Core Insights - Diamondback Energy, Inc. (FANG) has executed a definitive agreement to divest its 27.5% equity stake in EPIC Crude Holdings, LP for over $596 million, which includes approximately $500 million in upfront cash and a contingent payment of $96 million based on capacity expansion approval by 2027 [1][2][9] Transaction Details and Valuation Implications - The transaction values EPIC Crude at an implied enterprise value of $2.85 billion, indicating the deal's attractiveness and the growth potential within EPIC Crude's midstream infrastructure [3] - The deal is expected to close in early 2026, pending regulatory approvals, including those under the Hart-Scott-Rodino Antitrust Improvements Act [3][9] Strategic Focus and Commercial Partnership Continuity - The divestiture is a key liquidity event for Diamondback, allowing for capital redeployment to enhance upstream operations and strategic initiatives [4] - Despite the sale, Diamondback will maintain a strong commercial relationship with EPIC Crude, continuing as an anchor shipper on the EPIC Crude pipeline [5][6] Growth Prospects of EPIC Crude - EPIC Crude plays a vital role in crude oil gathering and transportation, supporting multiple producers in the Permian Basin, a highly productive oil region [7] - The pending capacity expansion aims to enhance throughput volumes and operational flexibility, reinforcing EPIC Crude's competitive positioning [8] Regulatory Review and Transaction Closing Outlook - The transaction is subject to customary closing conditions, with industry analysts expecting a smooth regulatory review due to its alignment with competitive practices [10] Implications for Investors and Market Positioning - This transaction reflects Diamondback's prudent capital management and strategic asset optimization, strengthening its balance sheet and increasing financial flexibility [12] - The sale price and contingent consideration indicate market confidence in EPIC Crude's operational capabilities and expansion potential [13] Conclusion: Commitment to Operational Excellence and Growth - The divestiture represents a landmark transaction in Diamondback's portfolio strategy, providing substantial capital inflow while maintaining midstream partnership continuity [14]

Core Insights - Deep Blue Midland Basin LLC has announced the acquisition of Environmental Disposal Systems, LLC from Diamondback Energy, significantly enhancing its position as the largest independent water infrastructure platform in the Midland Basin [1][2] - The acquisition is valued at $750 million, with Diamondback retaining a 30% equity interest in Deep Blue and receiving approximately $675 million in upfront cash, along with potential performance-based earnouts of up to $200 million by the end of 2028 [2][5] - This transaction is expected to create operational and commercial synergies, broadening Deep Blue's customer base and enhancing its capabilities in sustainable produced water management [3][4] Company Overview - Deep Blue was formed in 2023 as a joint venture between Diamondback and Five Point Infrastructure, rapidly establishing itself as a leader in the Midland Basin's water infrastructure sector [4][6] - The company operates an integrated midstream water infrastructure network, managing significant volumes of water for exploration and production companies, with a treatment and recycling capacity of 1.2 million barrels per day and a disposal capacity of 3.4 million barrels per day [6][7] - Deep Blue aims to minimize water disposal through advanced recycling technologies and sustainable practices, positioning itself as a pioneer in resource-efficient water management [7] Strategic Implications - The acquisition is seen as a strategic move to optimize water management in the Midland Basin, ensuring customers benefit from enhanced scale and innovative solutions [3][5] - Diamondback's continued partnership with Deep Blue as both a customer and equity holder underscores the alignment of interests and the potential for future growth in the water management sector [5] - Five Point Infrastructure's involvement highlights the commitment to setting industry standards in water management practices across U.S. energy production [5]

MIDLAND, Texas, Sept. 02, 2025 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback”) today announced that its wholly owned subsidiaries have entered into a definitive agreement to sell their 27.5% equity interest in EPIC Crude Holdings, LP (“EPIC Crude”), an affiliate of EPIC Midstream Holdings LP, to a wholly owned subsidiary of Plains All American Pipeline, L.P. and Plains GP Holdings (collectively “Plains”) for approximately $500 million in net upfront cash and an additional $96 mil ...

Group 1 - The core viewpoint of the articles indicates that the U.S. oil and gas industry is entering a merger and acquisition (M&A) boom in 2024, with a projected total M&A value of $206.6 billion, representing a 331% year-on-year increase [1] - The number of leading publicly listed exploration and production (E&P) companies in the U.S. has decreased from 50 to 40, yet these 40 companies contribute approximately 41% of the nation's oil and gas production, highlighting a trend of "the strong getting stronger" [1] - In 2024, 42% of the M&A budget will be allocated to undeveloped reserves, a significant increase from 18% in 2023, indicating a strategic shift towards securing high-quality drilling locations for long-term production potential [1] Group 2 - The exploration and development costs have decreased by 7% year-on-year, despite the ongoing M&A activity, and the industry's reserve replacement rate remains above 100%, demonstrating the effectiveness of the new model of achieving reserve growth through M&A while reducing traditional exploration investments [2] - Following the M&A boom, U.S. oil and gas companies are focusing on addressing various uncertainties in the macro environment, with operational efficiency and capital discipline becoming critical for success [2] - The M&A activity is expected to slow significantly by the second quarter of 2025 due to the scarcity of quality targets, forcing buyers to diversify into non-core areas [2]

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].

Core Viewpoint - Diamondback Energy, Inc. has successfully completed the acquisition of Sitio Royalties Corp. through its subsidiary Viper Energy, Inc., leading to an increase in production guidance for Q3 2025 [1][2]. Group 1: Acquisition Details - The acquisition of Sitio Royalties Corp. was previously announced and has now been closed, enhancing Viper Energy's asset portfolio [1]. - The acquisition is expected to contribute to Diamondback's production figures starting from August 19, 2025 [2]. Group 2: Revised Production Guidance - Diamondback's Q3 2025 net production guidance has been revised to 908 - 938 MBOE/d, up from the previous range of 890 - 920 MBOE/d [2]. - Oil production guidance for Diamondback has been adjusted to 494 - 504 MBO/d, an increase from the earlier guidance of 485 - 495 MBO/d [2]. - Viper Energy's Q3 2025 production guidance is set at 104.0 - 110.0 MBOE/d, reflecting the impact of the Sitio acquisition [2]. Group 3: Company Background - Diamondback Energy is an independent oil and natural gas company based in Midland, Texas, focusing on the acquisition and development of unconventional oil and natural gas reserves, primarily in the Permian Basin [3]. - Viper Energy, Inc. is a subsidiary of Diamondback, established to own and acquire oil and natural gas properties, with a focus on mineral and royalty interests in oil-weighted basins [4].

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]