Diamondback Energy, Inc. (FANG)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 beat on S&P Global consensus across EPS, revenue and EBITDA: EPS $4.54 vs $4.20 (+8%), revenue $3.86B vs $3.75B, and EBITDA $3.02B vs $2.81B, reflecting stronger realizations and cost control; GAAP diluted EPS was $4.83 and total revenues were $4.05B (company figures) . S&P Global values marked with an asterisk; see Estimates Context below for details.*
• Management pivoted to maximize free cash flow amid commodity volatility: FY25 capex cut ~$0.4B at midpoint to $3.4–$3.8B (from $3.8–$4.2B) while trimming FY25 oil guidance slightly to 480–495 MBO/d (from 485–498); Q2 oil guidance set at 485–500 MBO/d with $800–$900M capex .
• Operational execution remained best‑in‑class: average oil 475.9 MBO/d (850.7 MBOE/d), cash costs $10.48/BOE, consolidated Adjusted EBITDA $2.95B, and Adjusted FCF $1.58B; declared $1.00 base dividend and repurchased ~$575M of stock (55% of Adjusted FCF returned) .
• Narrative/catalysts: proactive capex discipline and buyback bias, explicit “red/yellow/green” oil-price thresholds for activity, and FY25 capital efficiency improvement (MBO per $MM capex +~10%) could support multiple resilience; tariff‑driven casing cost inflation and higher GP&T/cash tax guide are offsets .

What Went Well and What Went Wrong

What Went Well

• EPS/revenue/EBITDA beat vs S&P Global consensus; company reported GAAP diluted EPS $4.83, consolidated Adjusted EBITDA $2.95B, Adjusted FCF $1.58B; buybacks + dividend returned ~55% of Adjusted FCF . S&P Global consensus and actuals in Estimates Context.*
• Capital allocation pivot: “We are lowering our full year 2025 capital budget to $3.4–$3.8B… We would prefer to use the incremental dollar generated to repurchase shares and pay down debt over drilling and completing wells at these prices today.” .
• Record operations: “We averaged 8.8 days from spud to TD, the fastest average performance in Diamondback history,” and ~3,500 feet completed per day; four electric Zeus fleets in use .

What Went Wrong

• Macro headwinds: management cited OPEC supply additions and slowing global demand; activity cut by three rigs and one frac crew, with sequential oil decline expected from Q2 peak to Q3 (~30 Mbo/d gross impact from dropping a frac crew) .
• Cost headwinds: casing costs up >10% due to tariffs (~$6/ft, ~1% total well cost, ~+$40M annually at current pace), though expected to be offset by service-cost deflation/efficiency gains .
• 2025 guide mix shifted: GP&T raised to $1.40–$1.60/BOE (from $1.20–$1.40); net interest expense guide raised to $0.40–$0.65/BOE (from $0.25–$0.50); cash tax rate to 19–22% (from 17–20%) .

Financial Results

Income statement, EPS and EBITDA (chronological: oldest → newest)

Note: Margins computed from cited figures.

Revenue composition

Operating KPIs and costs

Cash flow and capital

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Taking $400 million out of our capital budget and 3 drilling rigs and 1 frac spread allowed us to maximize the CapEx reduction while minimizing volume impact… [and] provide… flexibility to respond in either direction in future quarters.” — Travis Stice .
• “We would prefer to use the incremental dollar generated to repurchase shares and pay down debt over drilling and completing wells at these prices today.” — Letter to Stockholders .
• “For the first quarter, Diamondback produced 475.9 MBO/d, above the high end of the oil guidance… Capital expenditures were $942 million, below the midpoint.” — Letter .
• “Red is probably something with a 4 in front of it… yellow… a 5… green… mid- to high 50s with a 50 to 70 to accelerate through that green light.” — Kaes Van’t Hof .
• “We averaged 8.8 days from spud to target depth… the fastest average performance in Diamondback history.” — Letter .

Q&A Highlights

• Capital return mix: Expect ~25–30% of FCF to debt reduction (including opportunistic bond repurchases), with the remaining 70–75% to buybacks and base dividend in current environment; variable dividend curtailed at present prices .
• Sequential production cadence: Q2 oil around 495 Mbo/d then modest decline into Q3 (~485) as frac crews reduced; highlights how quickly reduced activity translates to production .
• DUC and cost posture: Largest DUC backlog in North America; not building gross DUCs now given casing tariffs (+~12% QoQ), preferring to buy back stock; anticipate service-cost relief as activity falls .
• Gas takeaway and power: ~750 mmcf/d firm transport by end‑’26; optionality for power generation/data center to monetize gas and insulate LOE from rising power costs .
• Asset monetizations: BANGL sale to MPLX expected in summer; Deep Blue integration for water; non-core sales paced by market conditions, no need to force sales .

Estimates Context

Results vs S&P Global consensus (Q1 2025):

• EPS (Adjusted/Primary): Actual $4.54 vs Consensus $4.20 — beat by ~8%*
• Revenue: Actual $3.86B vs Consensus $3.75B — beat by ~3%*
• EBITDA: Actual $3.02B vs Consensus $2.81B — beat by ~8%*

Values retrieved from S&P Global.*

Context: Company-reported GAAP diluted EPS was $4.83 and total revenues $4.05B; non-GAAP adjusted EPS $4.54 and consolidated Adjusted EBITDA $2.95B (definitions differ from S&P constructs) . Post‑print, Q2 2025 S&P consensus stood at EPS $2.72 and revenue $3.33B, reflecting planned activity moderation and seasonality.*

Key Takeaways for Investors

• Quality beat with strong FCF conversion and continued cost leadership; company metrics (cash costs, efficiency) and S&P consensus beats support estimate upward bias for FY EBITDA if macro stabilizes .*
• Strategy: management is explicitly prioritizing FCF and per‑share growth over volumes, cutting capex but keeping oil guide nearly flat vs prior — supportive for return of capital and multiple resilience .
• Capital returns likely skew to buybacks near‑term; base dividend held at $1.00/share; potential to lift buyback authorization as current one nears usage .
• Watch cost mix: LOE guided slightly better, but GP&T and cash taxes higher; casing tariffs are a headwind yet likely offset by service-cost deflation as basin activity slows .
• Near‑term production trajectory: expect Q2 uptick then modest Q3 decline with fewer frac crews; year still anchored by 480–495 Mbo/d oil on reduced capex .
• Monetization catalysts: BANGL proceeds, water integration (Deep Blue), and selective non-core asset sales can accelerate deleveraging toward ~$10B net debt target .
• Optionalities: gas takeaway expansion and power/data center initiatives could enhance long‑term gas monetization and protect LOE amid rising Texas power costs .

Additional documents read (Q1 2025 period)

• 8‑K (Item 2.02) with Exhibit 99.1 (press release) and Exhibit 99.2 (Letter to Stockholders), dated May 5, 2025 .
• Q1 2025 earnings press release (GlobeNewswire), May 5, 2025 –.
• Q1 2025 earnings call transcript, May 6, 2025 –.
• Q1 2025 operational update press release (pre‑release), April 16, 2025 –.
• Prior two quarters for trend: Q4 2024 press release and call (Feb 24–25, 2025) – –; Q3 2024 call and October 10, 2024 8‑K pre‑release – –.