Diamondback Energy, Inc.
- Diamondback has increased its 2016 production guidance to a range of 34.0 to 38.0 Mboe/d, up from 32.0 to 38.0 Mboe/d, as a result of retaining its third horizontal rig and adding a second dedicated completion crew to decrease its backlog of drilled but uncompleted wells ("DUCs").
- Diamondback's Q1 2016 production was 38.3 Mboe/d (76% oil), up 2% from 37.6 Mboe/d (76% oil) in Q4 2015.
- Lease operating expenses ("LOE") per boe declined 36% from $8.14/boe in the first quarter of 2015 to $5.23/boe in the first quarter of 2016. The Company has lowered its full year 2016 LOE guidance range to $5.50 to $6.50 per boe from a prior range of $6.00 to $7.00 per boe.
- Leading-edge costs to drill, complete and equip are currently trending below $5.0 million for a 7,500 foot lateral and between $6.0 and $6.5 million for a 10,000 foot lateral well.
- Diamondback continues to decrease drilling times and achieve new Company records:
- During the first quarter of 2016, the Company drilled a 9,800 foot lateral well in Howard County in less than 11 days from spud to total depth ("TD").
- Diamondback drilled a 7,300 foot lateral well in Spanish Trail in less than 10 days from spud to TD, a new record for the Company in Midland County.
- In April 2016, the Company drilled two 10,000 foot lateral wells in Andrews County in 25 days from spud of the first well to rig release of the second well.
- Diamondback has completed a two-well pad in Glasscock County targeting the Wolfcamp A and Wolfcamp B with an average lateral length of 7,465 feet. The two wells achieved a combined average peak 30-day 2-stream initial production ("IP") rate of 2,312 boe/d (84% oil) and an average of 2,096 boe/d (83% oil) over the first 75 days of production.
- In March 2016, Moody's reaffirmed Diamondback's B1 corporate family rating with a positive outlook. In February 2016, Standard & Poor's raised its issue-level rating on Diamondback's senior notes to BB- from B+. Standard & Poor's had previously reaffirmed Diamondback's B+ corporate credit rating.
"During the first quarter of 2016, we witnessed commodity prices falling to levels not seen in many years. As we have discussed in the past, we slow down activity when our returns to stockholders decline. As such, we completed fewer horizontal wells during the first quarter of 2016 than in any quarter since the first half of 2013. With recent improvement in oil prices, we have retained our third operated horizontal rig and picked up a second dedicated completion crew to complete our backlog of nearly 30 DUCs. Increasing activity allows us to raise the lower end of our production guidance to 34.0 Mboe/d from 32.0 Mboe/d. We anticipate some lumpiness in production during the second quarter of 2016, with the production response from the increased completion activity expected in the second half of 2016. Furthermore, we are prepared to pick up a fourth horizontal rig early in the third quarter of 2016 should oil prices continue to strengthen. We have over $230 million in cash and an undrawn revolving credit facility, and we can accelerate as commodity prices improve without stressing our balance sheet," stated Travis Stice, Chief Executive Officer of Diamondback.
Mr. Stice continued, "Roughly a third of our completed wells this year will be in Spanish Trail, where Viper owns the underlying minerals. We are pleased with the early performance of our completions in Glasscock County, which on average are tracking a one MMboe type curve, exceeding the acquisition model expectations. We continue to be encouraged by offset results in Howard County and are excited to begin completion of our wells there later this week."
HORIZONTAL DRILLING UPDATE
In Howard County, Diamondback has drilled two three-well pads targeting the Lower Spraberry, Wolfcamp A and Wolfcamp B intervals. The Company intends to begin frac operations on the first pad this week.
Diamondback is currently operating three horizontal rigs and is running two completion crews to work through its inventory of nearly 30 DUCs with a production response expected in the second half of this year.
Diamondback drilled 16 gross horizontal wells during the first quarter of 2016. Eight operated horizontal wells were completed in the first quarter of 2016, consisting of three Lower Spraberry wells, two Wolfcamp A wells and three Wolfcamp B wells. The Company also participated in one non-operated completion in the first quarter of 2016. Diamondback elected not to complete a number of wells during the first quarter of 2016 as a result of low commodity prices.
During the first quarter of 2016, the Company incurred an impairment charge of $31 million as a result of depressed commodity prices. Diamondback recorded a net loss of $33 million for the quarter.
The Company's first quarter 2016 adjusted net income attributable to Diamondback Energy, Inc. (a non-GAAP financial measure as defined and reconciled below) was $2 million, or $0.02 per share.
First quarter 2016 Adjusted EBITDA (as defined and reconciled below) was $58 million and first quarter 2016 revenues were $87 million.
As of March 31, 2016, Diamondback had $236 million in cash and an undrawn credit facility. The agent lender under the Company's credit facility has recently...