No bad stock

Diamondback Energy, Inc.
CEO : Mr. Travis D. Stice

Quarterly earnings growth(YoY,%)

Travis Stice says,

Dividend

• The company has a focus on providing a sustainable and growing base dividend.
• They have recently increased their base dividend by 5%.
• The base dividend is expected to remain important and is covered down to $40 a barrel of oil.

Share Buybacks

• Share buybacks are determined based on future cash flow expectations and turned into a stock price.
• In recent quarters, the company has used discretionary free cash flow after the base dividend to repurchase shares.
• The number of share repurchases is influenced by the stock price, with more repurchases at lower stock prices and fewer at higher stock prices.

Variable Dividend

• Any remaining cash flow after the base dividend and share buybacks will be distributed in the form of a variable dividend.
• The company has committed to returning 75% of their free cash flow to shareholders.

Kaes Van’t Hof says,

Asset Purchases

• The company has been engaging in leasing and netting up activities, particularly in undeveloped interests and non-operating pieces in their development.
• They have also been considering leasing deeper rights in the Midland Basin, which is reflected in their cash flow statement.

Asset Divestitures

• The company has divested non-core acreage and acreage that is not expected to compete for capital in the next 10 years of development.
• They have received good prices for these divestitures.
• Currently, the company is more focused on non-core midstream divestitures, such as the recently announced OMOG divestiture.
• They have not increased their non-core asset sale target and are more likely to tag along rather than control the divestiture process.

Q & A sessions,

Impact of M&A on Stock Movement

• The deals completed earlier in the year have been seamlessly integrated
• Both acquired companies were running more rigs, indicating a trend of operators focusing on increased profitability
• Limited opportunities currently exist for M&A, especially compared to the previous quarters
• FANG’s discipline in M&A is noteworthy, focusing on deals that make the company better, not just bigger

Dividend and Share Buybacks

• The base dividend is of paramount importance and has been increased by 5% this quarter
• The base dividend is covered down to $40 per barrel of oil
• Share buybacks are determined based on future cash flow expectations and stock price
• FANG has been leaning in on discretionary free cash flow to repurchase shares
• Any remaining cash flow is distributed in the form of a variable dividend, fulfilling the commitment to return 75% of free cash flow to shareholders

Cost Control and Efficiency

• FANG’s culture places extreme focus on cost control and efficiencies
• Gains in efficiencies become permanent and contribute to future capital allocation decisions, making the company more competitive
• Incentives are provided for rigs and completion crews to encourage efficiency and cost control measures

Asset Purchases and Divestitures

• FANG has been involved in leasing and netting up for asset purchases
• On the divestiture side, non-core acreage and assets that do not compete for capital in the next 10 years have been sold
• FANG is focused on non-core midstream divestitures, with less emphasis on controlling the process