Diamondback Energy issued the following announcement.
Diamondback Energy, Inc. (NASDAQ: FANG) ("Diamondback" or the "Company") provided revised full year 2020 guidance and updated hedge positions.
REVISED 2020 GUIDANCE HIGHLIGHTS
- Full year revised 2020 production guidance of 295.0 - 310.0 MBOE/d
- Full year revised 2020 oil production guidance of 183.0 - 193.0 MBO/d
- Q4 2020 exit rate production guidance of 170.0 – 180.0 MBO/d (275.0 – 290.0 MBOE/d)
- Full year 2020 CAPEX guidance of $1.5 - $1.9 billion, including drill, complete and equip ("D,C&E") spend of $1.31 - $1.63 billion, $100 - $150 million of midstream capital and $90 - $120 million of infrastructure capital
- The Company plans to exit the third quarter of 2020 operating eight drilling rigs, and exit 2020 operating seven drilling rigs, and will cut further should conditions warrant
- After returning from a one to three month frac holiday, the Company plans to operate between three and five completion crews, and complete between 170 - 200 gross (153 – 180 net) wells with an average lateral length of approximately 10,000 feet in 2020
- Diamondback believes it can maintain Q4 2020 exit rate oil production through 2021 with a four to five completion crew cadence, six to eight operated drilling rigs and a capital budget 20% - 30% less than 2020’s $1.5 - $1.9 billion capital budget
Mr. Stice continued “A majority of our oil production will flow through the Epic and Gray Oak pipelines beginning in April, where we have both firm transportation on each respective pipeline and associated long-term firm sales contracts tied to the length of our firm transportation commitments. The majority of our remaining oil production, which is currently exposed to the Midland market, is protected in the form of basis hedges. In addition, less than 10% of our current oil production receives West Texas Light pricing. The combination of firm transportation, long-term firm sales agreements, pipeline equity ownership, and financial protection via hedges provide a solid foundation for Diamondback through these uncertain times.”
REVISED FULL YEAR 2020 GUIDANCE
| Revised | ||
| 2020 Guidance | ||
| Total net production – MBOE/d | 295.0 - 310.0 | |
| Oil production – MBO/d | 183.0 - 193.0 | |
| Unit costs ($/BOE) | ||
| Lease operating expenses, including workovers | $4.40 - $4.80 | |
| G&A | ||
| Cash G&A | $0.60 - $0.90 | |
| Non-cash equity-based compensation | $0.40 - $0.65 | |
| D,D&A | $13.00 - $15.00 | |
| Interest expense (net of interest income) | $1.25 - $1.75 | |
| Gathering and transportation | $0.80 - $1.00
(Q1 $1.20 - $1.40) | |
| Production and ad valorem taxes (% of revenue)(a) | 7% | |
| Gross horizontal D,C&E/Ft. - Midland Basin | $600 - $670 | |
| Gross horizontal D,C&E/Ft. - Delaware Basin | $930 - $1,030 | |
| Gross horizontal wells completed (net) | 170 - 200 (153 - 180) | |
| Average lateral length (Ft.) | ~10,000' | |
| Midland Basin net lateral feet (%) | ~60% | |
| Delaware Basin net lateral feet (%) | ~40% | |
| Capital Budget ($ - million) | ||
| Horizontal drilling and completion | $1,310 - $1,630 | |
| Midstream (ex. long-haul pipeline investments) | $100 - $150 | |
| Infrastructure | $90 - $120 | |
| 2020 Capital Spend | $1,500 - $1,900 | |
DERIVATIVES UPDATE
The Company now has a total of 178.8 thousand barrels per day protected in 2020, with 98% of those hedges having unlimited downside protection as a swap, put or collar. The Company has an average of 83.5 thousand barrels per day of hedge protection in 2021 through a combination of collars and swaps. These hedge positions are consolidated to include hedges in place at Viper Energy Partners LP (“Viper”).
As of March 30, 2020, the Company had the following outstanding consolidated derivative contracts, including derivative contracts at Viper. The Company has restructured a significant number of its 2020 contracts, increased hedge protection to cover almost all of its expected 2020 production, and built a position to protect 2021 cash flow. The Company’s derivative contracts are based upon reported settlement prices on commodity exchanges, with crude oil derivative settlements based on New York Mercantile Exchange West Texas Intermediate pricing and Crude Oil Brent and with natural gas derivative settlements based on the New York Mercantile Exchange Henry Hub pricing. When aggregating multiple contracts, the weighted average contract price is disclosed.
| Crude Oil (Bbls/day, $/Bbl) | |||||||||||||||||||
| Q2 2020 | Q3 2020 | Q4 2020 | 1H 2021 | 2H 2021 | |||||||||||||||
| Swaps - WTI (Cushing) | 15,000 | 11,000 | 11,000 | — | — | ||||||||||||||
| $ | 46.77 | $ | 43.47 | $ | 43.47 | $ | — | $ | — | ||||||||||
| Swaps - WTI (Magellan East Houston)(1) | 14,000 | 14,000 | 14,000 | 5,000 | 5,000 | ||||||||||||||
| $ | 56.98 | $ | 56.98 | $ | 56.98 | $ | 37.78 | $ | 37.78 | ||||||||||
| Swaps - Crude Brent Oil(2) | 30,200 | 24,200 | 24,200 | 16,000 | 5,000 | ||||||||||||||
| $ | 50.27 | $ | 47.62 | $ | 47.62 | $ | 43.79 | $ | 41.62 | ||||||||||
| Puts - WTI (Cushing) | 4,700 | 4,700 | 4,700 | — | — | ||||||||||||||
| $ | 46.51 | $ | 46.51 | $ | 46.51 | $ | — | $ | — | ||||||||||
| Costless Collars - WTI (Cushing) | 51,029 | 51,029 | 51,029 | 10,000 | 10,000 | ||||||||||||||
| Long Put Price ($/Bbl) | $ | 35.56 | $ | 35.56 | $ | 35.56 | $ | 30.00 | $ | 30.00 | |||||||||
| Ceiling Price ($/Bbl) | $ | 41.54 | $ | 41.54 | $ | 41.54 | $ | 43.05 | $ | 43.05 | |||||||||
| Costless Collars - WTI (Magellan East Houston) | 4,000 | 4,000 | 4,000 | — | — | ||||||||||||||
| Long Put Price ($/Bbl) | $ | 39.00 | $ | 39.00 | $ | 39.00 | $ | — | $ | — | |||||||||
| Ceiling Price ($/Bbl) | $ | 49.00 | $ | 49.00 | $ | 49.00 | $ | — | $ | — | |||||||||
| Costless Collars - Crude Brent Oil | 62,710 | 62,710 | 62,710 | 58,000 | 58,000 | ||||||||||||||
| Long Put Price ($/Bbl) | $ | 37.74 | $ | 37.74 | $ | 37.74 | $ | 39.52 | $ | 39.52 | |||||||||
| Ceiling Price ($/Bbl) | $ | 45.87 | $ | 45.87 | $ | 45.87 | $ | 48.26 | $ | 48.26 | |||||||||
| Costless Put Spreads - WTI (Magellan East Houston) | 3,800 | 3,800 | 3,800 | — | — | ||||||||||||||
| Short Put Price ($/Bbl) | $ | 25.00 | $ | 25.00 | $ | 25.00 | $ | — | $ | — | |||||||||
| Long Put Price ($/Bbl) | $ | 50.00 | $ | 50.00 | $ | 50.00 | $ | — | $ | — | |||||||||
| Midland-Cushing Basis Swaps - WTI | 45,538 | 45,087 | 45,087 | — | — | ||||||||||||||
| $ | (1.57 | ) | $ | (1.57 | ) | $ | (1.57 | ) | $ | — | $ | — | |||||||
| Roll Swaps - WTI | 20,000 | 20,000 | 20,000 | — | — | ||||||||||||||
| $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | — | $ | — | ||||||||||
(2) Includes of 11,000 of swaps in the first half of 2021 whereby the counterparty has the right to extend the hedge into the second half of 2021 at an average price of $44.77/Bbl
| Natural Gas (Mmbtu/day, $/Mmbtu) | |||||||||||||||||||
| Q2 2020 | Q3 2020 | Q4 2020 | 1H 2021 | 2H 2021 | |||||||||||||||
| Natural Gas Swaps - Henry Hub | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | ||||||||||||||
| $ | 2.55 | $ | 2.55 | $ | 2.55 | $ | 2.46 | $ | 2.46 | ||||||||||
| Natural Gas Swaps - Waha Hub | 80,000 | 90,000 | 90,000 | — | — | ||||||||||||||
| $ | 1.68 | $ | 1.58 | $ | 1.58 | $ | — | $ | — | ||||||||||
| Natural Gas Basis Swaps - Waha Hub | 145,000 | 145,000 | 145,000 | 170,000 | 170,000 | ||||||||||||||
| $ | (1.57 | ) | $ | (1.57 | ) | $ | (1.57 | ) | $ | (0.71 | ) | $ | (0.71 | ) | |||||
Original source can be found here.