Diamondback Energy (FANG) Valuation Update - May 6

[dan_s]

At the time of this post FANG was trading at $132.73.

I have updated my forecast/valuation model for the Company's strong Q1 results and updated guidance.

I have lowered my valuation by $6 to $214 per share just because I think a lower valuation multiple from 6.5 to 6.25 X annualized operating cash flow is justified. This is just based on the Company's decision to "tap the brakes a bit' and lower production forecast. Lower D&C CapEx will actually increase free cash flow. Waiting for oil prices to increase before ramping up production is good business.

Diamondback's oil hedges are all Puts with strike prices of $54 to $58, so it does have downside protection should oil prices decline much further.

Natural gas hedges for the remainder of 2025 are collars with $2.49 floors and $5.28 ceilings.

Their realized natural gas price did improve quite a bit from Q4 to Q1; a nice surprise.

Production mix is now 55.5% crude oil, 22.8% natural gas and 21.7% NGLs.