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Diamondback Energy’s 2018 Capex Forecast and Outlook

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Apr. 12 2018, Published 8:02 a.m. ET

Diamondback’s 2018 capex

Diamondback Energy (FANG), an upstream company, has the second-highest capex growth forecast for 2018. The company’s capital expenditure or capex forecast for 2018 is $1.4 billion compared to ~$861 million in 2017, which is ~63% growth.

Diamondback Energy noted in its 10-K annual filing that its higher forecast capex budget in 2018 reflects higher anticipated oilfield service costs. Oilfield services companies are expected to increase pricing following stronger oil prices. In the 10-K filing, Diamondback Energy’s management said, “To combat rising service costs, we have looked to lock in pricing for dedicated activity levels and will continue to seek opportunities to control additional well cost where possible. Our 2018 drilling and completion budget accounts for rising capital costs that we believe will cover potential increases in our service costs during the year.”

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2018 capex plans

Around 89% of Diamondback Energy’s 2018 capex will be spent on drilling, completion, and equipment. The rest of the capex will be spent on infrastructure.

Diamondback Energy expects to put 170–190 gross operated horizontal wells to production in 2018 with an average lateral length of ~9,300 feet.

2018 production growth forecast

Diamondback Energy has a production growth forecast of 40% in 2018 compared to the levels in 2017 within operating cash flows at current commodity prices. The company has increased its production within cash flows for the past three years.

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