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Last Updated: Aug 09, 2022

After both companies suffered losses in market trading, earnings forecast for shale producers Devon Energy and Diamondback Energy beat expectations on Monday. Stocks continued to fall during extended trading hours. FANG and DVN are the first U.S. shale-oil producers to report quarterly results this week. They follow Exxon Mobil, Chevron (CVX), and Shell (SHEL), all of whom posted record profits. On Monday, crude oil prices dropped sharply and shale oil producer stocks declined.

Earnings of Devon Energy

According to FactSet, Devon Energy’s earnings would rise 285% year-on-year to US$2.31 per diluted share. Sales increased by 72% to US$4.1 billion for Q2. Devon Energy reported a profit of US$2.59 per share. This is a 331% increase from the previous year. Revenue increased 133% to US$5.6 billion.

Based on Q2’s performance, full year production rose by 3%, to a range between 600,000 and 610,000 oil-equivalent crude barrels per day. Devon Energy has also increased its guidance for upstream capital to US$2.2-$2.4 billion, from US$2.1 billion.

The average daily production for Q2 was 616,000 barrels of oil-equivalent barrels per day. This is an increase of 7% over Q1. The company expected a 5% decrease in upstream capital expenditures, which totalled US$513 million. Devon Energy anticipates that capital expenditures in Q3 will total between US$680 and US$755 million.

DVN shares dropped 2% to US$61.59 at the stock exchange on Monday. After finding support at its 200-day line, Devon Energy has begun to move higher. MarketSmith still shows DVN stock below its 50-day level. Devon Energy, located in Oklahoma City, is the largest U.S. offshore oil & natural gas producer. It operates in many basins in the United States, including the resource-rich Delaware Basin, West Texas, and the Barnett Shale in Texas, which is one of the largest on-shore natural gas fields in America.

The company ranks third within the Gas & Oil U.S. Exploration and Production sector group. DVN’s Composite Rating is 99. It has a Relative Strength Rating of 99. This is an IBD StockCheckup gauge for price movement that gives a score between 1 and 99. The rating indicates how the stock’s performance in the past 52 weeks compares to other stocks in IBD’s databank. The stock has an EPS Rating of 80.

Earnings of Diamondback

Wall Street expected Diamondback Energy earnings per sharing of US$6.68. That’s a 179% rise over the previous year and a 48% jump in sales to US$2.5 million.

Earnings per share rose 194% to US$7.07. Revenue rose 59% to US$2.7 billion. In Q2, capital spending on drilling operations and non-operating drilling was US$468 million. Diamondback Energy has spent US$905 million on capital so far in 2022. In Q3, Diamondback Energy expects to spend an additional US$470-$510 million.

“We will continue to concentrate on operational excellence and cost management in this inflationary operating climate, offset of inflationary pressure or working to mitigate pressures that we are seeing across all of our businesses. Diamondback’s cost control record is strong and we plan to build on that track record in the coming quarters,” Travis Stice, CEO of Diamondback stated.

FANG stock fell 1.7% to 125.83 on Monday. The shares are trying to surpass their 200-day mark. According to MarketSmith analysis, the stock is currently in consolidation. It’s currently at 16% below its official buy point of 148.09, which is currently 16% lower than what it was.

Diamondback Energy ranks fifth within the Oil & Gas U.S. Exploration and Production category. FANG is rated 99 Composite. It has a Composite Rating of 99 and a Relative Strength Rating of 94.

Diamondback was reportedly aggressive in Q1 and operated 12 rigs within the Permian basin. But, well completion services, labor, and materials are becoming more expensive and difficult to obtain. Much of the drilling has been done to maintain output levels.

“Everything is tight across all areas, whether it be sand or casing, new high-spec equipment, frack crews – every aspect is very, very tight,” Kaes Van’t Hof, CFO, stated during the Q1 earnings call. “We are doing our part by maintaining our activity levels flat.”

The rising oil prices have made it difficult to keep production stable. Diamondback earnings are expected to rise 126% to US$25.50 per share in 2022, based on an increase of 41% in sales to US$9.6 million.


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