Diamondback Energy (FANG)

Author

Yimin Xu
November 21, 2024

Hi YXI friends,

Today, we are examining FANG - not Facebook, Apple, Netflix, and Google, but Diamondback Energy. Earlier this week, we identified Diamondback Energy as a standout in its cohort, with attractive growth metrics and potential for trade setups.

Here, we will take a close look at Diamondback’s Q3 performance, valuation, and price technicals, with a trade idea at the end.

Table of Contents

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. A Permian Basin Pure-play

Diamondback Energy operates exclusively in the Permian Basin. The Permian Basin is the largest oil producing region in the US, located in western Texas and southeastern New Mexico. The U.S. Geological Survey estimates the Delaware Basin alone holds 46.3 billion barrels of oil and 281 trillion cubic feet of natural gas.

The Permian Basin is divided into three main sections: Midland Basin, Central Basin Platform, and Delaware Basin. Diamondback’s operations focus on the Midland and Delaware Basins, with approximately 870,000 net acres under its belt. In Q3 2024, the company reported 321.1 Mbo/d (thousand barrels of oil per day) of production, expected to increase to 473 Mbo/d in Q4 2024.

2. This Year Has Been A Turnaround In Growth

Diamondback’s revenue primarily depends on its production of oil, natural gas, and natural gas liquids (NGLs), multiplied by their respective market prices.

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