Can Diamondback Energy Weather The Slump In Oil Prices?

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About: Diamondback Energy, Inc. (FANG)
by: Sarfaraz A. Khan
This article is exclusive for subscribers.
Sarfaraz A. Khan
Energy, commodities, macro, long only
Summary

Oil prices could average in the mid-$50s in 2019 which will hurt Diamondback Energy's earnings and cash flows.

Diamondback Energy's production mix is heavily tilted towards crude oil and it hasn’t hedged a vast majority of oil production for 2019.

However, Diamondback Energy is targeting 28% growth in production and has shown that it can turn profits in a $50 a barrel oil price environment.

The company lives within its cash flows and has a solid balance sheet with a debt-to-equity ratio of just 34%.

The dip in oil prices is going to hurt Diamondback Energy (FANG) which is one of Permian Basin's leading operators. However, the Midland, Texas-based oil producer is well positioned to weather the slump,