Diamondback Energy (FANG)

dan_s · Post by **dan_s** » Mon May 23, 2016 5:54 pm

I worked on Diamondback most of the afternoon and we will be sending out an updated profile on Tuesday.

I am increasing my valuation by $13.00/share to $99.00. This compares to First Call's price target of $95.33.

The primary reason for the increase is that I believe Diamondback's 88% stake in Viper Energy Partners LP (VNOM) is worth AT LEAST $20/share and probably $30/share by year-end. FANG has a VERY STRONG balance sheet and plenty of liquidity, but their interest in Viper gives them another source of liquidity.

VNOM is a "variable rate" MLP, so if you are looking for cash flow and you believe oil & gas prices are going higher (I certainly do), then VNOM may be a good fit for you. 2/3s of the wells that FANG completes this year will be on leasehold where Viper holds a royalty interest.

We cover Viper in the profile we will be sending out on Tuesday. < This is why you pay me the Big Bucks.