Diamondback Energy (NASDAQ: FANG) is one of the most successful energy stocks of the past few years, rising over 300% since it went public in 2012. The company is a Permian Basin-focused exploration and production company with much of its operations concentrated in the Delaware sub-basin of the Wolfcamp and Bone Spring formations.
With continued domestic oil production growth, Diamondback stands to benefit from several aspects of the production business. The company has a well-balanced portfolio of mostly oil and natural gas liquids-rich assets with the capacity to increase production through optimization projects and strategic investment. Diamondback also has a sizable portfolio of acquisition and divestiture opportunities which provides even more upside potential.
Diamondback Energy maintains a low-cost structure thanks to its efficient management techniques and its laser-like focus on improving operational efficiency. Its natural gas operations are mainly concentrated in the Permian Basin, where it has assembled a large, contiguous acreage position, which is well-positioned to capitalize on the strong economies of scale that come with accessing multiple fields from a single location. This strategy has resulted in strong organic growth in production, as well as cost savings from reduced surface access costs.
In addition, Diamondback has an advantage in the Permian due to its access to the extensive pipeline system which has enabled it to move its product to market faster and cheaper than other operators. The company also has access to competitively priced midstream and downstream service providers, enabling it to further reduce costs. By utilizing well-orchestrated operational and investment strategies, the company has been able to remain competitive in a tough market.
The combination of a focus on efficiency, access to low-cost midstream assets, and an attractive portfolio of assets provides Diamondback Energy an edge in the energy sector. With a well-defined strategic plan and a team of experienced executives, the company has achieved impressive results and continues to be one of the leading players in the energy sector.
