Diamondback to cut debt with free cash flow if commodity prices rise

By Devika Patel

Knoxville, Tenn., Nov. 6 – Diamondback Energy, Inc. will use excess free cash flow to pay down debt if commodity prices rally.

“If commodity prices rally, we plan to use excess free cash flow to accelerate our capital return program and reduce debt,” chief executive officer Travis D. Stice said on the company’s third quarter ended Sept. 30 earnings conference call on Wednesday.

The company’s management is pleased with Diamondback’s leverage and leverage metrics.

“We feel like we’ve got the revolver to a point where we’re comfortable,” executive vice president of business development and chief financial officer Kaes Van't Hof said on the call.

“We have a significant borrowing base behind it.

“Our proforma borrowing base is closer to $5.5 billion.

“We’re trying to run this company like an investment-grade company and we hope that time comes, and at that point, we would reduce our revolver borrowings to zero and term out our debt, but we feel really comfortable about our growth profile and what our absolute leverage and leverage metrics look like,” Van't Hof said.

Consolidated Adjusted EBITDA was $732 million for the quarter.

Cash and cash equivalents were $100 million as of Sept. 30, 2019, compared to $215 million as of Dec. 31, 2018.

Long-term debt was $4,761,000,000 as of Sept. 30, 2019, compared to $4,464,000,000 as of Dec. 31, 2018.

Diamondback Energy is a Midland, Tex., oil and natural gas company.

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