It is a truth universally acknowledged, amongst those who concern themselves with the black, viscous bounty beneath our feet, that the fortunes of oilmen are tethered to the whims of a most capricious mistress: the price of crude. Yet, to observe merely the dance of numbers on a ticker tape is to miss the true comedy, the subtle tragedies, and the peculiar logic that governs these enterprises. One must, instead, peer behind the polished veneer of balance sheets and observe the frantic scurrying, the desperate hedging, and the occasional, inexplicable stroke of luck. And so, let us consider two such players, Diamondback Energy and Vitesse Energy, and attempt to discern which, in the grand, absurd drama of 2026, is likely to emerge with a slightly less tarnished reputation – and, perhaps, a slightly fuller coffer.
Vitesse Energy, you see, is a most curious creature. It does not dig, not precisely. It does not pump, not with its own hands. It is, rather, a collector of scraps, a gatherer of orphaned wells in the Bakken region. Imagine a man who does not cultivate a garden, but instead wanders the fields, picking up fallen apples – a perfectly respectable occupation, certainly, but hardly one to inspire grand pronouncements of agricultural prowess. They boast of owning interests in over 7,600 wells, a number so vast it becomes almost meaningless. It’s like counting the grains of sand on a beach – an exercise in futility, and one that leaves you covered in grit. They call it diversification; I call it a desperate attempt to appear busy. Chord Energy, Devon Energy, and Continental Resources – these are the true gardeners, while Vitesse is merely the scavenger, picking over their leavings.
Their strategy, it seems, is to return capital to shareholders via dividends – a current yield of 11.7%. A generous gesture, to be sure, but one that smacks of desperation. It’s as if they are saying, “Behold! We may not be growing anything, but we are certainly giving it away!” A most peculiar form of alchemy, attempting to transmute stagnation into shareholder delight. They hedge, of course, employing a flexible strategy to mitigate downside exposure. But hedging, my dear reader, is merely a sophisticated form of worry. It is the anxious twitch of a man who knows his foundation is built on sand.
Diamondback Energy: A More Robust, Though Not Necessarily More Sensible, Enterprise
Diamondback Energy, in contrast, is a creature of the Permian Basin – a region so rich in oil it feels as if the very earth is sweating. They own their wells, they operate them, and they are known for being one of the lowest-cost producers in the industry. A most admirable quality, though it does little to alleviate the inherent absurdity of extracting black goo from the bowels of the earth. Their base dividend of $4 a share is protected down to a price of $37 a barrel, and their hedges offer further protection. They speak of free cash flow and capital returns with a solemnity usually reserved for matters of life and death. As if a few extra dollars in the coffers will somehow stave off the inevitable entropy of the universe.
Their capital return policy is flexible, offering a base dividend, opportunistic share buybacks, and a variable dividend. They estimate free cash flow per share at $19, $20, or $21 depending on the price of oil. A most precise calculation, as if the market will obediently conform to their projections. It is a comforting illusion, this belief in control, but an illusion nonetheless.
| Diamondback Estimates for 2025 | $50 per barrel | $60 per barrel | $70 per barrel |
|---|---|---|---|
| Free cash flow per share | $19 | $20 | $21 |
| Free cash flow yield* | 12.6% | 13.2% | 13.9% |
The Better Buy? A Question of Avoiding the Most Spectacular Collapse
So, which is the better buy? Diamondback, undoubtedly. Vitesse, in its attempt to be a non-operator, has recently acquired Lucero Energy, now operating 10% of its own assets. A most perplexing move. It is as if a man who has spent his life collecting stamps suddenly decides to become a painter. A change of heart, perhaps, or simply a desperate attempt to appear more substantial. Furthermore, 60% of Vitesse’s 2025 oil production is hedged at just under $70, while the remaining 40% is not protected. A most precarious situation. Should oil prices fall, hedging the remaining production at similar prices will be… expensive. Imagine trying to purchase a rare artifact after everyone else has already claimed the best specimens.
Vitesse’s dividend, the main reason many investors buy the stock, could be at risk if the Trump administration institutes actions that further lower oil prices. Diamondback’s low breakeven costs, however, offer a degree of protection. It is not a guarantee of success, mind you, but a slightly less certain path to ruin.
In conclusion, Diamondback offers a better balance of risk and reward in 2026. It is not a dazzling prospect, not a path to untold riches, but a slightly more sensible wager in a world governed by absurdity and the fickle whims of black gold. And in the grand, chaotic drama of the oil market, sometimes, merely avoiding the most spectacular collapse is a victory in itself.
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2026-01-22 02:12