Overview
This week's pick is Diamond Energy Inc. (FANG), an independent oil and natural gas company based in Midland, Texas. Specializing in onshore reserves, particularly in the Permian Basin of West Texas, Diamondback's recent merger with Endeavor Energy has set It up as one of the largest pure-play operators in the area. Diamondback’s local US focus allows the company to maintain a lower cost structure and higher operational efficiency than many of its industry peers.
Operations
Diamondback’s business model is far from flashy. The company centers on a disciplined “maintenance-level” production strategy, targeting approximately 500-510 MBO/d, meaning they consistently produce 500 to 510,000 barrels of oil per day. This approach has led to $5.9 billion in FCF over the last fiscal year and has increased their dividend yield to roughly 2.4% over the same period. Even if oil prices drop to $60 per barrel, their understated production strategy will continue to generate billions in cash. Additionally, the company has an active $8.0 billion share buyback program, with $2.3 billion available as of February 20, 2026, to continue to repurchase shares, ultimately reducing the total share count and increasing the value of remaining holdings for investors.
Geopolitical Implications
The ongoing instability in the Middle East has created significant volatility in global energy markets. The conflict involving the US, Israel, and Iran has widened the spread between Brent (the international crude oil price standard) and WTI (West Texas Intermediate; the American crude oil price standard). While Brent prices are more sensitive to disruptions and conflict in the Strait of Hormuz and the Gulf, Diamondback’s production is entirely domestic. As long as WTI can maintain its current strength relative to Brent, Diamondback Energy’s well positioned to capitalize on the current geopolitical turmoil and isn’t subject to international supply-chain exposure.
Why-to-Buy
Diamondback Energy is a strong candidate for investors seeking to capitalize on current world affairs while also benefiting from domestic stability. It’s a great way for investors to diversify and break into the oil and gas market, without taking on the risk of international energy companies. With its expanded asset base in the Permian Basin, a commitment to returning over 50% of FCF to shareholders through dividends and buybacks, and low-cost operations, Diamondback Energy is CFR’s Pick of the Week!
