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EOG Sources (NYSE:EOG) -1.1% and Diamondback Power (NASDAQ:FANG) -0.3% in Monday’s buying and selling as Citi downgraded each firms to Impartial from Purchase, with respective worth targets of $135 and $170.
Whereas EOG’s (EOG) working prowess is with out query, the well being of its legacy basins and long-term strategic route are debating factors, Citi’s Scott Gruber stated.
EOG’s (EOG) Permian nicely productiveness is exhibiting enchancment, however stays down from 2021 whereas Eagle Ford and Powder River have upset, and whereas EOG will pivot towards the spectacular Dorado and Utica shale performs over time and should discover success in shallow-water exploration, profitable execution possible equates with a number of preservation, not a re-rating, in accordance with Gruber.
On Diamondback (FANG), the shortage worth of being the lone remaining large-cap Permian producer ought to enable the inventory to carry its present a number of, however additional upside seems restricted, the analyst wrote.
Recognized for a capital environment friendly working mannequin, Gruber stated he doesn’t see many alternatives for Diamondback (FANG) to materially cut back working prices or enhance effectivity sooner than friends.