Diamondback Energy Aims to Be a Buyer in U.S. Shale Consolidation

(Reuters) — Diamondback Energy on Monday said it expects to be a buyer of rivals, rather than their target, amid consolidation in the shale industry, and raised its full-year oil production forecast.

Mergers of U.S. shale oil producers have climbed in the last two years with publicly-traded companies using their high share prices to gobble up smaller firms.

Exxon Mobil and Chevron in recent months snapped up rivals' Pioneer Natural Resources, Hess and PDC Energy.

"We expect Diamondback to remain a consolidator in the future," Chief Executive Travis Stice wrote in a letter to stockholders. "We believe in the pure-play independent E&P business model and know we can compete for investor capital in a consolidated space," he added.

The company said it closed asset sales for proceeds of about $1.7 billion, adding that it could cash out midstream assets but was not increasing its $1 billion non-core asset sale target.

Diamondback also raised its net 2023 production to about 447,000 barrels of oil and gas per day (boepd), compared with a previous forecast for up to 445,000 boepd.

Production averaged 452,848 boepd in the third quarter ended Sept 30, higher than the 390,630 boepd a year ago.

Production is expected to grow in the fourth quarter to between 455,000 and 460,000 boepd, mainly due to longer wells, multi-well pads and a high mineral interest, the company said.

Full-year capital spending is expected to be about $2.68 billion at the midpoint of its range, slightly above previous forecast of $2.64 billion.

Average sales prices fell 19% to $54.37 per barrel of oil and gas, reducing net income, which fell nearly 23% to $915 million.

On an adjusted basis, the company earned $5.49 per share for the quarter ended Sept. 30, compared with analysts' average estimate of $5.01 per share, according to LSEG data.

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