Diamondback Energy(FANG) - 2025 Q2 - Quarterly Results

Second Quarter 2025 and Recent Highlights 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 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] - Net cash provided by operating activities was $1.7 billion, with Operating Cash Flow Before Working Capital Changes at $2.1 billion[4] - Free Cash Flow was $1.2 billion, and Adjusted Free Cash Flow was $1.3 billion[4] - A Q2 2025 base cash dividend of $1.00 per share was declared, implying a 2.7% annualized yield[4] - 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] - Total Q2 2025 return of capital was $691 million, representing approximately 52% of Adjusted Free Cash Flow[4] - 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] - Repurchased $252 million in aggregate principal amount of senior notes at a weighted average price of 76.8% of par (~$196 million)[4] Updated 2025 Guidance Highlights 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 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] - Annual BOE guidance increased by 2% to 890 - 910 MBOE/d[4] - 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] - 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] - 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] - Q3 2025 oil production guidance is 485 - 495 MBO/d (890 - 920 MBOE/d) and cash capital expenditures guidance is $750 - $850 million[4] Operations Update This section details Diamondback Energy's Q2 and H1 2025 drilling and completion activities, primarily in the Midland Basin Drilling and Completion Activity Summary 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] - 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] Detailed Operated Activity by Formation 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] Financial Update This section provides a comprehensive overview of Diamondback Energy's Q2 2025 financial performance, including income, cash flow, and debt Q2 2025 Financial Performance 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] - Adjusted net income for Q2 2025 was $785 million, or $2.67 per diluted share[7] Cash Flow and Capital Expenditures The company generated significant operating and free cash flow in Q2 and H1 2025, with capital expenditures focused on drilling and completions Net Cash Provided by Operating Activities: | Period | Amount ($ 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 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 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] - Approximately $1.9 billion was available for future borrowings under the facility, resulting in approximately $2.1 billion of total liquidity[14] - Consolidated total debt was $15.3 billion and consolidated net debt was $15.1 billion as of June 30, 2025[14] Dividend Declarations This section details Diamondback Energy's Q2 2025 base cash dividend declaration and future dividend policy Q2 2025 Base Cash Dividend 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] - The dividend is payable on August 21, 2025, to stockholders of record at the close of business on August 14, 2025[15] - Future base and variable dividends remain subject to review and approval at the discretion of the Company's Board of Directors[15] Common Stock Repurchase Program This section summarizes Diamondback Energy's share repurchase activities and the significant increase in its buyback authorization Share Repurchase Activity and Authorization Increase 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] - 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] - 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 $3.5 billion remaining available[16] - Diamondback intends to continue opportunistic common stock purchases using cash on hand, free cash flow from operations, and proceeds from potential liquidity events[16] Full Year 2025 Guidance This section presents Diamondback Energy's detailed full-year 2025 guidance for production, costs, and capital expenditures Detailed 2025 Guidance Table This table provides a comprehensive breakdown of Diamondback Energy's updated full-year 2025 guidance, excluding the pending Sitio Acquisition 2025 Guidance Summary (Diamondback Energy, Inc.): | Metric | 2025 Guidance (Current) | 2025 Guidance (Previous) | | :-------------------------------------- | :-------------------------- | :------------------------- | | Net production - MBOE/d | 890 - 910 | 857 - 900 | | Oil production - MBO/d | 485 - 492 | 480 - 495 | | Q3 2025 Oil production - MBO/d (total - MBOE/d) | 485 - 495 (890 - 920) | N/A | | Unit costs ($/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 This section provides details for Diamondback Energy's Q2 2025 earnings conference call and webcast Q2 2025 Earnings Conference Call Details 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] - Access to the live webcast and replay will be available via Diamondback's website under the 'Investor Relations' section[19] About Diamondback Energy, Inc. This section describes Diamondback Energy, Inc.'s company profile, focusing on its operations in the Permian Basin Company Profile and Focus 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] - 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] Forward-Looking Statements This section contains standard forward-looking statements, highlighting inherent risks and uncertainties that could impact future results Disclaimer and Risk Factors 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] - 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][22][23] - Diamondback operates in a competitive and rapidly changing environment, and new risks may emerge[24] - The company disclaims any obligation to update or revise any forward-looking statements unless required by applicable law[24] Condensed Consolidated Balance Sheets 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) 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] - Current maturities of debt significantly decreased to $14 million as of June 30, 2025, from $900 million as of December 31, 2024[26] Condensed Consolidated Statements of Operations 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) 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] Condensed Consolidated Statements of Cash Flows 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) 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] Net Cash Provided by (Used in) Financing Activities (in millions): | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $482 | $4,932 | | H1 | $1,657 | $4,663 | Selected Operating Data This section details Diamondback Energy's selected operating data, including production, realized prices, and cash operating costs Production, Prices, and Costs (Q2 2025 vs. Prior Periods) Diamondback's Q2 2025 production saw significant increases year-over-year, though average realized prices for oil and natural gas decreased compared to Q2 2024 Production Data: | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :---------------------- | :------ | :------ | :------ | | Oil (MBbls) | 45,108 | 42,835 | 25,129 | | Natural gas (MMcf) | 110,119 | 100,578 | 51,310 | | Natural gas liquids (MBbls) | 20,248 | 16,961 | 9,514 | | Combined volumes (MBOE) | 83,709 | 76,559 | 43,195 | | Daily oil volumes (BO/d) | 495,692 | 475,944 | 276,143 | | Daily combined volumes (BOE/d) | 919,879 | 850,656 | 474,670 | Average Unhedged Realized Prices ($): | 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 This section provides reconciliations for Diamondback Energy's non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow Adjusted EBITDA Reconciliation 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] Adjusted Net Income Reconciliation 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] - 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] Operating Cash Flow Before Working Capital Changes and Free Cash Flow Reconciliation 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] Net Debt Reconciliation 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] - Total debt as of June 30, 2025, was $15,317 million, with cash and cash equivalents of $(219) million[46] - Net debt has increased significantly from $5,268 million as of June 30, 2024, to $15,098 million as of June 30, 2025[46] Derivatives This section details Diamondback Energy's outstanding consolidated derivative contracts for crude oil and natural gas Outstanding Consolidated Derivative Contracts Diamondback has various crude oil and natural gas derivative contracts in place for Q3 2025 through FY 2027 to manage commodity price risk Crude Oil Derivative Contracts (Q3 2025): | Type | Volume (Bbls/day) | Price ($/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]