An August 1 research report indicated that Diamondback Energy Inc.'s (FANG:NASDAQ) Kelley State 2H well, the company's first in the Lower Second Bone Spring, recently achieved a 30-day, peak flow rate of 898 boe/day. "This is, in our view, very significant," ROTH Capital Partners analyst John White said. "If the initial wells in this formation perform on par with the Wolfcamp A formation, this will pose meaningful potential for even more growth in FANG's reserves and production."
White reiterated that Diamondback's "operations are directed primarily at the large acreage areas of the Spraberry and Wolfcamp formations" and the company's "growth strategy is focused on the acquisition, development, exploration and exploitation of unconventional, long-life, onshore oil and natural gas reserves."
With respect to the Q2/17 numbers, Diamondback reported production of 76,977 boe/day, ahead of ROTH's estimate of 71,291 boe/day and consensus of 72,346 boe/day, the report showed. The beat was "due to better than expected drilling and completion results," added White.
The production level Diamondback attained in Q2/17 led to it also exceeding ROTH and consensus estimates for earnings and cash flow, White reported. Adjusted earnings per share was $1.25, compared to $1.04 and $0.91, respectively.
Further, Diamondback raised 2017 production guidance by 4.8% and lowered capex for the year "due to better productivity and efficiency in the drilling and completion results," said White. The higher revised guidance range has a midpoint of 76 Mboe/day, which compares to the midpoint of the previous guidance range of $72.5 Mboe/day. "The positive cadence on the operations continues with lease operating expense per BOE guidance moving lower, to a range of $3.75–4.75, from the previous range of $4.75–5.75."
ROTH Capital rates Diamondback a Buy with a target price of $120 per share. The stock is currently trading at about $94 per share.
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles with industry analysts and commentators, visit our Streetwise Articles page.
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: none. She or members of her household are paid by the following companies mentioned in this article: none.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Additional disclosures about the sources cited in this article
