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DATE
Tuesday, Nov. 3, 2026
CALL PARTICIPANTS
- VP of Investor Relations – Adam Lawlis
- Chief Executive Officer – Kaes Van’t Hof
- Chief Operating Officer – Danny Wesson
- Chief Financial Officer – Jere Thompson
- Chief Engineer – Al Barkmann
TAKEAWAYS
- Average Oil Production — 524,946 barrels of oil per day, contributing to a total combined production volume of 1,033,967 barrels of oil equivalent per day.
- Adjusted Free Cash Flow — $2.15 billion for the third quarter, driven by operational efficiencies and capital discipline.
- Base Dividend — $4.72 per share on an annual basis, representing an 18% year-over-year increase and a 7.3% rise over the previous quarter.
- Share Repurchases — 1.3 million shares acquired for approximately $251 million during the third quarter, plus an additional 389,841 shares repurchased in the fourth quarter to date.
- Senior Note Repurchases — $106 million in principal amount of 2054 and 2064 notes retired at a weighted average price of 94.9% of par.
- Debt Redemption — $698 million in 2026 Senior Notes redeemed at par on Oct. 1, 2026, using cash on hand.
- 2026 Production Guidance — Increased to approximately 524,000 barrels of oil per day and 1,015,000 barrels of oil equivalent per day for the full year.
- Capital Expenditure Guidance — Raised to a range of $3.95 billion to $4.00 billion from the previous estimate of approximately $3.9 billion.
- Q4 Capital Guidance — $1,000 million to $1,050 million, intended to maintain flattish oil production levels through the end of the year.
- Reinvestment Rate — 30% to 32% for the year, which management reported remains below the rates of industry super majors.
- Lease Operating Expenses — $5.97 per barrel of oil equivalent, reflecting management’s focus on controlling variable costs in the Permian Basin.
- Completion Lateral Length — 13,584 feet average for the 135 gross wells completed during the third quarter.
- Barnett Development Costs — $800 to $900 per foot targeted as the program transitions to full-field development in deeper horizons.
- Annual Cash Taxes — Approximately $2 billion projected for the full year 2026, representing a significant portion of the total corporate cash tax spend in the United States.
- Solitude Pipeline Equity — 7.5% interest acquired in the natural gas pipeline system, securing downstream takeaway capacity from the Permian to Katy.
- Oil Recovery Factor — 10% extraction of oil in place currently, with management aiming to reach 11% through enhanced completion and chemical technologies.
- Developed NPV Efficiency — 89% capture of idealized value in developed drilling spacing units, compared to a peer average in the low 60% range.
- Automation Deployment — 1,000 plunger lift wells being transitioned to autonomous, self-optimizing solutions to reduce manpower and compression needs.
- Viper Transaction Strategy — 79% of subsidiary capital deployed to proprietary or off-market deals, including the McElroy Ranch acquisition.
- GAAP Net Income — $1.6 billion attributable to the company, or $5.69 per diluted share.
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RISKS
- Wesson warned that “If there’s an inflation cycle, which at $100 oil, you can expect that there’s going to be probably some inflation cycle that comes through on the service side,” potentially affecting future drilling and completion costs.
- Van’t Hof noted that “the market is volatile” and cited a “$60 a barrel swing in Q3 alone” as a primary driver for maintaining a low reinvestment rate and high cash liquidity.
SUMMARY
Diamondback Energy, Inc. (FANG -3.71%) reported financial results for the third quarter of 2026, highlighted by increased production guidance and a focus on maintaining a low reinvestment rate. Management reported that the company is allocating free cash flow toward debt reduction and dividend growth while preparing for long-term operations extending into the 2030s. Strategic initiatives include the transition of the Barnett deep zone play into full-field development and the advancement of infrastructure projects such as the Bryant Ranch power project and the Solitude Pipeline System. The company is also integrating artificial intelligence and autonomous technologies across its production operations to combat potential service cost inflation and improve recovery factors.
- Van’t Hof emphasized the company’s regional expertise, stating, “1,700 people spend every day trying to get better at what we do in the Permian Basin, and we do not spend a lot of time thinking about other places outside the basin.”
- The company is prioritizing infrastructure to capitalize on evolving energy needs: Van’t Hof noted that “the basin moving from supply push to demand pull, whether it be power or LNG, should be a good thing for the owner of the molecule long term.”
- Management identified significant value in deep zone development: Barkmann reported that Diamondback is “leaning into sort of the co-development in those areas just because the returns and the well performance are robust enough to compete.”
- Jere Thompson indicated that the company is nearing final investment decisions on power infrastructure, noting a “unique project on Bryant Ranch that is shovel-ready” with secured equipment and remediated land.
- The company is utilizing technology to optimize subsurface results, with Van’t Hof stating that “AI impact the subsurface and productivity, whether that is completion design, completion technology, subsurface evaluation, all of that could be the billion or multi-billion dollar wins.”
INDUSTRY GLOSSARY
- Barnett: A geological formation within the Permian Basin being targeted by the company for deep zone development.
- DSU: Drilling Spacing Unit, the geographic area assigned to a well or group of wells for production purposes.
- EOR: Enhanced Oil Recovery, techniques such as chemical or surfactant injections used to increase the amount of crude oil that can be extracted from a reservoir.
- LOE: Lease Operating Expenses, the daily costs of operating wells and maintaining equipment.
- MBO/d: Thousand barrels of oil per day.
- MBOE/d: Thousand barrels of oil equivalent per day.
- NPV: Net Present Value, a financial metric used to estimate the current value of future cash flows.
- Permian Basin: A large sedimentary basin in West Texas and New Mexico that is one of the most productive oil and gas regions in the United States.
- Solitude Pipeline System: A natural gas pipeline project transporting molecules from the Permian Basin to the Katy market hub.
- Viper: Viper Energy, Inc., a subsidiary of Diamondback focused on the acquisition and ownership of mineral and royalty interests.
- Waha: A natural gas pricing hub located in West Texas.
Full Conference Call Transcript
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