Diamondback Energy Inc. (NASDAQ:FANG)

Debt to equity

The debt to equity ratio shows a general upward trend from March 2017 to December 2020, increasing from 0.21 to 0.66. This indicates a gradual increase in leverage during this period. Starting in March 2021, the ratio begins to decline steadily and falls to 0.39 by September 2022, suggesting a reduction in financial leverage relative to equity in the most recent periods.

Debt to capital

This ratio follows a similar pattern to the debt to equity ratio, rising from 0.17 in March 2017 to a peak of 0.42 in June 2021. After this peak, the ratio declines each quarter, reaching 0.28 by September 2022. This trend represents a shift from increasing debt reliance towards a more balanced capital structure over the last year and a half.

Debt to assets

The debt to assets ratio also exhibits a steady increase from 0.15 in March 2017 to a peak of 0.35 in June 2021, signaling more assets financed through debt over this timeframe. Subsequent quarters display a consistent decrease, descending to 0.22 in September 2022, highlighting a decreasing proportion of assets funded by debt in the latest periods.

Financial leverage

Financial leverage rose gradually from 1.37 in March 2017 to 2.06 in June 2021, indicating higher total asset exposure per unit of equity. After reaching this high, leverage begins to reduce steadily, declining to 1.72 by September 2022. This downward trend reflects a reduction in the use of debt financing relative to equity and assets, supporting the observed decreases in the other debt ratios.

The financial data reveals several notable trends regarding the company's debt, equity, and leverage ratios over the analyzed periods.

Total Debt

Total debt increased substantially from March 2017 through December 2018, rising from $986 million to a peak of $4,464 million. Following this peak, debt levels fluctuated moderately but generally declined from 2019 onward, ending at $5,357 million in September 2022. Despite some fluctuations, the trend from late 2018 to 2022 indicates an initial buildup followed by stabilization and slight reduction in total debt.

Total Stockholders’ Equity

Equity showed a steady increase from March 2017 at $4,652 million up to a significant surge by December 2018, reaching $13,699 million. After peaking at this high level, equity experienced a moderate decline and volatility between 2019 and 2020, with values falling to around $8,794 million at the end of 2020. However, from 2021 onwards, equity consistently increased again, ending at $13,843 million in September 2022, slightly above the previous peak level.

Debt to Equity Ratio

The debt to equity ratio rose gradually from 0.21 in March 2017 to 0.39 by December 2018, coinciding with the increase in debt and equity in this period. This was followed by a marked increase in leverage during 2019 and 2020, reaching a high of 0.72 at June 2021. During this time, the debt level remained elevated while equity had decreased temporarily, leading to the peak ratio. From mid-2021 onwards, the ratio steadily declined to 0.39 in September 2022, reflecting reductions in debt relative to the strengthening equity base.

Overall, the company demonstrated a period of aggressive capital expansion and debt accumulation through late 2018, accompanied by a surge in equity. This was followed by a phase of elevated leverage and some equity contraction until mid-2021. The latest data suggests a movement towards deleveraging and a more balanced capital structure, highlighting improved financial stability as debt levels drop and shareholder equity strengthens.

The financial data reveals that the total debt of the company steadily increased from March 31, 2017, reaching a peak in December 31, 2018. Following this peak, the debt level exhibited fluctuations but remained elevated, generally staying above the 5000 million US$ mark from late 2018 onwards. There was a notable rise in total debt in the first half of 2021, attaining the highest value in March 31, 2021, before a gradual decline through September 30, 2022.

Total capital followed an upward trajectory from March 31, 2017, until a substantial jump occurred in December 31, 2018, more than doubling the prior period's value. This new elevated capital level was maintained with minor fluctuations until the end of the period in September 30, 2022, hovering around the 18000 to 19000 million US$ range. There was a decline in total capital during 2019 and 2020, but the amounts reversed course and recovered in 2021 and 2022.

The debt to capital ratio demonstrates a general rising trend from 0.17 in early 2017 to a peak of 0.42 in June 30, 2021, indicating an increasing proportion of debt relative to total capital over the period. However, after mid-2021, the ratio declined steadily, ending at approximately 0.28 by September 30, 2022, reflecting a reduction in leverage or a relative increase in capital compared to debt.

Overall, the data points to an initial period of growing indebtedness alongside rising capital, followed by heightened leverage ratios that peaked around mid-2021 but subsequently improved toward the later quarters of 2022. The notable spike in total capital at the end of 2018 and the subsequent rise in debt suggest strategic financial adjustments that impacted the company's capital structure across the years analyzed.

Total Debt

The total debt exhibited an overall increasing trend from March 31, 2017, until December 31, 2018, rising from $986 million to a peak of $4,464 million. During 2019, total debt remained relatively elevated, fluctuating between approximately $4,472 million and $5,371 million. Entering 2020, debt levels peaked around mid-year at $5,952 million but then began a gradual decline. By the end of 2022 (September 30), total debt was reduced to $5,357 million, indicating a strategic reduction in leverage after earlier increases.

Total Assets

Total assets increased steadily from $6,370 million at the start of the period to a significant peak of $21,596 million by December 31, 2018. Following this peak, asset levels remained relatively stable with minor fluctuations, ranging between $17,619 million and $23,843 million through September 30, 2022. Notably, there was a dip in assets in 2020, with a low around $17,619 million at year-end, followed by a recovery to levels exceeding $23,000 million by 2022. This pattern suggests an expansion phase culminating in 2018, followed by consolidation and stabilization thereafter.

Debt to Assets Ratio

The debt to assets ratio started at a low 0.15 in early 2017, rising gradually to 0.24 by the end of 2018. This upward trajectory reflects increasing leverage concurrent with growing total debt and a rapidly expanding asset base. From 2019 through mid-2020, the ratio rose further, peaking at 0.33 in late 2020, indicating heightened financial risk amid rising debt. However, starting in late 2020 and continuing through 2022, the ratio declined steadily, reaching 0.22 by September 2022. This decrease points to a reduction in debt relative to assets, highlighting an effort to improve leverage and financial stability during this period.

Summary of Trends and Insights

Overall, the financial data reveals a phase of aggressive growth and asset accumulation until the end of 2018, accompanied by increasing leverage. This was followed by a period marked by a peak in debt levels and debt to assets ratio around 2020, potentially reflecting strategic borrowing or market conditions at that time. Subsequently, the company appears to have shifted towards deleveraging, reducing total debt and improving the balance between debt and assets. The relative stability of total assets from 2019 onward, alongside the reduction in leverage, may indicate a focus on consolidation and strengthening the financial position. The improvements in the debt to assets ratio towards the end of the period suggest enhanced creditworthiness and reduced financial risk.

The financial data reveals several key trends regarding the company's assets, equity, and financial leverage over the period from March 2017 to September 2022. Overall, the company experienced growth in total assets and equity, accompanied by changes in financial leverage that suggest shifts in the capital structure.

Total Assets

The total assets displayed a general upward trend, increasing from approximately $6.37 billion in March 2017 to $23.84 billion by September 2022. Notably, there was a significant jump between September 2018 and December 2018, where total assets more than doubled from $9.81 billion to $21.60 billion. After this sharp increase, the asset base remained relatively stable with slight fluctuations, ranging between about $22 billion and $23.8 billion for the subsequent periods.

Total Stockholders’ Equity

Stockholders’ equity rose steadily from $4.65 billion in March 2017 to a peak of $13.70 billion in December 2018, coinciding with the sharp increase in total assets seen in the same period. Following this peak, equity fluctuated but generally trended lower from late 2018 through 2020, declining to $8.79 billion by December 2020. Starting in 2021, equity resumed an upward trajectory, reaching $13.84 billion by September 2022. This indicates a recovery in equity value after a period of decline, potentially reflecting improved profitability or capital contributions.

Financial Leverage

Financial leverage ratios exhibited a gradual increase from 1.37 in March 2017 to 1.96 by December 2020, indicating a rising proportion of total assets financed through liabilities relative to equity. The peak leverage at 2.06 occurred in June 2021, after which the ratio decreased steadily to 1.72 by September 2022. The rising leverage trend until 2021 suggests increased borrowing or debt relative to equity, followed by a period of deleveraging or equity growth thereafter.

In summary, the company saw substantial growth in asset size, with an especially sharp increase in late 2018, mirrored by expanded equity. However, equity contracted for a time during 2019 and 2020 while leverage increased, implying greater reliance on debt financing during this period. Improvements in equity and reductions in financial leverage since early 2021 point to a strengthening balance sheet and a more conservative capital structure moving forward.