Post 1Q26 Adjustments—FANG & VNOM

Research evidence excerpt

Post 1Q26 Adjustments—FANG & VNOM

Equity Research

Price Target Change — May 14, 2026

Exploration & Production

Our Call Hanwen Chang, CFA

FANG’s revised framework reflects a more constructive macro view and differentiated Equity Analyst | Wells Fargo Securities, LLC

Hanwen.Chang@wellsfargo.com | 212-214-8017

operational flexibility. While reduced buyback visibility remains debated, we view modest

growth & incremental deleveraging as disciplined capital allocation.

FANG—Capital Allocation Debate. While FANG’s decision to modestly accelerate activity

into a materially stronger oil macro appears well supported given its inventory depth,

operational flexibility, and ability to grow volumes with limited incremental capital,

investor focus has centered on the revised shareholder return framework. The removal

of a formulaic FCF return commitment reduces buyback visibility and introduces greater

discretion around capital allocation priorities.

In our view, stepping away from a formulaic buyback framework introduces signaling

risk, particularly if repurchases slow at higher share prices, leaving companies balancing

countercyclical discipline against perceived valuation signals. That said, FANG’s approach

remains disciplined, with modest growth and incremental FCF directed toward

deleveraging. We believe prioritizing balance sheet improvement post-Endeavor is a

reasonable use of capital and could ultimately enhance LT equity value.

Revised 2026 Plan. Mgmt materially increased FY26 oil production guide to 520+ mbbl/

d from 500-510 mbbl/d, while raising capex guide modestly to $3.9bn from $3.75bn. The

updated plan reflects more constructive macro view, as mgmt cited a meaningful global

supply disruption and tightening physical crude markets as justification to accelerating