Diamondback Energy, Inc. (FANG)

Diamondback Energy reported on 8 October 2026 that its third-quarter 2026 oil sold for an average of $87.30 a barrel before hedges and $85.89 after them 3.

It also expects a net loss of $97 million on settled hedges and a non-cash loss of $85 million on derivative contracts 3. Hedges are contracts that fix prices in advance, and because hedged prices came in below unhedged ones, they cost the company money in the quarter 3.

The release covers only prices, derivative activity and the share count, so the full third-quarter results are still to come 3.

In the second quarter, Diamondback reported net income of $1.9 billion and average production of 1,017.7 thousand barrels of oil equivalent a day, surpassing the 1.0 million milestone 2. A barrel of oil equivalent counts six thousand cubic feet of natural gas as one barrel of oil 2.

The quarterly report says the conflict in the Middle East moved the global oil market from surplus to deficit in 2026 and raised benchmark crude prices 2. Oil, gas and liquids revenue rose $961 million to $4.8 billion from the first quarter, with $861 million of that from higher oil prices 2.

A pending deal signed on 3 August 2026 would move certain mineral and royalty interests to Diamondback's listed subsidiary Viper in exchange for 3.65 million Viper units 2.

Diamondback calls itself an independent oil and gas company that drills for oil mainly in the Permian Basin of West Texas 1. Many rivals also run pipelines and refineries, while it concentrates on producing oil and gas 1.

Its growth came largely from buying other producers 1. On 10 September 2024 it completed the purchase of Endeavor Parent for $7.1 billion in cash, about 117.27 million new shares and the repayment of $238 million of Endeavor's net debt 1.

Endeavor added about 500,849 gross acres, 361,927 of them net, mostly in the Permian Basin 1. Gross acres count every acre in a lease, and net acres count only the company's own share 1.

On 1 April 2025 it bought Double Eagle for $3.1 billion in cash and about 6.84 million shares, adding about 67,700 gross (40,000 net) acres, mostly in the Midland Basin 1.

Oil, gas and liquids revenue grew about 33 percent to $13.5 billion in 2025 from 2024 1. Production volumes grew 54 percent, adding $4.9 billion, while lower oil prices took away $1.6 billion 1.

About 41 percent of the volume growth came from Endeavor, 12 percent from Double Eagle and 42 percent from new wells 1.

WTI, the main US oil benchmark, averaged $64.73 a barrel in 2025 against $75.76 in 2024 1. The company recorded a non-cash write-down of $3.7 billion on its oil and gas properties for 2025 1. Such a charge cuts reported profit but not cash flow 1.

To pay down debt, it sold about $1.7 billion of non-core assets in 2025, including its 27.5 percent stake in EPIC Crude Holdings and a water-handling subsidiary 1.

Its mineral subsidiary Viper bought Sitio Royalties in an all-equity deal worth about $4.0 billion, completed on 19 August 2025 1. On 9 February 2026 Viper sold its non-Permian assets for about $617 million in net cash 1.

A second write-down of $1.4 billion followed in the first quarter of 2026, again because of lower SEC prices, the trailing-year average used in the accounting test 2.

What it produces and sells

Diamondback reports one business segment, upstream, which means finding and producing oil and gas 2. Substantially all of its revenue comes from selling oil, natural gas and natural gas liquids, the liquid products separated from gas 2.

In 2025 oil brought in $11,621 million, natural gas liquids $1,432 million and natural gas $400 million 1. By volume, oil was 54 percent of 2025 production, natural gas 22 percent and natural gas liquids 24 percent 1.

It also resells oil bought from others to use pipeline space it has committed to, which brought in $1,476 million in 2025 and a net $2 million of profit 1.

Second-quarter 2026 production averaged 1,017,659 barrels of oil equivalent a day, including 525,176 barrels a day of oil 2. Cash operating costs were $10.96 per barrel of oil equivalent, of which lease operating expenses, the cost of keeping wells running, were $5.96 2.

Where it works

At 30 June 2026 it held about 902,005 net acres in the Permian Basin, with 808,401 net acres in the Midland Basin and 93,604 in the Delaware Basin 2. It operated 10,040 gross wells on that date 2.

It was running 17 drilling rigs and five completion crews, and in the second quarter it drilled 97 gross horizontal wells and turned 168 into production 2.

Its estimated proved reserves at 31 December 2025 were 3,617,856 thousand barrels of oil equivalent, about 49 percent of it oil 1. Proved reserves are quantities that data show can be recovered with reasonable certainty 1.

People

Kaes Van't Hof signed the annual report on 25 February 2026 as chief executive and a director 1. The company ended 2025 with 1,762 full-time employees, none covered by a union agreement 1.

Rivals and problems

The annual report calls the industry intensely competitive and says some rivals have greater resources and also run pipelines and refineries 1.

Gas sold at the Waha Hub in West Texas was hurt in 2026 by limited pipeline capacity, which at times meant negative prices 2. The average gas price it realized in the second quarter was negative $2.15 per thousand cubic feet 2.

At 30 June 2026 it had about $3.4 billion of liquidity and about $1.5 billion of senior notes maturing within a year 2.

The umbrella, in words

Diamondback sells commodities, not branded goods, so it has no consumer brands 2. Its wholly owned subsidiaries at 30 June 2026 include Diamondback E&P, Rattler Midstream, QEP Resources and Diamondback RE Holdco 2.

Viper Energy, a publicly traded subsidiary, owns mineral and royalty interests, which pay a share of oil and gas revenue without drilling costs 2. Diamondback owned about 39 percent of Viper's combined stock at 30 June 2026 and consolidates it because it controls its activities 2.

In March 2026 it sold about 12.39 million Viper shares in a secondary offering, with total cash proceeds of about $589 million 2.

Endeavor's former equityholders held about 35.8 percent of Diamondback's common stock at 31 December 2025 1. Its Permian acreage then totalled about 869,036 net acres 1.

In the second quarter the board raised the 2026 capital budget guidance by 4 percent to about $3.90 billion, including $3.31 billion for operated drilling and completion 2.

The company also raised its annual production guidance by 3 percent to about 1,000 thousand barrels of oil equivalent a day 2.

On 30 July 2026 the board raised its share repurchase authorization from $8.0 billion to $16.0 billion 2. It declared a base dividend of $1.10 per share for the third quarter of 2026 2.

The annual report says the company intends to return at least 50 percent of its quarterly adjusted free cash flow to stockholders 1. It also plans 3 percent to 4 percent of its 2026 capital budget for the Barnett/Woodford zone 1.

The company expects the gas pipeline bottleneck to ease later in 2026 as new contracts and infrastructure add takeaway capacity 2. The Viper drop down signed on 3 August 2026 is still pending, subject to customary adjustments 2.