Diamondback Energy (FANG) Valuation Update - Dec 17

[dan_s]

I have updated my forecast/valuation model for FANG. It will be posted to the EPG website this afternoon.
I broke out my 2025 forecast by quarter and I added my initial forecast for 2026.

My valuation increases by $3 to $238.

TipRanks: "In the last 3 months, 23 ranked analysts set 12-month price targets for FANG. The average price target among the analysts is $214.82." < The 23 price targets range from $185 to $255. 20 of them rate it a BUY. 7 updates in December are all BUYs.

At the time of this post FANG was trading for $157.

Diamondback closed the "Mega Merger" with Endeavor Energy on September 10th.
> Q4 2024 will be the first full quarter of combined results. Production will be up BIG from 571,098 Boepd in Q3 to ~845,000 Boepd in Q4.
> Production mix in Q4 should be approximately 56% crude oil, 21.5% natural gas and 22.5% NGLs.
> Higher natural gas and NGL prices will more than offset realized oil price being down about $5/bbl.
> Diamondback's Operating Cash Flow should be up $700 million from Q3 to Q4.
> Free Cash Flow should be over $1 billion per quarter going forward. This is a "Cash Flow Machine".
> The Wall Street Gang's love for FANG will increase with operating cash flow going from $6.4 billion in 2024 to $9.6 billion in 2025 and probably over $11 billion in 2026.

The Mega Merger is also very good for Viper Energy (VNOM).