Energy reserve Diamondback Energy (FANG) beat earnings estimates and matched sales estimates on Monday as the oil producer returned nearly $900 million to its shareholders while output was largely flat in Q3. Warren Buffett Stocks Occidental Petroleum (OXY) will report third-quarter earnings on Tuesday. Shares of Diamondback Energy and shares of OXY advanced on Monday.
Energy Stocks: Diamondback Energy Earnings
Assessments: The Street expects Diamondback Energy’s earnings to jump 119% to $6.45 per share. Analysts had expected revenue to rise 26% to $2.4 billion in the third quarter. Capital spending is projected to be $492 million, up 5% from last quarter and up 26% from last year.
Results: Diamondback Energy reported a 120% increase in EPS to $6.48. Revenue for the third quarter was $2.4 billion, up 26% from last year. The company had $491 million in capital spending, which was slightly below expectations.
Diamondback Energy also reported that it returned $874 million to its shareholders through share buybacks and dividends. That represented about 75% of the company’s third-quarter free cash flow of $1.16 billion.
Diamondback Energy produced 390,630 barrels of oil equivalent per day in Q3, up 2% from Q2 and down 3% from a year ago.
“We focused on cost control, working to mitigate inflationary pressures associated with the variable components of our cost structure through improved operating techniques,” CEO Travis Stice said in a statement Monday.
Shares of Diamondback Energy were lower late Monday after rising 1.3% to 163.49 on the day market trade. FANG shares topped the official 162.34 point of purchase from pattern on the base of the cupAccording to MarketSmith analysis. But that’s 18% above the 50-day moving average. Shares have jumped 47% since hitting recent lows of 110.97 on September 26.
The Midland, Texas-based energy company primarily produces oil but also has significant natural gas operations. In Q2, earnings per share increased 194% to $7.07. Revenue rose 59% to $2.7 billion. Capital expenditures for operating and non-operating drilling in Q2 were $468 million.
Well completion services, materials and labor have become increasingly expensive and difficult to secure, and much of the drilling has gone simply to maintain stable production levels. Rising oil prices have made stabilizing production a profitable strategy. Analysts forecast Diamondback’s full-year 2022 earnings to rise 126% to $25.50 a share on a 41% increase in sales to $9.6 billion.
Shares of shale energy Diamondback Energy rank ninth in the Oil and Gas – Exploration and Production in the United States industrial group. FANG stocks have a perfect Composite rating of 99. The stock has a 96 relative strength rating, outstanding IBD Stock Check gauge of stock price movement. The EPS rating is 95.
Energy stocks and the oil and gas market
The financial report comes after President Joe Biden stepped up criticism of oil producers, but also after oil prices rose again.
Biden called for companies to pay higher taxes to lower fuel costs for consumers. The president also said Friday that he plans to speak directly with oil companies soon.
U.S. crude futures fell 0.7 percent on Monday to $91.93 a barrel, hovering around prices not seen since late August. Prices rose nearly 9% in October, the first monthly advance since May. Entering November, the production cut of 2 million barrels per day by the Organization of the Petroleum Exporting Countries and its key allies, including Russia, known as OPEC+, is officially in place.
Meanwhile, US natural gas prices jumped 4.6% on Monday to $7.06 per million British thermal units. U.S. natural gas futures are up about 53% year-to-date. However, they are about 40% lower than the 14-year highs reached in August.
Financial outlooks from Diamondback Energy and Occidental Petroleum come after a number of energy stocks reported earnings last week.
Devon Energy (DVN) reported a 96% jump in third-quarter EPS to $2.18 and sales up 20% to $4.15 billion. Energy reserve Marathon oil (MRO) topped the earnings and sales outlook and Marathon Petroleum (MPC) reported explosive gains of 969% to $7.81 per share. The week before Pioneer Natural Resources (PXD) beat revenue estimates but missed revenue.
Occidental Petroleum Earnings
Assessments: Wall Street had forecast Occidental Petroleum earnings of $2.48, a 185% gain, and $9.1 billion in revenue, a 34% increase, according to FactSet. Analysts expect capital expenditures of $1.2 billion, up 100% from a year earlier.
Results: Check on Tuesday after the market closes.
Shares of Occidental Petroleum advanced 3.7% to 75.95 on Monday. Shares of OXY recently cleared a cup-handled buy point of 72.14. The buy range extends to 75.75, according to MarketSmith analysis. OXY shares are currently outperforming the S&P 500, with their RS line at a three-year high.
But OXY shares are more than 10% above their 50-day line.
Houston-based Occidental Petroleum’s business exposure is primarily in oil, natural gas liquids and natural gas. It also has a petrochemicals segment that has performed well in recent quarters.
OXY beat forecasts with record profits in the second quarter on August 2. Occidental’s earnings jumped 888% to $3.16 per share. Revenue increased 81% to $10.7 billion. This was mainly due to higher oil prices as oil production volumes remained in line with guidance.
Billionaire investor Warren Buffett has been buying OXY shares this year with his own Berkshire Hathaway (BRAGGING), adding more than 20 million shares to its portfolio since July. Berkshire Hathaway has increased its stake in OXY to about 21%, according to SEC filings, with warrants to increase its holdings beyond 25%.
Occidental Petroleum ranks fifth in the Oil and Gas – International Exploration and Production industrial group. OXY stock has a perfect composite rating of 99. OXY has a star rating of 98 for relative strength. The energy stock has an EPS rating of 80.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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