Diamondback Energy, Inc. · NASDAQ:FANG
Diamondback Energy — Energy Summit February 2013
29 slides from Diamondback Energy's conference presentation, Feb 6, 2013
Slide 1: Energy Summit
Exhibit 99.1 Energy Summit February 2013
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this presentation that addres
Slide 3: Diamondback Overview
Diamondback Overview NASDAQ Ticker: FANG Independent E&P focused on Permian Basin headquartered in Midland, Texas Completed IPO on October 17, 2012 at $17.50 / share $235 mm of growth capital raised to drive production Deep vertical well inventory with strong returns 5 Wolfcamp B horizontal well res
Slide 4: Investment Highlights
Investment Highlights Pure Play Exposure to Exposure to one of the most concentrated high quality acreage positions in the Permian Basin the Permian Basin 51,709 net acres primarily in Wolfberry trend of Midland Basin 5 HorizontalWolfcampBwell resultsexpectedover the next60 days- 2 HzWCB Strong Hori
Slide 5: Pure Play Exposure to the Permian Basin
Investment Highlights Pure Play Exposure to the Permian Basin 5 HorizontalWolfcampBwell resultsexpectedover the next60 days- 2 HzWCB Strong Horizontal wells completed in 2012 with impressive results Upside 67% of 2013 capital expenditures focused on horizontal development 849net locationswith 40 acr
Slide 6: Concentrated Permian Position
Concentrated Permian Position Solid – Inventory Diamondback Acreage Position Resurgent Texas Oil Production 100% of acreage located in the Midland Basin (Thousand Barrels per Day) 3,000 51,709 net acres, operate ~99% of acreage 217 gross producing wells, 4 rigs running (2 Vert, 2 Hz) 2,600 Q4 2012 p
Slide 7: Permian Basin Economics Remain Some of the Strongest in the US
Permian Basin Economics Remain Some of the Strongest in the US High liquids content, large areal extent of resource combined with improving technology likely to support substantial growth potential of the basin Nearterm erosionto economicsfrom weakenedprice differentialsaddressed Costs going down st
Slide 8: Strong Production Growth Outlook Built on Existing Inventory
Strong Production Growth Outlook Built on Existing Inventory Drilling program shifting from vertical to horizontal development Ended 2012 with 6 rigs (4 vertical, 2 horizontal) Currently operating 4 rigs (2 horizontal, 2 vertical) Additional rig planned in 2H 2013 to focus on horizontal development
Slide 9: Substantial Reserve Upside from Horizontal Potential
Substantial Reserve Upside from Horizontal Potential Current reserves based only on ~30% of 40-acre vertical development RyderScottestimatedPUDEURsaverage135 MBOEper verticalwell - 86%liquids(66%crudeoil) Reserve assumptions currently exclude value uplift expected from: Horizontal wells 20-acre down
Slide 10: Strong Horizontal Upside
Investment Highlights Pure Play Exposure to Exposure to one of the most concentrated high quality acreage positions in the Permian Basin the PermianBasin 51,709 net acres primarily in Wolfberry trend of Midland Basin Strong Horizontal Upside 849net locationswith 40 acrespacing;1,027net locationswith
Slide 11: Horizontal Wolfcamp B Drilling Shifting North
Horizontal Wolfcamp B Drilling Shifting North Horizontal drilling becoming a primary rather than secondary use of capital in Wolfberry trend Results are trending upward (longer laterals, frac designs) Original majority of horizontal activity focused on southern Midland Basin Pioneer southern Midland
Slide 12: Horizontal Drilling Program Development Progress
Horizontal Drilling Program Development – Progress Horizontal Focus: Midland County Midland County Kemmer has produced 56 MBOE since initial production in September 2012 ST 25-1H first operated Midland County horizontal Wolfcamp B Per Stage Lateral IP / Stage Number 30-day IP Peak IP EUR Length (BOE
Slide 13: Deep Vertical Drilling Inventory
Investment Highlights Pure Play Exposure to Exposure to one of the most concentrated high quality acreage positions in the Permian Basin the PermianBasin 51,709 net acres primarily in Wolfberry trend of Midland Basin 5 HorizontalWolfcampBwell resultsexpectedover the next60 days- 2 HzWCB Strong Horiz
Slide 14: Low Risk Vertical Inventory
Low Risk Vertical Inventory Multi-Year Drilling Inventory Increasing Initial Production Rates $567 mm of year-end2011 SECPre-taxPV-10value 303 locations currently booked as PUDs out of 916 locations on 40-acre spacing No valuefor 20-acrespacedwells or horizontallocations includedin PV-10value Vertic
Slide 15: High Inventory Made Up of Strong ROR Projects
High Inventory Made Up of Strong ROR Projects Identified Net Potential Drilling Locations Potential Optimized Spacing Reserve Potential Per Section Vertical Vertical Horizontal Total (40s) (20s) Wells / Section 16 9 16 41 EUR / Well 135 MBOE 400 MBOE 108 MBOE -- Reserves / 2.2 3.6 1.7 7.7 MMBOE Sect
Slide 16: Expect Margins to Head Higher
Investment Highlights Pure Play Exposure to Exposure to one of the most concentrated high quality acreage positions in the Permian Basin the PermianBasin 51,709 net acres primarily in Wolfberry trend of Midland Basin 5 HorizontalWolfcampBwell resultsexpectedover the next60 days- 2 HzWCB Strong Horiz
Slide 17: Operational Efficiency to Drive Expense Reduction
Operational Efficiency to Drive Expense Reduction Quarterly LOE (per BOE) Spud to TD Time(1) (1) Time Until Placed on Production Well Failure Rate 17 Source: US Energy Information Administration, Company Filings, Management Data and Estimates. Financialdataandmanagementestimatesasof December31,2012.
Slide 18: Plan to Reduce Lifting Costs by $2.00-$4.00 / BOE in 2013
Plan to Reduce Lifting Costs by $2.00-$4.00 / BOE in 2013 Water Disposal: Midland County Gathering and Processing Moving flowback water by pipeline rather than truck Accessing oil pipelines in Midland County (heaviest drilling area) Building infrastructure in Midland County to connect to pipeline no
Slide 19: Takeaway Contracts Improve Realizations
Takeaway Contracts Improve Realizations Oil: Magellan Pipeline NGL WTI LLS pricing less $7 / barrel through Magellan Takeaway capacity on Lone Star and West Texas Longhorn pipeline pipelines Line begins to fill as early as April 2013 10 year contract $11.19 / barrel price improvement relative to cur
Slide 20: Improved Realizations and Lower Costs Increase Value
Improved Realizations and Lower Costs Increase Value Diamondback has a path to an over $10.00 / BOE improvement in cash margins in 2013. ($ per BOE) 20 20 Source: Company Filings, Management Data and Estimates. Financial data and management estimates as of December 31, 2012. (1)CalculatedWTI-LLS spr
Slide 21: Financial Strength / Strong Management
Investment Highlights Pure Play Exposure to Exposure to one of the most concentrated high quality acreage positions in the Permian Basin the PermianBasin 51,709 net acres primarily in Wolfberry trend of Midland Basin 5 HorizontalWolfcampBwell resultsexpectedover the next60 days- 2 HzWCB Strong Horiz
Slide 22: Liquidity and Financial Flexibility – 2013 Capital Program
Liquidity and Financial Flexibility 2013– Capital Program 2013 Capital Plan 2013 Capital Expenditures $270 –$300 mm capital expenditures: Horizontal Drilling: 67% Two horizontal rigs operating Third horizontal rig to be added 2H 2013 25 gross wells to be drilled Focus on Midland and Upton Counties V
Slide 23: Consistent Cash Flow Growth
Consistent Cash Flow Growth Revenue Growth Hedging ($ in mms) Management’sgoal is to hedge40%- 70%of production 2013 Hedges 1,000 barrels / day at $109.70 Brent 1,000 barrels / day at $80.55 WTI EBITDA Growth Realizations(2) ($ in mms) 23 23 Source: Company Filings, Management Data and Estimates. Fi
Slide 24: Diamondback Guidance
Diamondback Guidance Full Year 2013 Production 7,200 –7,500 BOEPD Capital Expenditures $270 -$300 mm Horizontal Well Costs $7.5 -$8.5 mm Vertical Well Costs $2.0 -$2.2 mm Operating Costs (per BOE) Lease Operating Expense$11.00 -$13.00 / BOE Tax ~6% G&A $3.00 -$5.00 / BOE DD&A $22.00 -$25.00 / BOE 24
Slide 25: Management Team – Over 225 Years Combined Experience
Management Team Over – 225 Years Combined Experience Years Team Prior Experience Experience Permian Basin Production Manager of Apache Corporation Vice President of Permian Basin for Laredo Petroleum Holdings Travis Stice Development Manager of Mid-Continent Business Unit for 28 Chief Executive Offi
Slide 26: In Conclusion…
In Conclusion… PurePlayExposureto the Permian Basin Strong Horizontal Upside Deep Vertical Drilling Inventory Expect Margins to Head Higher Financial Strength / Strong Management 26 26
Slide 27: Corporate Contact Information
Corporate Contact Information Diamondback Energy, Inc Auditor 500 West Texas Grant Thornton LLP Suite 1225 Oklahoma City, Oklahoma Midland, Texas 79701 (432) 221-7400 Independent Petroleum Engineer Ryder Scott Company, L.P. Houston, Texas 14301 Caliber Drive Suite 300 Legal Counsel Oklahoma City, Ok
Slide 28: Appendix
Appendix 28 DIAMONOBACK Energy
Slide 29: EBITDA Reconciliation
EBITDA Reconciliation Year ended December 31, Quarter Ended Nine Months Ended ($ in ‘000s) 2009 2010 2011 9/30/2012 9/30/2012 Reconciliation of Adjusted EBITDA to Net Income (Loss): Net Income (Loss) ($2,706) $8,216 ($545) $1,242 $16,182 Loss on Derivative Contracts 4,068 148 13,009 688 (4,477) Inte