FANG 10-K & 10-Q changes, risk factors and insider trading
Diamondback Energy, Inc. · Nasdaq · Crude Petroleum & Natural Gas · CIK 1539838 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations.”
New heading “Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves.”
New heading “Failure to comply with cybersecurity and data privacy laws and regulations could have a material adverse effect on our reputation, results of operations or financial condition.”
New heading “Our substantial indebtedness could adversely affect our results of operations, business flexibility and our ability to service our debt.”
New heading “The provision of our certificate of incorporation and bylaws requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against us and our directors, officers and employees.”
Removed heading “Conservation measures and technological advances could reduce demand for oil and natural gas.”
Removed heading “A significant portion of our net leasehold acreage is undeveloped, and that acreage may not ultimately be developed or become commercially productive, which could cause us to lose rights under our leases as well as have a material adverse effect on our oil and natural gas reserves and future production and, therefore, our future cash flow and income.”
Removed heading “Our success depends on finding, developing or acquiring additional reserves.”
Removed heading “The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate.”
Removed heading “We depend upon several significant purchasers for the sale of most of our oil and natural gas production. The loss of one or more of these purchasers could, among other factors, limit our access to suitable markets for the oil and natural gas we produce.”
Removed heading “Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.”
Removed heading “Derivatives reform legislation and related regulations could have an adverse effect on our ability to hedge risks associated with our business.”
Removed heading “We rely on a few key employees whose absence or loss could adversely affect our business.”
Removed heading “Our use of 2-D and 3-D seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations.”
Removed heading “We own interests in certain pipeline projects and other joint ventures, and we may in the future enter into additional joint ventures, and our control of such entities is limited by provisions of the governing documents of such entities and by our percentage ownership in such entities.”
Removed heading “A terrorist attack or armed conflict could harm our business.”
Removed heading “We are subject to cybersecurity risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.”
Removed heading “Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.”
Removed heading “The significant additional indebtedness incurred in connection with the Endeavor Acquisition, as well as additional indebtedness that may be incurred in connection with future acquisitions, may limit our operating or financial flexibility and make it difficult to satisfy our obligations with respect to our other indebtedness.”
Removed heading “We and our subsidiaries may still be able to incur substantial additional indebtedness in the future, which could further exacerbate the risks that we and our subsidiaries face.”
Removed heading “Implementing our capital programs may require, under some circumstances, an increase in our total leverage through additional debt issuances, and any significant reduction in availability under our revolving credit facility or inability to otherwise obtain financing for our capital programs could require us to curtail our capital expenditures.”
Removed heading “Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities.”
Removed heading “We depend on our subsidiaries for dividends and other payments.”
Removed heading “Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk.”
Removed heading “The market value of our common stock could decline if large amounts of our common stock are sold following the Endeavor Acquisition and the pending Double Eagle Acquisition.”
Largest changes
“Risks from cybersecurity threats have not materially affected, and are not currently anticipated to materially affect our company, including our business strategy, results of operations and financial condition. …”see in full comparison
“Our IT Systems and Confidential Information, and that of our vendors, service providers and other third-party providers and business partners, are vulnerable to evolving cybersecurity threats, including, without limitation, denial-of-service attacks; malicious software (e.g., ransomware); the exploitation of known and unknown misconfigurations, “bugs,” and other hardware or software vulnerabilities; data privacy breaches by employees, insiders or others with authorized access; social engineering (e.g. …”see in full comparison
“A significant cybersecurity attack or incident that compromises our Confidential Information or disrupts our normal operations, including our exploration, completion, production and corporate functions, could materially and adversely affect us in a variety of ways, including, but not limited to the following: exploitation of our Confidential Information such as business data, reserves information, strategic information or other sensitive or proprietary information or personal information of our employees, vendors, service providers, royalty and working interest owners, or other third parties; …”see in full comparison
Certain of our debt instruments contain, and the terms of any future indebtedness may contain, restrictive covenants that limit our ability to, among other things: incur or guarantee additional indebtedness; make certain investments; create liens; sell or transfer assets; issue preferred stock; merge or consolidate with another entity; pay dividends or make other distributions; create unrestricted subsidiaries; and engage in transactions with affiliates.see in full comparisonAWebreachand our subsidiaries may be prevented from taking advantage ofanybusiness opportunities that arise because ofthesethe limitations imposed on us by the restrictivecovenantscovenants.couldIf a default occurs under our revolving credit facility, the lenders thereunder may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable, which would result in an event of default under theapplicableindenturesdebtgoverninginstrument.our senior notes. The lenders will also have the right in these circumstances to terminate any commitments they have to provide further borrowings.
Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us. If any of these developments reduce the desirability of participating in the oilfield services, midstream or downstream portions of the oil and gas industry, then these developments may also reduce the availability to us of necessary third-party services and facilities that we rely on, which could increase our operational costs and adversely affect our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategy.see in full comparisonThe enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation.
The enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation. For further discussion regarding the risks to us of climate change-related regulations, policies and initiatives, please see the section entitled Items 1 and 2. Business and Properties—Regulation—Climate Change of this report.see in full comparison
Full comparison: every changed paragraph (159)
The nature of our business activities subjects us to certain hazards and risks. The following is a summary of some of the material risks relating to our business activities. Other risks are described in Items 1 and 2. “Business and Properties,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.” These risks are not the only risks we face. We could also face additional risks and uncertainties not currently known to us or that we currently deem to be immaterial. If any of these risks actually occurs, it could materially harm our business, financial condition or results of operations and the trading price of our shares could decline.
•MarketGeopolitics conditionsand market conditions, and particularly volatility in prices for oil and natural gasgas, may adversely affect our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves.
•Changes in U.S. trade policy and the impact of tariffs may have a material adverse impact on our business and results of operations.
•The IRA and other risksRisks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us.
•Changing political and social perspectives on climate change and other environmental, social and governance factors may create risks and uncertainties impacting our business.
•Our targets related to sustainability and emissions reduction initiatives, including our public statements and disclosures regarding them, may expose us to numerous risks.
•Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves.
•Climate change-related regulations, policies and initiatives may have other adverse effects, such as a greater potential for governmental investigations or litigation.
•We may be unable to obtain needed capital or financing on satisfactory terms or at all to fund our acquisitionsacquisitions, exploration or development activities, which could lead to a loss of properties and a decline in our oil and natural gas reserves and future production.activities.
•Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings, and title defects in the properties in which we invest may lead to losses.earnings.
•If production from our Permian Basin acreage decreases, weWe may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contract, which may adversely affect our operations.contracts.
•The inabilityloss of one or more of our customers or their inability to meet their obligations, or loss of one or more of our significant purchasers,obligations may adversely affect our financial results.
•The standardized measure of our estimated proved reserves is not necessarily the same as the current market value of our estimated proved reserves.
•If transportation or other facilities, certain of which we do not control, or rigs, equipment, raw materials, oilsupplies, oilfield services or personnel arebecome unavailable,unavailable or too costly, our operations could be interrupted and our revenues reduced.
•Restrictions on our ability to obtain water and dispose of produced water, and additional monitoring and reporting requirements related to existing and new produced water disposal wells in the Permian Basin could adversely impact our business, results of operations and financial condition.
•Our planned exploratory drilling in existing or emerging shale plays is subject to risks associated with drilling and completion techniques.
•Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive and may impose restrictions on our operations.expensive.
•U.S. tax legislation, including recently adopted IRA,legislation may negatively affect our business, results of operations, financial condition and cash flow.
•We operate in areas of high industry activity, which may affect our ability to hire, train or retain qualified personnel needed to manage and operate our assets.
•Operating hazards and uninsured risks may result in substantial losses and could prevent us from realizing profits.
•We may not be able to keep pace with technological developments in our industry.
•Our operations depend heavily on electrical power, internet and telecommunication infrastructure and information and computer systems. If any of these systems are compromised or unavailable, our business could be adversely affected.
•Legal proceedings brought against us could result in substantial liabilities and materially and adversely impact our financial condition.
•Failure to comply with cybersecurity and data privacy laws and regulations could have a material effect on our reputation, results of operations or financial loss.
•Drilling for and producing oil and natural gas are high-risk activities with many uncertainties that may result in a total loss of investment and adversely affect our business, financial condition or results of operations.
•We rely on a few key employees whose absence or loss could adversely affect our business.
•A terrorist attack or armed conflict could harm our business and could adversely affect our business.
•A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.
•Our substantial level of indebtedness could adversely affect our financialresults conditionof andoperations, preventbusiness us from fulfilling our obligations under our indebtedness, and weflexibility and our subsidiaries may be ableability to incurservice substantialour additional indebtedness in the future.debt.
•The significant additional indebtedness incurred in connection with the Endeavor Acquisition may limit our operating or financial flexibility relative to our current position and make it difficult to satisfy our obligations with respect to our other indebtedness.
•Implementing our capital programs may require, under some circumstances, an increase in our total leverage through additional debt issuances, and any significant reduction in availability under our revolving credit facility or inability to otherwise obtain financing for our capital programs could require us to curtail our capital expenditures.
•Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities.
•We depend on our subsidiaries for dividends and other payments.
•If we experience liquidity concerns, we could face aA downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.
•Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk.
•The market value of our common stock could decline if large amounts of our common stock are sold following the Endeavor Acquisition.
•A change of control could limit our use of net operating losses.losses and certain other tax attributes.
•The provision of our certificate of incorporation and bylaws requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against us and our directors, officers and employees.
MarketGeopolitics and market conditions for oil and natural gas, and particularly volatility in prices for oil and natural gas, have in the past adversely affected, and may in the future adversely affect, our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves.
Our revenues, operating results, profitability, future rate of growth and the carrying value of our oil and natural gas properties depend significantly upon the prevailing prices for oil and natural gas. Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, including the domestic and foreign supply of oil and natural gas; the level of prices and expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports; political and economic conditions in oil producing countries,countries; includingregional the Middle East, Africa, South Americaconflicts and Russia;political the potential impact of the war in Ukraine, the Israel-Hamas War and other conflicts in the Middle East on the global energy markets and macroeconomic conditionsinstability; the continued threat of terrorismterrorism, including attacks targeting oil and gas facilities and the impact of military and other action, including U.S. military operations in the Middle Eastaction; the ability of members of the OPEC+ to agree to and maintain oil price and production controls; speculative trading in crude oil and natural gas derivative contracts; the level of consumer product demand; extreme weather conditions and other natural disasters; risks associated with operating drilling rigs; technological advances affecting energy consumption; the price and availability of alternative fuels; domestic and foreign governmental regulations and taxes, including the new administration’s energy and environmental policiestaxes; global or national health concerns, including the outbreak of pandemic or contagious disease; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; and overall domestic and global economic conditions. Our results of operations may also be adversely impacted by any future government rule, regulation or order that may impose production limits, as well as pipeline capacity and storage constraints, in the Permian Basin where we operate.
These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty. From the beginning of 20222023 through the end of 2024, NYMEX2025, WTI prices ranged from $65.75$55.27 to $123.70$93.68 per Bbl and the NYMEX Henry Hub price of natural gas ranged from $1.58 to $9.68$5.29 per MMBtu. If the prices of oil and natural gas decline, our operations,production, financialproved conditionreserves and levelcash offlows expendituresare forlikely the development of our oil and natural gas reserves mayto be materially and adversely affected.impacted.
Primarily as a result of our Endeavor Acquisition, the Viper Tumbleweed Acquisitions, and the pending Double Eagle Acquisition, if consummated, we expect to increase our fourth quarter 2024 production levels in 2025. We cannot reasonably predict whether production levels will remain at current levels or the full extent of the impact of the events above and any subsequent recovery may have on our industry and our business.
If commodity prices fall below current levels, we may be required to record impairments in future periods and such impairments could be material. Further, if commodity prices decrease, our production, proved reserves and cash flows will be adversely impacted. Reductions in our reserves could also negatively impact the borrowing base under our revolving credit facility, which could limit our liquidity and ability to conduct additional exploration and development activities.
We use commodity price derivatives, which have historically included swaps, basis swaps, swaptions, roll hedges, costless collars, puts and basis puts, to reduce price volatility associated with certain of our oil, natural gas liquids and natural gas liquids sales. Currently, we have hedged a portion of our estimated 20252026 and 20262027 production. To the extent that the prices of oil, natural gas liquids and natural gas liquids remain at current levels or decline further, we may not be able to economically hedge additional future production at the same level as our current commodity price derivatives, and our results of operations and financial condition may be negatively impacted. While these commodity price derivatives are intended to mitigate risk from commodity price volatility, we may be prevented from fully realizing the benefits of increases in the prices of oil, natural gas liquids and natural gas liquids above the price levels of the commodity price derivatives used to manage price risk.
Additionally, U.S. and non‑U.S. derivatives reforms (including the Dodd‑Frank Act) impose clearing, margin and other requirements. While we do not expect material direct effects, our counterparties’ compliance could increase our hedging costs, limit instrument availability, and heighten counterparty credit exposure, leading to greater earnings and cash flow volatility. These regulations could also depress commodity prices, further reducing our revenues.
Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations.
Our business and results of operations may be adversely affected by uncertainty and changes in U.S. trade policies, including tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments. The recent uncertainty over such policies has caused substantial volatility in commodity, capital and financial markets, increased concerns over domestic and global inflation and adversely impacted consumer confidence in the U.S. and worldwide.
Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy, and ultimately reduced demand for oil and natural gas. Such conditions could have a material adverse impact on our business, results of operations and cash flows. Also, disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital. Such adverse changes could increase our costs of capital and limit our access to external financing sources to fund acquisitions, repurchases of securities or other capital requirements.
Changes in tariffs and trade restrictions can be announced with little or no advance notice. The adoption and expansion of tariffs or other trade restrictions, increasing trade tensions, or other changes in governmental policies related to taxes and tariffs, are difficult to predict, which makes attendant risks difficult to anticipate and mitigate. If we are unable to navigate further changes in U.S. or international trade policy, it could have a material adverse impact on our business and results of operations.
The IRA and other risksRisks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us.
Governmental and regulatory bodies, investors, consumers, industry and other stakeholders have beenevolving increasinglyand focusedvaried views on climate change matters in recent years. ThisSuch focus,views, together with changes in consumer and industrial/commercial behavior, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in;: (i) the enactment of new or evolving climate change-related regulations, policies and initiatives by governments, investors, and other companies, including alternative energy or “zero carbon” requirements and fuel or energy conservation measures; (ii) technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar and hydrogen power, as well as battery technology); (iii) increasedvariability availability of, and increasedin demand from consumers and industry for,for energy sources other than oil and natural gas (including wind, solar, nuclear, and geothermal sources as well as electric vehicles); and (iv) development of, and increasedvariable demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies) as well as more efficient products and services.
Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us.
Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us. If any of these developments reduce the desirability of participating in the oilfield services, midstream or downstream portions of the oil and gas industry, then these developments may also reduce the availability to us of necessary third-party services and facilities that we rely on, which could increase our operational costs and adversely affect our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategy. The enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation.
In recent years, federal, state and local governments have taken steps to reduce emissions of greenhouse gases. For example, the Infrastructure Investment and Jobs Act and the IRA include billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration. Also, in March 2024, the EPA finalized ambitious rules to reduce harmful air pollutant emissions, including greenhouse gases, from light-, medium-, and heavy-duty vehicles beginning in model year 2027. These incentives and regulations could accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for, and in turn the prices of, the oil and natural gas that we produce and sell and adversely impact our business. In addition, the IRA imposes the first ever federal fee on the emission of greenhouse gases through a methane emissions charge, which could increase our operating costs and thereby adversely impact our business, financial condition and cash flows. On January 20, 2025, President Trump signed multiple executive orders seeking to reverse these climate incentives, including pausing the disbursement of funds under the IRA. The same day, President Trump also issued executive orders to encourage fossil fuel production and exploration on federal lands and waters, while moving away from incentivizing renewable energy and electric vehicles. It is unclear what effect those actions will have.
In addition to potentially reducing demand for our oil and natural gas and potentially reducing the availability of oilfield services and midstream and downstream customers, any further regulatory or other climate change incentives, to the extent they continue, may create reputational risks associated with the exploration for, and production of, hydrocarbons, which may adversely affect the availability and cost to us of capital. For example, in recent years, certain stakeholders and capital providers sought to restrict or seek more stringent conditions with respect to their investment in or financing of certain carbon intensive sectors. If financial institutions and other investors refuse to invest in or provide capital to the oil and gas sector in the future because of these reputational risks, that could result in capital being unavailable to us, or only at significantly increased costs.
The enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation. For further discussion regarding the risks to us of climate change-related regulations, policies and initiatives, please see the section entitled Items 1 and 2. Business and Properties—Regulation—Climate Change of this report.
In addition to potentially reducing demand for our oil and natural gas and potentially reducing the availability of oilfield services and midstream and downstream customers, further regulatory or other climate change incentives, to the extent they continue, may create investment and reputational risks associated with the exploration for, and production of, hydrocarbons, which may adversely affect the availability and cost to us of capital. Certain stakeholders and capital providers may seek to restrict or seek to impose stringent conditions with respect to their investment in or financing of certain carbon intensive sectors, which could result in capital being unavailable to us, or only at significantly increased costs.
InWe recentmay years,not increasedbe attentionable to globalmeet evolving expectations of stakeholders, including governmental officials, standard setters, investors, employees, and customers, relating to climate changechange, resultedhuman in increased investor attentioncapital, and another increasedESG riskissues. For example, while some policymakers, including the European Union and the State of publicCalifornia, have adopted disclosure and privateother litigation.requirements relating to ESG matters, other policymakers have sought to constrain companies’ consideration of such matters. Further, shareholders have sought to effect changes to public companies’ businesses or governance to deal with climate change-related issues through shareholder proposals, public campaigns, proxy solicitations or other actions. Any such future actions may result in significant management distraction and potentially significant expense.
We have developed, and will continue to develop, targets related to our environmental, social and governance (“ESG”) initiatives, including our emissions reduction targets and strategy. Statements in this and other reports we file with the SEC and other public statements related to these initiatives reflect our current plans and expectations and are not a guarantee the targets will be achieved or achieved on the currently anticipated timeline. Our ability to achieve our ESG targets, including emissions reductions, is subject to numerous factors and conditions, some of which are outside of our control, and failure to achieve our announced targets or comply with ethical, environmental or other standards, including reporting standards, may expose us to government enforcement actions or private litigation and adversely impact our business. Further, our continuing efforts to research, establish, accomplish and accurately report on these targets may create additional operational risks and expenses and expose us to reputational, legal and other risks.
ESG expectations, including both the matters in focus and the management of such matters, as well as perspectives on the efficacy of ESG considerations, continue to evolve, and we cannot currently predict how regulators’, investors’ and other stakeholders’ views on ESG matters may affect the regulatory and investment landscape and affect our business, financial condition, and results of operations. Further, in response to the evolving regulatory environment and investor expectations, or due to our acquisitions of other companies or assets, we may, periodically, make adjustments to our environmental targets or goals. If we do not, or are perceived to not, adapt or comply with certain investor or stakeholder expectations and standards on ESG matters, we may suffer from reputational damage and our business, financial condition and results of operations could be materially and adversely affected. Any reputational damage associated with ESG factors may also adversely impact our ability to recruit and retain employees and customers.
Management's Discussion & Analysis (MD&A)
New heading “Diamondback Acquisition and Divestitures”
New heading “EPIC Divestiture”
New heading “Divestiture of Water Assets to Deep Blue”
New heading “Viper Acquisitions and Divestitures”
New heading “Divestiture of Non-Permian Assets”
New heading “Sitio Acquisition”
New heading “Diamondback Capital Transactions”
New heading “2025 Term Loan Agreement”
New heading “2035 Notes Offering”
New heading “Diamondback Retirement of Notes”
New heading “Viper Capital Transactions”
New heading “Viper 2025 Notes Offering and Retirement of Notes”
New heading “Viper 2025 Term Loan”
New heading “Comparison of the Years Ended December 31, 2025 and 2024”
New heading “Viper’s Revolving Credit Facility”
Removed heading “2025 Transactions”
Removed heading “Pending 2025 Drop Down Transaction”
Removed heading “2024 Diamondback Acquisitions and Divestitures”
Removed heading “Endeavor Acquisition”
Removed heading “TRP Energy, LLC Asset Exchange”
Removed heading “WTG Midstream Transaction”
Removed heading “2024 Viper Acquisitions”
Removed heading “Viper Tumbleweed Acquisitions”
Removed heading “2024 Capital Transactions”
Removed heading “Viper 2024 Equity Offering”
Removed heading “April 2024 Notes Offering”
Removed heading “Term Loan Agreement”
Removed heading “Comparison of the Years Ended December 31, 2024 and 2023”
Largest changes
“In addition to commodity prices, our production rates, levels of proved reserves, future development costs, transfers of unevaluated properties, income tax rate assumptions and other factors will determine our actual ceiling test calculation and impairment analysis in future periods. If the trailing 12-month commodity prices fall as compared to the commodity prices used in prior quarters, we may have material write-downs in subsequent quarters. …”see in full comparison
Prices for oil, natural gas and natural gas liquids are determined primarily by prevailing market conditions. Regional and worldwide economic activity, changes in trade or other government policies or regulations, including with respect to U.S. energy and monetary policies, tariffs or other trade barriers and any resulting trade tensions, regional conflicts and political instability, extreme weather conditions and other substantially variable factors, influence market conditions for these products. These factors are beyond our control and are difficult to predict. Duringsee in full comparison2024,2025,20232024 and2022 the NYMEX2023, WTI prices averaged$75.76,$64.73,$77.60$75.76 and$94.33$77.60 per Bbl, respectively, andthe NYMEXHenry Hub prices averaged$2.41,$3.62,$2.66$2.41 and$6.54$2.66 per MMBtu, respectively.
“During the year ended December 31, 2024, net cash provided by financing activities was primarily attributable to (i) $5.5 billion of proceeds from the issuance of the April 2024 Notes, (ii) $900 million in borrowings on our Tranche A Loans, net of repayments, (iii) $476 million in proceeds from the Viper 2024 Equity Offering (as defined and discussed in Note 9—Stockholders’ Equity and Earnings (Loss) Per Share in Item 8. …”see in full comparison
Full comparison: every changed paragraph (182)
•Recorded net income of $1.7 billion, which includes impairment of approximately $3.7 billion recorded on our proved oil and natural gas properties during the fourth quarter of 2025.
•We recorded net income of $3.3 billion.
•Increased our annual base dividend to $4.00 per share of common stock in the fourth quarter of 2024, paid dividends to stockholders of $1.6 billion during 2024 and declared a base cash dividend payable in the first quarter of 2025 of $1.00 per share of common stock.
•Increased our common stock repurchase program authorization to $6.0 billion, excluding excise taxes, and repurchased $959 million of our common stock, leaving approximately $2.7 billion available for future purchases under our common stock repurchase program at December 31, 2024.
•Issued the April 2024 Notes for an aggregate of $5.5 billion in proceeds and incurred $1.0 billion in initial borrowings under the Tranche A Loans (as defined below in “—Transactions and Recent Developments”) to fund a portion of the cash consideration for the Endeavor Acquisition.
•Our average production was 598,284 MBOE/d.
•Drilled 372 gross horizontal wells (including 342 in the Midland Basin and 30 in the Delaware Basin).
•Turned 410 gross operated horizontal wells (including 391 in the Midland Basin and 19 in the Delaware Basin) to production.
•As of December 31, 2024, we had approximately 860,719 net acres, which primarily consisted of 737,181 net acres in the Midland Basin and 123,218 net acres in the Delaware Basin. As of December 31, 2024, we had an estimated 9,188 gross horizontal locations that we believe to be economic at $50.00 per Bbl WTI. In addition, our publicly traded subsidiary, Viper, owns mineral interests underlying approximately 987,861 gross acres and 35,671 net royalty acres in the Permian Basin. We operate approximately 52% of these net royalty acres.
•Incurred cash capital expenditures, excluding acquisitions, of $2.9$3.5 billion.
•Paid dividends to stockholders of $1.2 billion during 2025 and declared a base cash dividend payable in the first quarter of 2026 of $1.05 per share of common stock.
•Increased our common stock repurchase program authorization to $8.0 billion, excluding excise taxes, and repurchased $2.0 billion of our common stock in 2025, leaving approximately $2.7 billion available for future repurchases at December 31, 2025.
•Issued $1.2 billion aggregate principal amount of 5.550% Senior Notes due April 1, 2035 (the “2035 Notes”) to fund a portion of the cash consideration for the Double Eagle Acquisition.
•Repurchased an aggregate of approximately $455 million of our senior notes.
•Our average production was 921.0 MBOE/d.
•Drilled 463 gross horizontal wells (including 459 in the Midland Basin and 4 in the Delaware Basin).
•Turned 503 gross operated horizontal wells (including 488 in the Midland Basin and 15 in the Delaware Basin) to production.
•As of December 31, 2025, we had approximately 869,036 net acres in the Permian Basin, which primarily consisted of 774,645 net acres in the Midland Basin and 94,391 net acres in the Delaware Basin. As of December 31, 2025, we had an estimated 8,854 gross horizontal locations that we believe to be economic at $50.00 per Bbl WTI. Our publicly traded subsidiary, Viper, also owns mineral interests underlying approximately 36,004 net royalty acres in the Delaware Basin and approximately 50,595 net royalty acres in the Midland Basin. We operate approximately 35% of these net royalty acres.
Diamondback Acquisition and Divestitures
EPIC Divestiture
On October 31, 2025, we divested our 27.5% equity interest in EPIC for approximately $504 million in cash and an additional $96 million in contingent consideration (the “EPIC Divestiture”), which resulted in a gain on the sale of equity method investments of approximately $299 million. The gain is included in the caption “Other income (expense), net” on the consolidated statements of operations for the year ended December 31, 2025.
Divestiture of Water Assets to Deep Blue
On October 1, 2025, we divested EDS, a subsidiary originally acquired in connection with the Endeavor Acquisition, to our affiliate, Deep Blue Midland Basin LLC (“Deep Blue”), in exchange for upfront net cash proceeds of $694 million, subject to customary post-closing adjustments, and approximately $34 million of additional equity interests issued by Deep Blue as non-cash consideration. This transaction provides for the potential for us to earn up to an additional $200 million. If certain completion thresholds are not met, we could owe up to $150 million in contingent consideration for the years 2026 through 2028. The divestiture resulted in a gain of approximately $168 million, which is included in the caption “Other operating expenses, net” on the consolidated statements of operations for the year ended December 31, 2025. As part of the divestiture, we renewed our 15-year dedication to Deep Blue for its produced water and supply water within a 12-county area of mutual interest in the Midland Basin.
2025 Drop Down
On May 1, 2025, our wholly owned subsidiary, EER LP, divested the Endeavor Subsidiaries to Viper and Viper LLC in exchange for consideration consisting of (i) $873 million in cash including customary post-closing adjustments, and (ii) the issuance of 69.63 million Viper LLC units and an equal number of shares of Viper’s Class B common stock.
2025 Transactions
Pending Double Eagle Acquisition
On FebruaryApril 14,1, 2025, we entered into a definitive securities purchase agreement with Double Eagle to effectcompleted the pending Double Eagle Acquisition for consideration of $3.0$3.1 billion in cash and approximately 6.96.84 million shares of our common stock, subjectincluding totransaction costs and certain customary post-closing adjustments. The pending Double Eagle Acquisition consistsconsisted of approximately 67,700 gross (40,000 net) acres, which are primarily located in the Midland Basin, and approximately 407 gross (342 net) horizontal locations in primary development targets. We intend to fund the cash portion of the pending Double Eagle Acquisition through a combination of cash on hand, borrowings under our credit facility or proceeds from term loans and senior notes offerings. The pending Double Eagle Acquisition is expected to close in the second quarter of 2025, subject to the satisfaction of customary closing conditions and regulatory approval.
Viper Acquisitions and Divestitures
Divestiture of Non-Permian Assets
On February 9, 2026, Viper completed the Viper Non-Permian Divestiture for net cash proceeds of approximately $617 million, subject to customary post-closing adjustments. The divested properties consisted of approximately 9,400 net royalty acres in the Denver-Julesburg, Eagle Ford and Williston basins with current production of approximately 4,750 BO/d. Proceeds from the Viper Non-Permian Divestiture were used to repay the Viper 2025 Term Loan (as defined below) and to reduce borrowings outstanding on the Viper Revolving Credit Facility (as defined and discussed in Note 8—Debt in Item 8. Financial Statements and Supplementary Data of this report).
Sitio Acquisition
On August 19, 2025, Viper and Viper LLC completed the Sitio Acquisition in an all-equity transaction valued at approximately $4.0 billion, including customary transaction costs and post-closing adjustments and the partial retirement of Sitio’s net debt of approximately $1.2 billion. The mineral and royalty interests acquired in the Sitio Acquisition represent approximately 25,300 net royalty acres in the Permian Basin and approximately 9,000 net royalty acres in the Denver-Julesburg, Eagle Ford and Williston basins, for total acreage of approximately 34,300 net royalty acres.
See Note 4—Acquisitions and Divestitures and Note 16—Subsequent Events in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the acquisitions and divestitures discussed above.
Diamondback Capital Transactions
2025 Term Loan Agreement
In connection with the Double Eagle Acquisition, Diamondback Energy, Inc., as guarantor, entered into a term loan credit agreement with Diamondback E&P, as borrower, and Bank of America, N.A., as administrative agent (the “2025 Term Loan”). The 2025 Term Loan provided the Company with the ability to borrow up to $1.5 billion, which we drew in a single borrowing to fund a portion of the cash consideration for the Double Eagle Acquisition.
2035 Notes Offering
On March 20, 2025, we issued the 2035 Notes for net proceeds of $1.2 billion, after underwriters’ discounts and transaction costs, which we used to fund a portion of the cash consideration for the Double Eagle Acquisition.
Diamondback Retirement of Notes
During the year ended December 31, 2025, we opportunistically repurchased an aggregate principal amount of $455 million of our senior notes in open market transactions for total cash consideration, including accrued interest paid, of approximately $363 million, at an average of 79.3% of par value.
Viper Capital Transactions
Viper 2025 Notes Offering and Retirement of Notes
On July 23, 2025, Viper LLC issued $1.6 billion in aggregate principal amount of senior notes consisting of (i) $500 million aggregate principal amount of 4.900% Senior Notes due August 1, 2030 (the “Viper 2030 Notes”), and (ii) $1.1 billion aggregate principal amount of 5.700% Senior Notes due August 1, 2035 (the “Viper 2035 Notes” and together with the Viper 2030 Notes, the “Viper 2025 Notes”). Viper used approximately $824 million of the net proceeds from the issuance of the Viper 2025 Notes to redeem all of Viper’s 7.375% Senior Notes maturing on November 1, 2031 (the “Viper 2031 Notes”), and on November 1, 2025, Viper redeemed all of their 5.375% Senior Notes due 2027 (the “Viper 2027 Notes”), including accrued and unpaid interest through the date of redemption and any redemption premiums. Viper used the remaining net proceeds to partially retire Sitio’s net debt of approximately $1.2 billion including any fees, costs and expenses related to the redemption or repayment of such debt, and for general corporate purposes. On December 23, 2025, Viper Energy Partners LLC converted its legal form (the “Viper LLC Conversion”), in accordance with the applicable laws of the State of Delaware, to a Delaware limited partnership named Viper Energy Partners LP (“Viper LP”), which is now the issuer under the Viper 2025 Notes.
Viper 2025 Term Loan
On July 23, 2025, Former Viper, as guarantor, Viper LLC, as borrower, and Goldman Sachs Bank USA, as administrative agent, entered into a $500 million term loan credit agreement (the “Viper 2025 Term Loan”), which was fully drawn to partially fund the retirement of Sitio’s net debt. Following the closing of the Sitio Acquisition, New Viper became an additional guarantor of the borrower’s obligations under the Viper 2025 Term Loan. Further, after the Viper LLC Conversion, Viper LP, as successor to Viper Energy Partners LLC, became the borrower with respect to the Viper 2025 Term Loan. The Viper 2025 Term Loan was repaid in full in February 2026.
On February 3, 2025, Viper completed an underwritten public offering of approximately 28.34 million shares of its Class A common stock (the “Viper 2025 Equity Offering”),stock, which included approximately 3.70 million shares issued pursuant to an option to purchase additional shares of its Class A common stock granted to the underwriters at a price to the public of $44.50 per share.share, Viper receivedfor total net proceeds for theto Viper 2025 Equity Offering of approximately $1.2 billionbillion, after the underwriters’ discount and estimated transaction costs.costs (the “Viper 2025 Equity Offering”).
Pending 2025 Drop Down Transaction
On January 30, 2025, EER LP and the Endeavor Subsidiaries, each of which is our subsidiary, entered into a definitive equity purchase agreement with Viper and Viper LLC to divest the Endeavor Subsidiaries to Viper in exchange for consideration consisting of (i) $1.0 billion in cash and (ii) the issuance of 69.63 million Viper LLC units and an equal number of shares of Viper’s Class B common stock (which securities are exchangeable for an equal number of Viper’s Class A common stock), in each case subject to customary closing adjustments, including for net title benefits. The pending 2025 Drop Down is expected to close in the second quarter of 2025, subject to the approval by Viper’s stockholders, regulatory clearance and the satisfaction or waiver of other closing conditions. Viper intends to fund the cash consideration for the pending 2025 Drop Down with the net proceeds from the Viper 2025 Equity Offering discussed above. The mineral and royalty interests owned by the Endeavor Subsidiaries being divested in the pending 2025 Drop Down represent approximately 22,847 net royalty acres located primarily in the Permian Basin. The Endeavor Subsidiaries being sold in the pending 2025 Drop Down were acquired by us in the recently completed Endeavor Acquisition.
See Note 17—Subsequent Events in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the pending Double Eagle Acquisition, the Viper 2025 Equity Offering and the pending 2025 Drop Down.
2024 Diamondback Acquisitions and Divestitures
Endeavor Acquisition
On September 10, 2024, we completed the Endeavor Acquisition for consideration consisting of $7.3 billion in cash, subject to certain customary post-closing adjustments, and approximately 117.27 million shares of our common stock. The Endeavor Acquisition included approximately 500,849 gross (361,927 net) acres, which are primarily located in the Permian Basin. The cash consideration for the Endeavor Acquisition was funded through a combination of cash on hand, the net proceeds of the Company’s $5.5 billion April 2024 Senior Notes offering and $1.0 billion in borrowings under the Tranche A Loans (as defined and discussed below). See Note 5—Endeavor Energy Resources, LP Acquisition in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the Endeavor Acquisition.
TRP Energy, LLC Asset Exchange
On December 20, 2024, we completed an exchange agreement with TRP Energy, LLC (“TRP”), in which we exchanged approximately 47,034 gross (35,673 net) acres located in the Delaware Basin and $325 million in cash, subject to customary post-closing adjustments, for certain of TRP’s assets consisting of approximately 21,582 gross (15,421 net) acres located in the Midland Basin (the “TRP Exchange”). The TRP Exchange was valued at approximately $1.4 billion.
WTG Midstream Transaction
On July 15, 2024, Remuda Midstream Holdings LLC, (the “WTG joint venture”) sold its WTG Midstream LLC subsidiary (the “WTG Midstream Transaction”), resulting in proceeds to us of 10.1 million common units of Energy Transfer LP and $190 million in cash, subject to customary closing adjustments. At the closing of the WTG Midstream Transaction, the value attributable to us for the 10.1 million common units was approximately $135 million, of which we received approximately $81 million with the remaining $54 million held in escrow pursuant to an escrow agreement entered into by the WTG joint venture. A gain of approximately $74 million was recognized for the WTG Transaction in the third quarter of 2024.
2024 Viper Acquisitions
Viper Tumbleweed Acquisitions
On October 1, 2024, Viper and Viper LLC completed the Viper TWR Acquisition, for which the consideration consisted of approximately (i) $464 million in cash, (ii) 10.09 million Viper LLC units, including transaction costs and certain customary post-closing adjustments, (iii) the TWR Class B Option, and (iv) contingent cash consideration of up to $41 million payable in January of 2026. The mineral and royalty interests acquired in the Viper TWR Acquisition represent approximately 3,067 net royalty acres located primarily in the Permian Basin.
What changed in the latest 10-Q
Risk Factors
Our business faces many risks. Any of the risks discussed in this report and our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially impair our business operations, financial condition or future results.
As of the date of this filing, we continue to be subject to the risk factors previously disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 25, 2026, and in subsequent filings we make with the SEC. There have been no material changes in our risk factors from those described in our Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Pending 2026 Drop Down”
New heading “Increase in Stock Repurchase Program Authorization”
New heading “Viper Riverbend Acquisition”
New heading “Other Contractual Obligations and Commitments”
Removed heading “Viper Divestiture of Non-Permian Assets”
Largest changes
“As we pursue our business and financial strategy, we regularly consider which capital resources, including cash flow and debt and equity financings, are available to meet our future financial obligations, planned capital expenditure activities and liquidity requirements. Our future ability to grow proved reserves and production will be highly dependent on the capital resources available to us. …”see in full comparison
“In addition to future operating expenses and working capital commitments discussed in “—Transactions and Recent Developments—Upstream Operations,” our primary short and long-term liquidity requirements, excluding those of Viper, consist primarily of (i) capital expenditures, (ii) payments of principal and interest on the Revolving Credit Facility, 2025 Term Loan and senior notes, (iii) payments of other contractual obligations, and (iv) cash used to pay for dividends and repurchases of securities.”see in full comparison
Full comparison: every changed paragraph (90)
We are an independent oil and natural gas company currently focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. As discussed in Note 1—Description of the Business and Basis of Presentation and Note 17—Segment Information of the notes to the condensed consolidated financial statements, as of MarchJune 31,30, 2026, we have one reportable segment, the upstream segment.
FirstSecond Quarter 2026 Financial and Operating Highlights
•Recorded net income of $1.9 billion.
•Recorded net income of $25 million, which includes impairment of approximately $1.4 billion recorded on our proved oil and natural gas properties.
•Paid dividends to stockholdersstockholders, including dividend equivalent rights, of $295$311 million, or $1.05$1.10 per share, during the firstsecond quarter of 2026 and declared a base cash dividend payable in the secondthird quarter of 2026 of $1.10 per share of common stock.
•Repurchased $548$141 million of our common stock, excluding excise taxes, leaving approximately $2.1 billion available for future repurchases at March 31, 2026.taxes.
•Retired approximately $828 million in aggregate principal of our senior notes and $550 million in outstanding borrowings on our 2025 Term Loan, which was terminated upon repayment.
•Our average production was 979.41,017.7 MBOE/d.d, surpassing the 1.0 million BOE/d milestone.
Pending 2026 Drop Down
On August 3, 2026, we entered into a definitive purchase agreement with Viper Energy Partners LP to divest certain mineral and royalty interests in exchange for 3.65 million Viper LLC Units and an equivalent number of shares of Viper’s Class B common stock (the pending “2026 Drop Down”), subject to transaction costs and certain customary post-closing adjustments. The pending 2026 Drop Down will be accounted for as a transaction between entities under common control with the acquired properties recorded at Diamondback’s historical carrying value in the Company’s condensed consolidated balance sheet.
Increase in Stock Repurchase Program Authorization
On July 30, 2026, our board of directors approved an increase in stock repurchase authorization under the Company’s existing stock repurchase program from $8.0 billion to $16.0 billion, excluding excise tax.
Viper Riverbend Acquisition
On July 1, 2026, Viper and Viper Energy Partners LP acquired all of the equity interests of Riverbend for consideration consisting of approximately (i) $339 million in cash and (ii) 3.69 million shares of Viper’s Class A common stock, in each case, subject to customary post-closing adjustments.
Divestiture
Viper Divestiture of Non-Permian Assets
On February 9, 2026, Viper completed the Viper Non-Permian Divestiture for net cash proceeds of approximately $610 million, including transaction costs and customary post-closing adjustments. The divested properties consisted of approximately 9,400 net royalty acres in the Denver-Julesburg, Eagle Ford and Williston basins with current production of approximately 4,750 BO/d. Proceeds from the Viper Non-Permian Divestiture were used to repay amounts outstanding under the Viper 2025 Term Loan and the Viper Revolving Credit Facility and for general corporate purposes.
Prices for oil, natural gas and natural gas liquids are determined primarily by prevailing market conditions. Geopolitical global conflicts, tariffs or other trade barriers and any resulting trade tensions, regional and worldwide economic activity, changes in trade or other government policies or regulations, including with respect to U.S. energy and monetary policies, extreme weather conditionsconditions, changes in OPEC+ production levels and other substantially variable factors influence market conditions for these products. For example, as a result of the ongoing conflict in the lastMiddle quarterEast, in 2026 the global crude oil market shifted from a supply-demand surplus to a deficit, materially reducing crude oil and refined products from the markets, and increasing benchmark crude oil prices. These factors are beyond our control and are difficult to predict. OPEC+ continues to meet regularly to evaluate the state of global oil supply, demand and inventory levels and can heavily influence volatility in oil prices. During the threesix months ended MarchJune 31,30, 2026 and 2025, WTI prices averaged $72.67$83.00 and $71.42$70.81 per Bbl, respectively, and Henry Hub prices averaged $3.47$3.20 and $3.87$3.69 per MMBtu, respectively.
During the three and six months ended June 30, 2026, natural gas price realizations were adversely affected by widening basis differentials between natural gas prices at Waha Hub and prices at Henry Hub. The unfavorable differentials were primarily driven by regional natural gas takeaway constraints in the Permian Basin, which resulted in periods of negative pricing at Waha Hub. The Company expects the impact of these constraints to be reduced later in 2026 as its secured takeaway capacity is meaningfully increased through the execution of new contracts and expanded infrastructure build out in the region. However, realized prices are expected to continue to be influenced by, and subject to, future supply, demand, transportation availability and other market factors.
Our activities are primarily directed at the horizontal development of the WolfcampWolfcamp, Spraberry and SpraberryBarnett formations with exploratory development in the Barnett and Woodford shales in the Midland Basin and the Wolfcamp and Bone Spring formations in the Delaware Basin within the Permian Basin. Additionally, our publicly-traded subsidiary, Viper, is focused on owning and acquiring mineral interests and royalty interests in oil and natural gas properties primarily in the Permian Basin and derives royalty income and lease bonus income from such interests.
As of MarchJune 31,30, 2026, we had approximately 890,496902,005 net acres in the Permian Basin, which primarily consisted ofincluded approximately 797,074808,401 net acres in the Midland Basin and 93,42293,604 net acres in the Delaware Basin.
(1)The average lateral length for the wells completed during the firstsecond quarter of 2026 was 11,33211,983 feet. Operated completions during the firstsecond quarter of 2026 consisted of 3241 LowerWolfcamp SpraberryB wells, 3138 Wolfcamp A wells, 31 Jo Mill wells, 3031 WolfcampLower BSpraberry wells, eight13 Middle Spraberry wells, seven Wolfcamp D wells, sevenfive Middle SpraberryDean wells, sixone DeanBarnett wellswell and twoone Upper Spraberry wells.well.
(2)The average lateral length for the wells completed during the six months ended June 30, 2026 was 11,679 feet. Operated completions during the six months ended June 30, 2026 consisted of 71 Wolfcamp B wells, 69 Wolfcamp A wells, 63 Lower Spraberry wells, 62 Jo Mill wells, 20 Middle Spraberry wells, 15 Wolfcamp D wells, 11 Dean wells, three Upper Spraberry wells and one Barnett well.
As of MarchJune 31,30, 2026, we operated the following wells:
As of MarchJune 31,30, 2026, we and Viper held interests in 44,55244,314 gross (9,6799,810 net) wells, including 1,8631,909 gross (319331 net) wells in which we have a non-operated working interest.
We have increased our annual production guidance by 3% to approximately 1,000 MBOE/d based on our assessment of current market fundamentals, including global oil supply constraints that began in the first quarter of 2026 and their continuing impact on crude oil inventory levels. We expect to achieve this increase in part by continuing to convert portions of our drilled but uncompleted well balance and building upon our improved operational efficiencies.
In response to growing global oil supply constraints and the improved commodity pricing environment that began in March of 2026, we have increased our annual production guidance by 3% to approximately 972 MBOE/d, which we expect to achieve in part by working down our drilled but uncompleted well balance.
Comparison of the Three Months Ended MarchJune 31,30, 2026, and DecemberMarch 31, 20252026
Our oil, natural gas and natural gas liquids revenues for the firstsecond quarter of 2026 increased by $792$961 million to $3.8$4.8 billion compared to the fourthfirst quarter of 2025.2026. The increase consisted of an additional $811$861 million attributable largely to higher average prices received primarily for our oil production,production whichand wasan partiallyadditional offset by a $19$100 million reduction attributable to twohigher feweroil daysand ofnatural gas production volumes during the firstsecond quarter of 2026.
Lease operating expenses increased for the firstsecond quarter of 2026 compared to the fourthfirst quarter of 20252026 primarily due to additionalhigher costsproduction incurredvolumes, onwhich non-operatedwas properties,largely foroffset weather-relatedby eventsthe inbenefit Januaryof 2026the Company’s cost discipline initiatives and other individually insignificant changes.activity.
In general, production taxes are directly related to production revenues and are based upon current year commodity prices. Production taxes as a percentage of oil, natural gas and natural gas liquids revenue remained consistent from the fourth quarter of 2025 to the first quarter of 2026 to the second quarter of 2026.
Ad valorem taxes are based, among other factors, on property values driven by prior year commodity prices. Ad valorem taxes duringas a percentage of oil, natural gas and natural gas liquids revenue decreased in the firstsecond quarter of 2026 compareddue primarily to thecurrent fourthvaluations quarterreflecting oflower 2025 reflectcommodity a slight increase in expected tax rates for 2026 compared to 2025 as well as a $13 million adjustment recorded in the first quarter of 2026 for actual billings received related to prior years.prices.
The decrease in gathering, processing and transportation expenses primarily reflects a $19 million reduction in transportation costs incurred to meet our minimum volume commitments on certain pipelines, partially offset by other individually insignificant changes.
The decrease in depletion of proved oil and natural gas properties of $96$25 million for the firstsecond quarter of 2026 as compared to the fourthfirst quarter of 2025 primarily2026 consists of an $81$89 million reduction fromattributable to the decline in depletion rate following the ceiling test impairment recorded in the fourthfirst quarter of 20252026, andpartially offset by a $15$64 million reductionincrease due to the slight decline inhigher quarterly production volumes.
The non-cash ceiling test impairment chargescharge in both the first quarter of 2026 and the fourth quarter of 2025 primarily resulted from thea decline in SEC Prices applicable to eachthe period. Impairment charges affect our results of operations but do not reduce our cash flow.
In addition to commodity prices, our production rates, levels of proved reserves, future development costs, transfers of unevaluated properties, income tax rate assumptions and other factors will determine our actual ceiling test calculation and impairment analysis in future periods. If the trailing 12-month commodity prices fall as compared to the commodity prices used in priorthe quarters,current quarter, we may have material write-downs in subsequent quarters. WeCurrently, currentlywe do not expect to record additional impairment of our assets in the secondthird quarter of 2026.
Other Operating Expenses, Net. The following table shows other insignificant operating expenses for the periods indicated:
The change in other operating expenses, net during the first quarter of 2026 compared to the fourth quarter of 2025 was primarily due to (i) a reduction in the gain on sale of other property, plant and equipment of $140 million due largely to the fourth quarter of 2025 including the $167 million gain on the divestiture of the Company’s Environmental Disposal Systems, LLC subsidiary, (ii) a $13 million increase in impairment of certain midstream assets, and (iii) other insignificant activity.
(1)The three months ended June 30, 2026 includes cash received to terminate commodity contracts prior to their contractual maturity of $1 million, and the three months ended March 31, 2026,2026 includes cash paid on interest rate swaps terminated prior to their contractual maturity of $27 million.
The decrease in gain on derivative instruments for the second quarter of 2026 compared to the first quarter of 2026 primarily reflects (i) a net loss of $262 million attributable to our natural gas contracts, which was comprised of a $290 million decrease in the value of our unsettled natural gas contracts largely due to unfavorable basis differentials on our natural gas basis swap contracts, partially offset by a $28 million increase in cash received for the settlement of contracts, (ii) a net gain of $194 million attributable to our oil contracts, which was comprised of a $270 million increase in the value of our unsettled positions as market prices declined compared to our contract prices at June 30, 2026 compared to March 31, 2026, and a $76 million decrease in cash received for the settlement of contracts, and (iii) other insignificant activity.
The decrease in gain on derivative instruments for the first quarter of 2026 compared to the fourth quarter of 2025 primarily reflects a $145 million loss on our oil contracts due primarily to the value of our unsettled roll swap and put contracts declining as market prices for oil increased compared to our contract prices. This loss was partially offset by a net $77 million gain attributable to our natural gas contracts, which was comprised of an $83 million increase in cash received on the settlement of contracts primarily due to favorable differentials on our basis swaps, partially offset by a $6 million net decrease in the value of our unsettled natural gas contracts.
The gain on extinguishment of debt, net for the second quarter of 2026 primarily relates to the tender offer in which we repurchased $777 million of aggregate principal value on our senior notes at an average of 81.1% of par value. See Note 8—Debt of the notes to the condensed consolidated financial statements for details regarding outstanding borrowings and retirements of senior notes.
The decrease in interest expense, net for the first quarter of 2026 compared to the fourth quarter of 2025 primarily reflects $18 million in interest cost savings due to the repayment and termination of Viper’s 2025 Term Loan and a partial repayment of the 2025 Term Loan late in the fourth quarter of 2025 along with opportunistic repurchases of other senior notes and the net impact of other individually insignificant changes.
See Note 8—Debt and Note 16—Subsequent Events of the notes to the condensed consolidated financial statements for details regarding outstanding borrowings.
The decrease in other income for the first quarter of 2026 compared to the fourth quarter of 2025 was primarily due to the fourth quarter of 2025 including a gain of approximately $299 million recorded in connection with the EPIC Divestiture and other individually insignificant activity.
See Note 4—Acquisitions and Divestitures of the notes to the condensed consolidated financial statements for further details regarding the Company’s divestiture activity.
The changeincrease in our provision for income tax provisiontaxes for the firstsecond quarter of 2026 compared to our income tax benefit in the fourthfirst quarter of 20252026 was primarily due to the increase in pre-tax income between the periods, which resulted largely from the first quarter of 2026 including a reduction in the non-cash ceiling test impairment charge and an increase in our oil, natural gas and natural gas liquids revenues recorded in the firstsecond quarter of 2026 compared to the fourth quarter of 2025 as discussed above. See Note 11—Income Taxes of the notes to the condensed consolidated financial statements for further discussion of our income tax expense.
Comparison of the ThreeSix Months Ended MarchJune 31,30, 2026, and 2025
Our oil, natural gas and natural gas liquids revenues for the threesix months ended MarchJune 31,30, 2026, increased by $168$1.6 million,billion, or 5%,23%, to $3.8$8.6 billion from the same period in 2025. This net increase consisted of an additional $434$973 million from the 15% growth in our combined production volumes, partially offset by a net reduction of $266 million primarily due to lowerhigher average prices received for our oil production, offset partially by lower natural gas and natural gas liquids productionprices forreceived in 2026 and an additional $665 million from the three13% monthsgrowth endedin Marchour 31,combined 2026.production volumes.
Approximately 37%33% of the increase in our combined production volumes was attributable to theViper’s Double EagleSitio Acquisition and 31%16% was attributable to Viper’sthe SitioDouble Eagle Acquisition. The remainder of production growth is largely attributable to new wells added between periods.
Net Sales of Purchased Oil. We enter into purchase transactions and separate salesales transactions with third parties to satisfy certain of our unused oil pipeline capacity commitments. The following table presents the net sales of purchased oil from third parties for the periods indicated:
Other Revenues. The following table shows the other insignificant revenues for the periods indicated:
Other operating income increased for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to a $13 million increase in lease bonus income recorded by Viper following its Sitio Acquisition and the 2025 Drop Down, as well as other individually insignificant activity.
Lease operating expenses increased for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 20252025, primarily due to (i) the first quarter of 2025 including a $38$54 million reduction in cost estimates related to producing properties acquired in the Endeavor Acquisition, (ii) an additional $27 millionincrease in water servicesdisposal costs following the divestiture of the Company’s Environmental Disposal Systems, LLC subsidiary in the fourth quarter of 2025, (ii) recording a $43 million reduction in estimated prior period water related costs during the six months ended June 30, 2025, (iii) $24a $36 million of costs attributableincrease to operatingoperate wells acquired in the Double Eagle Acquisition, (iv) a $21$35 million increase in workover costs,and maintenance costs and (v) ana additional $11$34 million inincrease costs dueattributable to anhigher increaseproduction involumes legacyduring production,the andsix months ended June 30, 2026, (vi) ana increasedownward adjustment to initial cost estimates related to producing properties acquired in variousconnection with the Endeavor Acquisition during the six months ended June 30, 2025, and (vii) other weatherindividually relatedinsignificant costs due to a winter storm in January 2026.activity.
In general, production taxes are directly related to production revenues and are based upon current year commodity prices. Production taxes as a percentage of revenue from sales of oil, natural gas and natural gas liquids remained consistent in the first quarterhalf of 2026 compared to the first quarterhalf of 2025.
Ad valorem taxes are based, among other factors, on property values driven by prior year commodity prices. Ad valorem taxes remained relatively consistent per BOE and as a percentage of revenue from sales of oil, natural gas and natural gas liquids for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025 increased by $25 million, primarily due to taxes incurred on properties acquired in the Double Eagle Acquisition and Viper’s Sitio Acquisition.2025.
The decrease in gathering, processing and transportation expense for the six months ended June 30, 2026, compared to the same period in 2025 primarily relates to higher utilization of arrangements that require net presentation within related revenues in the second quarter of 2026, partially offset by an increase due to increased production volumes for the six months ended June 30, 2026.
The increase in depletion of proved oil and natural gas properties of $202$214 million for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025 consists of $161$293 million from growth in production volumesvolumes, andwhich $41was partially offset by a $79 million reduction attributable to ana increasedecrease in the depletion rate. The depletion rate fromdeclined due to a reduction in the depletable asset base, which was caused by the ceiling test impairment recorded in the fourth quarter of 2025 and the first quarter of 2026 as discussed below. This reduction was partially offset by the addition of higher value leasehold costs and proved reserves to the depletable base from the Double Eagle Acquisition and, to a lesser extent, Viper’s Sitio Acquisition subsequent to the first quarter of 2025.Acquisition.
The non-cash ceiling test impairment charge of $1.4 billion for the threesix months ended MarchJune 31,30, 2026 primarily resulted from the decline in SEC Prices during the preceding twelve months.
The decrease in other operating expenses for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025 primarily resulted from (i) a $33$72 million reduction in merger and transaction costs due to the first2025 quarter of 2025period, including costs incurred for the Endeavor AcquisitionAcquisition, the 2025 Drop Down and other individually insignificant transactions, and (ii) a $17$45 million decrease in midstream service expense following the divestiture of the Company’s Environmental Disposal Systems, LLC subsidiary in the fourth quarter of 2025.
FANG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 27 filings (11 insiders, 21 trade dates, 28,489,390 shares, about $5.8B; 4 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -28,489,390 (purchases minus sales); net value about -$5.8B.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-05 | Meloy Charles Alvin |
Open-market sale |
20,503 | $183.17 | $3.8M |
| 2026-10-05 | Meloy Charles Alvin |
Open-market sale |
6,476 | $184.31 | $1.2M |
| 2026-10-05 | Meloy Charles Alvin |
Open-market sale |
6,354 | $184.99 | $1.2M |
| 2026-09-16 | Sgf Fang Holdings, Lp |
Open-market sale | 9,079,675 | $205.26 | $1.9B |
| 2026-09-16 | Greth Lyndal |
Open-market sale | 9,079,675 | $205.26 | $1.9B |
| 2026-09-16 | Meloy Charles Alvin |
Gift | 25,000 | — | — |
| 2026-09-16 | Meloy Charles Alvin |
Gift | 12,500 | — | — |
| 2026-09-15 | Zmigrosky Matt |
Open-market sale | 1,326 | $212.56 | $281.9K |
| 2026-09-15 | Dick Teresa L. |
Open-market sale | 5,000 | $210.00 | $1.1M |
| 2026-09-15 | Meloy Charles Alvin |
Gift | 12,500 | — | — |
| 2026-09-15 | Meloy Charles Alvin |
Gift | 25,000 | — | — |
| 2026-09-11 | Stice Travis D. |
Open-market sale | 75,000 | $204.31 | $15.3M |
| 2026-09-10 | Zmigrosky Matt |
Shares withheld for tax | 861 | $202.63 | $174.5K |
| 2026-09-10 | Barkmann Albert |
Shares withheld for tax | 682 | $202.63 | $138.2K |
| 2026-08-21 | Plaumann Mark Lawrence |
Open-market sale | 1,000 | $210.58 | $210.6K |
| 2026-08-20 | Van't Hof Matthew Kaes |
Open-market sale | 500 | $215.06 | $107.5K |
| 2026-08-20 | Van't Hof Matthew Kaes |
Open-market sale | 9,500 | $214.64 | $2.0M |
| 2026-08-20 | Wesson Daniel N |
Open-market sale | 7,500 | $215.21 | $1.6M |
| 2026-08-14 | Zmigrosky Matt |
Open-market sale | 2,500 | $202.77 | $506.9K |
| 2026-08-14 | Thompson Jere W Iii |
Open-market sale | 500 | $204.14 | $102.1K |
| 2026-08-11 | Van't Hof Matthew Kaes |
Open-market sale | 5,000 | $202.46 | $1.0M |
| 2026-08-03 | Meloy Charles Alvin |
Open-market sale |
19,055 | $198.74 | $3.8M |
| 2026-08-03 | Meloy Charles Alvin |
Open-market sale |
7,562 | $197.91 | $1.5M |
| 2026-08-03 | Meloy Charles Alvin |
Open-market sale |
3,986 | $197.06 | $785.5K |
| 2026-08-03 | Meloy Charles Alvin |
Open-market sale |
2,730 | $199.44 | $544.5K |
| 2026-06-17 | Van't Hof Matthew Kaes |
Gift | 2,674 | — | — |
| 2026-06-16 | Meloy Charles Alvin |
Open-market sale |
4,049 | $187.68 | $759.9K |
| 2026-06-16 | Meloy Charles Alvin |
Open-market sale |
14,538 | $186.37 | $2.7M |
| 2026-06-16 | Meloy Charles Alvin |
Open-market sale |
64,747 | $187.25 | $12.1M |
| 2026-06-09 | Plaumann Mark Lawrence |
Open-market sale | 500 | $196.50 | $98.2K |
| 2026-06-04 | Dick Teresa L. |
Open-market sale | 5,000 | $205.00 | $1.0M |
| 2026-06-04 | Sgf Fang Holdings, Lp |
Open-market sale | 10,000,000 | $204.25 | $2.0B |
| 2026-06-03 | Van't Hof Matthew Kaes |
Open-market sale | 10,000 | $210.00 | $2.1M |
| 2026-06-03 | Van't Hof Matthew Kaes |
Open-market sale | 5,000 | $205.00 | $1.0M |
| 2026-06-03 | Zmigrosky Matt |
Open-market sale | 5,000 | $210.00 | $1.1M |
| 2026-06-02 | Dick Teresa L. |
Open-market sale | 7,000 | $200.90 | $1.4M |
| 2026-06-01 | Zmigrosky Matt |
Open-market sale | 5,000 | $200.54 | $1.0M |
| 2026-05-20 | Trent Melanie Montague |
Grant/award | 982 | — | — |
| 2026-05-20 | Klein Rebecca A |
Grant/award | 982 | — | — |
| 2026-05-20 | Mains Stephanie K. |
Grant/award | 982 | — | — |
| 2026-05-20 | Stice Travis D. |
Grant/award | 982 | — | — |
| 2026-05-20 | Holderness Darin G |
Grant/award | 982 | — | — |
| 2026-05-20 | West Steven E |
Grant/award | 982 | — | — |
| 2026-05-20 | Plaumann Mark Lawrence |
Grant/award | 982 | — | — |
| 2026-05-20 | Meloy Charles Alvin |
Grant/award | 982 | — | — |
| 2026-05-20 | Brooks Vincent K |
Grant/award | 982 | — | — |
| 2026-05-20 | Tsuru Frank D. |
Grant/award | 982 | — | — |
| 2026-05-20 | Reeves Robert K |
Grant/award | 982 | — | — |
| 2026-05-20 | Robertson Lance W |
Grant/award | 982 | — | — |
| 2026-05-19 | Dick Teresa L. |
Open-market sale | 5,000 | $207.00 | $1.0M |
| 2026-05-15 | Barkmann Albert |
Open-market sale | 3,000 | $204.04 | $612.1K |
| 2026-05-15 | Thompson Jere W Iii |
Open-market sale | 1,000 | $203.16 | $203.2K |
| 2026-05-14 | Dick Teresa L. |
Open-market sale | 5,000 | $200.00 | $1.0M |
| 2026-05-13 | Zmigrosky Matt |
Open-market sale | 5,000 | $200.10 | $1.0M |
| 2026-05-08 | Meloy Charles Alvin |
Open-market sale |
3,545 | $188.72 | $669.0K |
| 2026-05-08 | Meloy Charles Alvin |
Open-market sale |
3,909 | $189.56 | $741.0K |
| 2026-05-08 | Meloy Charles Alvin |
Open-market sale |
403 | $187.54 | $75.6K |
| 2026-05-07 | Meloy Charles Alvin |
Open-market sale |
2,887 | $190.14 | $548.9K |
| 2026-05-07 | Meloy Charles Alvin |
Open-market sale |
2,492 | $189.44 | $472.1K |
| 2026-05-07 | Meloy Charles Alvin |
Open-market sale |
1,636 | $188.11 | $307.7K |
Well-known investors holding FANG (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 2,693,758 | $473.5M | 0.29% | Added 60% |
| Yacktman Asset Management | 2026-06-30 | 1,014,114 | $178.3M | 2.2% | Added 1% |
| Renaissance Technologies | 2026-06-30 | 331,500 | $58.3M | 0.08% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 182,317 | $32.0M | 0.01% | Added 28% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 157,978 | $27.8M | 0.06% | Added 327% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 102,425 | $18.0M | 0.01% | Reduced 41% |
| Two Sigma Investments | 2026-06-30 | 75,337 | $13.2M | 0.01% | Reduced 8% |
| Millennium Management (Israel Englander) | 2026-06-30 | 66,273 | $11.6M | 0.01% | Added 123% |