Diamondback (NASDAQ:FANG) has successfully reduced drilling and completion (D&C) costs to $600 per foot, though Citi analysts expect that further cost reductions may taper off. With an impressive gross profit margin of 76.35% and strong revenue growth of 18.25% over the last twelve months, well productivity in the Midland region remains a strong point for Diamondback. This continued improvement has been credited to the utilization of Halliburton’s (NYSE:HAL) fracture optimization software, adjustments to completion techniques, and successful exploration of different geological zones.The analysts’ reiteration of the Neutral rating and price target reflects their updated analysis of Diamondback’s operational adjustments and strategic focus, as well as the company’s consistent performance in enhancing well productivity in a key oil-producing region. For deeper insights into Diamondback’s valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial health and future potential.
The Citi team estimates that Diamondback’s fourth-quarter cash flow per share (CFPS) will be $7.67, slightly above the current consensus average of $7.57. The company, trading at a P/E ratio of 10.02 and maintaining an attractive 4.69% dividend yield, has sustained dividend payments for seven consecutive years. Looking forward to 2025, the analysts suggest that Diamondback’s management might adjust their strategy from slight growth to a focus on maintaining current production levels. This shift is anticipated to prioritize free cash flow (FCF) generation and per-share metrics, potentially resulting in a capital program around $4.1 billion and oil production levels between 470 and 480 thousand barrels of oil equivalent per day (mboe/d).
Diamondback has successfully reduced drilling and completion (D&C) costs to $600 per foot, though Citi analysts expect that further cost reductions may taper off. Nonetheless, well productivity in the Midland region remains a strong point for Diamondback. This continued improvement has been credited to the utilization of Halliburton’s (HAL) fracture optimization software, adjustments to completion techniques, and successful exploration of different geological zones.
The analysts’ reiteration of the Neutral rating and price target reflects their updated analysis of Diamondback’s operational adjustments and strategic focus, as well as the company’s consistent performance in enhancing well productivity in a key oil-producing region.
In other recent news, Diamondback Energy has been the subject of several significant analyst reviews and operational developments. JPMorgan analysts maintained an Overweight rating on the stock, emphasizing the positive impact of efficiency gains and cost reductions on the company’s financial outlook. The firm also highlighted Diamondback Energy’s strong productivity trends which could further enhance capital efficiency.
On the other hand, CFRA upgraded Diamondback Energy from Hold to Buy, citing the company’s current valuation as a buying opportunity. The firm also adjusted the 12-month target price for Diamondback Energy, taking into account a projected operating cash flow multiple for 2025.
Roth/MKM reiterated its Buy rating on Diamondback Energy, maintaining a price target of $212.00 per share. The firm’s positive outlook on the company is based on its status as a low-cost producer in the Permian Basin, its efficient capital and operational costs, strong returns of capital, and a healthy balance sheet.
Piper Sandler maintained an Overweight rating on the company, citing a positive rate of change in well productivity and a core inventory duration that contributes to a lower recycle ratio relative to its peers.
These recent developments highlight Diamondback Energy’s commitment to cost efficiency, shareholder value, and resilience in the face of broader market challenges.
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