Diamondback Energy misses profit estimates on weaker gas prices

July 31 (Reuters) – U.S. shale oil producer Diamondback Energy (FANG.O) missed Wall Street estimates for second-quarter profit on Monday, as gas prices took a hit from easing supply concerns.

Natural gas prices have fallen nearly 63% from last year, when western sanctions on Russia after the Ukraine war crimped supplies.

Diamondback said its average unhedged realized prices for natural gas tumbled nearly 85% to 94 cents per million cubic feet, sending its shares down 1.7% after the bell.

The company’s production rose 18.3% to 449,912 barrels of oil equivalent per day (boepd) for the reported quarter, boosted by its recently purchased oil and gas producers, Lario Permian and FireBird Energy.

Diamondback also raised its 2023 production forecast to between 435,000 boepd and 445,000 boepd, from an earlier forecast of 430,000 boepd to 440,000 boepd.

The company also raised its annual base dividend by 5% to $3.36 per share.

Due to more spending on midstream projects, Diamondback now sees full-year capital expenditure of between $2.6 billion and $2.68 billion, compared with an earlier forecast of $2.5 billion to $2.7 billion.

However, the company expects expenditure to decline in the third and fourth quarters, with lower completed well costs as it heads into 2024.

“They alluded to a much more efficient 2024 outlook … and it’s going to be a driver for the stock tomorrow,” said Siebert Williams Shank analyst Gabriele Sorbara.

On an adjusted basis, the company posted an income of $3.68 per share for the quarter ended June 30, compared with analysts’ average estimate of $3.90 per share, according to Refinitiv data.

Reporting by Sourasis Bose in Bengaluru; Editing by Devika Syamnath

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