Diamondback Energy, Inc. (NASDAQ:FANG) is one of the Best Oil and Gas Stocks to Buy According to Analysts. On August 25, William Blair analyst Neal Dingmann began coverage of the company’s stock with an “Outperform” rating, as reported by The Fly. As per the analyst, Diamondback Energy, Inc. (NASDAQ:FANG)’s robust FCF as well as healthy financials offer capital allocation options, such as share buybacks. The company reported that its total Q2 2025 return of capital came in at $691 million, which represents ~52% of adjusted FCF from stock repurchases and the declared Q2 2025 base dividend.
During Q2 2025, Diamondback Energy, Inc. (NASDAQ:FANG) turned 108 operated wells to production in the Midland Basin and 8 gross wells in the Delaware Basin, with an average lateral length of 13,402 feet. Its FCF amounted to $1.2 billion, while adjusted FCF came in at $1.3 billion.
Diamondback Energy, Inc. (NASDAQ:FANG) also announced that its wholly-owned subsidiaries entered into a definitive agreement to sell 27.5% equity interest in EPIC Crude Holdings, LP to a wholly-owned subsidiary of Plains All American Pipeline, L.P. and Plains GP Holdings for ~$500 million in net upfront cash as well as further additional $96 million contingent cash payment due if the capacity expansion of EPIC Crude will get formally sanctioned before year-end 2027. Artisan Partners, an investment management company, released its Q2 2025 investor letter. Here is what the fund said:
“Our energy holdings Schlumberger and Diamondback Energy, Inc. (NASDAQ:FANG) were key detractors. Unlike most equity sectors that recovered a significant proportion of their early-April declines after reciprocal tariffs were paused, the rebound among energy stocks was muted. The sector has been held back by falling oil prices as concerns about the impact of tariffs and general macro uncertainty on oil demand drove the price of WTI crude oil below $60 in May, its lowest level in four years. Oil prices have generally been trending down since 2022. While we understand the short-term concerns weighing on the sector, our interest remains on the long-term economics and valuations of our individual portfolio companies. Diamondback Energy, which we purchased in Q42024, is an oil and gas producer operating in the Permian Basin of the southwestern US. When investing in oil and gas exploration and production companies, we are highly selective. Not only do producers have no control over the underlying commodity prices, but they frequently prioritize capital expenditures over cash flow. Diamondback’s core operating philosophy is that the low-cost producer in a commodity market wins. Diamondback has a strong cost profile that is primarily the result of a contiguous, high-quality acreage position in the Permian Basin. The company’s culture supplements the acreage position with drilling discipline and conservative business plans. Our thesis is simple: Diamondback is an efficient Permian operator committed to a strong balance sheet and shareholder distributions.”
While we acknowledge the potential of FANG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FANG and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center