Diamondback Energy, Inc. (FANG) | Investment Case

1. Company Snapshot

1.a. Company Description

Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas.It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico.As of December 31, 2021, the company's total acreage position was approximately 524,700 gross acres in the Permian Basin; and estimated proved oil and natural gas reserves were 1,788,991 thousand barrels of crude oil equivalent.

It also held working interests in 5,289 gross producing wells, as well as royalty interests in 6,455 additional wells.In addition, the company owns mineral interests approximately 930,871 gross acres and 27,027 net royalty acres in the Permian Basin and Eagle Ford Shale; and owns, operates, develops, and acquires midstream infrastructure assets, including 866 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin.Diamondback Energy, Inc.

was founded in 2007 and is headquartered in Midland, Texas.

Show Full description

1.b. Last Insights on FANG

Diamondback Energy's recent performance has been driven by strong quarterly earnings, with Q2 earnings of $2.67 per share beating estimates. The company's revenue jumped 48% in Q2. Additionally, Diamondback Energy continues its cycle of acquisitions and rapid debt reduction, with recent cash raises generating nearly $1 billion. Management targets a debt ratio reduction from 1.5 to a long-term goal of 1.0. The company's strategy of acquisitions and debt reduction is expected to drive growth. (Source: company's Q2 earnings release and investor presentations)

1.c. Company Highlights

Last Price	158.6
Change Percentage	-0.57%
Open	159.64
Previous Close	159.51
Market Cap ( Millions)	46112
Volume	1840384
Year High	180.91
Year Low	114
M A 50	145.64
M A 200	143.41

FCF Yield	0.96%
Dividend Yield	2.52%
ROE	10.89%
Debt / Equity	41.55%
Net Debt / EBIDTA	149.14%
Price To Book	1.18
Price Earnings Ratio	10.97
Price To FCF	104.33
Price To sales	3.01
EV / EBITDA	5.77

2. Diamondback Energy's Q3 2025 Earnings: A Closer Look

Diamondback Energy reported a strong third quarter in 2025, with actual EPS coming in at $3.08, beating analyst estimates of $2.94. The company's financial performance was solid, with a 36% reinvestment rate at mid-$60s oil prices. Diamond's focus on capital efficiency and disciplined spending is reflected in its ability to maintain a strong balance sheet, with a low 'Net Debt / EBITDA' ratio of 0.02.

Publication Date: Nov -05

                                    📋 Highlights
                                    Reinvestment Rate:
                                                Maintained 36% reinvestment rate at mid-60s oil prices, prioritizing disciplined capital allocation.
CapEx Guidance:
                                                $925 million Q4 CapEx target reflects shift to maintenance mode with 510 mbo/d oil production baseline.
Efficiency Gains:
                                                Reduced well costs by 20% despite steel tariffs, enhancing drilling efficiency and lowering break-even costs.
Gas Transportation Strategy:
                                                70% of gas to Waha now, reducing to 40% by 2026 via Whistler, Blackcomb, and Hugh Brinson pipelines.
Core Inventory:
                                                5,000–5,500 sub-40 type core locations, expanding with co-development of Upper Spraberry and Wolfcamp D zones.

                                

Financial Performance

The company's revenue growth is expected to be modest, with analysts estimating a 0.5% growth rate for the next year. Diamondback's 'P/E Ratio' of 9.64 and 'P/S Ratio' of 2.64 indicate that the stock is reasonably valued, considering its growth prospects. The company's 'ROE (%)' of 10.89 and 'ROIC (%)' of 6.18 suggest a strong return on equity and invested capital.

Operational Highlights

During the quarter, Diamondback continued to focus on its development style, which has been a key factor in its success. The company is co-developing all zones in the Midland Basin, and its well productivity per section has been increasing. As Kaes Van't Hof mentioned, "we famously moved to co-development in 2019. Now we're codeveloping all zones in the Midland Basin." This approach has resulted in more oil per section at a lower cost structure, leading to higher returns.

Guidance and Outlook

The company provided guidance for the fourth quarter, with a CapEx of $925 million, which is expected to result in a relatively stable production level. Diamondback's 'yellow light' scenario, indicating a cautious outlook due to the current macro environment, is a reflection of the industry's uncertainty. However, the company is well-positioned to navigate this environment, with a strong balance sheet and a focus on capital efficiency.

Valuation and Dividend

The company's 'Dividend Yield (%)' of 2.8% is attractive, considering its growth prospects and financial stability. The 'EV/EBITDA' ratio of 3.76 is relatively low, indicating that Diamondback's enterprise value is reasonable compared to its EBITDA. Overall, Diamondback's strong financial performance, disciplined spending, and attractive valuation make it an interesting investment opportunity in the energy sector.

3. NewsRoom

Market Today: Deal Talks, Retail Wins, AI Chips, and Crypto Volatility

Dec -02

Source: gurufocus.com

The Next 3 Years Could Make Or Break Portfolios - Here's My Plan

Dec -02

Source: seekingalpha.com

Artisan Partners Limited Partnership Has $97.39 Million Stock Position in Diamondback Energy, Inc. $FANG

Nov -21

Source: defenseworld.net

End the Year Strong With These 3 Comeback Champions

Nov -19

Source: marketbeat.com

The Best Energy Stock to Hold in Uncertain Times

Nov -19

Source: fool.com

Banco Bilbao Vizcaya Argentaria S.A. Sells 13,750 Shares of Diamondback Energy, Inc. $FANG

Nov -18

Source: defenseworld.net

My Most Contrarian Call Yet: Energy Is About To Rewrite Wall Street's Playbook

Nov -17

Source: seekingalpha.com

Top Wall Street analysts are bullish on these 3 dividend stocks

Nov -16

Source: cnbc.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.80%)

6. Segments

Upstream

Expected Growth: 15.8%

Diamondback Energy's upstream segment is driven by its strong operational performance, increasing crude oil production, and strategic acreage acquisitions, positioning it for long-term growth.

7. Detailed Products

Crude Oil

Diamondback Energy, Inc. is an independent oil and natural gas company that focuses on the acquisition, development, and exploration of unconventional oil and natural gas properties. The company's primary product is crude oil, which is extracted from its properties in the Permian Basin.

Natural Gas

In addition to crude oil, Diamondback Energy, Inc. also produces natural gas, which is extracted from its properties in the Permian Basin. The company's natural gas production is primarily composed of methane, with small amounts of natural gas liquids.

Natural Gas Liquids (NGLs)

Diamondback Energy, Inc. also produces natural gas liquids (NGLs), which are extracted from its properties in the Permian Basin. NGLs are a group of hydrocarbons that are liquefied at the surface and include ethane, propane, butane, and natural gasoline.

8. Diamondback Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Diamondback Energy, Inc. is medium due to the availability of alternative energy sources such as wind and solar power.

Bargaining Power Of Customers

The bargaining power of customers for Diamondback Energy, Inc. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Diamondback Energy, Inc. is medium due to the company's dependence on a few key suppliers for drilling and extraction services.

Threat Of New Entrants

The threat of new entrants for Diamondback Energy, Inc. is low due to the high barriers to entry in the oil and gas industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Diamondback Energy, Inc. is high due to the competitive nature of the oil and gas industry, with many established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	29.03%
Debt Cost	3.95%
Equity Weight	70.97%
Equity Cost	13.43%
WACC	10.67%
Leverage	40.91%

11. Quality Control: Diamondback Energy, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

EOG Resources

A-Score: 6.4/10

Value: 5.9

Growth: 5.7

Quality: 7.8

Yield: 8.0

Momentum: 2.5

Volatility: 8.3

1-Year Total Return ->

Diamondback Energy

A-Score: 6.2/10

Value: 7.4

Growth: 7.8

Quality: 6.3

Yield: 7.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

Devon Energy

A-Score: 6.0/10

Value: 8.1

Growth: 5.2

Quality: 5.9

Yield: 8.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

Hess

A-Score: 5.7/10

Value: 3.6

Growth: 7.1

Quality: 6.6

Yield: 2.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

ConocoPhillips

A-Score: 5.6/10

Value: 6.0

Growth: 5.1

Quality: 6.5

Yield: 6.0

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

Oxy

A-Score: 5.0/10

Value: 6.9

Growth: 5.2

Quality: 5.1

Yield: 3.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

35.52%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.67%

Diamondback Energy, Inc. - US25278X1090

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on FANG

1.c. Company Highlights

Higher Growth

Better Quality

Medium Volatility

Revenues Beats

Earnings Beats

Strong Momentum

Higher Yield

Expensive

Earnings Miss

Average Quality

Average Yield

Stable Momentum

Weak Momentum

2. Diamondback Energy's Q3 2025 Earnings: A Closer Look

Financial Performance

Operational Highlights

Guidance and Outlook

Valuation and Dividend

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.80%)

6. Segments

Upstream

Expected Growth: 15.8%

7. Detailed Products

Crude Oil

Natural Gas

Natural Gas Liquids (NGLs)

8. Diamondback Energy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Diamondback Energy, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

158.6$

Current Price

158.6$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA