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Diamondback Energy Raises Production Guidance for 2016

Zacks

Upstream energy player, Diamondback Energy, Inc. FANG recently raised the production guidance for 2016. It also provided the preliminary output projection for 2017.

The company raised its 2016 production outlook to a range of 41–42 thousand barrels of oil equivalent per day (MBOE/D) from the prior guidance of 38–40 MBOE/D. This reflects Diamondback Energy’s continued robust well performance. This year, the company is planning to complete roughly 65 to 70 gross horizontal wells.

For 2017, Diamondback projects output between 52 MBOE/D and 58 MBOE/D. This is higher than the production level expected in 2016. It is to be noted that during 2017, the company anticipates to complete drilling 90 to 120 gross horizontal wells.

The company also added that its capital spending program for 2016 will remain unchanged at $350–$425 million.

We believe that the improved production guidance for the next year will definitely add to the company’s cash flows and hence, will benefit its shareholders. This apart, the OPEC’s decision to curb oil production amid an oversupplied commodity market is expected to result in crude price recovery, which in turn, will add on to the improved cash flows of the company. Other energy players that are likely to benefit from the possible increase in crude prices include Antero Resources Corporation AR, Comstock Resources Inc. CRK and Denbury Resources Inc. DNR.

Headquartered in Midland, TX, Diamondback is involved in operations that include exploitation and development of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

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Presently, the company carries a Zacks Rank #2 (Buy), implying that it will outperform the broader U.S. equity market over the next one to three months. You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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