Diamondback Energy Inc: 2Q26 Preview - Cruisin‘ Through Green Lights

Research evidence excerpt

Diamondback Energy Inc: 2Q26 Preview - Cruisin‘ Through Green Lights

port the Barnett developments later this year. Against this backdrop, we Q1 4.24 4.24 0 4.23

forecast oil volumes growing to 527mbopd in 4Q26 and 535mbopd in FY27. Q2E 5.59 5.13 -8 6.17

Q3E 4.46 3.72 -17 4.81

Barnett. We look for another Barnett update, with delineation activity Q4E 4.08 3.85 -6 4.55

accelerating in 2H26. We see FANG continuing to focus on acreage trades to block 12/26E 18.38 16.95 -8 19.24

up 3- and 4-mile laterals in the near-term. On costs, improvements are expected to 12/27E 16.89 14.57 -14 17.14

be more of a step shift when the asset enters development mode, through 12/28E 15.70 15.35 -2 17.63

continuous pumping and simulfrac, rather than a quarter to quarter improvement. Josh Silverstein

Financial Update. After adjusting its prior formulaic capital returns plan to a Analyst

josh.silverstein@ubs.com

flexible format with 1Q26 earnings, we see FANG continuing to prioritize the

+1-212-713 3513

balance sheet for the rest of 2026. With this, we see FANG reaching its $10Bn net

debt target in 3Q26. While this likely includes a cash build in 3Q26, we see Peyton Dorne

FANG taking out the outstanding 2026 maturities that come due in 4Q26, before Analyst

peyton.dorne@ubs.com

it targets a larger debt reduction for pre-2030 maturities in 2027.

+1-212-713 4359

Updating Estimates and PT. We lowered our FY26/FY27 WTI forecast to $79/ William Barber

$71/bbl and our FY26 HH forecast to $3.75. Our FY26/FY27 Adj. EBITDAX Associate Analyst

forecasts decrease by 5%/6% to $12.20/$11.62Bn. We increase our PT multiple william.barber@ubs.com

0.25x to 6.5x as our oil deck is now in line with strip, but our PT decreases from +1-212-713 5553

$246 to $243 on the reduced price deck.