Texas Shale Firm Diamondback Energy Spikes To High On Production Outlook


Diamondback Energy (FANG) raised its 2016 production guidance and ended buyout talks Monday.

The shale exploration and production company raised its full year production outlook by 6% from the midpoint of its July guidance to 41,000 to 42,000 barrels of oil equivalent per day.

During the third-quarter Diamondback averaged 44,923 barrels of oil equivalent per day, up 22% from Q2 2016.

Looking ahead to 2017, the company sees production up 30% vs. its updated 2016 expectations.

Diamondback shares soared 8.2% to 102.49 in the stock market today, hitting a record high. EOG (EOG) rose 1.2%. Continental Resources (CLR) was up 1.7%. Devon Energy (DVN) climbed 2.1%.

IBD's TAKE: The Permian Basin has seen production rates fall less than in other basins in the U.S. thanks to its exceptional geology. Read more about how Diamondback is dominating prime acreage in the lucrative basin in a recent New America.

"Diamondback's continued strong well performance and increased completion cadence during the third quarter reflects our ability to turn our growth engine back on into a rising commodity price after reducing completion activity in early 2016," chief executive Travis Stice said in release.

Stice also said the company had been engaged in acquisition discussions, "but are not actively pursuing further negotiations at this time."

Diamondback didn't specify who is had been in buyout talks with, but reports had it close to a deal to buy privately held Silver Hill Energy Partners, with a lot of acreage in the Permian Basin, for about $2.5 billion. That news sent Diamondbank shares down 4% on Oct. 3.

U.S. crude rose 2.8% to $51.19 a barrel. Brent jumped above $53 a barrel, hitting a one-year high, as top producers meet in Istanbul to work out details for a production cap.

U.S. oil prices have been staying around the critical $50 per barrel price point. On Wednesday, the Energy Information Administration said U.S. crude inventories fell by 2.98 million barrels for the week ended Sept. 30, while analysts expected a 2.6 million-barrel increase, a fifth straight week of declines.


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