Diamondback Energy, Inc. · NASDAQ:FANG
Diamondback Energy — Q2 2023 Earnings Presentation
29 slides from Diamondback Energy's earnings presentation, Aug 1, 2023
Slide 1: Investor Presentation
Investor Presentation August 2023 1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statemen
Slide 3: Disciplined Capital Allocator with Differentiated Returns
Disciplined Capital Allocator with Differentiated Returns Best-In-Class Execution Durable Cash Flow Creation through the Cycle Long Life, Pure Play Permian Basin Inventory Base Investment Grade Balance Sheet Peer Leading ESG Profile 3
Slide 4: Disciplined Capital Allocator with Differentiated Returns
Disciplined Capital Allocator with Differentiated Returns Continued Free Cash Flow Generation: FANG Return of Capital Framework ~$547 million of Free Cash Flow (“FCF”) in Q2 2023 ($3.03 / share)(1) Q2 2023 Return of Capital: $473 million ($2.62 / Share) Expect at least $2.8 billion of FCF in 202
Slide 5: Second Quarter Highlights
Second Quarter Highlights Investment Framework and Q2 2023 Results Q2 2023 Execution Q1 2023 Q2 2023 Maintain Oil Volumes Oil Production per Oil production of 263.1 Mbo/d (449.9 Mboe/d) Oil production per million shares of 1,459 Bo/d, up 17% year over Million Shares 1,381 1,459 Net Mbo/d year Ex
Slide 6: Overview of 2023 Guidance
Overview of 2023 Guidance 2023 Activity and Guidance Midpoints vs 2022 2023 Production and Activity Outlook 2023 2022A 1H23A Guidance 260 - 262 FY 2023 Activity Mbo/d Oil Production 19.0 16.5 Lario Outperformance / 335 - 350 Organic Growth Net Mbo/d 257 261 220 FireBird (Feb. 23+) 257.3 224 Gross op
Slide 7: Return of Capital Framework
Return of Capital Framework Diamondback’s return of capital strategy is underpinned by a sustainable and growing base dividend, as well as additional return of capital from a combination of stock repurchases and/or variable dividends Our strategy gives us the flexibility to pivot to share repurc
Slide 8: Return of Capital History and Highlights
Return of Capital History and Highlights Declared Base Dividends Since 2018 ($ / Share) $4.0 Billion Authorized Stock Repurchase Program(1) +5.7x Base Dividend Growth Stock Repurchases ($MM) Cumulative Shares Repurchased (MM) ~10% average quarterly CAGR 18.2 $2,236 20.00 $3.2000 $3.3600 18.00 $3.000
Slide 9: 2023 Free Cash Flow Sensitivity
2023 Free Cash Flow Sensitivity Illustrative 2023E Consolidated Free Cash Flow at Various WTI Oil Prices ($MM)(1) YTD FCF Base Dividend Additional ROC Remaining FCF FCF Yield (EV) FCF Yield (Market Cap) FY 2023 Assumptions $4,000 25% 260 - 262 Mbo/d Oil Production $3,200+ $2,850+ 20% $2.600 - $2.675
Slide 10: Investment Grade Balance Sheet
Investment Grade Balance Sheet Recent Highlights and Balance Sheet Summary: FANG’s Liquidity and Capitalization ($MM) Standalone pro forma liquidity of ~$1.6 billion(1)(2) FANG's Consolidated Capitalization 6/30/2023 Pro Forma(1) Consolidated pro forma net debt of ~$6.4 billion(1)(3) Cash and ca
Slide 11: Peer Leading ESG Profile
Peer Leading ESG Profile Diamondback is committed to successful execution on its environmental strategy and targets discussed in the 2022 Corporate Responsibility Report and highlighted below As part of this commitment, in March 2023, Diamondback joined the Oil & Gas Methane Partnership 2.0 (“OG
Slide 12: 2023 Guidance Detail
2023 Guidance Detail Diamondback Viper Full year 2023 oil production guidance of 260 – 262 435 – 445 Mbo/d, up from 256 – 262 Mbo/d previously Net production – Mboe/d (from 430 – 440) 36.50 – 37.50 Full year 2023 CAPEX budget of $2.600 – $2.675 billion Oil production – Mbo/d 260 – 262 21.00 – 21
Slide 13: Appendix
DIAMONUBACK ENERGY APPENDIX 13 DIAMONOBACK ENERGY
Slide 14: Longstanding Track Record of Capital Efficiency and Growing Per Share Metrics
Longstanding Track Record of Capital Efficiency and Growing Per Share Metrics Diamondback Cash Flow / Free Cash Flow Since IPO ($ / Share)(1) FCFPS +26.7x Cash Flow / Share growth since 2012 CFPS $36.96 $22.02 $14.86 $17.74 $25.98 $9.59 $12.79 $3.54 $6.97 $6.64 $4.63 $13.64 $1.33 $0.78 $1.03 -$1.90
Slide 15: Development Strategy and Performance Update
Development Strategy and Performance Update Development Strategy Update: Midland Basin Well Productivity by Year Midland Basin productivity has been consistent year 2017 2018 2019 2020 2021 2022 2023 over year and continues to improve in 2023 This performance is credited to the shift to co- 200
Slide 16: Inventory and Asset Overview
Inventory and Asset Overview Midland Basin Gross (Net) Locations Economic at $50 / Bbl(1) Diamondback Acreage Map(3) 5,000'+ 7,500'+ 10,000'+ Total Avg. Lateral MS / JM 63 (28) 265 (205) 668 (568) 996 (801) 9,700' LS 105 (52) 219 (159) 821 (690) 1,145 (901) 9,900' WCA 100 (41) 121 (90) 477 (391) 698
Slide 17: Year-end Reserves Summary
Year-end Reserves Summary YE22 proved reserves increased 14% y/y to 2,033 Total Proved Reserve Growth (MMBoe) MMBoe (1,070 MMBo, 69% PDP) FANG Standalone VNOM 1P BOE / Share PDP reserves of 1,404 MMBoe; PDP oil reserves of 700 MMBo 2,033 15 1,789 2000.0 Oil comprised 53% of total proved reserves
Slide 18: Environmental Performance Scorecard
Environmental Performance Scorecard Flaring (% of Gross Gas Production) GHG Intensity (mt / mboe Produced) Methane Intensity (mt / mboe Produced) FANG Operated Goal: Reduce 2019 intensity by 50% by 2024 Goal: Reduce 2019 intensity by 70% by 2024 3rd Party Planned Maintenance 3rd Party Unplanned Main
Slide 19: Scope 1 Emissions Breakdown and Strategic Reduction Initiatives
Scope 1 Emissions Breakdown and Strategic Reduction Initiatives Diamondback 2022 Scope 1 Emissions Detail and Current Strategic Initiatives: Atmospheric Storage Atmospheric Storage Tanks / Other: ~11K mt, or 1% of 2022 CO2e emissions Tanks / Other 1% Combustion Equipment: (55K mt, or 4% of 2021 CO2e
Slide 20: Methane Emissions and Strategic Reduction Initiatives
Methane Emissions and Strategic Reduction Initiatives Diamondback 2022 Methane Emissions Detail and Current Strategic Initiatives: Gas Pneumatic Devices: Flare Stacks: ~3.8K mt, or 56% of 2022 CH4 emissions ~2.1K mt, or 31% of 2022 CH4 emissions (2.8K mt, or 59% of 2021 CH4 emissions) (1.2K mt, or 2
Slide 21: Governance Summary
Governance Summary Board Independence & Diversity: Board Independence and Diversity 8 of 9, or 89%, of Board are independent 100% of Committee Members are independent 5 of 9, or 56%, of Board are diverse (gender or ethnic minority) Board Leadership: 56% of 89% of Directors are Two female dir
Slide 22: Current Hedge Summary: Oil
Current Hedge Summary: Oil Consolidated Crude Oil Hedges (Bbl/day, $/Bbl) Crude Oil Hedges Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 12,000 12,000 4,000 – – – Long Puts - WTI $55.00 / -$1.80 $55.00 / -$1.85 $55.00 / -$1.77 – – – 32,000 28,000 14,000 4,000 – – Long Puts - MEH $55.00 / -$1.68 $5
Slide 23: Current Hedge Summary: Natural Gas
Current Hedge Summary: Natural Gas Consolidated Natural Gas Hedges (Mmbtu/day, $/Mmbtu) Natural Gas Hedges Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2025 Costless Collars - Henry Hub 310,000 310,000 200,000 200,000 200,000 200,000 – Floor / Ceiling $3.18 / $9.22 $3.18 / $9.22 $3.00 / $8.42
Slide 24: Viper Summary
Viper Summary Viper Energy Partners: Viper Mineral and Royalty Assets Publicly-traded mineral and royalty subsidiary (NASDAQ: VNOM) created by Diamondback ◊ Focused on owning and acquiring minerals and royalty interests in the Permian Basin, with a primary focus on Diamondback-operated acreage 2
Slide 25: Overview of Equity Method Joint Ventures
Overview of Equity Method Joint Ventures Gray Oak EPIC Crude Wink to Webster OMOG WTG BANGL Long-Haul Crude Oil Long-Haul Crude Oil Long-Haul Crude Oil In-Basin Crude Oil Gas Gathering and Long-Haul Y Grade Project Type Pipeline Pipeline Pipeline Gathering Processing NGL Pipeline Operator Other Inve
Slide 26: Non-GAAP Definitions and Reconciliations
Non-GAAP Definitions and Reconciliations Adjusted EBITDA: Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA a
Slide 27: Non-GAAP Definitions and Reconciliations
Non-GAAP Definitions and Reconciliations Operating Cash Flow before Working Capital Changes, Free Cash Flow and Adjusted Free Cash Flow: Operating cash flow before working capital changes, which is a non-GAAP financial measure representing net cash provided by operating activities as determined un
Slide 28: Non-GAAP Definitions and Reconciliations
Non-GAAP Definitions and Reconciliations Net Debt: The Company defines the non-GAAP measure of net debt as total debt less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses
Slide 29: Diamondback Energy Corporate Headquarters
Diamondback Energy Corporate Headquarters Adam Lawlis, Vice President, Investor Relations 500 West Texas Ave., Suite 100 (432) 221-7400 Midland, TX 79701 ir@diamondbackenergy.com www.diamondbackenergy.com 29