Diamondback Energy, Inc. · NASDAQ:FANG
Diamondback Energy — Q1 2024 Earnings Presentation
34 slides from Diamondback Energy's earnings presentation, May 1, 2024
Slide 1: Investor Presentation
Investor Presentation May 2024 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 Investment Grade Balance Sheet Peer Leading ESG Profile Pending Endeavor Merger Creates the Must-Own Permian Pure-Play 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 $791 million of Free Cash Flow (“FCF”) in Q1 2024 ($4.43 / share)(1) Q1 2024 Return of Capital: $396 million ($2.20 / Share) Expect at least $3.3 billion of FCF in 2024
Slide 5: First Quarter Highlights and Execution
First Quarter Highlights and Execution Investment Framework and Q1 2024 Results Q1 2024 Execution Q4 2023 Q1 2024 Maintain Oil Volumes Oil production of 273.3 Mbo/d (461.1 Mboe/d) Oil Production Flat 273.1 273.3 Oil production per million shares of 1,532 Bo/d, up 11% year Net Mbo/d over year Exe
Slide 6: Return of Capital Framework
Return of Capital Framework Diamondback’s return of capital strategy is underpinned by a sustainable and growing base dividend, as well as additional return of capital from a combination of share repurchases and/or variable dividends Strategy allows the flexibility to pivot to share repurchases
Slide 7: Return of Capital History and Highlights
Return of Capital History and Highlights Declared Base Dividends Since 2018 ($ / Share) $4.0 Billion Authorized Stock Repurchase Program(1) +6.2x Base Dividend Growth Stock Repurchases ($MM) Cumulative Shares Repurchased (MM) ~9% average quarterly CAGR $2, 500 $42 $2,408 25. 00 $3.3800 $3.6000 19.1
Slide 8: Industry Leading Free Cash Flow Generation and Capital Efficiency
Industry Leading Free Cash Flow Generation and Capital Efficiency FY 2023 Free Cash Flow Margin vs. Peers (FCF / E&P Revenue; FCF / Boe of Production)(1) FCF / Revenue FCF / Boe 40% 36% $20 33% 30% 29% 30% $17.89 26% $15 24% FCF Margin $14.83 $14.37 FCF / Boe $13.81 19% 20% 17% $10 $11.69 14% 10% $8
Slide 9: 2024 Free Cash Flow Sensitivity
2024 Free Cash Flow Sensitivity Illustrative 2024E Consolidated Free Cash Flow at Various WTI Oil Prices ($MM)(1) FY 2024 Assumptions(2) Base Dividend Additional FCF Returned Remaining FCF FCF Yield (EV) FCF Yield (Market Cap) 270 - 275 Mbo/d Oil Production $5,000 25% $2.3 - $2.55 billion $3,900+ Ca
Slide 10: Investment Grade Balance Sheet
Investment Grade Balance Sheet Pro Forma Highlights and Balance Sheet FANG’s Pro Forma Liquidity and Capitalization ($MM)(1) Summary(1): FANG's Consolidated Capitalization PF 3/31/2024 Standalone liquidity of ~$7.9 billion(2) Cash and cash equivalents $6,350 Consolidated net debt of ~$5.9 billio
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 2023 Corporate Responsibility Report and highlighted below As part of this commitment, Diamondback is a proud member of the Oil & Gas Methane Partnership 2.0 (“OGM
Slide 12: Overview of 2024 Guidance
Overview of 2024 Guidance 2024 Activity and Guidance Midpoints vs 2023 2024 Production and Activity Outlook 2024 2023A Guidance 270 – 275 FY 2023 2024 Activity Mbo/d Oil Production 270 265 335 –- 350 285 Net Mbo/d 263 273 220 Gross operated wells drilled 170 263.1 266.1 273.1 120 251.4 330 300 – 345
Slide 13: 2024 Guidance Detail
2024 Guidance Detail Full year 2024 oil production guidance of 270 – 275 Diamondback Viper Mbo/d Net production – Mboe/d 458 – 466 46.00 – 48.00 Full year 2024 CAPEX budget of $2.30 – $2.55 billion Oil production – Mbo/d 270 – 275 25.75 – 26.75 Expect to complete between 300 and 320 gross well
Slide 14: Pending Endeavor Merger Creates the Must-Own Permian Pure-Play
Pending Endeavor Merger Creates the Must-Own Permian Pure-Play 14
Slide 15: Transaction Overview
Transaction Overview Transaction Details Diamondback Pro Forma Acreage Consideration Mix and Funding Considerations $8 billion cash (subject to adjustment) and 117.3 million of Diamondback shares to be issued to Endeavor equity holders at closing Cash expected to be funded through a combination
Slide 16: Premier Permian Acreage Footprint
Premier Permian Acreage Footprint Best in Class Core Inventory Quality and Depth World Class Assets in a World Class Basin (<$40 WTI Break Evens) Transaction extends duration of high quality inventory development while maintaining status quo base production decline ~6,100 ~3,800 Diamondback Acres: 3
Slide 17: Industrial Logic Drives Significant, Tangible Synergies
Industrial Logic Drives Significant, Tangible Synergies Operational synergies resulting from Diamondback’s Capital and lower existing capital cost structure Operating $325mm Costs Expect combined cash operating cost reductions of 5-10% per Boe Longest duration of sub $40 oil breakeven location
Slide 18: Minerals Portfolio Offers Significant Value Upside Potential
Minerals Portfolio Offers Significant Value Upside Potential Key Highlights Pro Forma Asset Minerals Locator Map Portfolio High royalty interest enhances further upside value creation Minerals Overlap Transaction adds significant in basin scale Enhances combined reinvestment rate through increas
Slide 19: Appendix
DIAMONUOBACK ENERGY APPENDIX 19 DIAMONOBACK ENERGY
Slide 20: Year-end Reserves Summary
Year-end Reserves Summary Year-end 2023 proved reserves increased 7% y/y to Total Proved Reserve Growth (MMBoe) 2,178 MMBoe (1,144 MMBo, 69% PDP) FANG Standalone VNOM 1P BOE / Share PDP reserves of 1,497 MMBoe; PDP oil reserves of 2,178 744 MMBo 2,033 15 1,789 200 0.0 Oil comprised 53% of total
Slide 21: Inventory and Asset Overview
Inventory and Asset Overview Midland Basin Gross (Net) Locations Economic at $50 / Bbl(1) Diamondback Acreage Map(3) <10,000' 10,000'+ 12,500'+ Total Avg. Lateral MS / JM 328 (227) 416 (340) 200 (172) 944 (738) 9,800' LS 252 (167) 430 (351) 217 (191) 899 (709) 10,000' WCA 179 (111) 265 (202) 121 (10
Slide 22: Differentiated Large-Scale, Multi-Zone Development Strategy
Differentiated Large-Scale, Multi-Zone Development Strategy Development Strategy Summary: Midland Basin Well Productivity by Year Midland Basin average per well productivity (normalized for 200 2019 2020 2021 2022 2023 lateral length) improved in 2023 Cumulative Mbo/d (Normalized to This perform
Slide 23: Longstanding Track Record of Capital Efficiency and Growing Per Share Metrics
Longstanding Track Record of Capital Efficiency and Growing Per Share Metrics Diamondback Cash Flow / Free Cash Flow Since IPO ($ / Share)(1) FCFPS +22.4x Cash Flow / Share growth since 2012 CFPS $36.96 $31.24 $22.02 $14.86 $17.74 $25.98 $9.59 $12.79 $16.24 $3.54 $6.97 $6.64 $4.63 $13.64 $1.33 $1.03
Slide 24: Environmental Performance Scorecard
Environmental Performance Scorecard Flaring (% of Gross Gas Production) GHG Intensity (mt / mboe Produced) Methane Intensity (mt / mboe Produced) Goal: Eliminate Routine Flaring by 2025(1) Goal: Reduce 2019 intensity by 50% by 2024 Goal: Reduce 2019 intensity by 70% by 2024 FANG Operated 3.4% 3rd Pa
Slide 25: 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 26: 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 27: 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 28: Current Hedge Summary: Oil
Current Hedge Summary: Oil Consolidated Crude Oil Hedges (Bbl/day, $/Bbl) Crude Oil Hedges Q2 2024 Q3 2024 Q4 2024 Q1 2025 110,000 80,000 53,000 11,000 Long Puts - Brent $55.45 / -$1.49 $55.25 / -$1.55 $56.04 / -$1.57 $60.00 / -$1.39 32,000 28,000 20,000 8,000 Long Puts - MEH $55.63 / -$1.56 $56.07
Slide 29: Current Hedge Summary: Natural Gas
Current Hedge Summary: Natural Gas Consolidated Natural Gas Hedges (Mmbtu/day, $/Mmbtu) Natural Gas Hedges Q2 2024 Q3 2024 Q4 2024 FY 2025 Costless Collars - Henry Hub 290,000 290,000 290,000 270,000 Floor / Ceiling $2.83 / $7.52 $2.83 / $7.52 $2.83 / $7.52 $2.50 / $5.42 Total Costless Collars 290,0
Slide 30: Viper Summary
Viper Summary Viper Energy, Inc: 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 ~32,0
Slide 31: 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 32: Non-GAAP Definitions and Reconciliations
Non-GAAP Definitions and Reconciliations Operating Cash Flow before Working Capital Changes and Free Cash Flow: Operating cash flow before working capital changes, which is a non-GAAP financial measure, represents net cash provided by operating activities as determined under GAAP without regard to
Slide 33: 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 (excluding debt issuance costs, discounts, premiums and fair value hedges) less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful t
Slide 34: 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 34