Financial Performance - Diamondback Energy reported quarterly earnings of $2.67 per share, missing the analyst consensus estimate of $2.92 [1] - Quarterly revenue was $3.67 billion, exceeding the Street estimate of $3.36 billion and up from $2.48 billion in the same period last year [1] Operational Insights - The company indicated that U.S. shale oil production has likely peaked at current oil prices, with activity levels in the Lower 48 expected to remain depressed [2] - The U.S. oil-directed rig count has decreased by approximately 60 rigs this year, with 59 rigs lost in the second quarter alone [2] - The active completion crew count in the Permian Basin has declined to around 70 active crews, down over 25% from 2024 [2] Cash Flow and Expenditures - Net cash provided by operating activities was $1.7 billion, with Operating Cash Flow Before Working Capital Changes at $2.1 billion [4] - Cash capital expenditures totaled $864 million, while Adjusted Free Cash Flow was reported at $1.3 billion [4]

[Second Quarter 2025 and Recent Highlights](index=1&type=section&id=SECOND%20QUARTER%202025%20AND%20RECENT%20HIGHLIGHTS) This section highlights Diamondback Energy's strong Q2 2025 financial and operational performance, including significant production and capital returns [Q2 2025 Financial and Operational Performance](index=1&type=section&id=Q2%202025%20Financial%20and%20Operational%20Performance) Diamondback Energy reported strong Q2 2025 results, featuring significant oil production, robust cash flow, and enhanced capital returns to shareholders - Average oil production reached **495.7 MBO/d** (**919.9 MBOE/d**)[4](index=4&type=chunk) - Net cash provided by operating activities was **$1.7 billion**, with Operating Cash Flow Before Working Capital Changes at **$2.1 billion**[4](index=4&type=chunk) - Free Cash Flow was **$1.2 billion**, and Adjusted Free Cash Flow was **$1.3 billion**[4](index=4&type=chunk) - A Q2 2025 base cash dividend of **$1.00 per share** was declared, implying a **2.7% annualized yield**[4](index=4&type=chunk) - Repurchased **2,991,653 shares** of common stock in Q2 2025 for **$398 million** and an additional **1,669,115 shares** in Q3 2025 to date for **$238 million**[4](index=4&type=chunk) - Total Q2 2025 return of capital was **$691 million**, representing approximately **52% of Adjusted Free Cash Flow**[4](index=4&type=chunk) - The Board of Directors approved a **$2.0 billion** increase to the share repurchase authorization, raising the total to **$8.0 billion**, with approximately **$3.5 billion** currently available[4](index=4&type=chunk) - Repurchased **$252 million** in aggregate principal amount of senior notes at a weighted average price of **76.8% of par** (~**$196 million**)[4](index=4&type=chunk) [Updated 2025 Guidance Highlights](index=1&type=section&id=UPDATED%202025%20GUIDANCE%20HIGHLIGHTS) This section outlines Diamondback Energy's revised full-year 2025 guidance, emphasizing production, capital expenditures, and efficiency improvements [Key Changes in Full Year 2025 Guidance](index=1&type=section&id=Key%20Changes%20in%20Full%20Year%202025%20Guidance) Diamondback updated its full-year 2025 guidance, narrowing oil production, increasing BOE guidance, and lowering cash capital expenditures - Full year oil production guidance narrowed to **485 - 492 MBO/d**[4](index=4&type=chunk) - Annual BOE guidance increased by **2% to 890 - 910 MBOE/d**[4](index=4&type=chunk) - Full year cash capital expenditures lowered to **$3.4 - $3.6 billion**, which is **$100 million (3%)** below the prior midpoint and **$500 million (13%)** down from the original 2025 guidance midpoint[4](index=4&type=chunk) - Implied full year 2025 oil production per million dollars of cash capital expenditures ("MBO per $MM of CAPEX") is **50.9**, approximately **14% better** than original guidance[4](index=4&type=chunk) - The company expects to drill **425 - 450 gross (395 - 418 net) wells** and complete **490 - 515 gross (458 - 482 net) wells** with an average lateral length of approximately **11,500 feet** in 2025[4](index=4&type=chunk) - Q3 2025 oil production guidance is **485 - 495 MBO/d (890 - 920 MBOE/d)** and cash capital expenditures guidance is **$750 - $850 million**[4](index=4&type=chunk) [Operations Update](index=3&type=section&id=OPERATIONS%20UPDATE) This section details Diamondback Energy's Q2 and H1 2025 drilling and completion activities, primarily in the Midland Basin [Drilling and Completion Activity Summary](index=3&type=section&id=Drilling%20and%20Completion%20Activity%20Summary) Diamondback's Q2 2025 operations focused on the Midland Basin, with significant wells turned to production and high average lateral length **Q2 2025 Drilling and Completion Activity:** | Metric | Gross | Net | | :----- | :---- | :-- | | Drilled Wells | 122 | 114 | | Completed Wells | 116 | 109 | **H1 2025 Drilling and Completion Activity:** | Metric | Gross | Net | | :----- | :---- | :-- | | Drilled Wells | 248 | 232 | | Completed Wells | 239 | 228 | - During Q2 2025, **108 operated wells** in the Midland Basin and **8 gross wells** in the Delaware Basin were turned to production, with an average lateral length of **13,402 feet**[6](index=6&type=chunk) - For the six months ended June 30, 2025, **224 operated wells** in the Midland Basin and **15 operated wells** in the Delaware Basin were turned to production, with an average lateral length of **12,656 feet**[6](index=6&type=chunk) [Detailed Operated Activity by Formation](index=3&type=section&id=Detailed%20Operated%20Activity%20by%20Formation) Most Q2 and H1 2025 drilling and completion activity concentrated in the Midland Basin, targeting various Spraberry and Wolfcamp formations **Q2 2025 Gross Operated Activity by Basin:** | Area | Drilled Wells | Completed Wells | | :------------ | :------------ | :-------------- | | Midland Basin | 121 | 108 | | Delaware Basin | 1 | 8 | **H1 2025 Gross Operated Activity by Basin:** | Area | Drilled Wells | Completed Wells | | :------------ | :------------ | :-------------- | | Midland Basin | 245 | 224 | | Delaware Basin | 3 | 15 | - In the Midland Basin during Q2 2025, key formations for drilling included **Lower Spraberry (27 wells)**, **Wolfcamp B (26 wells)**, **Jo Mill (26 wells)**, and **Wolfcamp A (24 wells)**[6](index=6&type=chunk) [Financial Update](index=3&type=section&id=FINANCIAL%20UPDATE) This section provides a comprehensive overview of Diamondback Energy's Q2 2025 financial performance, including income, cash flow, and debt [Q2 2025 Financial Performance](index=3&type=section&id=Q2%202025%20Financial%20Performance) Diamondback reported net income of **$699 million** and adjusted net income of **$785 million** for Q2 2025 - Net income for Q2 2025 was **$699 million**, or **$2.38 per diluted share**[7](index=7&type=chunk) - Adjusted net income for Q2 2025 was **$785 million**, or **$2.67 per diluted share**[7](index=7&type=chunk) [Cash Flow and Capital Expenditures](index=3&type=section&id=Cash%20Flow%20and%20Capital%20Expenditures) The company generated significant operating and free cash flow in Q2 and H1 2025, with capital expenditures focused on drilling and completions **Net Cash Provided by Operating Activities:** | Period | Amount ($ millions) | | :----- | :------------------ | | Q2 2025 | 1,700 | | H1 2025 | 4,032 | **Cash Capital Expenditures:** | Period | Amount ($ millions) | | :----- | :------------------ | | Q2 2025 | 864 | | H1 2025 | 1,800 | **Consolidated Adjusted EBITDA:** | Period | Amount ($ millions) | | :----- | :------------------ | | Q2 2025 | 2,400 | | H1 2025 | 5,400 | **Free Cash Flow:** | Period | Amount ($ millions) | | :----- | :------------------ | | Q2 2025 | 1,200 | | H1 2025 | 2,800 | **Adjusted Free Cash Flow:** | Period | Amount ($ millions) | | :----- | :------------------ | | Q2 2025 | 1,300 | | H1 2025 | 2,900 | [Realized Prices and Operating Costs](index=4&type=section&id=Realized%20Prices%20and%20Operating%20Costs) Q2 2025 saw average unhedged realized prices of **$63.23/Bbl** for oil and **$18.13/Bbl** for NGLs, with natural gas at **$0.88/Mcf**, and total cash operating costs of **$10.10 per BOE** **Average Unhedged Realized Prices (Q2 2025):** | Commodity | Price | | :-------- | :---- | | Oil | $63.23 per barrel | | Natural Gas | $0.88 per Mcf | | NGLs | $18.13 per barrel | | Total Equivalent | $39.61 per BOE | **Cash Operating Costs per BOE (Q2 2025):** | Cost Category | Amount ($/BOE) | | :------------ | :------------- | | Lease Operating Expenses (LOE) | $5.26 | | Cash General and Administrative (G&A) | $0.55 | | Production and Ad Valorem Taxes | $2.56 | | Gathering, Processing and Transportation | $1.73 | | **Total Cash Operating Costs** | **$10.10** | [Liquidity and Debt Position](index=4&type=section&id=Liquidity%20and%20Debt%20Position) As of June 30, 2025, Diamondback maintained **$2.1 billion** in total liquidity, with **$191 million** in standalone cash and **$15.3 billion** in consolidated total debt - As of June 30, 2025, Diamondback had **$191 million** in standalone cash and **$595 million** of borrowings outstanding under its revolving credit facility[14](index=14&type=chunk) - Approximately **$1.9 billion** was available for future borrowings under the facility, resulting in approximately **$2.1 billion** of total liquidity[14](index=14&type=chunk) - Consolidated total debt was **$15.3 billion** and consolidated net debt was **$15.1 billion** as of June 30, 2025[14](index=14&type=chunk) [Dividend Declarations](index=4&type=section&id=DIVIDEND%20DECLARATIONS) This section details Diamondback Energy's Q2 2025 base cash dividend declaration and future dividend policy [Q2 2025 Base Cash Dividend](index=4&type=section&id=Q2%202025%20Base%20Cash%20Dividend) Diamondback declared a base cash dividend of **$1.00 per common share** for Q2 2025 - The Board of Directors declared a base cash dividend of **$1.00 per common share** for the second quarter of 2025[15](index=15&type=chunk) - The dividend is payable on August 21, 2025, to stockholders of record at the close of business on August 14, 2025[15](index=15&type=chunk) - Future base and variable dividends remain subject to review and approval at the discretion of the Company's Board of Directors[15](index=15&type=chunk) [Common Stock Repurchase Program](index=5&type=section&id=COMMON%20STOCK%20REPURCHASE%20PROGRAM) This section summarizes Diamondback Energy's share repurchase activities and the significant increase in its buyback authorization [Share Repurchase Activity and Authorization Increase](index=5&type=section&id=Share%20Repurchase%20Activity%20and%20Authorization%20Increase) The company actively repurchased shares in Q2 and Q3 2025, with the Board significantly increasing the share repurchase authorization to **$8.0 billion** - During Q2 2025, Diamondback repurchased approximately **3.0 million shares** of common stock at an average price of **$133.15**, totaling approximately **$398 million**[16](index=16&type=chunk) - To date in Q3 2025, approximately **1.7 million shares** have been repurchased for **$238 million** at a weighted average price of **$142.45 per share**[16](index=16&type=chunk) - The Board of Directors approved an incremental **$2.0 billion** increase to the share repurchase authorization, raising the total buyback capacity to **$8.0 billion**, with approximately **$3.5 billion** remaining available[16](index=16&type=chunk) - Diamondback intends to continue opportunistic common stock purchases using cash on hand, free cash flow from operations, and proceeds from potential liquidity events[16](index=16&type=chunk) [Full Year 2025 Guidance](index=6&type=section&id=FULL%20YEAR%202025%20GUIDANCE) This section presents Diamondback Energy's detailed full-year 2025 guidance for production, costs, and capital expenditures [Detailed 2025 Guidance Table](index=6&type=section&id=Detailed%202025%20Guidance%20Table) This table provides a comprehensive breakdown of Diamondback Energy's updated full-year 2025 guidance, excluding the pending Sitio Acquisition **2025 Guidance Summary (Diamondback Energy, Inc.):** | Metric | 2025 Guidance (Current) | 2025 Guidance (Previous) | | :-------------------------------------- | :-------------------------- | :------------------------- | | Net production - MBOE/d | 890 - 910 | 857 - 900 | | Oil production - MBO/d | 485 - 492 | 480 - 495 | | Q3 2025 Oil production - MBO/d (total - MBOE/d) | 485 - 495 (890 - 920) | N/A | | **Unit costs ($/BOE)** | | | | Lease operating expenses, including workovers | $5.30 - $5.70 | $5.65 - $6.05 | | Cash G&A | $0.60 - $0.75 | N/A | | Non-cash equity-based compensation | $0.25 - $0.35 | N/A | | DD&A | $14.50 - $15.50 | $14.00 - $15.00 | | Interest expense (net of interest income) | $0.60 - $0.80 | $0.40 - $0.65 | | Gathering, processing and transportation | $1.60 - $1.75 | $1.40 - $1.60 | | Production and ad valorem taxes (% of revenue) | ~7% | ~7% | | Corporate tax rate (% of pre-tax income) | 23% | N/A | | Cash tax rate (% of pre-tax income) | 15% - 18% | 19% - 22% | | Q3 2025 Cash taxes ($ - million) | $50 - $110 | N/A | | **Capital Budget ($ - million)** | | | | Operated drilling and completion | $2,850 - $2,950 | $2,780 - $3,090 | | Capital workovers, non-operated properties and science | $250 - $300 | $280 - $320 | | Infrastructure, environmental and midstream | $300 - $350 | $340 - $390 | | 2025 Total capital expenditures | $3,400 - $3,600 | $3,400 - $3,800 | | Q3 2025 Capital expenditures | $750 - $850 | N/A | | Gross horizontal wells drilled (net) | 425 - 450 (395 - 418) | 385 - 435 (349 - 395) | | Gross horizontal wells completed (net) | 490 - 515 (458 - 482) | 475 - 550 (444 - 514) | | Average lateral length (Ft.) | ~11,500' | N/A | | FY 2025 Midland Basin well costs per lateral foot | $550 - $580 | $550 - $590 | | FY 2025 Delaware Basin well costs per lateral foot | $860 - $910 | N/A | | Midland Basin completed net lateral feet (%) | ~95% | N/A | | Delaware Basin completed net lateral feet (%) | ~5% | N/A | [Conference Call](index=7&type=section&id=CONFERENCE%20CALL) This section provides details for Diamondback Energy's Q2 2025 earnings conference call and webcast [Q2 2025 Earnings Conference Call Details](index=7&type=section&id=Q2%202025%20Earnings%20Conference%20Call%20Details) Diamondback will host a conference call and webcast on August 5, 2025, to discuss its Q2 2025 financial and operating results - The conference call and webcast will be held on Tuesday, August 5, 2025, at 8:00 a.m. CT[19](index=19&type=chunk) - Access to the live webcast and replay will be available via Diamondback's website under the 'Investor Relations' section[19](index=19&type=chunk) [About Diamondback Energy, Inc.](index=7&type=section&id=About%20Diamondback%20Energy%2C%20Inc.) This section describes Diamondback Energy, Inc.'s company profile, focusing on its operations in the Permian Basin [Company Profile and Focus](index=7&type=section&id=Company%20Profile%20and%20Focus) Diamondback Energy, Inc. is an independent oil and natural gas company headquartered in Midland, Texas, focused on unconventional reserves in the Permian Basin - Diamondback is an independent oil and natural gas company headquartered in Midland, Texas[20](index=20&type=chunk) - The company focuses on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas[20](index=20&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements, highlighting inherent risks and uncertainties that could impact future results [Disclaimer and Risk Factors](index=7&type=section&id=Disclaimer%20and%20Risk%20Factors) This section contains standard forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections - Statements regarding future performance, business strategy, operations, financial estimates, reserve estimates, and anticipated effects of strategic transactions are considered forward-looking[21](index=21&type=chunk) - Actual outcomes could differ materially due to risks and uncertainties including changes in commodity supply and demand, U.S. energy policies, actions by OPEC and Russia, financial market instability, inflationary pressures, higher interest rates, and regulatory initiatives related to hydraulic fracturing and climate change[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Diamondback operates in a competitive and rapidly changing environment, and new risks may emerge[24](index=24&type=chunk) - The company disclaims any obligation to update or revise any forward-looking statements unless required by applicable law[24](index=24&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents Diamondback Energy's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 [Balance Sheet Overview (June 30, 2025 vs. December 31, 2024)](index=9&type=section&id=Balance%20Sheet%20Overview%20(June%2030%2C%202025%20vs.%20December%2031%2C%202024)) The balance sheet shows the company's financial position as of June 30, 2025, with total assets increasing to **$71.9 billion**, driven by oil and natural gas properties **Key Balance Sheet Data (in millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $71,941 | $67,292 | | Property and equipment, net | $69,229 | $64,472 | | Total Liabilities | $29,122 | $27,430 | | Long-term debt | $15,119 | $12,075 | | Total Equity | $42,819 | $39,862 | - Oil and natural gas properties (full cost method) increased to **$89,302 million** as of June 30, 2025, from **$82,240 million** as of December 31, 2024[26](index=26&type=chunk) - Current maturities of debt significantly decreased to **$14 million** as of June 30, 2025, from **$900 million** as of December 31, 2024[26](index=26&type=chunk) [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides Diamondback Energy's condensed consolidated statements of operations for Q2 and H1 2025 versus 2024 [Income Statement Overview (Q2 and H1 2025 vs. 2024)](index=10&type=section&id=Income%20Statement%20Overview%20(Q2%20and%20H1%202025%20vs.%202024)) For Q2 2025, total revenues were **$3,678 million**, leading to a net income attributable to Diamondback Energy, Inc. of **$699 million** **Total Revenues (in millions):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $3,678 | $2,483 | | H1 | $7,726 | $4,710 | **Net Income Attributable to Diamondback Energy, Inc. (in millions):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $699 | $837 | | H1 | $2,104 | $1,605 | **Earnings (loss) per common share (Diluted):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $2.38 | $4.66 | | H1 | $7.20 | $8.93 | - Total costs and expenses for Q2 2025 increased to **$2,539 million** from **$1,327 million** in Q2 2024, primarily due to higher depreciation, depletion, amortization and accretion[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines Diamondback Energy's condensed consolidated statements of cash flows for Q2 and H1 2025 versus 2024 [Cash Flow Overview (Q2 and H1 2025 vs. 2024)](index=11&type=section&id=Cash%20Flow%20Overview%20(Q2%20and%20H1%202025%20vs.%202024)) Net cash provided by operating activities was **$1,677 million** in Q2 2025, with investing activities resulting in a net cash outflow of **$3,979 million** **Net Cash Provided by Operating Activities (in millions):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $1,677 | $1,529 | | H1 | $4,032 | $2,863 | **Net Cash Used in Investing Activities (in millions):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $(3,979) | $(449) | | H1 | $(5,632) | $(1,200) | - Property acquisitions accounted for **$3,125 million** in Q2 2025 and **$3,875 million** in H1 2025[30](index=30&type=chunk) **Net Cash Provided by (Used in) Financing Activities (in millions):** | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $482 | $4,932 | | H1 | $1,657 | $4,663 | [Selected Operating Data](index=12&type=section&id=Selected%20Operating%20Data) This section details Diamondback Energy's selected operating data, including production, realized prices, and cash operating costs [Production, Prices, and Costs (Q2 2025 vs. Prior Periods)](index=12&type=section&id=Production%2C%20Prices%2C%20and%20Costs%20(Q2%202025%20vs.%20Prior%20Periods)) Diamondback's Q2 2025 production saw significant increases year-over-year, though average realized prices for oil and natural gas decreased compared to Q2 2024 **Production Data:** | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :---------------------- | :------ | :------ | :------ | | Oil (MBbls) | 45,108 | 42,835 | 25,129 | | Natural gas (MMcf) | 110,119 | 100,578 | 51,310 | | Natural gas liquids (MBbls) | 20,248 | 16,961 | 9,514 | | Combined volumes (MBOE) | 83,709 | 76,559 | 43,195 | | Daily oil volumes (BO/d) | 495,692 | 475,944 | 276,143 | | Daily combined volumes (BOE/d) | 919,879 | 850,656 | 474,670 | **Average Unhedged Realized Prices ($):** | Commodity | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------ | :------ | :------ | :------ | | Oil ($ per Bbl) | 63.23 | 70.95 | 79.51 | | Natural gas ($ per Mcf) | 0.88 | 2.11 | 0.10 | | Natural gas liquids ($ per Bbl) | 18.13 | 23.94 | 17.97 | | Combined ($ per BOE) | 39.61 | 47.77 | 50.33 | **Average Hedged Realized Prices ($):** | Commodity | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------ | :------ | :------ | :------ | | Oil ($ per Bbl) | 62.34 | 70.06 | 78.55 | | Natural gas ($ per Mcf) | 1.45 | 3.34 | 1.03 | | Natural gas liquids ($ per Bbl) | 18.13 | 23.94 | 17.97 | | Average price, hedged ($ per BOE) | 39.89 | 48.89 | 50.89 | **Total Operating Expense - Cash ($/BOE):** | Period | Q2 2025 | Q1 2025 | Q2 2024 | | :----- | :------ | :------ | :------ | | Total | $10.10 | $10.48 | $11.67 | [Non-GAAP Financial Measures](index=13&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section provides reconciliations for Diamondback Energy's non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow [Adjusted EBITDA Reconciliation](index=13&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was **$2,442 million** (consolidated) and **$2,311 million** (attributable to Diamondback Energy, Inc.), reflecting adjustments for non-cash items **Consolidated Adjusted EBITDA (in millions):** | Period | Amount | | :----- | :----- | | Q2 2025 | $2,442 | | H1 2025 | $5,389 | **Adjusted EBITDA attributable to Diamondback Energy, Inc. (in millions):** | Period | Amount | | :----- | :----- | | Q2 2025 | $2,311 | | H1 2025 | $5,112 | - Key adjustments for Q2 2025 included adding back **$160 million** in non-cash derivative losses, **$56 million** in net interest expense, **$1,266 million** in DDA, and **$204 million** in income taxes to net income of **$739 million**[36](index=36&type=chunk) [Adjusted Net Income Reconciliation](index=15&type=section&id=Adjusted%20Net%20Income%20Reconciliation) Adjusted net income attributable to Diamondback Energy, Inc. for Q2 2025 was **$785 million** (**$2.67 per diluted share**), excluding specific non-cash and non-operational items - Adjusted net income attributable to Diamondback Energy, Inc. for Q2 2025 was **$785 million**, or **$2.67 per diluted share**[39](index=39&type=chunk) - The adjustment process for Q2 2025 started with net income attributable to Diamondback Energy, Inc. of **$699 million**, adding back **$160 million** for non-cash derivative losses, subtracting **$55 million** for gain on extinguishment of debt, adding **$40 million** for merger and transaction expenses, and applying a **$29 million** income tax adjustment[39](index=39&type=chunk) [Operating Cash Flow Before Working Capital Changes and Free Cash Flow Reconciliation](index=16&type=section&id=Operating%20Cash%20Flow%20Before%20Working%20Capital%20Changes%20and%20Free%20Cash%20Flow%20Reconciliation) Operating cash flow before working capital changes was **$2,106 million** for Q2 2025, resulting in Free Cash Flow of **$1,242 million** and Adjusted Free Cash Flow of **$1,334 million** **Operating Cash Flow Before Working Capital Changes (in millions):** | Period | Amount | | :----- | :----- | | Q2 2025 | $2,106 | | H1 2025 | $4,593 | **Free Cash Flow (in millions):** | Period | Amount | | :----- | :----- | | Q2 2025 | $1,242 | | H1 2025 | $2,787 | **Adjusted Free Cash Flow (in millions):** | Period | Amount | | :----- | :----- | | Q2 2025 | $1,334 | | H1 2025 | $2,917 | - Total Cash CAPEX for Q2 2025 was **$864 million**, which is subtracted from operating cash flow before working capital changes to derive Free Cash Flow[43](index=43&type=chunk) [Net Debt Reconciliation](index=18&type=section&id=Net%20Debt%20Reconciliation) As of June 30, 2025, Diamondback's consolidated net debt was **$15,098 million**, reflecting total debt less cash and cash equivalents - Net debt as of June 30, 2025, was **$15,098 million**[46](index=46&type=chunk) - Total debt as of June 30, 2025, was **$15,317 million**, with cash and cash equivalents of **$(219) million**[46](index=46&type=chunk) - Net debt has increased significantly from **$5,268 million** as of June 30, 2024, to **$15,098 million** as of June 30, 2025[46](index=46&type=chunk) [Derivatives](index=19&type=section&id=DERIVATIVES) This section details Diamondback Energy's outstanding consolidated derivative contracts for crude oil and natural gas [Outstanding Consolidated Derivative Contracts](index=19&type=section&id=Outstanding%20Consolidated%20Derivative%20Contracts) Diamondback has various crude oil and natural gas derivative contracts in place for Q3 2025 through FY 2027 to manage commodity price risk **Crude Oil Derivative Contracts (Q3 2025):** | Type | Volume (Bbls/day) | Price ($/Bbl) | | :-------------------------- | :---------------- | :------------ | | Long Puts - Crude Brent Oil | 41,000 | $55.61 | | Long Puts - WTI (Magellan East Houston) | 107,000 | $54.53 | | Long Puts - WTI (Cushing) | 158,000 | $54.29 | | Basis Swaps - WTI (Midland) | 76,000 | $1.05 | **Natural Gas Derivative Contracts (Q3 2025):** | Type | Volume (Mmbtu/day) | Price/Range ($/Mmbtu) | | :-------------------------- | :------------------- | :-------------------- | | Costless Collars - Henry Hub | 690,000 | Floor $2.49, Ceiling $5.28 | | Natural Gas Basis Swaps - Waha Hub | 610,000 | $-0.98 | | Natural Gas Basis Swaps - Houston Ship Channel | 20,000 | $-0.49 | - The company's crude oil derivative contracts extend through Q2 2026, while natural gas derivative contracts extend through FY 2027[48](index=48&type=chunk)

Core Viewpoint - The company is navigating a challenging macroeconomic environment with a focus on maintaining operational flexibility and financial discipline while preparing for potential future growth in oil production [4][6][7]. Macro Update - The macroeconomic uncertainty discussed in previous communications persists, with U.S. shale oil production likely having peaked and activity levels in the Lower 48 states remaining depressed [4]. - The U.S. oil-directed rig count has decreased by approximately 60 rigs this year, with a notable decline in active completion crews in the Permian Basin [4]. 2025 Guidance Update - The company has reduced its full-year 2025 capital budget by 10% to a range of $3.4 - $3.8 billion due to macroeconomic concerns, with an additional reduction of $100 million to a new range of $3.4 - $3.6 billion [7][8]. - The company plans to operate 13 to 14 rigs and five completion crews for the remainder of the year, expecting to drill approximately 30 more gross wells while completing 10 fewer wells than previously anticipated [8]. Operational Performance - In the second quarter, oil production averaged 496 MBO/d, near the top end of the guidance range, with capital expenditures of $864 million [11]. - The company achieved record-low drilling and completion cycle times, drilling the longest well in its history at a total depth of 31,035 feet [12]. Financial Performance - The company generated $1.7 billion in net cash from operating activities in the second quarter, resulting in $1.2 billion of Free Cash Flow [15]. - Approximately $691 million was returned to stockholders in the second quarter through dividends and stock repurchases, equating to about 52% of Adjusted Free Cash Flow [15]. Share Repurchase Program - The company has repurchased approximately 3.0 million shares for about $398 million in the second quarter, with a total of 6.6 million shares repurchased for $973 million in the first half of 2025 [15][16]. - An incremental $2.0 billion increase to the share repurchase authorization program has been approved, raising the total buyback approval to $8.0 billion [16]. Balance Sheet - Consolidated net debt rose by roughly $2.8 billion following the Double Eagle acquisition, with approximately $15.3 billion of consolidated gross debt reported [17]. - The company plans to continue reducing net debt through Free Cash Flow generation and proceeds from non-core asset sales [17]. Non-Core Asset Sales - The company realized net proceeds of approximately $130 million from the sale of a 10% interest in the BANGL pipeline and is progressing towards a $1.5 billion target for non-core asset sales [19][20].

Core Viewpoint - Viper Energy, Inc. reported strong financial and operational results for Q2 2025, highlighting significant oil production growth and a positive outlook driven by the anticipated merger with Sitio Royalties Corp. [1][4][5] Financial Highlights - Q2 2025 average production reached 41,615 barrels of oil per day (bo/d) and 79,286 barrels of oil equivalent per day (boe/d) [6] - Consolidated net income for Q2 2025 was $84 million, with net income attributable to Viper at $37 million, equating to $0.28 per Class A common share [6][8] - Cash available for distribution to Class A common shares was $97 million, or $0.74 per share, with a declared base cash dividend of $0.33 per share, implying a 3.6% annualized yield [6][12][13] - The company repurchased 255,843 shares of Class A common stock for approximately $10 million during Q2 2025 [6][14] Operational Updates - A total of 302 gross horizontal wells were turned to production during Q2 2025, with an average lateral length of 12,846 feet [6][16] - The company maintains a footprint of approximately 61,275 net royalty acres as of June 30, 2025 [17] Recent Events and Future Outlook - The merger with Sitio is set for a shareholder vote on August 18, 2025, with expectations to close shortly after if approved [4] - Viper anticipates a year-over-year growth of over 15% in Diamondback-operated net oil production, projecting average daily production guidance for Q3 2025 between 46,000 to 49,000 bo/d [5][19] Debt and Capital Management - As of June 30, 2025, Viper had total long-term debt of $1.1 billion, with a target of maintaining net debt at or below $1.5 billion [9][11] - The company completed a public offering of $500 million in senior notes maturing in 2030 and $1.1 billion in senior notes maturing in 2035, with net proceeds used for debt redemption and general corporate purposes [11][10] Production and Pricing - Average unhedged realized prices for Q2 2025 were $63.64 per barrel of oil, $0.99 per Mcf of natural gas, and $20.70 per barrel of natural gas liquids, resulting in a total equivalent realized price of $39.78 per boe [7][8] - The company reported a total operating income of $297 million for Q2 2025 [8]

Core Insights - Diamondback Energy, Inc. reported strong financial and operational results for Q2 2025, with significant increases in production and cash flow metrics [1][2][9]. Financial Performance - Q2 2025 net income was $699 million, or $2.38 per diluted share, with adjusted net income of $785 million, or $2.67 per diluted share [9]. - Net cash provided by operating activities for Q2 2025 was $1.7 billion, with consolidated adjusted EBITDA of $2.4 billion [11][12]. - Free cash flow for Q2 2025 was $1.2 billion, with adjusted free cash flow of $1.3 billion [12]. Operational Highlights - Average oil production reached 495.7 MBO/d, with total equivalent production of 919.9 MBOE/d for Q2 2025 [7][35]. - The company drilled 122 gross wells and completed 116 gross wells in Q2 2025, with a total of 248 gross wells drilled and 239 completed in the first half of 2025 [4][8]. Capital Expenditures and Shareholder Returns - Cash capital expenditures for Q2 2025 totaled $864 million, with a full-year guidance reduction to $3.4 - $3.6 billion [7][18]. - The company declared a base cash dividend of $1.00 per share, representing a 2.7% annualized yield based on the closing share price of $146.14 on August 1, 2025 [7][16]. - Diamondback repurchased approximately 3 million shares for $398 million in Q2 2025 and increased its share repurchase authorization to $8 billion [17]. Updated Guidance - The company narrowed its full-year oil production guidance to 485 - 492 MBO/d and increased annual BOE guidance by 2% to 890 - 910 MBOE/d [7][18]. - Q3 2025 oil production guidance is set at 485 - 495 MBO/d, with cash capital expenditures expected to be between $750 - $850 million [7][18].

Core Viewpoint - Diamondback Energy is navigating the current volatile oil market successfully, contrasting with many exploration and production (E&P) companies that are struggling [1]. Group 1: Company Performance - Diamondback Energy is performing well despite fluctuations in oil prices, indicating strong operational resilience [1]. Group 2: Market Context - The broader E&P sector is facing challenges due to unstable oil prices, which are affecting many companies negatively [1].

Core Viewpoint - Diamondback Energy (FANG) is expected to report a significant decline in quarterly earnings per share while experiencing a notable increase in revenues compared to the previous year [1]. Earnings Estimates - Wall Street analysts predict quarterly earnings of $2.63 per share, reflecting a decline of 41.8% year-over-year [1]. - The consensus EPS estimate has been adjusted upward by 6.8% over the past 30 days, indicating a reassessment of projections by analysts [2]. Revenue Projections - Total revenues are forecasted to be $3.37 billion, representing a year-over-year increase of 35.8% [1]. - Analysts estimate revenues from oil, natural gas, and natural gas liquids to reach $3.21 billion, indicating a change of +47.8% from the prior-year quarter [5]. - Oil sales revenues are projected at $2.73 billion, suggesting a +36.7% year-over-year change [5]. - Revenues from natural gas liquid sales are expected to reach $320.12 million, reflecting an increase of +87.2% year-over-year [5]. - Natural gas sales revenues are predicted to be $115.33 million, indicating a substantial year-over-year change of +2206.6% [6]. Production Metrics - Average daily production is expected to be 890,056 barrels of oil equivalent per day, up from 474,670 barrels in the same quarter last year [6]. - Total production volume is projected at 80,985 thousand barrels of oil equivalent, compared to 43,195 thousand barrels in the same quarter of the previous year [7]. - Total production volume for oil is estimated at 44,921 thousand barrels, up from 25,129 thousand barrels year-over-year [8]. - Total production volume for natural gas liquids is expected to be 18,364 thousand barrels, compared to 9,514 thousand barrels in the same quarter last year [9]. Price Estimates - Average prices for natural gas liquids are projected to be $18 per barrel, consistent with the previous year's figure [7][9]. - Average prices for oil are expected to reach $63 per barrel, down from $80 per barrel in the same quarter last year [10]. - Average prices for hedged natural gas liquids are estimated at $18 per barrel, unchanged from the previous year [7]. Market Performance - Diamondback shares have shown a return of +6.4% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [11].

Core Viewpoint - Diamondback Energy (FANG) is expected to report second-quarter 2025 results on August 4, with a consensus estimate of $2.63 earnings per share and $3.4 billion in revenues, reflecting a significant year-over-year revenue increase of 35.9% despite a projected earnings decline of 41.8% [1][3][9]. Group 1: Previous Performance - In the first quarter, Diamondback reported adjusted earnings per share of $4.54, exceeding the Zacks Consensus Estimate of $4.09, with revenues of $4 billion surpassing estimates by 8.1% [2]. - The company has beaten the Zacks Consensus Estimate in three of the last four quarters, indicating a strong performance trend [3]. Group 2: Production and Operations - Diamondback holds approximately 900,000 net acres in the Delaware and Midland regions, with nearly 9,600 drilling locations and a production capacity exceeding 880,000 barrels of oil equivalent per day [4]. - The company’s wells have low oil price breakeven costs, requiring prices below $40 per barrel to remain profitable [4]. - Following the $26 billion acquisition of Endeavor Energy, Diamondback is expected to benefit from increased production, with an anticipated average second-quarter volume of 884,987.3 BOE/d, representing an 86.4% increase from the previous year [5][6]. Group 3: Earnings Expectations - The current earnings model suggests a likely earnings beat for Diamondback, supported by a positive Earnings ESP of +1.28% and a Zacks Rank of 3 [7]. - The consensus estimate for the second quarter indicates a significant decline in earnings year-over-year, contrasting with the expected revenue growth [3][9].

In the latest trading session, Diamondback Energy (FANG) closed at $152.50, marking a +1.32% move from the previous day. The stock outperformed the S&P 500, which registered a daily loss of 0.3%. On the other hand, the Dow registered a loss of 0.46%, and the technology-centric Nasdaq decreased by 0.38%. The energy exploration and production company's shares have seen an increase of 9.55% over the last month, surpassing the Oils-Energy sector's gain of 3.2% and the S&P 500's gain of 3.64%.The upcoming earnin ...

Industry Overview - The Zacks Oil and Gas Exploration and Production – United States industry is crucial to the U.S. energy framework, focusing on identifying and extracting oil and gas reserves [2] - The U.S. is a leading global producer of oil and natural gas, with significant production areas including the Permian Basin and Eagle Ford [2] - Innovations like hydraulic fracturing and horizontal drilling have significantly boosted domestic production, reducing reliance on imports [2] Environmental and Regulatory Challenges - The industry is facing increasing environmental challenges, stricter regulations, and a global shift towards renewable energy [3] - Volatile commodity prices impact investment decisions and operational strategies [3] - U.S. E&P companies are enhancing efficiency, reducing emissions, and adopting sustainable practices to remain competitive [3] Company Profiles Devon Energy Corporation (DVN) - Devon Energy is recognized as a top-tier U.S. onshore oil and gas producer with a diversified asset base and strong capital management [4] - The company consistently generates robust free cash flow and engages in shareholder-friendly initiatives, including a variable dividend program [4] - Devon's low-cost operating structure and strong balance sheet position it well to benefit from ongoing hydrocarbon demand [4] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 14.11% for 2025, with a modest growth of 2.09% for 2026 [7] - Devon's current ROE is 21.9%, outperforming both Diamondback Energy and the industry average of 16.74% [13] - The company plans to invest between $3.7 billion and $3.9 billion in capital expenditures for 2025 [19] - Devon Energy trades at a lower EV/EBITDA of 3.6X compared to Diamondback's 6.84X [16] Diamondback Energy Inc. (FANG) - Diamondback Energy is a low-cost operator in the Permian Basin, focusing on capital discipline and shareholder value [5] - The company has high-margin assets and consistently produces strong free cash flow [5] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 19.19% for 2025 and 12.63% for 2026 [10] - Diamondback's current ROE is 11.22%, which is lower than Devon's [13] - The company has reduced its 2025 capital budget by $400 million, resulting in a total investment range of $3.4 billion to $3.8 billion [19] Financial Metrics Comparison - Devon Energy's dividend yield is 2.88%, while Diamondback Energy's is 2.75%, both exceeding the S&P 500's yield of 1.46% [12] - Devon has a debt to capital ratio of 36.24%, compared to Diamondback's 23.74% [14] - Devon's liquidity ratio is 1.08, indicating sufficient liquidity to meet near-term obligations, while Diamondback's is 0.86 [14] Conclusion - Devon Energy is favored due to its multi-basin portfolio, cheaper valuation, higher dividend yield, and better ROE compared to Diamondback Energy [21]