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How Investors May Respond To Diamondback Energy (FANG) Expanding Into West Texas Gas-Fired Power Generation

Simply Wall St · 2d ago
  • Conduit Power announced it has entered into financial agreements with Diamondback Energy and Granite Ridge Resources to develop 200 megawatts of new natural gas power generation across ERCOT’s Load Zone West, with Conduit building, owning and operating the facilities and targeting phased commercial operations starting in 2026.
  • This move gives Diamondback a foothold in West Texas power infrastructure, linking its Permian presence to grid reliability and an additional cash-flow stream tied to preferred power proceeds.
  • We’ll now explore how Diamondback’s move into West Texas gas-fired power generation could influence its investment narrative built around Permian efficiency.

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Diamondback Energy Investment Narrative Recap

To own Diamondback, you generally need to believe in the resilience of its Permian-focused, low cost oil and gas model and its ability to keep converting production into solid cash generation. The Conduit Power deal adds a small, infrastructure linked income stream but does not fundamentally change the near term focus on managing costs and commodity price exposure, or the key risk that weaker oil and gas prices could pressure future free cash flow and shareholder distributions.

The most relevant recent announcement alongside this power investment is Diamondback’s updated 2025 guidance, which centers on high oil weighting and disciplined production levels. That focus on efficiency and capital discipline frames how investors might see the West Texas gas fired power exposure: as a complementary, grid linked adjunct to a core story still driven by well economics, operating costs and sensitivity to commodity price swings.

Yet against this efficiency focused story, investors should still be aware of how rising Permian power and water costs could…

Read the full narrative on Diamondback Energy (it's free!)

Diamondback Energy's narrative projects $15.6 billion revenue and $4.5 billion earnings by 2028. This requires 5.2% yearly revenue growth and about a $0.7 billion earnings increase from $3.8 billion today.

Uncover how Diamondback Energy's forecasts yield a $179.03 fair value, a 22% upside to its current price.

Exploring Other Perspectives

FANG 1-Year Stock Price Chart
FANG 1-Year Stock Price Chart

Five members of the Simply Wall St Community value Diamondback between US$145 and about US$477, underscoring how far opinions can diverge. When you set that wide range against the company’s sensitivity to oil and gas price swings and less robust hedging beyond 2026, it underlines why many investors look at several viewpoints before deciding how this business might perform.

Explore 5 other fair value estimates on Diamondback Energy - why the stock might be worth over 3x more than the current price!

Build Your Own Diamondback Energy Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.