Energy Prospectus

I just got off the FANG Q4 conference call. For now, I am holding my valuation at $162/share, but this one has a lot of upside if oil prices go where I think they are heading. I just want to see a full quarter post-merger with Energen, so that I can confirm some line items in my forecast/valuation model. Check out Stifel's valuation below.

From Derrick Whitfield received on Feb. 20:
Diamondback Energy, Inc. (FANG, $104.80, Buy; Target $201.00) - Announces strong quarter and provides encouraging 2019 outlook and synergy update -
Derrick Whitfield - We view the quarter and year-end release as positive. The positives include: i) strong Q418 production on higher than expected capex, ii) strong capital efficiency implied in 2019 guidance (bopd flat, capex down ~2%), iii) impressive synergy progress (70% of primary synergy value already captured), and iv) strong 2nd Bone Spring Shale results (implying potentially superior economics to WC-A in the area) in Pecos. The negatives include: i) slight miss on Q418 EBITDA (5.0% below consensus) and ii) higher than expected Q418 capex (9.0% above consensus). We caution investors to note the misses on EBITDA (oil and gas realizations) and capex were messaged by management. Net-net, we believe the strength of FANG's 2019 guidance and synergy update should far outweigh Q418 concerns.

TPH comments:

FANG Q4'18 Quick Look

Slight positive on synergies execution improving 2019 guidance; Q4 EPS missed on realizations

Sector: NAm E&P | Ticker: FANG | Recommendation: BUY | Target: $140 | Close: $104.80

EGN integration off to a strong start reflected in quick synergy wins in both the Midland ($215/ft achieved vs. $223/ft 2020 target) and Delaware ($55-60/ft achieved vs. $50/ft 2019 target). As a result, budget was tempered (to $2.7-3.0B from $2.7-3.1B; TPHe/Street $2.7B/$2.9B), despite increases to well count (to 290-320 from 280-320) and avg. lateral length (to 9,400ft from 9,200ft); production guide unchanged. A neutral Q4 (TPHe) includes better production (183mboepd vs. TPHe/Street 178/173; 130mbpd oil vs. TPHe/Street 125/121) for higher capex ($525MM vs. TPHe/Street $500MM/$482MM), but given conversations heading into earnings, spotlight may shine on realized pricing of $45.51/bbl (drove clean EPS miss; $1.21 vs. consensus $1.61). Driver is hedge protection that's currently out of the money, but the go-forward outlook is in-line with TPHe in 2019 (85-90% of WTI in Q1, 87-92% Q2, and 90-95% H2) and ahead of TPHe in 2020 (100% vs. TPHe 97%). Through this multi-year timeframe, we see the above (along with our assumptions on D&C activity) as generative of an average ~4% FCF yield, and supportive of average exit/exit production growth of ~15%. On the call, looking for detail around cost savings achieved thus far (and line of sight to incremental improvements), as well as color on the game plan for the CBP.