Diamondback Energy Warns of Lower Q4 Oil Prices
(Reuters) — U.S. shale producer Diamondback Energy on Monday flagged lower prices for its oil production in the fourth quarter, compared to the preceding three months.
Crude prices LCoc1 fell about 6% in the October-December quarter, weighed down by a patchy post-pandemic demand recovery, China's sluggish economy and excess global supply. Prices have fallen nearly 12% from a year ago.
The company said the average realized prices, or the price it received for total oil production, declined to $69.48 per barrel during the three months ended Dec. 31, compared with $73.13 per barrel in the preceding quarter.
However, a near 30% rise in U.S. natural gas prices NGc1 is expected to offer some respite to shale producers' earnings for the quarter.
The Texas-based producer signaled higher prices for its natural gas production in the fourth quarter. The average realized prices for natural gas were 82 cents per thousand cubic feet (Mcf) after hedging, compared to 60 cents per Mcf in the third quarter, the company said.
RBC Capital Markets analyst Scott Hanold said Diamondback's commodity price realizations were "generally above expectations" and added that the company remained active with stock buybacks, but likely below the robust pace in the third quarter, which included repurchases associated with selling shareholders.
Diamondback's quarterly snapshot comes just days after rivals Exxon Mobil and Occidental Petroleum also warned of a similar trend in their fourth-quarter earnings.
Exxon expects changes in oil prices and refining profits would lower its earnings by about $1.75 billion, while Occidental said it received lower prices for its oil production during the quarter.
Analysts expect Diamondback Energy to post a profit of $3.36 per share for the fourth quarter, and $15.86 for the full-year, according to estimates compiled by LSEG.
The producer will release its financial results on Feb. 24, the company's website showed.
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