Diamondback Energy (FANG)

[dan_s]

I have updated my forecast model for Diamondback and it will be posted to the EPG website late today.

I've gained quite a bit of confidence in my forecast for this one since adding it to our Sweet 16 on 1/1/2015, but the big acquisition of Brigham adds a bit of uncertainty. They do give some guidance for 2017 in their most recent presentation. After the acquisition closes, Diamondback's production should be ~65,000 BOE per day (~74% crude oil) and they expect to ramp up production by another 20,000 BOE per day by year-end. The Sweet 16 is all about "growth" and this company has strong production and proven reserve growth locked in. Production should grow 60% in 2017 and another 40% in 2018, based on the ten rig program I expect them to be running in just a few months.

Wall Street is "head-over-heals in love" with FANG, which is definitely worth something.

Extending my forecast through 2018, my valuation increases by $14.00/share to $130.00. First Call's price target is $124.33.