Core Viewpoint - Viper Energy, Inc. has successfully completed the acquisition of Sitio Royalties Corp. in an all-equity transaction, marking a significant milestone in the mineral and royalty industry, enhancing its position in the North American shale market [1][2]. Revised Third Quarter 2025 Guidance - The merger creates a leader in size, scale, float, liquidity, and access to investment-grade capital in the fragmented minerals market, while Viper maintains a unique relationship with its parent company, Diamondback Energy [2]. - Pro forma Viper is positioned for sustained growth with no capital expenditures and limited operating costs [2]. Production Estimates - Average oil production is projected to be between 54,500 and 57,500 barrels per day (bo/d), reflecting an increase of 8,500 bo/d at the midpoint compared to prior standalone guidance, due to 43 days of contribution from Sitio [7]. - Average total production is expected to range from 104,000 to 110,000 barrels of oil equivalent per day (boe/d), representing an increase of 18,000 boe/d at the midpoint compared to prior standalone guidance, also attributed to the contribution from Sitio [7].

MIDLAND, Texas, Aug. 19, 2025 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) ("Diamondback" or the "Company") today announced that its publicly traded subsidiary, Viper Energy, Inc. (NASDAQ: VNOM) ("Viper"), has closed its previously announced acquisition of Sitio Royalties Corp. ("Sitio"). Additionally, the Company announced revised Q3 2025 production guidance to give effect to the closing of the Sitio acquisition. Updated Third Quarter 2025 Production Guidance Diamondback has increased its th ...

Core Insights - Diamondback Energy, Inc. (FANG) reported second-quarter 2025 adjusted earnings per share of $2.67, exceeding the Zacks Consensus Estimate of $2.63, driven by higher production and lower cash operating costs, although down from $4.52 a year ago due to a 20% decrease in average realized oil price [1][6] Financial Performance - Revenues reached $3.7 billion, a 48.1% increase from the previous year, and surpassed the Zacks Consensus Estimate by 11.8% [2] - The company returned $691 million to shareholders, representing approximately 52% of its adjusted free cash flow, through share repurchases and dividends [3] - A quarterly cash dividend of $1 per share was declared, payable on August 21, 2025 [3] Share Repurchase and Debt Management - FANG expanded its share repurchase authorization by $2 billion to a total of $8 billion, with about $3.5 billion remaining for future repurchases [2] - During the second quarter, the company repurchased 2,991,653 shares for $398 million at an average price of $133.15 per share [4] - Additionally, $252 million in senior notes were repurchased at an average price of 76.8% of par, costing approximately $196 million [4] Production and Pricing - Average production was 919,879 barrels of oil equivalent per day (BOE/d), a 94% increase year-over-year, with 54% being oil [5] - The average realized oil price was $63.23 per barrel, down 20% from $79.51 a year ago, but above the estimate of $60.50 [6] - Average realized natural gas price increased significantly to 88 cents per thousand cubic feet from 10 cents in the prior year [6] Cost Structure - Cash operating costs decreased to $10.10 per BOE from $11.67 a year earlier, reflecting lower lease operating expenses [7] - Gathering, processing, and transportation expenses fell 9% year-over-year to $1.73 per BOE, while cash G&A expenses decreased to 55 cents from 63 cents [8] Capital Expenditure and Guidance - Capital expenditures totaled $864 million, with $707 million allocated to drilling and completion [9] - Full-year BOE production guidance was raised to 890-910 MBOE/d, with a lower capex outlook of $3.4 billion to $3.6 billion [11] - For Q3 2025, oil production is expected to be 485-495 MBO/d, with cash capital expenditures between $750 million and $850 million [12]

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Diamondback Energy, Inc [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, income statements, cash flows, and explanatory notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Account | June 30, 2025 (In millions) | December 31, 2024 (In millions) | | :--- | :--- | :--- | | **Total Current Assets** | $2,066 | $2,110 | | **Property and equipment, net** | $69,229 | $64,472 | | **Total Assets** | **$71,941** | **$67,292** | | **Total Current Liabilities** | $3,759 | $4,811 | | **Long-term debt** | $15,119 | $12,075 | | **Total Liabilities** | **$29,122** | **$27,430** | | **Total Equity** | **$42,819** | **$39,862** | | **Total Liabilities and Stockholders' Equity** | **$71,941** | **$67,292** | - Total assets increased to **$71.9 billion** as of June 30, 2025, from **$67.3 billion** at year-end 2024, primarily driven by an increase in net property and equipment. Total liabilities also grew, largely due to a rise in long-term debt from **$12.1 billion** to **$15.1 billion**[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's financial performance, including revenues, operating income, and net income for the three and six months ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 (In millions) | Three Months Ended June 30, 2024 (In millions) | | :--- | :--- | :--- | | **Total Revenues** | $3,678 | $2,483 | | **Income from operations** | $1,139 | $1,156 | | **Net income attributable to Diamondback** | $699 | $837 | | **Diluted EPS** | $2.38 | $4.66 | | Metric | Six Months Ended June 30, 2025 (In millions) | Six Months Ended June 30, 2024 (In millions) | | :--- | :--- | :--- | | **Total Revenues** | $7,726 | $4,710 | | **Income from operations** | $2,812 | $2,274 | | **Net income attributable to Diamondback** | $2,104 | $1,605 | | **Diluted EPS** | $7.20 | $8.93 | - For Q2 2025, total revenues increased to **$3.68 billion** from **$2.48 billion** in Q2 2024, but net income decreased to **$699 million** from **$837 million**, primarily due to a **$197 million** net loss on derivative instruments and higher operating costs. For the six-month period, revenues and net income both increased significantly year-over-year[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Outlines the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 (In millions) | Six Months Ended June 30, 2024 (In millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $4,032 | $2,863 | | **Net cash used in investing activities** | $(5,632) | $(1,200) | | **Net cash provided by financing activities** | $1,657 | $4,663 | | **Net increase in cash** | $57 | $6,326 | - Cash from operations increased to **$4.0 billion** in the first six months of 2025, up from **$2.9 billion** in the prior year period. Cash used in investing activities surged to **$5.6 billion**, driven by **$3.9 billion** in property acquisitions. Financing activities provided **$1.7 billion**, a decrease from **$4.7 billion** in the prior year, reflecting different financing needs and activities[29](index=29&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information regarding significant accounting policies, transactions, and financial events impacting the statements - **Acquisitions and Divestitures (Note 4):** - **2025 Drop Down:** On May 1, 2025, the company divested Endeavor Subsidiaries to its subsidiary Viper for **$1.0 billion** in cash and **69.63 million** Viper LLC units[52](index=52&type=chunk) - **Double Eagle Acquisition:** On April 1, 2025, the company acquired Double Eagle for **$3.0 billion** in cash and **~6.84 million** shares of common stock[54](index=54&type=chunk) - **Pending Sitio Acquisition:** Viper entered an agreement to acquire Sitio Royalties Corp. in an all-equity transaction valued at approximately **$4.1 billion**, expected to close in Q3 2025[55](index=55&type=chunk) - **Endeavor Acquisition (Note 5):** The acquisition of Endeavor was completed on September 10, 2024, for total consideration of **$27.42 billion**, consisting of **$7.31 billion** in cash and **$20.11 billion** in stock[78](index=78&type=chunk)[80](index=80&type=chunk). For the six months ended June 30, 2025, the Endeavor assets contributed **$2.5 billion** in revenue and **$758 million** in net income[84](index=84&type=chunk) - **Debt (Note 9):** In Q2 2025, the company repurchased **~$252 million** of its senior notes in open market transactions for **~$196 million**, resulting in a gain on debt extinguishment of **~$55 million**[107](index=107&type=chunk). In March 2025, the company issued **$1.2 billion** of 5.550% Senior Notes due 2035 to fund the Double Eagle Acquisition[111](index=111&type=chunk) - **Stockholders' Equity (Note 10):** The company repurchased **$973 million** of its common stock in the first six months of 2025[115](index=115&type=chunk). As of June 30, 2025, approximately **$1.7 billion** remained available under the repurchase program[121](index=121&type=chunk). Dividends paid in the first half of 2025 totaled **$584 million**, or **$2.00 per share**[121](index=121&type=chunk) - **Subsequent Events (Note 17):** - On July 31, 2025, the board declared a Q2 base dividend of **$1.00 per share**[166](index=166&type=chunk) - On July 31, 2025, the stock repurchase authorization was increased by **$2.0 billion** to a total of **$8.0 billion**[167](index=167&type=chunk) - On July 23, 2025, subsidiary Viper completed a **$1.6 billion** notes offering and used proceeds to redeem or discharge **$780 million** of existing notes[168](index=168&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial condition, operating results, key transactions, and future outlook for Q2 and H1 2025 - **Q2 2025 Operating Highlights:** - Average production was **919.9 MBOE/d**[182](index=182&type=chunk) - Drilled **122** gross horizontal wells and turned **116** to production[182](index=182&type=chunk) - Cash operating costs were **$10.10 per BOE**[182](index=182&type=chunk) - Repurchased **$398 million** of common stock[182](index=182&type=chunk) | Metric | 2025 Guidance | | :--- | :--- | | **Net production** (MBOE/d) | 890 - 910 (revised up) | | **Oil production** (MBO/d) | 485 - 492 (narrowed range) | | **Lease operating expenses** ($/BOE) | $5.30 - $5.70 (revised down) | | **Depreciation, depletion, amortization** ($/BOE) | $14.50 - $15.50 (revised up) | | **Cash tax rate** (% of pre-tax income) | 15% - 18% (revised down) | - The company revised its 2025 development plan to hold oil production flat for the remainder of the year, reduce capital expenditures, and use free cash flow to pay down debt and repurchase stock, citing commodity market volatility[200](index=200&type=chunk) - For Q2 2025 vs Q1 2025, oil, natural gas, and NGL revenues decreased by **$0.3 billion** to **$3.3 billion**[207](index=207&type=chunk). This was due to a **$601 million** reduction from lower average commodity prices, partially offset by a **$260 million** increase from a **9%** growth in production volumes, largely driven by the Double Eagle Acquisition[208](index=208&type=chunk) - The company's revised 2025 capital budget is approximately **$3.40 billion** to **$3.60 billion**, a reduction from prior guidance[199](index=199&type=chunk). The plan is to run **13 to 14** rigs and **five** completion crews for the remainder of 2025[264](index=264&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details exposure to commodity price, counterparty credit, and interest rate risks, and the use of derivatives for mitigation - The company's primary market risk is commodity price volatility. To mitigate this, it uses derivative instruments such as swaps, collars, and puts[281](index=281&type=chunk)[282](index=282&type=chunk) - As of June 30, 2025, the company had a net asset derivative position of **$49 million**[283](index=283&type=chunk). A hypothetical **10%** increase in forward commodity prices would increase this net asset position by **$10 million**, while a **10%** decrease would reduce it by **$9 million**[284](index=284&type=chunk) - The company is exposed to interest rate risk on its variable-rate debt, including its revolving credit facilities and the 2025 Term Loan Agreement[287](index=287&type=chunk). It also uses interest rate swaps to manage fair value changes on its fixed-rate debt, with **$450 million** in notional amount outstanding as of June 30, 2025[292](index=292&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management's evaluation of disclosure controls and procedures, confirming effectiveness as of June 30, 2025, with an exclusion for Endeavor entities - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[294](index=294&type=chunk) - Management's assessment of internal control over financial reporting did not include the internal controls of the entities acquired in the Endeavor Acquisition on September 10, 2024, as the company is still in the process of integrating them[295](index=295&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other miscellaneous information for the reporting period [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Discloses routine legal proceedings, including specific lawsuits related to coastal erosion, with management asserting no material adverse effect - The company is a defendant in **five** lawsuits filed by coastal Louisiana parishes and the State of Louisiana related to coastal erosion, but believes the claims lack merit and intends to vigorously defend against them[165](index=165&type=chunk)[299](index=299&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to previously disclosed risk factors from the 2024 Annual Report on Form 10-K and Q1 2025 Form 10-Q - There have been no material changes in the company's risk factors from those described in its 2024 Annual Report on Form 10-K and Q1 2025 Form 10-Q[301](index=301&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the company's equity repurchase activities during Q2 2025 and confirms no unregistered sales of equity securities | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2025 | 1,892 | $129.50 | | May 2025 | 515 | $135.25 | | June 2025 | 586 | $143.13 | | **Total Q2 2025** | **2,993** | **$133.16** | - On July 31, 2025, the board of directors increased the common stock repurchase authorization by **$2.0 billion**, bringing the total to **$8.0 billion**[305](index=305&type=chunk). As of August 1, 2025, approximately **$3.5 billion** remained available for future repurchases[305](index=305&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) Confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) Provides an index of exhibits filed or incorporated by reference into the Form 10-Q, including key agreements and certifications

Group 1 - Laura Starks is the founder and CEO of Starks Energy Economics, LLC, established in 2007, with expertise in energy investments [1] - Starks holds a degree in chemical engineering and an MBA focused on finance, which she utilizes for personal investments and insights on energy companies [1] - The coverage of Starks includes various sectors such as utilities, independent power producers, energy service companies, petrochemical companies, and all segments of oil and natural gas: upstream, midstream, and downstream [1]

Group 1 - Diamondback Energy (NASDAQ: FANG) is noted for its ability to grow while also providing dividends, meeting market demand for shareholder returns [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] Group 2 - The analysis of oil and gas companies includes a breakdown of balance sheets, competitive positions, and development prospects [1]

Company Participants - The conference call featured key executives from Diamondback Energy, including Adam T. Lawlis (VP of Investor Relations), Daniel N. Wesson (Executive VP & COO), Jere W. Thompson (Executive VP & CFO), and Matthew Kaes Van't Hof (CEO & Director) [1][2][3] Conference Call Overview - The call was held to discuss Diamondback Energy's Second Quarter 2025 earnings, with an updated investor presentation and letter to stockholders available on the company's website [2][3]

Financial Data and Key Metrics Changes - The company reported a significant increase in cash flow, with a notable cash tax tailwind expected in Q3, contributing to a strong free cash flow outlook [28][34] - The cash tax rate is projected to decrease to 15% - 18% for 2025, down from 19% - 22% in the previous year, primarily due to one-time benefits from accelerated recovery of expenditures [78][79] Business Line Data and Key Metrics Changes - The company has increased its focus on workover programs, leading to production improvements of 20% to 100% on older wells [24][25] - The company announced a non-core asset sale target of $1.5 billion, with $250 million already realized from two small sales [16][18] Market Data and Key Metrics Changes - The company noted a significant increase in liquids yields, adding 33,000 barrels per day of NGLs in Q2 compared to Q1, indicating improved operational efficiency [46][48] - Flaring was reduced by 75 to 100 basis points in Q2 versus Q1, reflecting enhanced gas capture efforts [48] Company Strategy and Development Direction - The company aims to be the consolidator of choice in the Permian Basin, focusing on maximizing shareholder value through an "acquire and exploit" strategy [12][14] - The management emphasized a cautious approach to growth, maintaining flexibility in operations while waiting for favorable market conditions [130][136] Management's Comments on Operating Environment and Future Outlook - The management expressed a cautious outlook, indicating that while the demand and supply shocks have eased, uncertainty remains in the market [32][33] - The company is prepared to adjust its operations based on market conditions, with a focus on maintaining a strong balance sheet and reducing debt [28][120] Other Important Information - The company is exploring opportunities in power generation to reduce electricity costs, which are viewed as a significant inflationary pressure on cash costs [86][89] - The management highlighted the importance of maintaining a flexible drilling and completion strategy to adapt to market changes [75][77] Q&A Session Summary Question: Thoughts on reducing costs and consolidation in the industry - The CEO emphasized the company's focus on maximizing shareholder value and executing an effective acquisition strategy in the Permian [12][14] Question: Update on non-core asset sales and Endeavor water drop - The CEO provided an update on the $1.5 billion non-core asset sale target, with progress made on two small sales and ongoing efforts on larger assets [16][18] Question: Addressing production downtime and opportunities - The management discussed efforts to reduce production downtime and improve older wells through workover programs [24][25] Question: Managing cash from asset sales versus debt targets - The CEO indicated that cash from asset sales would be used to pay down debt, with a focus on maintaining a strong financial position [26][28] Question: Update on macro conditions and activity decisions - The management reiterated a cautious approach, indicating that while some uncertainty remains, they are prepared to adjust operations as needed [32][33] Question: Efficiency improvements and drilling performance - The COO highlighted ongoing efforts to improve drilling efficiency, with a focus on achieving consistent top-tier well performance [41][42] Question: Gas production improvements and midstream partnerships - The management noted significant improvements in gas capture and processing, contributing to increased production [46][48] Question: Recovery rates and technology developments - The CEO acknowledged ongoing efforts to improve recovery rates and emphasized the company's technical leadership in the basin [54][55] Question: Update on development mix and performance - The management discussed the evolving development mix, with expectations for increased focus on higher returning zones [82][84] Question: Power generation opportunities - The management highlighted ongoing efforts to explore in-basin egress solutions for natural gas and reduce electricity costs [86][89] Question: Industry support and pushback - The CEO characterized the overall industry response as supportive, while acknowledging some pushback from competitors [94][95] Question: Strategy for excess DUC balance - The management indicated a preference to maintain flexibility with DUCs, allowing for quick responses to market conditions [75][76] Question: Cash tax rate outlook - The CFO provided guidance on expected cash tax rates for 2025 and 2026, indicating a reduction in overall tax burden [78][79] Question: Development mix and performance in other zones - The management discussed the positive performance in new zones and the potential for continued growth in these areas [82][84] Question: Hedge book for 2026 - The CEO explained the strategy for building a hedge position for 2026, emphasizing patience in adding puts [119][120] Question: Operations post-water sale - The CEO indicated that while synergies would be created, the impact on operations would not be significant [121][122]

All right, welcome back. Let's get to a mad dash. We got about seven minutes before we get to uh the beginning of trading here at the New York Stock Exchange.Do you want to talk fang but the actual original. Now, that's important because I went we did our show from the Air Force Academy in Colorado and there was this guy there and I'm driving out and he goes, "You buried me in fine." And I I said, "Facebook, Amazon, Netflix." It's oh no, I thought you meant Diamond Energy. of which was not true.But Diamond ...

Financial Performance & Capital Allocation - Diamondback generated $1242 million of Free Cash Flow ("FCF") in Q2 2025, which is $425 per share, and $1334 million of Adjusted FCF, which is $457 per share[16] - The company expects to generate at least $58 billion of Adjusted FCF in 2025 at current commodity prices[16] - Diamondback is committed to returning at least 50% of quarterly FCF to stockholders[16] - Q2 2025 return of capital was $691 million, representing approximately 52% of Q2 2025 Adjusted FCF, distributed through base dividend and share repurchases[15, 16] - The company's share repurchase authorization increased by $20 billion, from $60 billion to $80 billion, with approximately $35 billion remaining[16] Production & Cost Efficiency - Q2 2025 oil production reached 4957 Mbo/d, and total production was 9199 Mboe/d[23] - Oil production per million shares was 1697 Bo/d, up 10% year-over-year[23] - The company's unhedged realized cash margin was 73% in Q2 2025[23] - Total operating cash expenses were $1010 per Boe[23] Asset Base & Strategy - Diamondback has significant scale with approximately 859000 net acres and approximately 490 Mbo/d (approximately 905 Mboe/d) of run-rate production beginning in Q3[18] - The company has approximately 9600 gross Permian Basin locations economic at $50 / Bbl[19] - Diamondback's annual base dividend is $400, representing a 27% current yield[16]