.
- Barclays also lifts its price target - by $3 to $88 - following the Delaware move, saying it expects FANG to achieve double-digit growth in 2017 while spending within cash flow.
Wed, Jul. 13, 7:55 AM
- Diamondback Energy (NASDAQ:FANG) -2.1% premarket after agreeing to acquire more than 19K net acres and related assets in the Southern Delaware Basin for $560M.
- The assets, primarily located along the Pecos River in Reeves and Ward counties, include ~1K boe/day of current net production.
- FANG also raises its 2016 production guidance to 38K-40K boe/day, up 11% from the midpoint of earlier guidance of 32K-38K boe/day, due to increasing activity from 3-4 rigs in H2 2016 as well as continued strong well performance.
- FANG now plans to complete 60-75 gross horizontal wells this year, vs. its prior outlook for 35-70 gross horizontal wells; as a result, the company raises its 2016 capex guidance to $350M-$425M from $250M-$375M prior.
- To help fund the deal, FANG announces a public offering of 5.5M common shares, with an underwriters option to purchase up to an additional 825K shares.
Tue, May 3, 4:14 PM
- Diamondback Energy (NASDAQ:FANG): Q1 EPS of $0.02 beats by $0.07.
- Revenue of $87.5M (-13.7% Y/Y) misses by $4.03M.