UBS Affirms Buy Rating on Diamondback Energy (FANG) Following VNOM Deal

On June 4, analysts at UBS reiterated a ‘Buy’ rating and a $163 price target on Diamondback Energy, Inc. (NASDAQ:FANG).

The analysts reiterated the bullish stance after the company’s subsidiary Viper Energy Partners (NASDAQ:VNOM), announced plans to acquire Sitio Royalties in an all-equity transaction. The deal is expected to be completed by the third quarter of 2025. This will help Viper grow its land holdings in the Permian Basin by adding 25,300 acres.

A crowded drilling platform in the Western Canada Sedimentary Basin, the workers handling oil and natural gas equipment.

The transaction will be important to Diamondback Energy in enhancing Viper Energy Partners’ cash balance. It is expected to increase cash available for distributions by 8% to 10%. The acquisition will also reduce Viper Energy’s breakeven costs by about $2 per barrel, bringing it below $20 WTI. Following the acquisition, Viper Energy Partners’ production will increase by mid-single digits for the fiscal year 2026, even on stable commodity prices.

Sitio Royalties acquisition aligns with UBS’s positive outlook for Diamondback Energy as part of its strategic initiative and partnerships. Additionally, the acquisition underscores the company’s strategic adjustments and market responses.

Diamondback Energy, Inc., is an independent oil and natural gas company focused on unconventional, onshore oil and natural gas reserves in the Permian Basin of West Texas. It engages in acquiring, developing, exploring, and exploiting these resources.

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Disclosure: None.