Diamondback Energy rated Buy at Roth after pre-reporting Q2 oil price realizations
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Diamondback Energy (NASDAQ:FANG) +2.5% in Tuesday's trading as preliminary Q2 unhedged oil price realizations topped expectations and Roth Capital reiterated its Buy rating on the stock.
In an 8-K filing, Diamondback (FANG) reported Q2 average unhedged realized prices of $71.33/bbl of oil, $0.94/Mcf of natural gas and $16.42/bbl of natural gas liquids, resulting in a total equivalent unhedged realized price of $46.31/boe.
Roth analyst Leo Mariani said Diamondback's (FANG) oil price realizations were generally in-line with his estimates, slightly above its $71.04 estimate and representing a $2.21 discount to WTI crude for the quarter.
Diamondback's (FANG) Q2 unhedged gas price was below Mariani's $1.18/Mcf estimate and unhedged NGL price was 15% below the analyst's estimate.
The company also pre-reported a Q2 cash hedging loss of $17M from derivatives, higher than Mariani's forecast for a $9M loss.
The analyst also noted Diamondback's (FANG) reported diluted share count of ~180.4M in Q2 implied a repurchase of slightly more than 1M shares, well below the Q1 buyback level of ~2.5M shares and a bit below expectations.
Mariani maintained his Buy rating and $158 price target on Diamondback (FANG), saying the stock trades at a discount to larger Permian Basin peers, has very low capital and operating costs, has high returns of capital and a strong balance sheet.
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