# Diamondback Energy (FANG)

Sector: Oil & gas exploration and production

| Field | Value |
|---|---|
| Price | $203.95 |
| Fair value (Analysts) | $220.00 |
| Discount to fair value | 7.3% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 1.88 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-11-02 (confirmed) |

## In short

The market fears that oil prices fall back after the Middle East conflict, and steady output with high free cash flow for debt cuts and buybacks can close the gap over two to four quarters.

## Themes and gap

- Themes: Power and energy (power-energy)
- Gap type: Can close (closable)
- Why: The Q3 2026 report on November 2, 2026 and the 2027 plan show how much cash Diamondback makes at the new oil prices.

## About

Diamondback Energy produces oil, natural gas and natural gas liquids in the Permian Basin of West Texas, mainly in the Midland Basin. In Q2 2026, it produced 1,018 thousand barrels of oil equivalent per day, of which 525 thousand barrels per day were oil. It became much larger after it bought Endeavor Energy Resources in 2024. Diamondback also controls Viper Energy, a listed company that owns mineral and royalty interests. Its results move mainly with the price of oil. It returns cash to shareholders with a base dividend and share buybacks.

## Thesis

The market prices Diamondback for the risk that oil prices fall back from their current high level. The conflict in the Middle East moved the global oil market into a deficit in 2026, and Diamondback's realized oil price rose to $96.82 per barrel in Q2 2026 from $63.23 a year earlier. In Q3 2026 it fell to $87.30. Its realized natural gas price in the Permian Basin was negative in Q2 2026. The Stephens family holders (SGF FANG Holdings), who received shares in the Endeavor purchase, sold 11 million shares in March 2026, and more sales can put pressure on the share price. For the gap to close, three things must be true. Diamondback must keep production at 1,000 thousand barrels of oil equivalent per day or more with capital spending of about $3.9 billion a year. It must keep its free cash flow high enough to cut debt and buy back shares, as in Q2 2026, when it cut debt by about $1.3 billion. Oil prices must stay high enough for strong cash flow after the conflict ends. The Q3 2026 report on November 2, 2026 gives the next test. The 2027 plan in February 2027 shows how much Diamondback can produce and return at the new oil prices. If these checks pass, the gap can close over the next two to four quarters. The main reason it may not close is a sharp fall in oil prices, which Diamondback cannot control.

## Checkpoints

- Nov 2, 2026: Q3 2026 results: free cash flow and debt. Status: Pending. Watch: Oil production within the 517 to 527 thousand barrels per day guidance, capital spending within $950 million to $1,050 million and lower net debt pass; lower production or higher spending fails.
- Feb 2027 (estimate): 2027 plan: production, capital spending and returns. Status: Pending. Watch: A 2027 plan with flat or higher oil production at capital spending near $3.9 billion passes; higher spending for the same output or a cut in shareholder returns fails.

## Balance sheet

- Cash: $462M
- Debt: $12.8B
- Net debt: $12.3B
- Undrawn credit line: $3.0B, to June 2031
- Debt due within 12 months: $1.5B
- Last debt due: 2064

Diamondback funds itself mainly with senior notes, and its consolidated figures include Viper Energy. At June 30, 2026, consolidated total debt was $12.77 billion and net debt was $12.30 billion, down about $1.3 billion and $1.6 billion from March 31, 2026. Debt due within 12 months was $1.55 billion. Nothing was drawn on its $3.0 billion revolving credit facility, which matures in June 2031, so standalone liquidity was $3.39 billion with standalone cash of $385 million. Its last notes mature in 2064. In April 2026, it bought back most of its notes due 2051 and 2052. Consolidated adjusted EBITDA was $6.94 billion in the first half of 2026. The board doubled the buyback authorization to $16.0 billion in July 2026, and about $9.9 billion remained.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/1539838/000153983826000142/fang-20260630.htm
- https://www.sec.gov/Archives/edgar/data/1539838/000153983826000137/diamondbackex991-8x3x26.htm
- https://www.sec.gov/Archives/edgar/data/1539838/000110465926074049/tm2617786d1_8k.htm

## Recent events

- 2026-10-08: Diamondback said that its average realized oil price was $87.30 per barrel in Q3 2026, or $85.89 with hedges. Its realized natural gas price was $1.12 per Mcf. It expects a net loss of $97 million on cash settlements of derivatives for the quarter.
- 2026-09-29: Diamondback and SGF FANG Holdings amended their stockholders agreement. The Stephens holders can now name two directors while they own 10% to 25% of the shares, and none below 10%. Two directors, Darin Holderness and Lance Robertson, left the board under this agreement.
- 2026-08-03: Diamondback reported Q2 2026 results. Production passed 1.0 million barrels of oil equivalent per day for the first time. Net income was $1,882 million, or $6.65 per share, and free cash flow was $2.3 billion. Total debt fell by about $1.3 billion to $12.8 billion. The board doubled the buyback authorization to $16.0 billion, and Diamondback raised its 2026 production guidance.
- 2026-06-12: Diamondback raised its revolving credit facility to $3.0 billion from $2.5 billion and extended its maturity to June 12, 2031, at a lower interest rate.
- 2026-04-10: Diamondback priced tender offers for all of its 4.400% senior notes due 2051 and 4.250% senior notes due 2052. Holders tendered most of the notes, and the amounts outstanding fell to $104 million and $111 million.
- 2026-03-10: SGF FANG Holdings, owned by the Stephens family, sold 11 million Diamondback shares in a secondary offering for gross proceeds of about $1.9 billion. Diamondback received no money from the sale.

## Risks

- High: Results depend on the price of oil. Prices rose in 2026 because of the conflict in the Middle East. If the conflict ends or OPEC+ adds supply, oil prices can fall quickly and cut cash flow.
- Medium: Local natural gas prices in the Permian Basin, such as at the Waha Hub, are often far below national prices. Diamondback's realized gas price was negative $2.15 per Mcf in Q2 2026. Low gas prices reduce income and can limit oil production.
- Medium: The Stephens holders still own a large stake from the Endeavor purchase. More large sales of shares can weigh on the share price.
- Low: Diamondback drills in one basin. New rules on emissions, water disposal or earthquakes in the Permian Basin can raise costs for all its wells.

## Links

- Page: https://picks.kamadorueda.com/company/FANG/
- History of changes: https://picks.kamadorueda.com/company/FANG/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/FANG.json

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