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Here's Why Diamondback Energy Could See 38% Production Growth Next Year

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Here's Why Diamondback Energy Could See 38% Production Growth Next Year

Canaccord Genuity said in a research note on Tuesday that it sees 38 percent production growth for Diamondback Energy Inc (NASDAQ: FANG) in 2017 to 58.4 million barrels per of oil equivalents per day, or MBoe/day, which is at the high end of the company's guidance range. The firm premised the expectation on having six rigs, one higher than its earlier estimate.

Analyst Sam Burwell noted that the company plans to add the fifth rig in Midlands in the coming week and its sixth in Delaware early next year. The company had estimated WTI prices of $45 for meeting the capital expenditure and had indicated that at current strip prices, it would not outspend cash low next year.

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Canaccord noted that the company's third-quarter volumes were very strong at 44.9 MBoe/day and it raised its 2016 production guidance to show sequential growth in the fourth quarter. Preliminary 2017 guidance was also above consensus and nearly topped the firm's very optimistic estimate, it noted.

Given the impressive guidance, the firm said the company continues to be one of the top performers in the Permian. According to the firm, the growth was made possible by a depth of quality inventory, top-tier corporate level capital efficiency and a sterling balance sheet.

Canaccord has a Buy rating on the shares of the company, while it raised its price target to $116 from $103.

At time of writing, Diamondback Energy shares were up 0.14 percent at $105.36.

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Latest Ratings for FANG

DateFirmActionFromTo
Jan 2021KeyBancMaintainsOverweight
Jan 2021KeyBancMaintainsOverweight
Dec 2020Morgan StanleyUpgradesEqual-WeightOverweight

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