Will Diamondback's Permian Scale Drive Q3 Earnings Beat?

Diamondback Energy (FANG) is set to release third-quarter 2025 results on Nov. 3. The Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.79 per share on revenues of $3.4 billion.

Let’s delve into the factors that might have influenced the Permian-focused oil and gas producer’s performance in the September quarter. But it’s worth taking a look at FANG’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, this Midland, TX-based upstream player beat the consensus mark on strong production and lower costs, which more than offset a fall in oil realization. Diamondback had reported adjusted earnings per share of $2.67 for the second quarter, surpassing the Zacks Consensus Estimate of $2.63. Revenues of $3.7 billion also topped the consensus estimate by 11.8%.

FANG beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other. This is depicted in the graph below:

Diamondback Energy, Inc. Price and EPS Surprise

Diamondback Energy, Inc. price-eps-surprise | Diamondback Energy, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line has been revised upward by 2.6% in the past seven days. The estimated figure indicates a 17.5% decline year over year. The Zacks Consensus Estimate for revenues, however, suggests a 29.1% increase from the year-ago period.

Factors to Consider

Diamondback is sitting on more than 850,000 net acres in the Delaware and Midland regions, with nearly 9.600 drilling locations and production of more than 900,000 barrels of oil equivalent per day. Overall, the wells drilled by the company have extremely low oil price breakeven costs and need the commodity to be less than $40 a barrel to be profitable.

In particular, Diamondback’s $26 billion Endeavor Energy acquisition significantly strengthens its Permian Basin position. The deal provides access to high-quality acreage with lower production costs.

Following the deal, Diamondback Energy is expected to have benefited from higher production during the third quarter. The company continues to churn out impressive volumes from its wide inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for FANG’s average third-quarter volume is pegged at 904,988.8 barrels of oil equivalent per day (BOE/d), up 58.5% from the year-ago quarter’s level of 571,098 BOE/d.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Diamondback Energy this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That is the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FANG has an Earnings ESP of +4.26% and a Zacks Rank #3.

Other Stocks to Consider

Diamondback Energy is not the only company looking up this earnings cycle. Here are some other energy firms that you may want to consider on the basis of our model:

Transocean Ltd. (RIG) has an Earnings ESP of +31.58% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 29.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2025 earnings of Transocean indicates 107.7% growth. Valued at around $3.7 billion, RIG has lost 3.2% in a year.

Imperial Oil Limited (IMO) has an Earnings ESP of +12.12% and a Zacks Rank #3. The firm is scheduled to release earnings on Oct. 31.

Imperial Oil beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 14.9%. Valued at more than $45 billion, IMO has gained 22.2% in a year.

Comstock Resources (CRK) has an Earnings ESP of +2.86% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov. 3.

The Zacks Consensus Estimate for 2025 earnings of Comstock Resources indicates 295.8% growth. Valued at more than $5 billion, CRK is up 49.7% in a year.

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This article originally published on Zacks Investment Research (zacks.com).

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