Diamondback Q4 results - big beat, less production, more shareholder returns
William_Potter/iStock via Getty Images

Diamondback Energy (NASDAQ:FANG) reported Q4 results after the close, posting strong earnings and pivoting the business towards shareholder returns and away from production growth: 

Earnings - the Company posted adjusted EPS of $3.63 in the quarter versus Bloomberg consensus estimates of $3.37, while delivering $772m in free cash flow (~3.2% of current market cap).

Production - Management guided the street to ~373kboe/d of production in 2022, versus Q4 results at 387kboe/d, or a ~4% reduction from current levels.
Capex - though production is planned to fall in 2022, capex is expected to increase from $1.5b in 2021 to $1.8b in 2022.
Shareholders - the base dividend was increased 20% to $2.40/s (~2% forward yield), and management committed to returning 50% of free cash flow to shareholders through dividends and buybacks (~8% of current market cap assuming strip pricing).

CEO Travis Stice commented that "going forward, we will remain committed to capital discipline by maintaining flat Permian oil production." It's unclear if this is a medium-term outlook, or simply referencing 2022 guidance. However, the clear pivot away from production growth towards shareholder returns is likely to be rewarded, if Pioneer's
(NYSE:PXD) and Devon's (NYSE:DVN) results and subsequent share price performance are any indication.