Diamondback Energy - Update Jan 22

[dan_s]

John White at Roth Capital sent me this note about FANG this morning:

"We have input our higher 2018 WTI crude oil price estimates into our valuation model which results in a NAV of $145.03 per share which we have rounded to $145.00 for our new price target. We have moved our 2018 oil price estimate to be more in line with the recent futures markets. Our 2018 WTI crude price estimate moves from $46.25/bbl to $56.25/bbl. < My valuation of FANG is $146/share - Dan

We have also updated our 4Q 2017 estimates for actual WTI crude oil and Henry Hub natural gas prices. Accordingly our 4Q 2017 estimates for EPS/CFPS/EBITDA move higher from $1.50/$2.34/$241.8 million to $1.68/$2.81/$290.0 million. < My Q4 2017 operating CFPS estimate for FANG is $2.71 - Dan

The application of our higher 2018 WTI crude oil price estimates increases our 2018 projections of EPS/CFPS/EBITDA from $7.57/$11.71/$1,208.9 million to $7.69/$12.81/$1,323.3 million." < Still using $50 WTI oil price beyond Q1 2018, by operating cash flow per share estimate for 2018 is $12.10 - Dan



I think FANG is going to report a significant increase in proven reserves at 12-31-2017, which should increase John's NAV estimate quite a bit.

John is Roth Capital's top energy sector analyst. He is kind enough to send me all of his reports "hot of the press", which is great because he follows a lot of the companies in our model portfolios. It is always nice to have another analyst to compare notes with.