Diamondback Energy

Great host and guest.

My question is on Diamondback Energy.

Are you a buyer of energy companies at today's price or would you wait for a pullback and at what price? Thank you s- for taking my call.

Thank you for the question.

They'd be a buyer.

Uh, uh, we own Oxy, and Berkshire Hathaway's a big owner of Oxy as well.

And, uh- Uh, and, and then, uh, we, we own, uh, uh, uh, Diamondback Energy.

Uh, and, and again, all these companies are practicing capital discipline.

So we've found, you know, we find companies during this, during this quarter that we liked.

Um, you know, we just bought Diamondback Energy.

We just bought ASML, that's, um, a, a, a lithographic company over in, over in the Netherlands.

Cheap-

Uh, people said, "Well, that's kinda strange." We just bought 'em.

Uh, but, but, uh, we like, we like what we see there.

And if you look at, you know, like I was saying, we just bought Diamondback Energy, just bought.

But on the sector, if I had to pick out one sector that would say that find the best buys for cash flow and dividends and everything, it's going to be energy.

Other producers have shown that they can respond quickly to local gas economics, although the larger question is how much they affect basin-wide production.

Diamondback Energy describes gas as additive to its value proposition, rather than a core focus.

Permian Resources, meanwhile, has shown it will curtail wells with a high gas-to-oil, or G-O-R, ratio.

When Waha prices turned sharply negative in Q2 2026, the company cut gas production by about 20%.

I'm looking to get in the energy service field.

I already own PSX and Fang, Diamondback Energy, and I've never heard of this company, and I was looking at it in some asset allocations in an ETF,

and it looks

pretty interesting.

You're also seeing these sort of private deals, right, where an individual data center arranges for its own power.

And you're seeing a lot of the natural gas producers that I cover, names like EQT, Expand Energy, even some of the Diamondback Energy, for example, in the Permian Basin, They're all working on these deals to create campuses, basically, to have a data center that would be powered by electricity generated by their natural gas, their produced natural gas.

And so I think you're going to see a lot more of that.

So on the natural gas side, that's been a game changer.

The group repaid $4.1 billion, or 19% of CFOA, following the outsized $7.9 billion repaid in Q1.

Occidental Petroleum, $1.8 billion, and Diamondback Energy, $1.2 billion, accounted for more than 70% of Q2 repayments, while Permian Resources and Devon Energy reduced debt by another $550 million and $500 million respectively.

Share repurchases increased 29% to $2.3 billion, or 10% of CFOA.

Despite the quarterly increase, buybacks remain well below their 2023 level as a percentage of cash flow, falling from 18% to 10% in Q2.

We have buys or four stars opinions on all of those.

Uh, and, and some select upstream names like EOG Resources, uh, we have a strong buy or five stars, and, uh, Diamondback Energy, ticker FANG, we have a four stars opinion.

Right.

I got most of those, Marathon, Valero, EOG, FANG.

Capital spending per BOE of production ranged from about $9 per BOE to $17 per BOE in Q2.

Major Permian producers such as Diamondback Energy, Occidental Petroleum and Devon Energy were near the lower end of the cost spectrum, indicating the high quality of their Permian portfolios.

ConocoPhillips, the largest E&P, spent nearly $5 per BOE more because of international development efforts.

Permian producer Ring Energy, which is one of the highest liquids weightings in the peer group, had the highest costs.