10-Q – 2025-08-06 – fang-20250630.htm

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35700
 

Diamondback Energy, Inc.
(Exact Name of Registrant As Specified in Its Charter)

DE
45-4502447

(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number)

500 West Texas Ave.,

Suite 100
Midland , TX
79701
(Address of principal executive offices) (Zip code)

( 432 ) 221-7400
(Registrant’s telephone number, including area code)

  Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share
FANG The Nasdaq Stock Market LLC
(NASDAQ Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer ☒ Accelerated Filer ☐

Non-Accelerated Filer ☐ Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐     No  ☒

As of August 1, 2025, the registrant had 289,486,120 shares of common stock outstanding.

DIAMONDBACK ENERGY, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2025
TABLE OF CONTENTS

Page
Glossary of Oil and Natural Gas Terms
ii

Glossary of Certain Other Terms
iii

Cautionary Statement Regarding Forward-Looking Statements
iv

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)
1

Condensed Consolidated Balance Sheets
1

Condensed Consolidated Statements of Operations
2

Condensed Consolidated Statements of Stockholders’ Equity
3

Condensed Consolidated Statements of Cash Flows
5

Notes to the Condensed Consolidated Financial Statements
6

1. Description of the Business and Basis of Presentation
6

2. Summary of Significant Accounting Policies
7

3. Revenue from Contracts with Customers
8

4. Acquisitions and Divestitures
9

5. Endeavor Energy Resources, LP Acquisition
13

6. Property and Equipment
15

7. Asset Retirement Obligations
15

8. Related Party Transactions
16

9. Debt
17

10. Stockholders’ Equity and Earnings (Loss) Per Share
19

11. Equity-Based Compensation
21

12. Income Taxes
23

13. Derivatives
24

14. Fair Value Measurements
26

15. Supplemental Information To Statements of Cash Flows
28

16. Commitments and Contingencies
28

17. Subsequent Events
29

18. Segment Information
30

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
31

Item 3. Quantitative and Qualitative Disclosures About Market Risk
49

Item 4. Controls and Procedures
51

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
52

Item 1A. Risk Factors
52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
52

Item 5. Other Information
53

Item 6. Exhibits
53

Signatures
55

i

Table of Contents

GLOSSARY OF OIL AND NATURAL GAS TERMS

The following is a glossary of certain oil and natural gas industry terms that are used in this Quarterly Report on Form 10-Q (this “report”) and our other periodic reports under the Exchange Act:

Argus WTI Houston Grade of oil that serves as a benchmark price for oil at Houston, Texas.
Argus WTI Midland Grade of oil that serves as a benchmark price for oil at Midland, Texas.
Basin A large depression on the earth’s surface in which sediments accumulate.
Bbl or barrel One stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.

BO/d One barrel of crude oil per day.
BOE One barrel of oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of oil.
BOE/d BOE per day.
Brent A major trading classification of light sweet oil that serves as a benchmark price for oil worldwide.

Completion The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

Henry Hub Natural gas gathering point that serves as a benchmark price for natural gas futures on the NYMEX.
HSC Hub
Natural gas gathering point that serves as a benchmark price for natural gas at the Houston Ship Channel area.

Horizontal wells Wells drilled directionally horizontal to allow for development of structures not reachable through traditional vertical drilling mechanisms.

MBbls
One thousand barrels of crude oil and other liquid hydrocarbons.

MBO/d One thousand BO per day.
MBOE One thousand BOE.
MBOE/d One thousand BOE per day.
Mcf One thousand cubic feet of natural gas.

Mineral interests The interests in ownership of the resource and mineral rights, giving an owner the right to profit from the extracted resources.
MMBtu One million British Thermal Units.
MMcf Million cubic feet of natural gas.
Net acres The sum of the fractional working interest owned in gross acres.

Oil and natural gas properties Tracts of land consisting of properties to be developed for oil and natural gas resource extraction.

Proved reserves The estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.

Reserves The estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to the market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Reservoir A porous and permeable underground formation containing a natural accumulation of producible natural gas and/or crude oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.

Royalty interest An interest that gives an owner the right to receive a portion of the resources or revenues without having to carry any costs of development, which may be subject to expiration.

Waha Hub Natural gas gathering point that serves as a benchmark price for natural gas at western Texas and New Mexico.
Working interest An operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.
WTI West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil that serves as a benchmark for oil on the NYMEX.
WTI Cushing
Grade of oil that serves as a benchmark price for oil at Cushing, Oklahoma.

ii

Table of Contents

GLOSSARY OF CERTAIN OTHER TERMS

The following is a glossary of certain other terms that are used in this report and our other periodic reports under the Exchange Act:

April 2024 Notes
The outstanding senior notes issued by Diamondback Energy, Inc. under indentures where Diamondback E&P is the sole guarantor, consisting of the 5.200% Senior Notes due 2027, 5.150% Senior Notes due 2030, 5.400% Senior Notes due 2034, 5.750% Senior Notes due 2054 and 5.900% Senior Notes due 2064.

ASU Accounting Standards Update.

Equity Plan The Company’s 2021 Amended and Restated Equity Incentive Plan.
Exchange Act The Securities Exchange Act of 1934, as amended.
FASB Financial Accounting Standards Board.
GAAP Accounting principles generally accepted in the United States.

Nasdaq The Nasdaq Global Select Market.

OPEC Organization of the Petroleum Exporting Countries.

SEC United States Securities and Exchange Commission.
Securities Act The Securities Act of 1933, as amended.

Guaranteed Senior Notes The outstanding senior notes issued by Diamondback Energy, Inc. under indentures where Diamondback E&P is the sole guarantor, consisting of the 3.250% Senior Notes due 2026, 5.200% Senior Notes due 2027, 3.500% Senior Notes due 2029, 5.150% Senior Notes due 2030, 3.125% Senior Notes due 2031, 6.250% Senior Notes due 2033, 5.400% Senior Notes due 2034, 5.550% Senior Notes due 2035, 4.400% Senior Notes due 2051, 4.250% Senior Notes due 2052, 6.250% Senior Notes due 2053, 5.750% Senior Notes due 2054 and 5.900% Senior Notes due 2064.

SOFR The secured overnight financing rate.
TSR Total stockholder return of the Company’s common stock.
Viper Viper Energy, Inc.

Viper LLC Viper Energy Partners LLC, a Delaware limited liability company and a subsidiary of Viper.

Wells Fargo Wells Fargo Bank, National Association.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties and assumptions. All statements, other than statements of historical fact, including statements regarding our: future performance; business strategy; future operations (including drilling plans and capital plans); estimates and projections of revenues, losses, costs, expenses, returns, cash flow and financial position; reserve estimates and our ability to replace or increase reserves; anticipated benefits or other effects of strategic transactions (including the Endeavor Acquisition, Double Eagle Acquisition and 2025 Drop Down (in each case, as defined below) discussed in this report and other acquisitions or divestitures, including the pending Sitio Acquisition; and plans and objectives of management (including plans for future cash flow from operations and for executing environmental strategies) are forward-looking statements. When used in this report, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to the Company are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although we believe that the expectations and assumptions reflected in our forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond our control. In particular, the factors discussed in this report and detailed under Part II, Item 1A. Risk Factors in this report and our Annual Report on Form 10–K for the year ended December 31, 2024 could affect our actual results and cause our actual results to differ materially from expectations, estimates or assumptions expressed, forecasted or implied in such forward-looking statements. Unless the context requires otherwise, references to “we,” “us,” “our” or the “Company” are intended to mean the business and operations of the Company and its consolidated subsidiaries.

Factors that could cause our outcomes to differ materially include (but are not limited to) the following:

• changes in supply and demand levels for oil, natural gas and natural gas liquids and the resulting impact on the price for those commodities;
• the impact of public health crises, including epidemic or pandemic diseases and any related company or government policies or actions;
• actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments;
• changes in general economic, business or industry conditions, including changes in foreign currency exchange rates, interest rates and inflation rates, instability in the financial sector;
• regional supply and demand factors, including delays, curtailment delays or interruptions of production, or governmental orders, rules or regulations that impose production limits;
• federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations;
• physical and transition risks relating to climate change;
• restrictions on the use of water, including limits on the use of produced water and a moratorium on new produced water well permits recently imposed by the Texas Railroad Commission in an effort to control induced seismicity in the Permian Basin;
• significant declines in prices for oil, natural gas, or natural gas liquids, which could require recognition of significant impairment charges;
• changes in U.S. energy, environmental, monetary and trade policies, including with respect to tariffs or other trade barriers and any resulting trade tensions;
• conditions in the capital, financial and credit markets, including the availability and pricing of capital for drilling and development operations and our environmental and social responsibility projects;
• challenges with employee retention and an increasingly competitive labor market;
• changes in availability or cost of rigs, equipment, raw materials, supplies and oilfield services;
• changes in safety, health, environmental, tax and other regulations or requirements (including those addressing air emissions, water management, or the impact of global climate change);
• security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, or from breaches of information technology systems of third parties with whom we transact business;
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• lack of, or disruption in, access to adequate and reliable transportation, processing, storage and other facilities for our oil, natural gas and natural gas liquids;
• failures or delays in achieving expected reserve or production levels from existing and future oil and natural gas developments, including due to operating hazards, drilling risks, or the inherent uncertainties in predicting reserve and reservoir performance;
• difficulty in obtaining necessary approvals and permits;
• severe weather conditions and natural disasters;
• acts of war or terrorist acts and the governmental or military response thereto;
• changes in the financial strength of counterparties to our credit agreement and hedging contracts;
• changes in our credit rating;
• risks related to the recently completed Endeavor Acquisition, Double Eagle Acquisition and the 2025 Drop Down; and
• other risks and factors disclosed or incorporated by reference in this report.

In light of these factors, the events anticipated by our forward-looking statements may not occur at the time anticipated or at all. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. We cannot predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements we may make. Accordingly, you should not place undue reliance on any forward-looking statements made in this report. All forward-looking statements speak only as of the date of this report or, if earlier, as of the date they were made. We do not intend to, and disclaim any obligation to, update or revise any forward-looking statements unless required by applicable law.

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PART I. FINANCIAL INFORMATION

ITEM 1.     CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2025 2024
(In millions, except par values and share data)
Assets
Current assets:
Cash and cash equivalents ($ 28 million and $ 27 million related to Viper)
$ 219   $ 161  
Restricted cash 2   3  
Accounts receivable:
Joint interest and other, net 256   198  
Oil and natural gas sales, net ($ 203 million and $ 149 million related to Viper)
1,278   1,387  

Inventories 115   116  
Derivative instruments 117   168  
Prepaid expenses and other current assets 79   77  
Total current assets 2,066   2,110  
Property and equipment:
Oil and natural gas properties, full cost method of accounting ($ 24,206 million and $ 22,666 million excluded from amortization at June 30, 2025 and December 31, 2024, respectively) ($ 10,560 million and $ 5,713 million related to Viper and $ 3,873 million and $ 2,180 million excluded from amortization related to Viper)
89,302   82,240  
Other property, equipment and land 1,456   1,440  
Accumulated depletion, depreciation, amortization and impairment ($ 1,272 million and $ 1,081 million related to Viper)
( 21,529 ) ( 19,208 )
Property and equipment, net 69,229   64,472  
Funds held in escrow 1   1  
Equity method investments 388   375  

Derivative instruments —   2  
Deferred income taxes, net ($ 42 million and $ 185 million related to Viper)
42   173  

Other assets 215   159  
Total assets $ 71,941   $ 67,292  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade $ 210   $ 253  
Accrued capital expenditures 793   690  
Current maturities of debt 14   900  
Other accrued liabilities 881   1,020  
Revenues and royalties payable 1,563   1,491  
Derivative instruments 21   43  
Income taxes payable 277   414  
Total current liabilities 3,759   4,811  
Long-term debt ($ 1,098 million and $ 1,083 million related to Viper)
15,119   12,075  
Derivative instruments 93   106  
Asset retirement obligations 616   573  
Deferred income taxes 9,516   9,826  
Other long-term liabilities 19   39  
Total liabilities 29,122   27,430  
Commitments and contingencies (Note 16)

Stockholders’ equity:
Common stock, $ 0.01 par value; 800,000,000 shares authorized; 291,155,296 and 290,984,373 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively
3   3  
Additional paid-in capital 33,127   33,501  
Retained earnings (accumulated deficit) 5,758   4,238  
Accumulated other comprehensive income (loss) ( 7 ) ( 6 )
Total Diamondback Energy, Inc. stockholders’ equity 38,881   37,736  
Non-controlling interest 3,938   2,126  
Total equity 42,819   39,862  
Total liabilities and stockholders’ equity $ 71,941   $ 67,292  

See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions, except per share amounts, shares in thousands)
Revenues:
Oil sales $ 2,852   $ 1,998   $ 5,891   $ 3,865  
Natural gas sales 97   5   309   55  
Natural gas liquid sales 367   171   773   355  

Sales of purchased oil 335   300   709   416  
Other operating income 27   9   44   19  
Total revenues 3,678   2,483   7,726   4,710  
Costs and expenses:
Lease operating expenses 440   254   848   509  
Production and ad valorem taxes 214   141   442   260  
Gathering, processing and transportation 145   82   256   159  
Purchased oil expense 331   299   713   416  
Depreciation, depletion, amortization and accretion 1,266   483   2,363   952  

General and administrative expenses 67   46   140   92  

Merger and transaction expenses 40   3   77   15  
Other operating expenses 36   19   75   33  
Total costs and expenses 2,539   1,327   4,914   2,436  
Income (loss) from operations 1,139   1,156   2,812   2,274  
Other income (expense):
Interest expense, net ( 56 ) ( 44 ) ( 96 ) ( 83 )
Other income (expense), net ( 2 ) 1   25   ( 2 )

Gain (loss) on derivative instruments, net ( 197 ) 18   29   ( 30 )

Gain (loss) on extinguishment of debt 55   —   55   2  
Income (loss) from equity investments, net 4   15   12   17  
Total other income (expense), net ( 196 ) ( 10 ) 25   ( 96 )
Income (loss) before income taxes 943   1,146   2,837   2,178  
Provision for (benefit from) income taxes 204   252   607   475  
Net income (loss) 739   894   2,230   1,703  
Net income (loss) attributable to non-controlling interest 40   57   126   98  
Net income (loss) attributable to Diamondback Energy, Inc. $ 699   $ 837   $ 2,104   $ 1,605  

Earnings (loss) per common share:
Basic $ 2.38   $ 4.66   $ 7.20   $ 8.93  
Diluted $ 2.38   $ 4.66   $ 7.20   $ 8.93  
Weighted average common shares outstanding:
Basic 292,135   178,360   290,880   178,418  
Diluted 292,135   178,360   290,880   178,418  

See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Income (Loss) Non-Controlling Interest Total
Shares Amount
($ in millions, shares in thousands)
Balance December 31, 2024 290,984   $ 3   $ 33,501   $ 4,238   $ ( 6 ) $ 2,126   $ 39,862  
Viper equity-based compensation —  —  —  —  —  1   1  
Distribution equivalent rights payments —  —  —  ( 1 ) —  —  ( 1 )
Stock-based compensation —  —  22   —  —  —  22  
Cash paid for tax withholding on vested equity awards ( 155 ) —  ( 25 ) —  —  —  ( 25 )
Repurchased shares under buyback program ( 3,656 ) —  ( 580 ) —  —  —  ( 580 )

Viper LLC’s units issued for acquisition —  —  —  —  —  119   119  

Net proceeds from Viper’s issuance of common stock —  —  —  —  —  1,232   1,232  
Dividends to non-controlling interest —  —  —  —  —  ( 95 ) ( 95 )
Dividends paid —  —  —  ( 290 ) —  —  ( 290 )
Issuance of shares upon vesting of equity awards 115   —  —  —  —  —  — 
Change in ownership of consolidated subsidiaries, net —  —  206   —  —  ( 199 ) 7  
Other comprehensive income (loss) —  —  1   —  ( 1 ) —  —  
Net income (loss) —  —  —  1,405   —  86   1,491  
Balance March 31, 2025 287,288   3   33,125   5,352   ( 7 ) 3,270   41,743  
Viper equity-based compensation —  —  —  —  —  2   2  
Distribution equivalent rights payments —  —  —  ( 2 ) —  —  ( 2 )
Stock-based compensation —  —  29   —  —  —  29  
Cash paid for tax withholding on vested equity awards ( 1 ) —  ( 1 ) —  —  —  ( 1 )
Repurchased shares under buyback program ( 2,992 ) —  ( 393 ) —  —  —  ( 393 )
Repurchased shares under Viper’s buyback program —  —  —  —  —  ( 10 ) ( 10 )
Common shares issued for acquisition 6,843   —  1,101   —  —  —  1,101  

Dividends to non-controlling interest —  —  —  —  —  ( 82 ) ( 82 )
Dividends paid —  —  —  ( 291 ) —  —  ( 291 )
Issuance of shares upon vesting of equity awards 17   —  —  —  —  —  — 
Change in ownership of consolidated subsidiaries, net —  —  ( 734 ) —  —  718   ( 16 )

Net income (loss) —  —  —  699   —  40   739  
Balance June 30, 2025 291,155   $ 3   $ 33,127   $ 5,758   $ ( 7 ) $ 3,938   $ 42,819  

See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity - (Continued)
(Unaudited)

Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated
Other
Comprehensive
Income (Loss) Non-Controlling Interest Total
Shares Amount
($ in millions, shares in thousands)
Balance December 31, 2023 178,724   $ 2   $ 14,142   $ 2,489   $ ( 8 ) $ 805   $ 17,430  

Distribution equivalent rights payments —  —  —  ( 4 ) —  —  ( 4 )
Stock-based compensation —  —  21   —  —  —  21  
Cash paid for tax withholding on vested equity awards ( 187 ) —  ( 34 ) —  —  —  ( 34 )
Repurchased shares under buyback program ( 279 ) —  ( 42 ) —  —  —  ( 42 )

Proceeds from partial sale of investment in Viper Energy, Inc. —  —  219   —  —  197   416  
Dividends to non-controlling interest —  —  —  —  —  ( 44 ) ( 44 )
Dividends paid —  —  —  ( 548 ) —  —  ( 548 )
Issuance of shares upon vesting of equity awards 82   —  —  —  —  —  — 
Change in ownership of consolidated subsidiaries, net —  —  ( 55 ) —  —  70   15  

Net income (loss) —  —  —  768   —  41   809  
Balance March 31, 2024 178,340   2   14,251   2,705   ( 8 ) 1,069   18,019  
Viper equity-based compensation —  —  —  —  —  1   1  
Distribution equivalent rights payments —  —  —  ( 3 ) —  —  ( 3 )
Stock-based compensation —  —  25   —  —  —  25  
Cash paid for tax withholding on vested equity awards ( 16 ) —  ( 3 ) —  —  —  ( 3 )

Dividends to non-controlling interest —  —  —  —  —  ( 54 ) ( 54 )
Dividends paid —  —  —  ( 352 ) —  —  ( 352 )
Issuance of shares upon vesting of equity awards 70   —  —  —  —  —  — 
Change in ownership of consolidated subsidiaries, net —  —  ( 6 ) —  —  6   —  

Net income (loss) —  —  —  837   —  57   894  
Balance June 30, 2024 178,394   $ 2   $ 14,267   $ 3,187   $ ( 8 ) $ 1,079   $ 18,527  

See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended June 30,
2025 2024
(In millions)
Cash flows from operating activities:
Net income (loss) $ 2,230   $ 1,703  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for (benefit from) deferred income taxes ( 18 ) 129  

Depreciation, depletion, amortization and accretion 2,363   952  

(Gain) loss on extinguishment of debt ( 55 ) ( 2 )

(Gain) loss on derivative instruments, net ( 29 ) 30  
Cash received (paid) on settlement of derivative instruments 48   ( 32 )
(Income) loss from equity investment, net ( 12 ) ( 17 )

Equity-based compensation expense 39   33  

Other 27   57  
Changes in operating assets and liabilities:
Accounts receivable 160   ( 45 )

Income tax receivable 3   12  

Prepaid expenses and other current assets ( 16 ) 89  
Accounts payable and accrued liabilities ( 383 ) ( 95 )

Income taxes payable ( 309 ) ( 15 )
Revenues and royalties payable ( 30 ) 14  

Other 14   50  
Net cash provided by (used in) operating activities 4,032   2,863  
Cash flows from investing activities:
Additions to oil and natural gas properties ( 1,806 ) ( 1,246 )

Property acquisitions ( 3,875 ) ( 203 )

Proceeds from sale of assets 57   252  

Other ( 8 ) ( 3 )
Net cash provided by (used in) investing activities ( 5,632 ) ( 1,200 )
Cash flows from financing activities:
Proceeds under term loan agreements 1,500   —  
Repayments under term loan agreements ( 900 ) —  
Proceeds from borrowings under credit facilities 5,922   174  
Repayments under credit facilities ( 5,263 ) ( 260 )
Proceeds from senior notes 1,200   5,500  
Repayment of senior notes ( 244 ) ( 25 )

Repurchased shares under buyback program ( 973 ) ( 42 )

Proceeds from partial sale of investment in Viper Energy, Inc. —   451  

Net proceeds from Viper’s issuance of common stock 1,232   —  
Dividends paid to stockholders ( 581 ) ( 900 )

Dividends to non-controlling interest ( 177 ) ( 98 )

Other ( 59 ) ( 137 )
Net cash provided by (used in) financing activities 1,657   4,663  
Net increase (decrease) in cash and cash equivalents 57   6,326  
Cash, cash equivalents and restricted cash at beginning of period 164   585  
Cash, cash equivalents and restricted cash at end of period $ 221   $ 6,911  

See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

1.     DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Organization and Description of the Business

Diamondback Energy, Inc., together with its subsidiaries (collectively referred to as “Diamondback” or the “Company” unless the context otherwise requires), is an independent oil and natural gas company currently focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas.

As of June 30, 2025, the wholly owned subsidiaries of Diamondback include Diamondback E&P LLC (“Diamondback E&P”), a Delaware limited liability company, Rattler Midstream GP LLC, a Delaware limited liability company, Rattler Midstream LP, a Delaware limited partnership, QEP Resources, Inc., a Delaware corporation and Eclipse Merger Sub II, LLC, a Delaware limited liability company.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries after all significant intercompany balances and transactions have been eliminated upon consolidation. The Company has one reportable segment, the upstream segment.

On March 5, 2024, the Company exercised certain of its demand rights, pursuant to a registration rights agreement initially entered into on June 23, 2014, as amended and restated on May 9, 2018 and November 10, 2023, and on March 8, 2024, completed a public offering of approximately 13.23  million shares of Viper’s Class A common stock at a price of $ 35.00 per share for proceeds, net of underwriters’ discount, of approximately $ 451 million. After this offering, the Company owned less than 50 % of Viper’s combined outstanding Class A common stock and Class B common stock, resulting in Viper no longer being a controlled company under the Nasdaq rules.

As of June 30, 2025, the Company owned approximately 54 % of Viper’s combined outstanding Class A common stock and Class B common stock. The Company determined, in each case, that it controls the activities of Viper in accordance with the guidance for variable interest entities in Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and therefore continues to consolidate Viper in the Company’s financial statements at June 30, 2025. See further discussion of the Company’s determination that Viper is a variable interest entity (“VIE”) in Note 2— Summary of Significant Accounting Policies . The results of operations attributable to the non-controlling interest in Viper are presented within equity and net income and are shown separately from the equity and net income attributable to the Company.

These condensed consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to SEC rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Company’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2024, which contains a summary of the Company’s significant accounting policies and other disclosures.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. These reclassifications had an immaterial effect on the previously reported total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Certain amounts included in or affecting the Company’s condensed consolidated financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the condensed consolidated financial statements are prepared. These estimates and assumptions affect the amounts the Company reports for assets and liabilities and the Company’s disclosure of contingent liabilities as of the date of the condensed consolidated financial statements. Actual results could differ from those estimates.

Making accurate estimates and assumptions is particularly difficult in the oil and natural gas industry given the challenges resulting from volatility in oil and natural gas prices. For instance, conflicts in the Middle East and globally, higher interest rates, effects of tariffs, actions taken by OPEC and its non-OPEC allies, known collectively as OPEC+, global supply chain disruptions, measures to combat persistent inflation and instability in the financial sector have contributed to recent economic and pricing volatility. The financial results of companies in the oil and natural gas industry have been impacted materially as a result of these events and changing market conditions. Such circumstances generally increase uncertainty in the Company’s accounting estimates, particularly those involving financial forecasts.

The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, fair value estimates of derivative instruments, the fair value determination of assets acquired and liabilities assumed and estimates of income taxes, including deferred tax valuation allowances.

Variable Interest Entity

Viper is a publicly traded corporation formed by the Company in 2014 to provide an attractive return to its stockholders (the largest of which is Diamondback) by focusing on business results, maximizing dividends through organic growth and pursuing accretive growth opportunities through acquisitions of mineral, royalty, overriding royalty, net profits and similar interests from the Company and from third parties. Viper has no employees and the Company provides management, operating and administrative services to Viper under a services and secondment agreement, including the services of the executive officers and other employees.

In connection with the reduction of the Company’s ownership percentage in Viper to below 50 % in March 2024, the Company re-evaluated whether Viper should continue to be consolidated in the Company’s financial statements. Viper meets the definition of a VIE under ASC Topic 810 and the Company continues to be the primary beneficiary of the VIE through its ability, via existing contractual agreements, to direct the activities that most significantly affect the economic performance of Viper. The Company also has the obligation to absorb losses and the right to receive benefits that could be significant to Viper. As such, the Company will continue to consolidate the activity of Viper. The Viper 2024 Equity Offering, the Viper 2025 Equity Offering (as defined and discussed in Note 10— Stockholders’ Equity and Earnings (Loss) Per Share ) and the 2025 Drop Down (as defined and discussed in Note 4— Acquisitions and Divestitures ) were determined not to be events that would cause the Company to change its conclusion regarding Viper’s status as a VIE.

Viper maintains its own capital structure that is separate from the Company. The Company is not under any obligation to provide additional financial support or investment to Viper. Viper’s assets cannot be used by the Company for general corporate purposes and the creditors of Viper’s liabilities do not have recourse to the Company’s assets. The assets and liabilities of Viper are included in the Company’s condensed consolidated balance sheets and disclosed parenthetically, if material.

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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

Recent Accounting Pronouncements

Recently Adopted Pronouncements

There are no recently adopted pronouncements of significance.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which requires that certain information in a reporting entity’s tax rate reconciliation be disaggregated and provides additional requirements regarding income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses,” which requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the income statement. The amendments are effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, previously disclosed, or not material upon adoption.

3.     REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from Contracts with Customers

The following tables present the Company’s revenue from contracts with customers:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
Oil sales $ 2,852   $ 1,998   $ 5,891   $ 3,865  
Natural gas sales 97   5   309   55  
Natural gas liquid sales 367   171   773   355  
Total oil, natural gas and natural gas liquid revenues 3,316   2,174   6,973   4,275  
Sales of purchased oil 335   300   709   416  
Other service revenues 14   7   25   15  
Total revenue from contracts with customers $ 3,665   $ 2,481   $ 7,707   $ 4,706  

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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

The following tables present the Company’s revenue from oil, natural gas and natural gas liquids disaggregated by basin:

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024
Midland Basin Delaware Basin Other Total Midland Basin Delaware Basin Other Total
(In millions)
Oil sales $ 2,626   $ 206   $ 20   $ 2,852   $ 1,659   $ 338   $ 1   $ 1,998  
Natural gas sales 89   8   —   97   2   3   —   5  
Natural gas liquid sales 335   32   —   367   128   42   1   171  
Total $ 3,050   $ 246   $ 20   $ 3,316   $ 1,789   $ 383   $ 2   $ 2,174  

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024
Midland Basin Delaware Basin Other Total Midland Basin Delaware Basin Other Total
(In millions)
Oil sales $ 5,427   $ 442   $ 22   $ 5,891   $ 3,162   $ 698   $ 5   $ 3,865  
Natural gas sales 280   28   1   309   36   18   1   55  
Natural gas liquid sales 709   63   1   773   265   89   1   355  
Total $ 6,416   $ 533   $ 24   $ 6,973   $ 3,463   $ 805   $ 7   $ 4,275  

4.     ACQUISITIONS AND DIVESTITURES

2025 Activity

Diamondback Acquisitions and Divestitures

2025 Drop Down Transaction

On May 1, 2025, the Company’s wholly owned subsidiary Endeavor Energy Resources, LP (“EER LP”) divested all of the issued and outstanding equity interests in 1979 Royalties, LP and 1979 Royalties GP, LLC (collectively, the “Endeavor Subsidiaries”), each of which was a subsidiary of the Company, pursuant to a definitive equity purchase agreement with Viper and Viper LLC in exchange for consideration consisting of (i) $ 1.0 billion in cash, including the release of funds held in escrow of approximately $ 223  million that was reflected in the caption “Restricted cash” on the Company’s condensed consolidated balance sheet at March 31, 2025, and (ii) the issuance of 69.63  million Viper LLC units and an equivalent number of shares of Viper’s Class B common stock, subject to transaction costs and certain customary post-closing adjustments (the “2025 Drop Down”). Viper funded the cash consideration for the 2025 Drop Down with a portion of the proceeds from the Viper 2025 Equity Offering (as defined and discussed in Note 10— Stockholders’ Equity and Earnings (Loss) Per Share ) and borrowings under the Viper LLC Revolving Credit Facility. The 2025 Drop Down was accounted for as a transaction between entities under common control.

EER LP can exchange some or all of the Viper LLC units received together with an equal number of shares of Viper’s Class B common stock for an equal number of shares of Viper’s Class A common stock. The mineral and royalty interests held and divested by the Endeavor Subsidiaries at the closing of the 2025 Drop Down represented approximately 24,446 net royalty acres in the Permian Basin, 69 % of which were operated by the Company, have an average net royalty interest of approximately 2.2 % and had oil production as of the closing date of approximately 17,097 BO/d (the “Endeavor Mineral and Royalty Interests”). The Endeavor Mineral and Royalty Interests included interests in horizontal wells comprised of 5,574 gross proved developed production wells (of which approximately 32 % were operated by the Company), 116 gross completed wells and 394 gross drilled but uncompleted wells, all of which were principally concentrated in the Midland Basin, with the balance located primarily in the Delaware and Williston Basins.

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Double Eagle Acquisition

On April 1, 2025, the Company completed its acquisition of all of the issued and outstanding interests of DE Permian, LLC, DE IV Combo, LLC and DE IV Operating, LLC, each of which were wholly owned subsidiaries of Double Eagle IV Midco, LCC (“Double Eagle”) (the “Double Eagle Acquisition”) for consideration of $ 3.0  billion in cash and approximately 6.84  million shares of the Company’s common stock, including transaction costs and subject to certain customary post-closing adjustments. The assets acquired in the Double Eagle Acquisition consisted 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. The Company funded the cash portion of the Double Eagle Acquisition through a combination of proceeds from the 2035 Notes, proceeds from the 2025 Term Loan Agreement and borrowings under the Company’s revolving credit facility.

Viper Acquisition

Pending Sitio Acquisition

On June 2, 2025, Viper and Viper LLC entered into an Agreement and Plan of Merger (the “Sitio Merger Agreement”) with Sitio Royalties Corp. (“Sitio”), Sitio Royalties Operating Partnership, LP, a subsidiary of Sitio (“Sitio OpCo”), New Cobra Pubco, Inc., a wholly owned subsidiary of Viper (“New Viper”), Cobra Merger Sub, Inc., a wholly owned subsidiary of New Viper and Scorpion Merger Sub, Inc., a wholly owned subsidiary of New Viper. Pursuant to the terms of the Sitio Merger Agreement, New Viper will acquire Sitio in an all-equity transaction valued at approximately $ 4.1  billion (including the redemption of Sitio’s net debt of approximately $ 1.1  billion as of June 30, 2025) (the “Sitio Acquisition”).

On June 2, 2025, following the execution of the Sitio Merger Agreement, the Company, Diamondback E&P and EER LLP, who together hold a majority of the voting power of Viper’s common stock, delivered a written consent approving the Sitio Merger Agreement and the transactions contemplated thereby, which constitutes the requisite approval of Viper’s stockholders under the Sitio Merger Agreement. The pending Sitio Acquisition is expected to close in the third quarter of 2025, subject to approval by a majority of stockholders at the special meeting of Sitio’s stockholders scheduled for August 18, 2025 and the satisfaction or waiver of other closing conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired at 11:59 p.m. Eastern Time on July 21, 2025.

The mineral and royalty interests to be acquired in the pending 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. Upon completion of the pending Sitio Acquisition, Viper expects to own 85,700 net royalty acres in the Permian Basin, approximately 43 % of which will be operated by the Company and an average 1.8 % net royalty interest in approximately 33,300 gross producing horizontal wells (approximately 608 net wells) with estimated average production of 64 - 68 MBO/d ( 122 - 130 MBOE/d) in the fourth quarter of 2025. Immediately following the closing of the pending Sitio Acquisition, the Company is expected to beneficially own approximately 41 % of Viper’s outstanding common stock. The Company expects that following such closing, the Company will continue to control the activities of Viper in accordance with the applicable ASC Topic 810 guidance and, accordingly, Viper will remain consolidated in the Company’s financial statements.

2024 Activity

Diamondback Acquisitions and Divestitures

Endeavor Acquisition

For details on the Endeavor Acquisition, which closed on September 10, 2024, see Note 5— Endeavor Energy Resources, LP Acquisition .

TRP Energy, LLC Asset Exchange

On December 20, 2024, the Company completed a transaction with TRP Energy, LLC (“TRP”), in which the Company exchanged certain assets including approximately 47,034 gross ( 35,673 net) acres located in the Delaware Basin and $ 312 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 with 55 operated locations (the “TRP Exchange”). The TRP
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Exchange is expected to expand our operating footprint and enhance our inventory of near-term drilling locations and was valued at approximately $ 1.3 billion. The Company funded the cash portion of the exchange with cash on hand and borrowings under its revolving credit facility.

The following table presents the acquisition consideration transferred in the TRP Exchange (in millions):

Consideration:
Oil and natural gas properties $ 989  
Midstream assets 53  
Suspense liabilities relieved ( 9 )
Cash consideration 312  
Total consideration $ 1,345  

Acquisition Date Fair Value of Consideration Transferred

The acquisition date fair value of oil and natural gas properties transferred was determined using an income approach utilizing the discounted cash flow method, which takes into account production forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. These inputs are not observable in the market and are considered level 3 inputs within the fair value hierarchy. The oil and natural gas properties transferred did not significantly impact the Company’s capitalized costs or proved reserves as of December 31, 2024.

The acquisition date fair value of midstream assets transferred was determined based on the cost approach, which utilized asset listings and cost records with consideration for the age, condition, utilization and economic support of the assets.

Allocation of Consideration Transferred

The TRP Exchange has been accounted for under the acquisition method of accounting for business combinations in accordance with ASC Topic 805, “Business Combinations.” The following table represents the allocation of the total consideration transferred in the TRP Exchange to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date. Although the allocation of consideration transferred is substantially complete as of the date of this filing, title to properties exchanged remain subject to change as the details of the transaction are finalized subsequent to closing. As such, there may be further adjustments to the fair value of certain assets acquired and liabilities assumed. The allocation of consideration transferred will be finalized within twelve months of the closing date of the transaction.

The following table sets forth the Company’s preliminary purchase price allocation (in millions):

Total consideration $ 1,345  

Fair value of liabilities assumed:
Suspense liabilities ( 4 )

Fair value of assets acquired:
Oil and natural gas properties 1,349  
Net assets acquired and liabilities assumed $ 1,345  

Oil and natural gas properties acquired were valued using an income approach utilizing the discounted cash flow method, which takes into account production forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. These inputs are not observable in the market and are considered level 3 inputs within the fair value hierarchy.

With the completion of the TRP Exchange, the Company acquired proved properties of $ 847 million and unproved properties of $ 502 million.
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The results of operations attributable to the TRP Exchange since the acquisition date have been included in the condensed consolidated statements of operations and include $ 88 million and $ 215 million of total revenue and $ 1 million and $ 112 million of net income for the three and six months ended June 30, 2025.

WTG Midstream Transaction

The Company owns a 25 % non-operating equity investment in Remuda Midstream Holdings LLC, referred to as the “WTG joint venture.” On July 15, 2024, the WTG joint venture sold its WTG Midstream LLC subsidiary (the “WTG Midstream Transaction”), for which the Company received as its portion of the consideration 10.1  million common units issued by Energy Transfer LP (NYSE: ET) and $ 190  million in cash, subject to customary post-closing adjustments. The common unit consideration is also subject to preferred distributions to incentive members of the WTG joint venture which reduce the proceeds attributable to the Company. At the closing of the WTG Midstream Transaction, the value attributable to the Company of the 10.1  million common units was approximately $ 135  million, of which approximately $ 81  million was received by the Company and $ 54 million was initially held in escrow pursuant to an escrow agreement entered into by the WTG joint venture in connection with the initial transaction. In the first half of 2025, the Company received approximately $ 15  million related to the settlement of working capital and $ 27  million of the initial escrow amount was released. The total value of distributions received by the Company through June 30, 2025 of $ 313  million, including certain customary post-closing adjustments, (excluding the remaining $ 27  million held in escrow) exceeded the carrying value of the Company’s investment balance in the WTG joint venture, resulting in an aggregate gain of approximately $ 116  million, of which approximately $ 42 million was recognized during the six months ended June 30, 2025. The gain is included in the caption “Other income (expense), net” in the condensed consolidated statement of operations.

Viper Acquisitions

Viper Tumbleweed Acquisitions

In September and October of 2024, Viper completed a series of related acquisitions including the Viper TWR Acquisition, the Viper Q Acquisition and the Viper M Acquisition, collectively the (“Viper Tumbleweed Acquisitions”), each as defined and discussed below.

On October 1, 2024, Viper acquired all of the issued and outstanding equity interests in TWR IV, LLC and TWR IV SellCo, LLC from Tumbleweed Royalty IV, LLC (“TWR IV”) and TWR IV SellCo Parent, LLC (the “Viper TWR Acquisition”), pursuant to a definitive purchase and sale agreement for consideration consisting of approximately (i) $ 464  million in cash, including transaction costs and certain customary post-closing adjustments, (ii) 10.09 million Viper LLC units to TWR IV, (iii) an option for TWR IV to acquire up to 10.09 million shares of Viper’s Class B common stock (the “TWR Class B Option”), and (iv) contingent cash consideration of up to $ 41 million, payable in January of 2026, based on the average price of WTI sweet crude oil prompt month futures contracts for the calendar year 2025 (the “WTI 2025 Average”).

TWR IV can exchange some or all of its Viper LLC units for an equal number of shares of Viper’s Class A common stock. The mineral and royalty interests acquired in the Viper TWR Acquisition represent approximately 3,067 net royalty acres located primarily in the Permian Basin. Viper funded the cash consideration through a combination of cash on hand, borrowings under the Viper LLC Revolving Credit Facility and proceeds from the Viper 2024 Equity Offering (as defined and discussed in Note 10— Stockholders’ Equity and Earnings (Loss) Per Share ).

On September 3, 2024, Viper acquired all of the issued and outstanding equity interests in Tumbleweed-Q Royalties, LLC (the “Viper Q Acquisition”), pursuant to a definitive purchase and sale agreement for consideration consisting of (i) approximately $ 114 million in cash, including transaction costs and certain customary post-closing adjustments, and (ii) contingent cash consideration of up to $ 5  million, payable in January of 2026, based on the WTI 2025 Average.

Additionally, on September 3, 2024, Viper acquired all of the issued and outstanding equity interests in MC TWR Royalties, LP and MC TWR Intermediate, LLC (the “Viper M Acquisition” and together with the Viper Q Acquisition, the “Viper Q & M Acquisitions”), pursuant to a definitive purchase and sale agreement for consideration consisting of (i) approximately $ 76 million in cash, including transaction costs and certain customary post-closing adjustments, and (ii) contingent cash consideration of up to $ 4  million, payable in January of 2026, based on the WTI 2025 Average. The mineral and royalty interests acquired in the Viper Q & M Acquisitions, represent approximately 406 and 267 net royalty acres located
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primarily in the Permian Basin, respectively. Viper funded the cash consideration for the Viper Q & M Acquisitions through a combination of cash on hand and borrowings under the Viper LLC Revolving Credit Facility.

See Note 14— Fair Value Measurements for further discussion of the fair value of the contingent consideration liabilities for each of the Viper Tumbleweed Acquisitions discussed above (collectively, the “2026 WTI Contingent Liability”).

5.     ENDEAVOR ENERGY RESOURCES, LP ACQUISITION

On September 10, 2024, the Company completed its acquisition of Endeavor Parent, LLC (“Endeavor”) (the “Endeavor Acquisition”) for consideration consisting of (i) $ 7.1  billion in cash paid to the Endeavor equityholders, (ii) $ 238 million for the repayment of Endeavor’s net debt, which included the $ 219 million net debt position and the associated $ 19 million make-whole premium paid upon redemption of the senior notes and costs incurred to terminate Endeavor’s revolving credit facility, and (iii) approximately 117.27 million shares of the Company’s common stock. The Endeavor Acquisition included approximately 500,849 gross ( 361,927 net) acres, which are primarily located in the Permian Basin. Following the Endeavor Acquisition, the Company believes its inventory has industry-leading depth and quality that will be converted into cash flow with the industry’s lowest cost structure, creating a differentiated value proposition for Diamondback stockholders.

The cash consideration for the Endeavor Acquisition was funded through a combination of cash on hand, the net proceeds from the Company’s April 2024 Notes offering and borrowings under the Tranche A Loans (as defined and discussed in Note 9— Debt ). Immediately following the close of the Endeavor Acquisition, Endeavor equityholders held approximately 39.8 % of Diamondback’s common stock. As of June 30, 2025, Endeavor’s equityholders held approximately 35.7 % of the Company’s common stock.

Following the closing of the Endeavor Acquisition, the Company filed with the SEC a shelf registration statement, which became immediately effective upon filing, registering for resale the shares of common stock issued in the Endeavor Acquisition, as required by the terms of the related registration rights agreement.

The following table presents the acquisition consideration paid to Endeavor equityholders in the Endeavor Acquisition (in millions, except per share data, shares in thousands):

Consideration:

Shares of Diamondback common stock issued at closing
117,267
Closing price per share of Diamondback common stock on the closing date
$ 171.49  
Fair value of Diamondback common stock issued
$ 20,110  

Base cash amount
$ 8,000  
Preliminary closing adjustments
( 928 )
Cash consideration to Endeavor equityholders
7,072  
Cash payment of net debt position and make-whole amount
238  
Total cash consideration
7,310  

Total consideration (including fair value of Diamondback common stock issued)
$ 27,420  

Purchase Price Allocation

The Endeavor Acquisition has been accounted for under the acquisition method of accounting for business combinations in accordance with ASC Topic 805, “Business Combinations.” The following table represents the preliminary allocation of the total purchase price for the acquisition of Endeavor to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date. Although the purchase price allocation is substantially complete as of the date of this filing, certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, final tax returns that provide the underlying tax basis of Endeavor’s assets and liabilities. As such, there may be further adjustments to the fair value of certain assets acquired and liabilities assumed, including Endeavor’s deferred tax liability, oil and natural gas properties, which include mineral and royalty interests acquired and other property and equipment. The Company expects to complete the purchase price allocation during the 12-month period following the acquisition date.

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The following table sets forth the Company’s preliminary purchase price allocation (in millions):

Total consideration $ 27,420  

Fair value of liabilities assumed:
Accounts payable - trade $ 18  
Accrued capital expenditures 173  
Other accrued liabilities 613  
Revenues and royalties payable 567  
Derivative instruments 5  
Income taxes payable 261  
Other current liabilities 21  
Asset retirement obligations 260  
Deferred income taxes 7,211  
Other long-term liabilities 5  
Amount attributable to liabilities acquired $ 9,134  

Fair value of assets acquired:

Accounts receivable - joint interest and other, net $ 69  
Accounts receivable - oil and natural gas sales, net 659  
Inventories 77  
Derivative instruments 25  
Prepaid expenses and other current assets 20  
Oil and natural gas properties 34,825  
Other property, equipment and land 849  
Other assets 30  
Amount attributable to assets acquired $ 36,554  

Net assets acquired and liabilities assumed $ 27,420  

The purchase price allocation above is based on the fair values of the assets and liabilities of Endeavor as of the closing date of the Endeavor Acquisition. The majority of the value of assets acquired and liabilities assumed was measured based on inputs that are not observable in the market and are therefore considered Level 3 inputs. The fair value of acquired property and equipment is based on the cost approach, which utilized asset listings and cost records with consideration for the reported age, condition, utilization and economic support of the assets. Oil and natural gas properties were valued using an income approach utilizing the discounted cash flow method, which takes into account production and mineral interest forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. The value of derivative instruments was based on observable inputs including forward commodity-price curves which are considered Level 2 inputs. Deferred income taxes represent the tax effects of differences in the tax basis and acquisition-date fair values of assets acquired and liabilities assumed. The fair values of asset retirement obligations and inventories were calculated in accordance with the Company’s internal policies as described in Note 2 — Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The fair values of various current assets and liabilities including accounts receivable and accounts payable approximate their carrying values on the closing date of the Endeavor Acquisition because of the short-term nature of the instruments.

With the completion of the Endeavor Acquisition, the Company acquired proved properties of $ 20.6 billion and unproved properties of $ 14.2 billion, primarily in the Midland Basin.

The results of operations attributable to the Endeavor Acquisition since the acquisition date have been included in the condensed consolidated statements of operations and include $ 1.1  billion and $ 2.5  billion of total revenue and $ 281  million and $ 758  million of net income for the three and six months ended June 30, 2025, respectively.

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6.     PROPERTY AND EQUIPMENT

Property and equipment includes the following as of the dates indicated:

June 30, December 31,
2025 2024
(In millions)
Oil and natural gas properties:
Subject to depletion $ 65,096   $ 59,574  
Not subject to depletion 24,206   22,666  
Gross oil and natural gas properties 89,302   82,240  
Accumulated depletion ( 13,368 ) ( 11,083 )
Accumulated impairment ( 7,954 ) ( 7,954 )
Oil and natural gas properties, net 67,980   63,203  
Other property, equipment and land 1,456   1,440  
Accumulated depreciation, amortization, accretion and impairment ( 207 ) ( 171 )
Total property and equipment, net $ 69,229   $ 64,472  

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter which determines a limit, or ceiling, on the book value of proved oil and natural gas properties. No impairment expense was recorded for the three and six months ended June 30, 2025 or 2024 based on the results of the respective quarterly ceiling tests.

In addition to commodity prices, the Company’s production rates, levels of proved reserves, future development costs, transfers of unevaluated properties and other factors will determine its actual ceiling test calculation and impairment analysis in future periods. If the future trailing 12 -month commodity prices decline as compared to the commodity prices used in prior quarters, the Company may have material write downs in subsequent quarters. It is possible that circumstances requiring additional impairment testing will occur in future interim periods, which could result in potentially material impairment charges being recorded.

7.     ASSET RETIREMENT OBLIGATIONS

The following table describes the changes to the Company’s asset retirement obligations liability for the following periods:

Six Months Ended June 30,
2025 2024
(In millions)
Asset retirement obligations, beginning of period $ 592   $ 245  
Additional liabilities incurred 28   2  
Liabilities acquired 12   1  
Liabilities settled and divested ( 31 ) ( 16 )
Accretion expense 17   8  
Revisions in estimated liabilities 20   71  
Asset retirement obligations, end of period 638   311  
Less current portion (1)
22   11  
Asset retirement obligations - long-term $ 616   $ 300  

(1)    The current portion of the asset retirement obligation is included in the caption “Other accrued liabilities” in the Company’s condensed consolidated balance sheets.

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8.     RELATED PARTY TRANSACTIONS

Deep Blue

On September 1, 2023, the Company closed on a joint venture agreement with Five Point Energy LLC to form Deep Blue Midland Basin LLC (“Deep Blue”), in which the Company owns a 30 % equity ownership interest. In addition to the Deep Blue transaction, the Company has other significant related party transactions with Deep Blue which include (i) certain accounts receivable from Deep Blue, (ii) accrued capital expenditures and other accrued payables related to a commitment to fund certain capital expenditures on projects that were in process at the time of the Deep Blue transaction, and (iii) lease operating expenses and capitalized expenses related to fees paid to Deep Blue under a 15-year dedication for its produced water and supply water within a 12 -county area of mutual interest in the Midland Basin.

The following table presents the significant related party balances included in the condensed consolidated balance sheets at June 30, 2025 and December 31, 2024:

June 30, December 31,
2025 2024
(In millions)
Current assets - Accounts receivable $ 5   $ 5  
Long-term assets - Equity method investments
$ 147   $ 137  
Current liabilities - Accrued capital expenditures $ ( 21 ) $ ( 31 )
Current liabilities - Other accrued liabilities $ ( 47 ) $ ( 22 )

During the three and six months ended June 30, 2025 and 2024, the Company recorded approximately $ 25  million, $ 72 million, $ 29 million and $ 60 million, respectively, for water services provided by Deep Blue during the completion phase of wells. These costs were capitalized and are included in the caption “Oil and natural gas properties” on the condensed consolidated balance sheets.

The following table presents the significant related party transactions included in the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
Lease operating expenses $ 35   $ 28   $ 72   $ 54  

Viper

For discussion on related party transactions with Viper, see Note 4— Acquisitions and Divestitures - 2025 Drop Down Transaction.

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9.     DEBT

Long-term debt consisted of the following as of the dates indicated:

June 30, December 31,
2025 2024
(In millions)
3.250 % Senior Notes due 2026
$ 750   $ 750  
5.625 % Senior Notes due 2026
14   14  
5.200 % Senior Notes due 2027
850   850  
7.125 % Medium-term Notes, Series B, due 2028
73   73  
3.500 % Senior Notes due 2029
915   915  
5.150 % Senior Notes due 2030
850   850  
3.125 % Senior Notes due 2031
740   767  
6.250 % Senior Notes due 2033
1,100   1,100  
5.400 % Senior Notes due 2034
1,300   1,300  
5.550 % Senior Notes due 2035
1,200   —  
4.400 % Senior Notes due 2051
539   650  
4.250 % Senior Notes due 2052
656   750  
6.250 % Senior Notes due 2053
650   650  
5.750 % Senior Notes due 2054
1,480   1,500  
5.900 % Senior Notes due 2064
1,000   1,000  
Tranche A Loans —   900  
2025 Term Loan Agreement 1,500   —  
Unamortized debt issuance costs ( 98 ) ( 91 )
Unamortized discount costs ( 23 ) ( 25 )
Unamortized premium costs 2   3  
Unamortized basis adjustment of dedesignated interest rate swap agreements (1)
( 65 ) ( 72 )
Revolving credit facility 595   —  
Viper revolving credit facility 325   261  
Viper 5.375 % Senior Notes due 2027
380   430  
Viper 7.375 % Senior Notes due 2031
400   400  
Total debt, net 15,133   12,975  
Less: current maturities of debt 14   900  
Total long-term debt $ 15,119   $ 12,075  

(1)    Represents the unamortized basis adjustment related to two receive-fixed, pay variable interest rate swap agreements which were previously designated as fair value hedges of the Company’s 3.500 % fixed rate senior notes due 2029. This basis adjustment is being amortized to interest expense over the remaining term of the 2029 Notes utilizing the effective interest method.

References in this section to the Company shall mean Diamondback Energy, Inc. and Diamondback E&P, collectively, unless otherwise specified.

Credit Agreement

On June 12, 2025, Diamondback E&P, as borrower and Diamondback Energy, Inc., as parent guarantor, entered into a sixteenth amendment to the existing credit agreement, which among other things (i) extended the maturity date to June 12, 2030, and (ii) decreased the interest rate, such that outstanding borrowings under the credit agreement bear interest at a per annum rate elected by Diamondback E&P that is equal to (x) term SOFR or (y) an alternate base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50 % and 1-month term SOFR plus 1.0 %, subject to a 1.0 % floor), in each case plus the applicable margin. The applicable margin ranges from 0.000 % to 0.750 % per annum in the case of
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the alternate base rate and from 1.000 % to 1.750 % per annum in the case of term SOFR, in each case based on the pricing level, and the commitment fee ranges from 0.100 % to 0.250 % per annum on the average daily unused portion of the commitments, based on the pricing level. The pricing level depends on the Company’s long-term senior unsecured debt ratings. The credit agreement provides for a maximum credit amount of $ 2.5 billion. As of June 30, 2025, the Company had $ 595 million outstanding borrowings under the credit agreement and approximately $ 1.9 billion available for future borrowings. During the three and six months ended June 30, 2025, the weighted average interest rate on borrowings under the credit agreement was 5.65 % and 5.70 %, respectively.

As of June 30, 2025, the Company was in compliance with all financial maintenance covenants under the credit agreement.

Term Loan Agreements

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 LLC, as borrower, and Bank of America, N.A., as administrative agent (the “2025 Term Loan Agreement”) on March 21, 2025.

The 2025 Term Loan Agreement provided the Company with the ability to borrow up to $ 1.5  billion on an unsecured basis to fund a portion of the cash consideration for the Double Eagle Acquisition and costs and expenses related to the acquisition. On the date of closing of the Double Eagle Acquisition, the 2025 Term Loan Agreement was fully drawn in a single borrowing. Any then-outstanding amounts will mature and be payable in full on the second anniversary of the initial funding date.

As of June 30, 2025, the Company had $ 1.5 billion in outstanding borrowings under the 2025 Term Loan Agreement. During the three and six months ended June 30, 2025, the weighted average interest rate on borrowings under the 2025 Term Loan Agreement was 5.67 %.

Outstanding borrowings under the 2025 Term Loan Agreement bear interest at a per annum rate elected by the Company that is equal to (i) term SOFR plus 0.10 % (“Adjusted Term SOFR”) or (ii) an alternate base rate (which is equal to the greatest of (a) the Federal Funds effective rate plus 0.50 %, (b) the prime rate (c) Adjusted Term SOFR plus 1.0 %, and (d) 1.0 %), in each case plus the applicable margin. The applicable margin ranges from 0.125 % to 1.000 % per annum in the case of the alternate base rate and from 1.125 % to 2.000 % per annum in the case of Adjusted Term SOFR, in each case based on the pricing level, and (ii) the commitment fee is equal to 0.125 % per annum on the aggregate principal amount of the commitments. The pricing level depends on the Company’s long-term senior unsecured debt ratings.

2024 Term Loan Agreement

On February 29, 2024, Diamondback Energy, Inc., as guarantor, entered into a Term Loan Credit Agreement with Diamondback E&P LLC, as borrower, and Citibank, N.A., as administrative agent (the “2024 Term Loan Agreement”), which is comprised of $ 1.0  billion of Tranche A Loans (the “Tranche A Loans”). The Tranche A Loans were fully drawn to fund a portion of the cash consideration for the Endeavor Acquisition.

On May 5, 2025, the Company used the cash proceeds received from the 2025 Drop Down to repay in full and terminate the $ 900 million remaining outstanding Tranche A Loans. During the three and six months ended June 30, 2025, the weighted average interest rate on borrowings under the Term Loan Agreement was 5.68 % and 5.87 %, respectively.

Issuance of Notes

On March 20, 2025, the Company issued $ 1.2 billion aggregate principal amount of 5.550 % Senior Notes due April 1, 2035 (the “2035 Notes”). The Company received net proceeds of $ 1.2 billion, after underwriters’ discounts and transaction costs. Interest on the 2035 Notes is payable semi-annually on April 1 and October 1 of each year. The Company used the net proceeds to fund a portion of the cash consideration for the Double Eagle Acquisition.

The 2035 Notes are included in the Guaranteed Senior Notes for the Company, which are senior unsecured obligations and are fully and unconditionally guaranteed by Diamondback E&P, are senior in right of payment to any of the Company’s
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future subordinated indebtedness and rank equal in right of payment with all of the Company’s existing and future senior indebtedness.

Repurchase of Notes

In the second quarter of 2025, the Company opportunistically repurchased an aggregate principal amount of approximately $ 252  million of its senior notes, which consisted of $ 27  million of the 3.125 % Senior Notes due 2031, $ 111  million of the 4.400 % Senior Notes due 2051, $ 94  million of the 4.250 % Senior Notes due 2052 and $ 20  million of the 5.750 % Senior Notes due 2054, all in open market transactions for total cash consideration, including accrued interest paid, of approximately $ 196  million, at an average of 76.8 % of par value. These repurchases resulted in a gain on extinguishment of debt of approximately $ 55 million during the three and six months ended June 30, 2025. Further, Viper also opportunistically repurchased principal amounts of $ 50 million of its 5.375 % Senior Notes due 2027 (the “Viper 2027 Notes”) in open market transactions for total cash consideration of $ 50 million, at an average of 99.7 % of par value. Viper’s repurchases resulted in an immaterial gain on extinguishment of debt during the three and six months ended June 30, 2025.

Viper LLC’s Revolving Credit Facility

On June 12, 2025, Viper, as guarantor, entered into a credit agreement with Viper LLC, as borrower, and Wells Fargo, as the administrative agent (the “Viper LLC Revolving Credit Facility”) which among other things, provides Viper LLC with a senior unsecured revolving credit facility with a commitment of $ 1.5 billion. The Viper LLC Revolving Credit Facility has a maturity date of June 12, 2030, with the ability to request three extensions of the maturity date by 1 year. As of June 30, 2025 the Viper LLC Revolving Credit Facility is guaranteed by certain subsidiaries of Viper LLC. Upon completion of the pending Sitio Acquisition, such subsidiary guarantees will be released and New Viper will become a guarantor under the Viper LLC Revolving Credit Facility. The Viper LLC Revolving Credit Facility replaced Viper LLC’s previous revolving credit facility, dated July 20, 2018, among Viper, Viper LLC and Wells Fargo as amended, restated, amended and restated, supplemented or otherwise modified prior to June 12, 2025. As of June 30, 2025, Viper LLC had $ 325 million in outstanding borrowings and $ 1.2 billion available for future borrowings under the Viper LLC Revolving Credit Facility. During the three and six months ended June 30, 2025 and 2024, the weighted average interest rates on borrowings under Viper LLC’s respective revolving credit facilities were 6.33 %, 6.42 %, 7.63 % and 7.52 % respectively.

Borrowings under the Viper LLC Revolving Credit Facility bear interest at a per annum rate elected by Viper LLC that is equal to term SOFR or an alternate base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50 % and 1-month term SOFR plus 1.0 %, subject to a 1.0 % floor), in each case plus the applicable margin. The applicable margin ranges from 0.125 % to 1.000 % per annum in the case of the alternate base rate loans and from 1.125 % to 2.000 % per annum in the case of term SOFR loans, in each case based on the pricing level. Further, the commitment fee ranges from 0.125 % to 0.325 % per annum on the average daily unused portion of the commitment, again based on the pricing level. The pricing level depends on the rating of Viper’s long-term senior unsecured debt by certain ratings agencies.

The Viper LLC Revolving Credit Facility contains a financial covenant that requires Viper to maintain a Total Net Debt to Capitalization Ratio (as defined in the Viper LLC Revolving Credit Facility) of no more than 65 %. As of June 30, 2025, Viper LLC was in compliance with all financial maintenance covenants under the Viper LLC Revolving Credit Facility.

10.     STOCKHOLDERS’ EQUITY AND EARNINGS (LOSS) PER SHARE

Stock Repurchase Program

The Company’s board of directors approved a common stock repurchase program to acquire up to $ 6.0 billion of the Company’s outstanding common stock, excluding excise tax. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions and are subject to market conditions, applicable regulatory and legal requirements, contractual obligations and other factors. The repurchase program does not require the Company to acquire any specific number of shares. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. During the three and six months ended June 30, 2025 and the six months ended June 30, 2024, the Company repurchased approximately $ 398 million, $ 973 million and $ 42 million of common stock under this repurchase program, respectively, in each case excluding excise tax. As of June 30, 2025, approximately $ 1.7 billion remained available for future repurchases under the Company’s common stock repurchase program, excluding excise tax. See Note 17— Subsequent Events —Increase in Stock Repurchase Program Authorization.

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Viper 2025 Equity Offering

On February 3, 2025, Viper completed an underwritten public offering of approximately 28.34  million shares of Viper’s Class A common stock, which included 3.70  million shares issued pursuant to an option to purchase additional shares of Viper’s Class A common stock granted to the underwriters, at a price to the public of $ 44.50 per share for total net proceeds of approximately $ 1.2  billion, after the underwriters’ discount and transaction costs (the “Viper 2025 Equity Offering”). The net proceeds were used (i) to fund a portion of Viper’s cash consideration for the 2025 Drop Down , (ii) for cash consideration for other acquisitions, and (iii) for general corporate purposes.

Viper 2024 Equity Offering

On September 13, 2024, Viper completed an underwritten public offering of approximately 11.5 million shares of its Class A common stock, which included 1.5 million shares issued pursuant to an option to purchase additional shares of Class A common stock granted to the underwriters, at a price to the public of $ 42.50 per share for total net proceeds to Viper of approximately $ 476  million, after underwriters’ discounts and transaction costs (the “Viper 2024 Equity Offering”). The net proceeds were used to fund a portion of the cash consideration for the Viper TWR Acquisition.

Change in Ownership of Consolidated Subsidiaries

Non-controlling interests in the accompanying condensed consolidated financial statements represent minority interest ownership in Viper and are presented as a component of equity. When the Company’s relative ownership interests in Viper change, adjustments to non-controlling interest and additional paid-in-capital, tax effected, will occur.

The following table summarizes changes in the ownership interest in consolidated subsidiaries during the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
Net income (loss) attributable to the Company $ 699   $ 837   $ 2,104   $ 1,605  
Change in ownership of consolidated subsidiaries ( 734 ) ( 6 ) ( 528 ) ( 61 )
Change from net income (loss) attributable to the Company’s stockholders and transfers with non-controlling interest $ ( 35 ) $ 831   $ 1,576   $ 1,544  

Dividends

The following table presents dividends and distribution equivalent rights paid on the Company’s common stock during the respective periods :

Base Variable Total Per Share Total
(In millions, except per share amounts)

2025
First quarter $ 1.00   $ —   $ 1.00   $ 291  
Second quarter 1.00   —   1.00   293  

Total year-to-date $ 2.00   $ —   $ 2.00   $ 584  

2024
First quarter $ 0.90   $ 2.18   $ 3.08   $ 552  
Second quarter 0.90   1.07   1.97   355  

Total year-to-date $ 1.80   $ 3.25   $ 5.05   $ 907  

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Earnings (Loss) Per Share

The Company’s earnings (loss) per share amounts have been computed using the two-class method. The two-class method is an earnings allocation proportional to the respective ownership among holders of common stock and participating securities. Basic earnings (loss) per share amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share include the effect of potentially dilutive non-participating securities outstanding for the period. Additionally, the per share earnings of Viper are included in the consolidated earnings per share computation based on the consolidated group’s holdings of the subsidiaries.

A reconciliation of the components of basic and diluted earnings per common share is presented below:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions, except per share amounts, shares in thousands)
Net income (loss) attributable to common shares $ 699   $ 837   $ 2,104   $ 1,605  
Less: distributed and undistributed earnings allocated to participating securities (1)
4   6   10   11  
Net income (loss) attributable to common stockholders $ 695   $ 831   $ 2,094   $ 1,594  
Weighted average common shares outstanding:
Basic weighted average common shares outstanding 292,135   178,360   290,880   178,418  
Effect of dilutive securities:
Weighted-average potential common shares issuable —   —   —   —  
Diluted weighted average common shares outstanding 292,135   178,360   290,880   178,418  
Basic net income (loss) attributable to common shares $ 2.38   $ 4.66   $ 7.20   $ 8.93  
Diluted net income (loss) attributable to common shares $ 2.38   $ 4.66   $ 7.20   $ 8.93  

(1)    Unvested restricted stock awards and performance stock awards that contain non-forfeitable distribution equivalent rights are considered participating securities and therefore are included in the earnings per share calculation pursuant to the two-class method.

11.     EQUITY-BASED COMPENSATION

Under the Equity Plan approved by the board of directors, the Company is authorized to issue up to 11.8 million shares of incentive and non-statutory stock options, restricted stock awards and restricted stock units, performance awards and stock appreciation rights to eligible employees. The Company currently has outstanding restricted stock units and performance-based restricted stock units under the Equity Plan. At June 30, 2025, approximately 3.7 million shares of common stock remain available for future grants under the Equity Plan. The Company classifies its restricted stock units and performance-based restricted stock units as equity-based awards and estimates the fair values of restricted stock awards and units as the closing price of the Company’s common stock on the grant date of the award, which is expensed over the applicable vesting period.

In addition to the Equity Plan, Viper maintains its own long-term incentive plan, which is not significant to the Company.

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The following table presents the financial statement impacts of equity compensation plans and related costs on the Company’s financial statements:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
General and administrative expenses $ 21   $ 19   $ 39   $ 33  
Equity-based compensation capitalized pursuant to full cost method of accounting for oil and natural gas properties $ 10   $ 7   $ 15   $ 14  

Restricted Stock Units

The following table presents the Company’s restricted stock unit activity during the six months ended June 30, 2025 under the Equity Plan:

Restricted Stock
 Units Weighted Average Grant-Date
Fair Value
Unvested at December 31, 2024
645,408   $ 159.84  
Granted 668,787   $ 149.34  
Vested ( 125,453 ) $ 160.02  
Forfeited ( 40,213 ) $ 154.19  
Unvested at June 30, 2025
1,148,529   $ 153.90  

The aggregate grant date fair value of restricted stock units that vested during the six months ended June 30, 2025 was $ 20 million. As of June 30, 2025, the Company’s unrecognized compensation cost related to unvested restricted stock units was $ 138 million, which is expected to be recognized over a weighted-average period of 2.3 years.

Performance Based Restricted Stock Units

The following table presents the Company’s performance restricted stock units activity under the Equity Plan for the six months ended June 30, 2025:

Performance Restricted Stock Units Weighted Average Grant-Date Fair Value
Unvested at December 31, 2024
278,902   $ 278.72  
Granted 186,519   $ 217.98  
Vested ( 6,590 ) $ 158.96  

Unvested at June 30, 2025 (1)
458,831   $ 256.13  

(1) A maximum of 1,107,526 units could be awarded based upon the Company’s final TSR ranking.

As of June 30, 2025, the Company’s unrecognized compensation cost related to unvested performance based restricted stock awards and units was $ 64 million, which is expected to be recognized over a weighted-average period of 1.8 years.

In March 2025, eligible employees received performance restricted stock unit awards totaling 171,638 units from which a minimum of 0 % and a maximum of 200 % of the units could be awarded based upon the measurement of total stockholder return of the Company’s common stock as compared to a designated peer group during the three-year performance period of January 1, 2025 to December 31, 2027 and cliff vest at December 31, 2027 subject to continued employment. The initial payout of the March 2025 awards will be further adjusted by a TSR modifier that may reduce the payout or increase the payout up to a maximum of 250 %. Additionally, in May 2025 the Company granted 14,881 performance restricted stock units under substantially the same terms as the March 2025 performance restricted stock unit awards.

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The fair value of each performance restricted stock unit issuance is estimated at the date of grant using a Monte Carlo simulation, which results in an expected percentage of units to be earned during the performance period.

The following table presents a summary of the grant-date fair values of performance restricted stock units granted and the related assumptions for the awards granted during the periods presented:

March 2025
May 2025

Grant-date fair value $ 222.34   $ 167.75  
Risk-free rate 3.99   % 4.00   %
Company volatility 34.60   % 33.30   %

12.     INCOME TAXES

The following table provides the Company’s provision for (benefit from) income taxes and the effective income tax rate for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions, except for tax rate)
Provision for (benefit from) income taxes $ 204   $ 252   $ 607   $ 475  
Effective income tax rate 21.6   % 22.0   % 21.4   % 21.8   %

Total income tax expense from continuing operations for the three and six months ended June 30, 2025 differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to (i) state income taxes, net of federal benefit, (ii) the effect of research and development tax credits, (iii) limitations on the deduction of certain permanent items, and (iv) other permanent differences between book and taxable income. For the three and six months ended June 30, 2024, total income tax expense from continuing operations differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to (i) state income taxes, net of federal benefit, and (ii) the impact of permanent differences between book and taxable income.

On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the “Act”), was enacted. The Act included multiple provisions applicable to U.S. income taxes for businesses, including immediate expensing of research or experimental expenses, bonus depreciation for qualified tangible property, deductible intangible drilling costs for purposes of the corporate alternative minimum tax, and enhancements to limits on business interest expense deductions. Management is currently evaluating the Act, which will be accounted for in the period of enactment, to determine its impact on the Company. A favorable impact to the Company’s current income tax balances, primarily offset by changes to the Company’s deferred income tax balances, is anticipated based on currently available guidance.

In connection with the 2025 Drop Down in May 2025, the Company recorded a $ 170  million increase in tax payable and a $ 164  million decrease in deferred tax liability through paid in capital. Due to the resulting increase in the Company’s ownership of Viper LLC, the Company recorded a $ 202  million decrease to deferred tax liability, and a $ 212  million decrease in the deferred tax asset through non-controlling interest on the Company’s condensed consolidated balance sheet.

In connection with the closing of the Endeavor Acquisition, the Company recognized a $ 7.2  billion deferred tax liability.

Based on application of the Inflation Reduction Act of 2022 guidance, the Company’s income tax expense for the three and six months ended June 30, 2025 was not impacted by the corporate alternative minimum tax.

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13.     DERIVATIVES

At June 30, 2025, the Company has commodity derivative contracts and interest rate swaps outstanding. All derivative financial instruments are recorded at fair value.

Commodity Contracts

The Company has entered into multiple crude oil and natural gas derivatives, indexed to the respective indices as noted in the table below, to reduce price volatility associated with certain of its oil and natural gas sales. The Company has not designated its commodity derivative instruments as hedges for accounting purposes and, as a result, marks its commodity derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the condensed consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”

By using derivative instruments to economically hedge exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company has entered into commodity derivative instruments only with counterparties that are also lenders under its credit facility and have been deemed an acceptable credit risk. As such, collateral is not required from either the counterparties or the Company on its outstanding commodity derivative contracts.

As of June 30, 2025, the Company had the following outstanding commodity derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed.

Swaps Collars
Settlement Month Settlement Year Type of Contract Bbls/MMBtu Per Day Index Weighted Average Differential Weighted Average Floor Price Weighted Average Ceiling Price
OIL
Jul. - Dec.
2025
Roll Swap
50,000 WTI Cushing
$ 1.09 $ — $ —
Jul. - Dec.
2025 Basis Swap (1)
76,000 Argus WTI Midland
$ 1.05 $ — $ —
NATURAL GAS
Jul. - Dec.
2025
Costless Collar 690,000 Henry Hub $ — $ 2.49 $ 5.28
Jan. - Dec.
2026
Costless Collar
800,000 Henry Hub
$ — $ 2.88 $ 6.34
Jan. - Dec.
2027
Costless Collar
220,000 Henry Hub
$ — $ 3.09 $ 6.47
Jul. - Dec.
2025
Basis Swap (1)
610,000 Waha Hub $( 0.98 ) $ — $ —
Jul. - Dec.
2025
Basis Swap (1)
20,000 HSC Hub
$( 0.49 ) $ — $ —
Jan. - Dec.
2026
Basis Swap (1)
530,000 Waha Hub
$( 1.64 ) $ — $ —
Jan. - Dec.
2026
Basis Swap (1)
80,000 HSC Hub
$( 0.36 ) $ — $ —
Jan. - Dec.
2027
Basis Swap (1)
240,000 Waha Hub
$( 1.48 ) $ — $ —
Jan. - Dec.
2027
Basis Swap (1)
20,000 HSC Hub
$( 0.26 ) $ — $ —

(1)    The Company has fixed price basis swaps for the spread between the Cushing crude oil price and the Midland WTI crude oil price as well as the spread between the Henry Hub natural gas price, the Waha Hub and the HSC Hub natural gas price. The weighted average differential represents the amount of reduction to the Cushing, Oklahoma oil price and the Waha Hub and HSC Hub natural gas price for the notional volumes covered by the basis swap contracts.

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Settlement Month Settlement Year Type of Contract Bbls Per Day Index Strike Price Deferred Premium
OIL
Jul. - Sep.
2025
Put
41,000 Brent
$ 55.61 $ 1.53
Jul. - Sep.
2025
Put
107,000 Argus WTI Houston
$ 54.53 $ 1.63
Jul. - Sep.
2025
Put
158,000 WTI Cushing
$ 54.29 $ 1.56
Oct. - Dec. 2025
Put
36,000 Brent
$ 54.31 $ 1.60
Oct. - Dec. 2025
Put
100,000 Argus WTI Houston
$ 53.00 $ 1.68
Oct. - Dec. 2025
Put
153,000 WTI Cushing
$ 53.77 $ 1.62
Jan. - Mar.
2026
Put 19,000 Brent $ 53.68 $ 1.71
Jan. - Mar.
2026
Put 30,000 Argus WTI Houston $ 52.50 $ 1.70
Jan. - Mar.
2026
Put 55,000 WTI Cushing
$ 54.55 $ 1.50
Apr. - Jul.
2026
Put 5,000 Argus WTI Houston $ 50.00 $ 1.85
Apr. - Jul.
2026
Put 5,000 WTI Cushing
$ 50.00 $ 1.85

Interest Rate Swaps and Treasury Locks

Interest Rate Swaps

As of June 30, 2025, the Company has two receive-fixed, pay-variable interest rate swap agreements for notional amounts of $ 150 million and $ 300  million, respectively, which are considered economic hedges of the Company’s 3.50 % fixed rate senior notes due 2029 (the “2029 Notes”). During the second quarter of 2025, the Company terminated and settled an aggregate $ 450  million of the previous $ 900  million notional amount of interest rate swaps for an aggregate loss of $ 52  million recognized in the caption “Gain (loss) on derivative instruments, net” on the condensed consolidated statements of operations for the three and six months ended June 30, 2025. The Company receives a fixed 3.50 % rate of interest on these swaps and pays the variable rate of SOFR plus 2.1865 %. The interest rate swaps are not treated as hedges for accounting purposes and, as a result, changes in fair value are recorded in earnings under the caption “Gain (loss) on derivative instruments, net” in the condensed consolidated statements of operations.

The interest rate swaps were designated as fair value hedges at inception, but the Company subsequently elected to discontinue hedge accounting. The cumulative fair value basis adjustment recorded at the time of dedesignation is being amortized to interest expense over the remaining term of the 2029 Notes utilizing the effective interest method. See Note 9— Debt for further details.

Treasury Locks

From time to time the Company enters into certain treasury lock contracts to reduce the forecasted interest rate risk associated with the issuance of senior unsecured notes. Changes in the value and settlement of treasury locks are recognized under the caption “Gain (loss) on derivative instruments, net” on the condensed consolidated statements of operations.

Balance Sheet Offsetting of Derivative Assets and Liabilities

The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 14— Fair Value Measurements for further details.

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Gains and Losses on Derivative Instruments

The following table summarizes the gains and losses on derivative instruments included in the condensed consolidated statements of operations:

Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
(In millions)
Gain (loss) on derivative instruments, net:
Commodity contracts $ ( 203 ) $ 54   $ 11   $ 38  
Interest rate swaps (1)
7   ( 11 ) 18   ( 43 )
2026 WTI Contingent Liability ( 1 ) —   1   —  
Treasury locks —   ( 25 ) ( 1 ) ( 25 )
Total $ ( 197 ) $ 18   $ 29   $ ( 30 )

Net cash received (paid) on settlements:
Commodity contracts $ 23   $ 24   $ 109   $ 20  
Interest rate swaps (1)
( 60 ) ( 27 ) ( 60 ) ( 27 )
Treasury locks —   ( 25 ) ( 1 ) ( 25 )
Total $ ( 37 ) $ ( 28 ) $ 48   $ ( 32 )

(1) The three and six months ended June 30, 2025 includes cash paid on interest rate swaps terminated prior to their contractual maturity of $ 52  million.

14.     FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As discussed in Note 14—Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, certain financial instruments of the Company are reported at fair value on the Company’s condensed consolidated balance sheets . The net amounts of derivative instruments are classified as current or noncurrent based on their anticipated settlement dates. The Company has an immaterial investment that is reported at fair value using observable, quoted stock prices and is included in “Other assets” on the Company’s condensed consolidated balance sheets at June 30, 2025 and December 31, 2024.

Viper LLC’s 2026 WTI Contingent Liability is reported at fair value using observable market data inputs and a Monte Carlo pricing model, which are considered Level 2 inputs within the fair value hierarchy. The 2026 WTI Contingent Liability was recorded in “Other accrued liabilities” on the Company’s condensed consolidated balance sheet at June 30, 2025 and in “Other long-term liabilities” on the Company’s consolidated balance sheet at December 31, 2024. The change in fair value of the 2026 WTI Contingent Liability is recognized in “Gain (loss) on derivative instruments, net” on the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2025.

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The following table provides the fair value of financial instruments that are recorded at fair value in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024:

As of June 30, 2025
Level 1 Level 2 Level 3 Total Gross Fair Value Gross Amounts Offset in Balance Sheet Net Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current assets- Derivative instruments:

Commodity derivative instruments $ —   $ 273   $ —   $ 273   $ ( 156 ) $ 117  

Non-current assets- Derivative instruments:
Commodity derivative instruments $ —   $ 64   $ —   $ 64   $ ( 64 ) $ —  
Non-current assets- Other assets:
Investment $ 50   $ —   $ —   $ 50   $ —   $ 50  

Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments $ —   $ 164   $ —   $ 164   $ ( 156 ) $ 8  
Interest rate swaps $ —   $ 13   $ —   $ 13   $ —   $ 13  
Current liabilities- Other accrued liabilities:
2026 WTI Contingent Liability $ —   $ 30   $ —   $ 30   $ —   $ 30  
Non-current liabilities- Derivative instruments:
Commodity derivative instruments $ —   $ 124   $ —   $ 124   $ ( 64 ) $ 60  
Interest rate swaps $ —   $ 33   $ —   $ 33   $ —   $ 33  

As of December 31, 2024
Level 1 Level 2 Level 3 Total Gross Fair Value Gross Amounts Offset in Balance Sheet Net Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current assets- Derivative instruments:

Commodity derivative instruments $ —   $ 274   $ —   $ 274   $ ( 106 ) $ 168  

Non-current assets- Derivative instruments:
Commodity derivative instruments $ —   $ 19   $ —   $ 19   $ ( 17 ) $ 2  
Non-current assets- Other assets:
Investment $ 8   $ —   $ —   $ 8   $ —   $ 8  

Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments $ —   $ 121   $ —   $ 121   $ ( 106 ) $ 15  
Interest rate swaps $ —   $ 28   $ —   $ 28   $ —   $ 28  
Non-current liabilities- Derivative instruments:
Commodity derivative instruments $ —   $ 27   $ —   $ 27   $ ( 17 ) $ 10  
Interest rate swaps $ —   $ 96   $ —   $ 96   $ —   $ 96  
Non-current liabilities- Other long-term liabilities:
2026 WTI Contingent Liability $ —   $ 30   $ —   $ 30   $ —   $ 30  

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Assets and Liabilities Not Recorded at Fair Value

The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets:

June 30, 2025 December 31, 2024
Carrying Value
Fair Value Carrying Value
Fair Value
(In millions)
Debt $ 15,133   $ 14,903   $ 12,975   $ 12,564  

The fair values of the Company’s credit agreement, the Viper LLC Revolving Credit Facility, the 2025 Term Loan Agreement and Tranche A Loans (prior to repayment and termination) approximate their carrying values based on borrowing rates available to the Company for bank loans with similar terms and maturities and are classified as Level 2 in the fair value hierarchy. The fair values of the outstanding notes were determined using the quoted market price at each period end, a Level 1 classification in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include those acquired in a business combination, inventory, proved and unproved oil and natural gas properties, equity method investments, asset retirement obligations and other long-lived assets that are written down to fair value when impaired or held for sale. Refer to Note 4— Acquisitions and Divestitures , Note 5— Endeavor Energy Resources, LP Acquisition and Note 6— Property and Equipment for additional discussion of nonrecurring fair value adjustments.

Fair Value of Financial Assets

The carrying amount of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, funds held in escrow, accounts payable and other accrued liabilities approximate their fair value because of the short-term nature of the instruments.

15.     SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS

Six Months Ended June 30,
2025 2024
(In millions)
Supplemental disclosure of cash flow information:

Cash (paid) received for income taxes, net $ ( 924 ) $ ( 260 )
Supplemental disclosure of non-cash transactions:
Accrued capital expenditures included in accounts payable and accrued expenses $ 850   $ 659  

Common shares issued for acquisitions $ ( 1,101 ) $ —  
Viper LLC’s units issued for acquisition $ ( 119 ) $ —  

16.     COMMITMENTS AND CONTINGENCIES

The Company is a party to various routine legal proceedings, disputes and claims arising in the ordinary course of its business, including those that arise from interpretation of federal and state laws and regulations affecting the crude oil and natural gas industry, personal injury claims, title disputes, royalty disputes, contract claims, employment claims, claims alleging violations of antitrust laws, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of the Company’s current operations. While the ultimate outcome of the pending proceedings, disputes or claims and any resulting impact on the Company, cannot be predicted with certainty, the Company’s management believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s assessment is based on information known about the pending matters and its experience in contesting, litigating and settling similar matters. Actual outcomes could differ materially from the Company’s assessment. The Company records
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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

accrued liabilities for contingencies related to outstanding legal proceedings, disputes or claims when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated.

Environmental Matters

The United States Department of the Interior, Bureau of Safety and Environmental Enforcement, ordered several oil and gas operators, including a corporate predecessor of Energen Corporation, to perform decommissioning and reclamation activities related to a Louisiana offshore oil and gas production platform and related facilities. In response to the insolvency of the operator of record, the government ordered the former operators and/or alleged former lease record title owners to decommission the platform and related facilities. The Company has agreed to an arrangement with other operators to contribute to a trust to fund the decommissioning costs, however, the Company’s portion of such costs are not expected to be material.

Several coastal Louisiana parishes and the State of Louisiana have filed numerous lawsuits under Louisiana’s State and Local Coastal Resources Management Act (“SLCRMA”) against numerous oil and gas producers seeking damages for coastal erosion in or near oil fields located within Louisiana’s coastal zone. The Company is a defendant in five of these cases. The Company has exercised contractual indemnification rights where applicable. Plaintiffs’ SLCRMA theories are unprecedented and there remains significant uncertainty about the claims (both as to scope and damages). Although the Company cannot predict the ultimate outcome of these matters, the Company believes the claims lack merit and intends to continue vigorously defending these lawsuits.

17.     SUBSEQUENT EVENTS

Second Quarter 2025 Dividend Declaration

On July 31, 2025, the board of directors of the Company declared a base cash dividend for the second quarter of 2025 of $ 1.00 per share of common stock, payable on August 21, 2025 to its stockholders of record at the close of business on August 14, 2025. Future base and variable dividends are at the discretion of the Company’s board of directors.

Increase in Stock Repurchase Program Authorization

On July 31, 2025, the board of directors of the Company approved a $ 2.0  billion increase in stock repurchase authorization under the Company’s existing stock repurchase program from $ 6.0 billion to $ 8.0 billion, excluding excise tax. As of August 1, 2025, approximately $ 3.5 billion remains available for future repurchases under such stock repurchase program, excluding excise tax. The stock repurchase program has no time limit and may be suspended, modified, or discontinued by the board of directors at any time.

Viper 2025 Notes Offering

On July 23, 2025, Viper LLC, as the issuer, and Viper as guarantor, completed an underwritten public offering (the “Viper 2025 Notes Offering”) of $ 1.6 billion in aggregate principal amount of Viper LLC’s 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 received net proceeds of approximately $ 1.58 billion, after underwriters’ discounts and transaction costs. Interest on the Viper 2025 Notes is payable semi-annually in February and August of each year. Concurrently, Viper LLC used a portion of the proceeds to redeem or satisfy and discharge, as discussed below, $ 780 million in aggregate principal amounts of Viper’s senior notes. Viper intends to use the remaining proceeds from the Viper 2025 Notes (i) if the pending Sitio Acquisition is consummated, to redeem Sitio’s 7.875 % senior notes due 2028, repay borrowings under Sitio’s revolving credit facility and pay any fees, costs and expenses related to the redemption or repayment of such debt, and (ii) for general corporate purposes. Viper LLC is not obligated to redeem or repurchase the Viper 2025 Notes if the pending Sitio Acquisition is not consummated.

The Viper 2025 Notes are senior unsecured obligations and are fully and unconditionally guaranteed by Viper and following the completion of the pending Sitio Acquisition will be fully and unconditionally guaranteed by both Viper and New Viper. The Viper 2025 Notes have been registered under the Securities Act.

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Diamondback Energy, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements - (Continued)
(Unaudited)

Viper Redemption of Notes

On July 23, 2025, using proceeds from the Viper 2025 Notes Offering, Viper (i) redeemed all of its outstanding 7.375 % senior notes due 2031 (the “Viper 2031 Notes”) for total cash consideration of approximately $ 434 million including the applicable redemption premium and accrued and unpaid interest up to, but not including, the redemption date, and (ii) issued and delivered a notice of redemption to redeem all of its outstanding Viper 2027 Notes on November 1, 2025, for total cash consideration, including payment of interest due to, but not including, the redemption date at a redemption price equal to 100 % of the principal amount of the Viper 2027 Notes. Viper irrevocably deposited with Computershare Trust Company, National Association, the trustee under the indenture governing the Viper 2027 Notes, approximately $ 390 million, which is sufficient to pay the redemption amount of the Viper 2027 Notes. Following the deposit of the funds, the Viper 2027 Notes indenture was satisfied and discharged in accordance with its terms and ceased to be of further effect as to the Viper 2027 Notes issued thereunder, except those provisions of the indenture that, by their terms, survive the satisfaction and discharge. The satisfaction and discharge of the Viper 2027 Notes did not represent a legal defeasance or release, and as such, the Viper 2027 Notes will remain on the Company’s balance sheet as a short-term obligation until redeemed on November 1, 2025.

Viper 2025 Term Loan

On July 23, 2025, Viper LLC and Viper entered into a term loan credit agreement with Goldman Sachs Bank USA (the “Viper 2025 Term Loan Credit Agreement”) providing for a two-year senior unsecured delayed draw term loan facility in an aggregate principal amount of $ 500 million (the “Viper 2025 Term Loan”) to be guaranteed by Viper and, upon completion of the pending Sitio Acquisition, by New Viper. As of the date of this report, the Viper 2025 Term Loan was undrawn. Viper LLC intends to draw on the Viper 2025 Term Loan at the closing of the pending Sitio Acquisition to partially redeem and/or repay Sitio’s debt. Following the consummation of the pending Sitio Acquisition, New Viper will fully and unconditionally guarantee the obligations under the Viper 2025 Term Loan.

Borrowings under the Viper 2025 Term Loan Credit Agreement bear interest at a per annum rate elected by Viper LLC that is equal to term SOFR or an alternate base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50 % and 1-month term SOFR plus 1.0 %, subject to a 1.0 % floor), in each case plus the applicable margin. The applicable margin ranges from 0.250 % to 1.125 % per annum in the case of the alternate base rate loans and from 1.250 % to 2.125 % per annum in the case of term SOFR loans, in each case based on the pricing level. The pricing level depends on the rating of Viper’s long-term senior unsecured debt by certain ratings agencies. In addition, the fee on undrawn commitments is equal to 0.20 % per annum on the aggregate principal amount of such commitments and accrues from and after the date that is 90 days after July 23, 2025 to but excluding the earliest of (i) the date on which the Viper 2025 Term Loan is funded, (ii) if the Applicable Margin Election (as defined in the Viper 2025 Term Loan Credit Agreement) is made, the Sitio Initial Outside Date (as defined in the Viper 2025 Term Loan Credit Agreement) and (iii) the termination or expiration of the commitments in respect of the Viper 2025 Term Loan Credit Agreement, and other fees as set forth therein.

18.     SEGMENT INFORMATION

The Company is managed on a consolidated basis as one operating segment and one reportable segment, the upstream segment, which is engaged in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. This singular operating and reportable segment is comprised of (i) the Company and its wholly owned subsidiaries, and (ii) Viper and its consolidated subsidiaries, which have been aggregated due to the similarity in their economic characteristics, products and services, processes, type of customers, method of distribution for their products and the regulatory environment in which they operate. The upstream segment derives its revenue from customers through the sale of oil and natural gas products as well as other immaterial service contracts. See Note 3— Revenue from Contracts with Customers for further discussion of the Company’s sources of revenue.

The Chief Operating Decision Maker (“CODM”) uses the Company’s condensed consolidated financial results to make key operating decisions, assess performance and to allocate resources. The measures of segment profit or loss and total assets utilized by the CODM are net income and total assets as reported on the condensed consolidated statements of operations and the condensed consolidated balance sheets, respectively. The significant expense categories, their amounts and other segment items that are regularly provided to the CODM are those that are reported in the Company’s condensed consolidated statements of operations.

The CODM uses consolidated net income as a measure of profitability to evaluate segment performance and to make capital allocation decisions such as reinvestment in the business or return of capital through the payment of base and variable dividends or repurchases under the share repurchase program.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto presented in this report as well as our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. See Part II. Item 1A. Risk Factors and Cautionary Statement Regarding Forward-Looking Statements .

Overview

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 18— Segment Information of the notes to the condensed consolidated financial statements, as of June 30, 2025, we have one reportable segment, the upstream segment.

Second Quarter 2025 Financial and Operating Highlights

• Recorded net income of $699 million.

• Paid dividends to stockholders of $291 million during the second quarter of 2025 and declared a base cash dividend payable in the third quarter of 2025 of $1.00 per share of common stock.

• Repurchased $398 million of our common stock, excluding excise taxes, and had approximately $1.7 billion available for future repurchases under our common stock repurchase program at June 30, 2025.

• Our cash operating costs were $10.10 per BOE, including lease operating expenses of $5.26 per BOE, cash general and administrative expenses of $0.55 per BOE and production and ad valorem taxes of $2.56 per BOE and gathering, processing and transportation expenses of $1.73 per BOE.

• Our average production was 919.9 MBOE/d.

• Drilled 121 gross horizontal wells in the Midland Basin and one gross horizontal well in the Delaware Basin, and turned 116 gross operated horizontal wells (108 in the Midland Basin and eight in the Delaware Basin) to production.

• Cash capital expenditures, excluding acquisitions, of $864 million.

Transactions and Recent Developments

Diamondback Acquisitions and Divestitures

2025 Drop Down Transaction

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) $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), subject to transaction costs and certain customary post-closing adjustments. Viper funded the cash consideration for the 2025 Drop Down with a portion of the proceeds from the Viper 2025 Equity Offering and borrowings under Viper LLC’s revolving credit facility. The mineral and royalty interests held and divested by the Endeavor Subsidiaries at closing of the 2025 Drop Down represented approximately 24,446 net royalty acres located primarily in the Permian Basin. The Endeavor Subsidiaries sold in the 2025 Drop Down were acquired by us in the recently completed Endeavor Acquisition.

Double Eagle Acquisition

On April 1, 2025, we completed the Double Eagle Acquisition for consideration of $3.0 billion in cash and approximately 6.84 million shares of our common stock, subject to transaction costs and certain customary post-closing adjustments. The Double Eagle Acquisition consisted 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
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funded the cash portion of the Double Eagle Acquisition through a combination of proceeds from the 2035 Notes, proceeds from the 2025 Term Loan Agreement and borrowings under our credit facility.

Viper Acquisition

Pending Sitio Acquisition