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Inside Diamondback Energy’s 1Q16 Earnings

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1Q16 earnings versus estimates

Diamondback Energy (FANG) announced its 1Q16 earnings on May 3, 2016, after the market closed. FANG reported an adjusted profit of $0.02 per share, which is $0.08 higher than the Wall Street analyst consensus of -$0.06 per share. Diamondback Energy’s 1Q16 earnings fell by $0.36 per share, as compared to $0.38 per share in 1Q15. Sequentially, its 1Q16 earnings are $0.56 per share lower than in 4Q15.

Inside Diamondback Energy's 1Q16 Earnings

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1Q16 revenues versus estimates

For 1Q16, FANG reported adjusted revenues of ~$93 million, which is ~1% higher than the Wall Street analyst consensus of ~$92 million. The company’s 1Q16 revenues are ~36% lower than its ~$145 million in 1Q15 and ~40% lower than revenues in 4Q15.

Due to the steep downward trend in crude oil (USO) and natural gas (UNG) prices, upstream companies QEP Resources (QEP) and EV Energy Partners (EVEP) have reported ~39% and ~32% YoY (year-over-year) declines, respectively, in their 1Q16 and 4Q15 revenues. (EVEP is set to report its 1Q16 earnings next week.) Notably, Antero Resources (AR) has reported ~17% YoY increase in its 1Q16 adjusted revenues.

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Earnings trends

Diamondback Energy’s earnings peaked in 2Q14 due to a continuous decline in realized crude oil (USO) (UWTI) (DWTI) and natural gas (UNG) (BOIL) prices. In 1Q16, the company saw its adjusted earnings estimate turn negative for the first time since 2012.

FANG has not reported negative earnings since its IPO (initial public offering) in 2012. Since 1Q13, Diamondback Energy has beaten earnings expectations ~62% of the time.

In this series

In the remaining three parts of this series, we’ll look at FANG’s operational performance, Wall Street analyst ratings, and past stock price reactions to estimate-beating earnings.

Let’s start with FANG’s operational performance in 1Q16.

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