Diamondback Energy, Inc. (FANG) Business Profile

What it does

Diamondback Energy is an independent oil and natural gas company headquartered in Midland. Founded in 2007, it is led by Chief Executive Officer Kaes Van’t Hof. Its business is acquiring and developing oil and gas resources, primarily in the Permian Basin of West Texas.

Diamondback drills horizontal wells into underground rock formations and uses hydraulic fracturing to help oil and gas flow. Horizontal drilling allows a well to follow a productive layer of rock; fracturing involves injecting water, sand and chemicals under pressure to create pathways through that rock. The company sells oil, natural gas and natural gas liquids, such as the liquids separated from gas during processing.

Its customers are primarily purchasers of oil and gas production. Diamondback typically sells to a relatively small number of customers, including companies involved in moving and trading crude oil. It also records revenue from sales of purchased oil.

Diamondback operates most of its acreage, giving it responsibility for managing much of the drilling and production activity. It also owns an interest in publicly traded Viper, which owns mineral interests primarily in the Permian Basin. Those interests give Viper a share of production from wells, including wells operated by companies other than Diamondback.

How it makes money

Diamondback reports one operating segment: upstream oil and gas. It earns revenue by producing and selling oil, natural gas and natural gas liquids, and it also records sales of purchased oil. Production from existing wells generates recurring sales, but those wells deplete over time, so the company must develop or acquire additional reserves to replace production.

FY2025 aggregate revenue: $15.0 billion. Before Q3 2026 results, it was reported on 26 October 2026 that quarterly revenue was expected to be $4.3 billion; this was a forecast, not a reported quarterly total.

Oil sales generated $11.6 billion in FY2025. The company’s sales prices depend on prevailing commodity market conditions, which are affected by supply and demand, economic activity, trade policy, weather and other factors outside its control. Production volumes and the mix of oil, gas and liquids also affect revenue.

Diamondback uses commodity derivatives to reduce price volatility on a portion of its production. These contracts can provide protection against falling prices, but can also limit the benefit from rising prices or require payments to counterparties. Diamondback does not require collateral from those counterparties.

Developing production requires continuing expenditure on drilling, completing and equipping wells, as well as infrastructure. In 2025, cash capital expenditures excluding acquisitions were $3.5 billion. The company intends to return at least 50% of quarterly Adjusted Free Cash Flow to stockholders and primarily use the remainder to reduce debt. Its program focuses on a base dividend and opportunistic share repurchases; dividends and repurchases remain subject to board discretion.

Customers and how it sells

Diamondback’s operations focus on the Permian Basin, which extends across West Texas and New Mexico. Its horizontal development targets the Spraberry and Wolfcamp formations in the Midland Basin and the Wolfcamp and Bone Spring formations in the Delaware Basin. At December 31, 2025, its Permian position covered approximately 1,097,846 gross (869,036 net) acres. Gross acreage is the total in which it has an interest; net acreage reflects its ownership share.

The company typically sells production to a relatively small number of purchasers. In FY2025, Medallion Midstream accounted for 16.0% of revenue, Shell Trading (USA) Company for 13.0%, Enterprise Crude Oil LLC for 12.0%, and Vitol Inc for 11.0%. Diamondback does not require collateral from its customers.

The company believes losing any single purchaser would not materially affect operating results because oil and natural gas are interchangeable commodities with established markets and numerous purchasers. It also has taken pipeline capacity to move gas closer to end markets and is discussing opportunities with large liquefied natural gas players.

Viper’s mineral interests are primarily in the Permian Basin. In February 2026, Viper sold its non-Permian assets, including properties in the Denver-Julesburg, Eagle Ford and Williston basins.

Suppliers and costs

Diamondback needs drilling rigs, equipment, raw materials, oilfield services, personnel and water to develop and operate its wells. It also relies on facilities that gather, process and transport production, some of which it does not control. Restrictions on obtaining water or disposing of produced water can affect operations and costs.

In 2025, cash operating costs were $10.23 per BOE, or barrel of oil equivalent. These included lease operating expenses, production and property taxes, gathering, processing and transportation, and cash general and administrative expenses. Cash capital expenditures excluding acquisitions were $3.5 billion in 2025.

Diamondback says its acreage is generally arranged in contiguous blocks, allowing it to use centralized production and fluid-handling facilities. It operates approximately 97% of its acreage, which it says helps it manage costs and the pace of development.

The company has seen inflation in consumables and expects to seek efficiencies and procurement value to offset variable costs. Service-sector costs can also change with market conditions. Following the sale of its water-assets subsidiary in 2025, Diamondback renewed its dedication to Deep Blue for produced and supply water within a 12-county area of the Midland Basin.

Competitive position

Diamondback competes with other oil and natural gas companies for productive properties, exploration prospects, equipment, supplies and personnel. Some competitors have greater financial or human resources and also operate in areas such as refining, transportation and marketing. They may be able to bid for more properties or continue exploring through periods of lower commodity prices. Oil and gas also compete with other energy sources, primarily on price.

Diamondback operates approximately 97% of its acreage and says its generally contiguous blocks support centralized facilities and economies of scale. Its acreage includes multiple potential drilling horizons, and the company uses seismic data to evaluate locations and potential acquisitions.

Our reading: Operating control and contiguous acreage provide a meaningful operational advantage because Diamondback can coordinate development and share infrastructure, although they do not remove competition for land and services. Our reading: Its drilling inventory and subsurface data support continued development, but their value depends on geology, costs and commodity prices. Our reading: These advantages do not give Diamondback control over the prices of the commodities it sells.

No company is identified as a direct competitor by name in the available evidence.

Growth opportunities

Diamondback’s development strategy centers on drilling its existing Permian acreage, improving well performance and pursuing acquisitions that meet its strategic and financial targets. At December 31, 2025, it had identified approximately 8,854 gross (6,541 net) potential horizontal drilling locations under its stated economic assumptions. The number ultimately drilled can vary with well spacing, costs, prices and other factors.

The company completed the Double Eagle acquisition in April 2025, adding acreage and potential horizontal locations primarily in the Midland Basin. In 2025, Viper acquired Sitio’s mineral and royalty interests; Viper subsequently sold its non-Permian assets in February 2026.

Diamondback has also been developing deeper formations. It says its Barnett play is moving from geologic success toward full-field development. The company is evaluating completion techniques and says results from chemical enhanced oil recovery have varied as it works on chemical compositions and deployment methods.

For gas, Diamondback has secured pipeline capacity closer to end markets and is discussing opportunities with liquefied natural gas companies. It has also committed production to Solitude. Separately, the company says its Bryant Ranch power-generation project is shovel-ready, with land remediated and equipment, water and gas secured. It must still get the project signed up.

Diamondback says any decision to grow production depends on the broader market environment and would require spending beyond its stated Q4 2026 range.

Structural risks

• Commodity prices: Oil and natural gas prices can be volatile. Falling prices can reduce revenue, cash flow and the value of estimated reserves; derivatives may not fully protect the company and can limit gains when prices rise.
• Reserve replacement: Existing reserves decline as they are produced. Diamondback must develop its acreage or acquire reserves, and some leases can expire if production is not established or maintained.
• Concentration and operations: The company’s primary operations are concentrated in one geographic area. Unavailable or costly rigs, services, transportation, equipment or personnel could interrupt operations and reduce revenue.
• Water and regulation: Restrictions on obtaining water or disposing of produced water can affect the business. Environmental and other regulations can impose compliance costs, delays and liabilities.
• Capital and debt: Development and acquisitions require substantial capital. Financing may be unavailable or costly, while debt can limit business flexibility and the ability to service obligations.
• Estimates and acquisitions: Reserve estimates depend on assumptions that may prove inaccurate. Acquired properties can have unidentified operational, title or environmental problems, and acquisitions may be difficult to integrate.

Leadership

Following the Endeavor acquisition, its former equityholders have the ability to significantly influence Diamondback’s business, and their interests may differ from those of other stockholders.

Bottom line

Our reading

Our reading: Diamondback is a Permian-focused production business whose operating control and drilling inventory support continued development, but whose existing wells require ongoing capital to replace depleted reserves (item1; item1a). Its results remain exposed to commodity markets, regional operating constraints and the availability of capital, while its gas-marketing and power projects offer additional avenues for development (item1a; call_qa; facts).