FANG Price Target Raised

[dan_s]

This morning (8/8) Roth Capital raised their price target for Diamondback Energy (FANG) to $104. Below are comments from John White, Roth's top energy analyst. - Dan

Our net asset value and target price are based on proved and probable
reserves, financial position, historical and expected drilling results. After
increasing our proved and probable reserve estimate for the recent acquisition
and estimated share count for the recent equity offering our price target is
increased to $104 and our rating is changed from Neutral to Buy.

With recent improvements in crude oil prices, FANG accelerated its drilling and
completion activity, adding its fourth drilling rig last month with the intention
of a fifth rig, should commodity prices strengthen further. It also has plans to
complete 20 drilled but uncompleted wells by 4Q 2016.

FANG also completed its first three wells in Howard County, yielding promising
results in both the Wolfcamp A and Wolfcamp B. Two of the three completed
wells posted strong results, with Phillips-Hodnett Unit 1WA and Phillips-
Hodnett 1WB achieving an average 30-day initial production peak of 1,374
BOE per day with 89% oil and 1,225 BOE per day with 83% oil respectively.
These strong well results encouraged FANG to increase its 2016 production
guidance by 11%, from a range of 34,000 to 38,000 BOE per day to a range
of 38,000 to 40,000 BOE per day.

Additionally, FANG announced its strategic entrance into the Southern
Delaware Basin earlier in July 2016, by agreeing to acquire approximately
19,180 net acres and associated production for $560 million purchase price.
This acquisition was funded by a recent secondary equity offering.

Consistent with management’s focus of developing more cost efficient drilling
techniques, FANG has also lowered its full year LOE guidance range from
$5.50 to $6.50 to a range of $5.50 to $6.25.

Updating for actual oil and gas prices during 2Q 2016 of $46.64/bbl for oil and
$2.25/MMBtu for natural gas, together with higher production guidance, our
estimates for full year 2016 of EBITDA/CFPS/EPS moves from $249.7 million/
$3.33/$(0.03) to $283.2 million/$3.43/$(2.08).