Diamondback Energy: Increased Geopolitical Tensions Raise Free Cash Flow Outlook

Harrison Schwartz
08-30

Summary

  • Diamondback Energy is poised for growth, supported by its merger with Endeavor, which will enhance its position in the Permian Basin.
  • The oil market remains range-bound, but geopolitical tensions and low US supply growth could drive prices higher, benefiting FANG's free cash flow.
  • FANG's valuation is almost reasonable compared to peers, with potential upside from higher oil prices and increased production capacity post-merger.
  • US oil producers like FANG offer a hedge against geopolitical risks and inflation, making them a strategic addition to portfolios.

Pla2na

The energy market has been among the few to be eerily quiet in 2024. While stocks face heightened volatility and gold surges to consecutive all-time highs, crude oil remains stuck in the ~$70 to ~$80 range since the end of 2022. Geopolitical turbulence

FANG's Valuation Accounts for Merger Synergy

Data by YCharts

Updated Oil Price Macroeconomic Outlook

Data by YCharts

The Bottom Line

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