Diamondback Energy: Updating Valuation Methodology for U.S. E&Ps

We have adjusted our valuation methodology for U.S. exploration and production companies. Our multistage DCF valuation incorporates explicit projections for a fixed period, typically 5 years. Terminal values are derived by assuming firms eventually earn their cost of capital in perpetuity. This contrasts with our previous methodology, which modeled the harvesting of all company assets over a 30-year timeframe The change brings our E&P valuations in line with Morningstar's standard equity research methodology.