Q2 2023 Diamondback Energy Inc Earnings Call

2017, or 2018, we'd be.

Stepping on the accelerator.

Spending more capital, but instead, we're focused on generating more free cash flow in the second half of the year and returning that cash to shareholders.

Okay. That's helpful. And then just on capital here, so kind of looking at kind of where you guys were in the second quarter.

It looks like that's going to be the peak, so we should be expecting.

Capex to come down I guess, both in <unk> and in <unk>.

How much of that is kind of related to service costs, you just talked about fewer completions in the second half, but is it really fourth quarter, where you start to see maybe more service cost benefit you talked about the one from low seven hundreds per foot start the year and it kind of low <unk> by the end of the year. So are you starting to get some of that benefit here in <unk>.

A similar number of completions, Amy should be down kind of a fair bit on capital here in <unk>, just help us think of that a little bit.

Yes, I think right now we're seeing the benefits of the raw materials decreases coming through the system, mainly pipe cement diesel.

And now.

After this call through the end of Q3 into Q4, some of the true service side rolling through the numbers.

As I mentioned, we're a cash capex payer. So today, we're paying for activity in June so we kind of have a good forward outlook.

That capex is coming down I think the cost per foot, we're seeing on wells put in the ground today is lower even than Q2.

That's all kind of translate to <unk>.

The lower average well cost in the at the end of the year.

Okay. Thanks.

Thanks Neil.

Yeah.

Thank you please standby for our next question.

Okay.

Our next question comes from the line of Paul Cheng of Scotiabank. Your line is now open.

Thank you good morning, guys.

Two questions. Please.

One of your.

Large cut them.

Yes, but I think about how much is that.

We comfortably improve all and yes, it's going to improve based on the.

What they are doing.

Wondering that Charles.

<unk>.

I mean are you looking.

Looking into that or that what does that.

Based on <unk> technology.

Multiple.

Economic for you to pursue trying to substantially improves that we come up with that.

The first question.

Second guess longest on.

Yes.

Well I'll answer the first one first.

Thank you.

Diamondback is really a technology company that produces oil and we are.

It's been a lot of time looking at improving Eur's you spent a lot of time looking across the fence line at what.

Competitors and peers are doing.

There's not a ton of secrets in the Permian basin.

If there is a better mouse trap, we're going to find a way to do it I think our advantage is that we can do it at a lower cost so.

Generally we're constantly pursuing improving <unk> improving recoveries.

Improving technologies.

So you would expect us to be on our front foot. There I don't think were going to spend a ton of dollars.

Testing that out with the <unk> be a fast follower on.

Anything that looks to be working.

Yes.

Based on what you can see today on the technology and the current pricing is it pulp apple that to consume.

Ken.

Such activities.

I don't think its possible today.

Certainly I think there is some people spending money to look at it but.

For us, we really want to allocate capital to the best returning projects that we have today and that for US is high return multi zone development in the Midland Basin.

Great.

The second question is on the lateral length you guys have seen.

Very successful continuing to lengthen yet I think.

Third quarter is expecting about 10000 feet.

So on your existing land position in your portfolio.

Do you think that that's pharma will point you to.

Lindsay is going to be able to push substantially higher than Q1 that we are pretty close to the Max on net debt.

Portfolio changes.

Yes, I think it's a risk reward decision ball there and there are certainly some areas, where we can drill longer.

But I think generally the way.

Our land positions laid out and we our acreage sits today that 10000 to 11000 range feels.

Right on average.

We'd rather drill at $15 Flutter, then $2 7500, 7500, footers, but I think today, we'd rather drill 210000 footers versus 120000 footer. So I think the drilling guys can do it on the drilling side. There is no doubt about that.

It's a risk reward decision because if something bad happens that 18000 feet. That's an expensive mistake. So we'd rather continue to get wells down at 10000 feet and eight.

Eight nine days consistently versus risking 30.

30, 40 day, well when something goes wrong.

Alright, great. Thank you.

Thanks, Paul.

Okay.

Thank you at this time I would now like to turn it back to Travis Stice for closing remarks.

I appreciate everyone listening in this morning.

Set of questions Hope you have a fantastic day, if you've got any questions just reach out to us at the number provided.

Yeah.

Thank you at this time today's call that concludes today's conference you may now disconnect.

Okay.

Yeah.

Yes.

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