Target Price Raised on Texas Oil & Gas Firm

April 29, 2019

The Energy Report

Source: Streetwise Reports   04/25/2019

The factors leading to the upgrade were addressed in a ROTH Capital Partners report.

In an April 23 research note, analyst John White reported that ROTH Capital Partners increased its target price on Diamondback Energy Inc. (FANG:NASDAQ) to $166 per share from $145 after revising its model on the company. In comparison, Diamondback’s current share price is around $111.03.

White explained that ROTH’s changes, which resulted in the $21 price target boost, are fourfold. They are the inclusion of the Energen reserves, the accounting for Diamondback’s “hefty extensions and discoveries,” the upward adjustments to its West Texas Intermediate crude oil price estimates and the downward revisions of its Henry Hub natural gas price projections.


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Regarding future WTI prices, ROTH raised its short-term forecasts to $64 a barrel ($64/bbl) from $50 for Q2/19; to $62/bbl from $52 for Q3/19; and to $65/bbl from $55 for Q4/19. It increased its longer-term, 2020 and beyond, projection to $60/bbl from $55.

As for Henry Hub prices for the rest of 2019, ROTH lowered its short-term estimates to $2.50 per million British thermal units ($2.50/MMBtu) from $2.70 for Q2/19; to $2.60/MMBtu from $2.75 in Q3/19; and to $2.80/MMBtu from $2.75 in Q4/19. It kept its longer-term, 2020 and thereafter, forecast of $2.70/MMBtu.

White also noted that the investment banking firm revised its Q1/19 estimates on Diamondback by using actual oil and gas prices during the quarter. These led to decreases in earnings per share, to $1.38 from $2; in cash flow per share, to $3.45 from $3.91; and to EBITDA, to $652.1 million from $731.3 million.

ROTH maintained its Buy rating on Diamondback Energy.

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Disclosures from ROTH Capital Partners, Diamondback Energy Inc., Company Note, April 23, 2019

Regulation Analyst Certification (“Reg AC”): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

ROTH makes a market in shares of Diamondback Energy, Inc. and as such, buys and sells from customers on a principal basis.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.

( Companies Mentioned: FANG:NASDAQ,
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