Q4 2024 Diamondback Energy Inc Earnings Call

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Speaker Change: I would now like to turn the conference over to Adam Lawlis, Vice President of Investor Relations you may begin.

Adam Lawlis: Thank you good morning, and welcome to Diamondback Energy's fourth quarter 2024 conference call.

Adam Lawlis: Our call today, we will reference an updated investor presentation and letter to stockholders, which can be found on Diamondbacks website.

Adam Lawlis: Presenting diamondback today are Travis Stice, chairman and CEO.

Danny Wilson: President Danny Wilson.

Larry Thompson: Larry Thompson CFO.

Larry Thompson: During this conference call. The participants may make certain forward looking statements relating to the company's financial condition.

Hello, and welcome to Diamondback energy fourth quarter 2024 earnings call.

Larry Thompson: Those of operations plans objectives future performance and businesses we caution.

At this time all participants are in a listen only mode.

Larry Thompson: Can you that actual results could differ materially from those that are indicated in these forward looking statements due to a variety of factors.

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In addition, we will make reference certain non-GAAP measures the reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

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Adam Lawlis: I would now like to turn the conference over to Adam Lawlis, Vice President of Investor Relations you may begin.

Larry Thompson: I'll now turn the call over to Travis Stice.

Travis Stice: Thank you Adam and welcome everyone and appreciate you joining this morning I Hope you find the shareholder letter a meaningful way to communicate and also as Adam pointed out we've got an updated investor deck out there that we can referenced during our questions. This morning, operator, if you'll please open the line for questions.

Adam Lawlis: Thank you good morning, and welcome to Diamondback Energy's fourth quarter 2024 conference call.

Speaker Change: Our call today, we will reference an updated investor presentation and letter to stockholders, which can be found on Diamondbacks website.

Speaker Change: Presenting diamondback today are Travis Stice, Chairman and CEO President Danny Wilson.

Larry Thompson: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Larry Thompson: Larry Thompson CFO.

Larry Thompson: During this conference call. The participants may make certain forward looking statements relating to the company's financial condition.

Larry Thompson: To withdraw your question. Please press star one again please.

Larry Thompson: Also of operations plans objectives future performance and businesses we caution.

Speaker Change: Please standby, while we compile the Q&A roster.

Larry Thompson: Yeah.

Larry Thompson: Can you that actual results could differ materially from those that are indicated in these forward looking statements due to a variety of factors.

Speaker Change: Our first question comes from the line of Neal Dingmann mature Securities. Your line is open.

Larry Thompson: Information concerning these factors can be found in the company's filings with the SEC.

Speaker Change: Good morning, Travis congratulations out to you, but obviously the case, Jerry but especially like bed desert career look forward to seeing you. Soon my first question, maybe just to round that again another great quarter. My first question is really around the free cash flow sensitivity that you all show on slide 30, and specifically you know we're looking at that I'm, just where you put a comment on that.

Larry Thompson: Additionally, we will make reference certain non-GAAP measures the reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

Travis Stice: I will now turn the call over to Travis Stice.

Travis Stice: Thank you Adam and welcome everyone and I. Appreciate you joining this morning I hope you find the shareholder letter.

Travis Stice: As a way to communicate and also as Adam pointed out we've got an updated investor deck out there that we can referenced during our questions. This morning, operator would you. Please open the line for questions.

Speaker Change: I would notice on the bottom of the slide suggesting now around $67 a barrel produced the same free cash flow of 76 last year I'm. Just wondering is this continued achieved through the larger scale as you know a lot of the the completion driver I'm. Just wondering maybe you could talk and discuss the drivers behind all of this.

Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: Yes.

Speaker Change: A new number.

Travis Stice: To withdraw your question. Please press star one again.

Speaker Change: We're going to start to look at here I kind of equate that number to your.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: The same thing as a dividend breakeven is basically are you know what oil price gets you the same free cash flow per share as the prior year and if that number is going down you know capital efficiencies improving or you've done an accretive deal and you know when we when we announced the endeavor deal you know a little over a year ago.

Travis Stice: Okay.

Speaker Change: Our first question comes from the line of Neal Dingmann mature Securities. Your line is open.

Speaker Change: Good morning, Travis Congratulations to you, but obviously the case, Jerry but especially with a fantastic career and look forward to seeing you. Soon my first question, maybe just to round that again another great quarter. My first question is really around the free cash flow sensitivity that you all show on slide 13, specifically, we're looking at that I'm, just where you put a comment on that.

Speaker Change: We said, we'd have 10, 10% plus free cash flow per share accretion and you know who you are a year later showing the free cash flow per share as you know are going down by $9 a barrel to equal the same number as last year. So.

Speaker Change: It's going to be tough to keep moving that number down $9 a barrel every year, but you know I think through a lower share count.

Speaker Change: I notice on the bottom of the slide suggested now around $67 a barrel produced the same free cash flow of 76 last year I'm. Just wondering is this continued achieved through the larger scale as you know a lot of the completion driver I'm. Just wondering maybe you can talk and discuss the drivers behind all of this.

Speaker Change: Lower cost structure and quality inventory.

Speaker Change: Certainly going to be the goal.

Speaker Change: No great great direction that thing it just keeps dropping and then my second question maybe on your DNC plans I'm just wondering can you talk about.

Speaker Change: Yes.

Speaker Change: The new number.

Speaker Change: Maybe I don't know case do you look at it completions per.

Speaker Change: We're going to start to look at here I kind of equate that number to you or.

Speaker Change: Several frac crew or you know, maybe maybe talk I'm just noticing the Mount of completed Wells and you know you all talk about sort of four to five.

Speaker Change: At the same thing as a dividend breakeven, it's basically what oil price gets you the same free cash flow per share the prior year and if that number is going down.

Speaker Change: Of these seibel Fracs and then secondly noticed.

Speaker Change: Capital efficiency is improving or you've done an accretive deal and when we announced the endeavor deal a little over a year ago.

Speaker Change: You'll continue to complete.

Speaker Change: Several more wells than you drilled like you did last year, maybe just discuss that.

Speaker Change: Yeah. So on the DUC drawdown, we're drilling were drilling less wells and we're completing you know a combination of things. We were ahead of plan last year. So we drilled more wells than we expected.

Speaker Change: We would have 10%, 10% plus free cash flow per share accretion.

Speaker Change: Who you are a year later showing the free cash flow per share is.

Speaker Change: Going down by $9, a barrel to equal the same number as last year. So.

Speaker Change: And then we also.

Speaker Change: You know acquired a lot of docs with the endeavour deal.

Speaker Change: Can we tell them to keep moving that number down $9 a barrel every year, but I think through a lower share count.

Speaker Change: Smaller amount with the.

Speaker Change: The TRP deal that closed earlier this year so.

Speaker Change: A lower cost structure and quality inventory.

Speaker Change: There's a pretty significant DUC drawdown are planned in the in the Capex budget I would just say if if if we're ahead of schedule and Capex is looking good for the year, we will probably reduce that drawdown and drill a few more wells, particularly right now given that.

Speaker Change: Certainly going to be the goal.

Speaker Change: No great great direction to take it just keeps dropping and then my second question maybe on your D&C plans I'm. Just wondering can you talk about may.

Speaker Change: Maybe I don't know case do you look at it completions per.

Speaker Change: Several frac crew or maybe talk I'm, just noticing the Mt.

Speaker Change: You know putting pipe in the ground on the drill drilling side is almost as cheap as it's been in the last five or six years. So I think we have flexibility in the plan, but are you really seeing the efficiencies come through here right with.

Speaker Change: Completed wells that you all talk about sort of 4% to five of.

Speaker Change: These <unk> Fracs and then secondly noticed.

Speaker Change: We'll continue to complete.

Speaker Change: Several more wells that you drill like you did last year, maybe just discuss that.

Speaker Change: Drilling at over 400 wells with 15 or 16 rigs this year versus last year going into the year. We thought we're going to drill 280 wells Diamondback standalone with with 15 or 16 rigs and then on the Frac side.

Speaker Change: Yes, so on the.

Speaker Change: DUC drawdown, we're drilling were drilling less wells and we're completing.

Speaker Change: A combination of things. We were ahead of plan last year, So we drilled more wells than we expected.

Speaker Change: And then we also.

Speaker Change: Basically the final Frac fleets are getting about 100 wells per fleet per year.

Speaker Change: Acquired a lot of docs with the endeavour deal.

Speaker Change: Smaller amount with the.

Speaker Change: The TRP deal that closed earlier this year so.

Speaker Change: That's kind of up from <unk> 80, a year ago.

Speaker Change: Just continued efficiencies in the field and that's partly due to the higher pump rates that we've implemented from some of the learnings from endeavor and I think we're still looking at ways to push that even higher we're trying some things that might get us closer to a 110 120 wells per year, none of them are playing today, but but that's some upside that we can.

Speaker Change: There is a pretty significant DUC drawdown and planned and.

Speaker Change: And the Capex budget I would just say.

Speaker Change: Ahead of schedule.

Speaker Change: Capex is looking good for the year will probably reduce the drawdown and drill a few more wells, particularly right now given that.

Speaker Change: Putting pipe in the ground on the drill drilling side is almost as cheap as it's been in the last five or six years. So I think we have flexibility in the plan.

Speaker Change: Our crude oil shareholders.

Speaker Change: Perfect. Thanks look towards signal.

Speaker Change: Thanks Neil.

Speaker Change: Please standby for our next question.

Speaker Change: But.

Speaker Change: Yes, we're really seeing the efficiencies come through here right with the.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Speaker Change: Drilling at over 400 wells with 15 or 16 rigs this year versus last year going into the year. We thought we're going to drill 280 wells Diamondback stand along with 15 or 16 rigs and then on the Frac side basically the final Frac fleets are getting about 100 wells per fleet per year.

Speaker Change: Good morning, and congratulations Travis Congratulations case Uh huh.

Speaker Change: The takeaway is it seems from the deck is.

Speaker Change: And post the double Eagle acquisition is that there might be a pause as it relates to M&A given that it feels like you've consolidated a lot of the quality positions in the Permian. So Keith Travis just love your perspective on that and if that's the case, how do you think about leaning into the share repurchase program at these valuation.

That's kind of up from 80, a year ago.

Speaker Change: Just continued efficiencies in the field and that's partly due to the <unk>.

Speaker Change: Higher pump rates that we've implemented from some of the learnings from endeavor.

I think we're still looking at ways to push that even higher we're trying some things that might get us closer to a 110 120 wells per year.

Speaker Change: Levels. Good morning, Neil Thank you for your comments as well too.

Speaker Change: Tried to articulate a during the announcement of the double Eagles right that this was really the last.

Speaker Change: Planned today, but but that's some upside that we could accrue.

Speaker Change: And the last you know.

Speaker Change: Accrue to our shareholders.

Speaker Change: Opportunity in the core of the Midland Basin and if.

Speaker Change: Perfect. Thanks look towards signal.

Speaker Change: If it in fact is the last opportunity then.

Speaker Change: Thanks Neil.

Speaker Change: Please standby for our next question.

Speaker Change: Then theres really not much left on a go forward basis. So.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Speaker Change: That's our strategy is to we took advantage of probably what was the.

Neil Mehta: Good morning, and congratulations Travis Congratulations case.

Speaker Change: The last meaningful assets.

Speaker Change: Midland Basin.

Speaker Change: Yeah.

Neil Mehta: Thank you one of the takeaways it seems from the deck is posted.

Speaker Change: I'm not saying, we're never going to do another deal again, but certainly you need to digest here you know the quality of the inventory that we have.

Neil Mehta: Post the double Eagle acquisition is that there might be a pause as it relates to M&A given that it feels like you've consolidated a lot of the quality positions in the Permian.

Speaker Change: Puts us in a really good position to move more towards the.

Speaker Change: The other side of the capital allocation discussion, which is the share repurchases.

Neil Mehta: Travis just love your perspective on that and if that's the case, how do you think about leaning into the share repurchase program at these valuation levels.

Speaker Change: Reducing the enterprise value.

Speaker Change: I think at these levels, it's very obvious that share repurchases is a great use of capital.

Neil Mehta: Neil Thank you for your comments as well too we tried to articulate.

Speaker Change: $70 oil this business generates $20 a share of free cash flow in 2025 and at current prices.

Neil Mehta: During the announcement of the double Eagle right that this was really the last.

Speaker Change: Essentially a 12 and a half 13% yield so for us that's a that's cheap and you know our goal is to continue to make our stock looks cheap by improving per share metrics and I think that's what we've laid out here with the 2025 plant.

Neil Mehta: The last.

Neil Mehta: Opportunity in the core of the Midland Basin.

Neil Mehta: If it in fact is the last opportunity then.

Neil Mehta: Theres really not much left on a go forward basis. So.

Neil Mehta: That's our strategy is.

Speaker Change: Yeah.

We took advantage of probably what was the.

Speaker Change: Keith on that buyback program and you have a very concentrated shareholder coming out of the endeavor transaction. How do you think about maintaining the dry powder for potential sell downs, there and how should the market be thinking about it.

Neil Mehta: Among the last meaningful assets.

Neil Mehta: Base.

Neil Mehta: Yes.

Neil Mehta: Not saying, we're never going to do another deal again, but certainly you need to digest here the quality of the inventory that we have.

Neil Mehta: Puts us in a really good position to move more towards.

Speaker Change: You know your largest shareholder in general.

Speaker Change: Yeah, I mean, I I think I think the market.

Neil Mehta: The other side of the capital allocation discussion, which is share repurchases.

Speaker Change: Realize that we have a long a long term patient shareholder and the the Stephen's family that you know is known this basin for 45 years, and it's very very comfortable with the decision they made an emerging with with Diamondback.

Neil Mehta: Reducing the enterprise value.

Neil Mehta: And I think at these levels, it's very obvious that.

Neil Mehta: Share repurchases is a great use of capital.

Neil Mehta: $70 oil this business generates $20 a share of free cash flow in 2025, and our current prices.

Speaker Change: This isn't a private equity investment that has to monetize for fun life. There's there's a lot of patients from their side and we have conversations with them just like all of our other shareholders and de.

Neil Mehta: Essentially.

Neil Mehta: All 513% yield so for us that's cheap and our goal is to continue to make our stock looks cheap by improving per share metrics and I think that's what we've laid out here with the 2025 plan.

Speaker Change: They like our other shareholders you can see on page one of our roster encouraging us to lean into our buyback right now because the stock's cheap and.

Speaker Change: You know the best use of capital to buyback our shares so.

Neil Mehta: Yeah, Keith on that buyback program.

Speaker Change: Lastly, I'd, probably say that.

Neil Mehta: You have a very concentrated shareholder coming out of the endeavor transaction. How do you think about maintaining the dry powder for potential sell downs, there and how should the market be thinking about.

Speaker Change: I think the market has gotten a little ahead of this this.

Speaker Change: Lockup expirations over the coming you know Matson.

Speaker Change: In my mind, there's a lot of other ways to reduce the ownership that art.

Neil Mehta: Your largest shareholder in general.

Speaker Change: Well telegraphed marketed deals and that's stuff that we're thinking about it I think we have the balance sheet capacity and the free cash flow generation. Most importantly to you know get creative on that front, while still buying back shares in the open market.

Neil Mehta: I think I think the market sure.

Neil Mehta: Realize that we have a long a long term patient shareholders.

Speaker Change: Stephen's family that has known this basin for 45 years and was very very comfortable with the decision they made an emerging with diamondback.

Speaker Change: Thanks Keith.

Speaker Change: Thank you.

Neil Mehta: This isn't a private equity investment that.

Speaker Change: Please standby for our next question.

Speaker Change: Ask the monetize for fund life.

Speaker Change: Our next question comes from the line of John Freeman with Raymond James Your line is open.

Neil Mehta: Theres a lot of patients from their side.

Speaker Change: We have conversations with them just like all of our other shareholders.

John Freeman: Yeah. Good morning, Yeah remarkable career travelers say, congratulations case, Jerry on a well deserved promotion.

Speaker Change: They like our other shareholders that you can see on page one of our roster encouraging us to lean into our buyback right now because the stock's cheap.

Speaker Change: I I just wanted to start on looking at the midstream budget, the roughly 415 million on the midstream infrastructure budget is there anything that's sort of onetime in nature related to either kind of double eagle or in debit transactions, where you're kind of either had to put in cement.

Speaker Change: The best use of capital to buyback our shares so.

Speaker Change: Lastly, I'd, probably say that.

Speaker Change: I think the market has gotten a little ahead of us.

Speaker Change: Lockup explorations over the coming months.

Speaker Change: In my mind, there's a lot of other ways to reduce ownership that are well telegraphed marketed deals.

John Freeman: Structure facility upgrades or anything like that that we should be aware of.

Speaker Change: That stuff that we're thinking about it I think we have the.

Speaker Change: Yeah John.

John Freeman: One thing we highlighted is that there is $60 million.

Speaker Change: The balance sheet capacity and the free cash flow generation, most importantly, too.

John Freeman: Of midstream Capex in their traditional midstream capex from the endeavor water business E D S.

Speaker Change: Get creative on that front, while still buying back shares in the open market.

Speaker Change: Thanks Keith.

John Freeman: If that business were to monetize.

Speaker Change: Thank you.

John Freeman: Likely into our deep Blue JV.

Speaker Change: Standby for our next question.

John Freeman: You know that would reduce our capex burn depending on the timing of.

Speaker Change: Our next question comes from the line of John Freeman with Raymond James Your line is open.

John Freeman: That deal I think second to that.

John Freeman: Yes, good morning, yes remarkable career Travis Congratulations case, Jerry on the walls or promotions.

John Freeman: We have some kind of accelerated environmental capex. This.

John Freeman: This year and probably a little bit next but to the tune of 60 or $70 million.

John Freeman: I just wanted to start on looking at the midstream budget, roughly 415 million on the midstream infrastructure budget is there anything that sort of onetime in nature related either kind of double eagle, our endeavor transactions, where you kind of either had to put into Memphis.

John Freeman: One time this year, so couple of things going away in the future.

John Freeman: In.

John Freeman: In general, we we'd like to get that midstream, we're sorry that infrastructure and other budget down to kind of 5% to 7% of total capital from where it is today and the teams we put it in Travis as letter the teams have already worked on.

John Freeman: <unk> facility upgrades or anything like that that we should be aware of.

John Freeman: Yes, John I think one thing we highlighted is that there is $60 million.

John Freeman: Best in class combined facility design that we expect will save US you know a million and a half or about 10% or so per facility and that allowed us over the years as we develop the asset base.

John Freeman: Midstream capex in their traditional midstream capex from the endeavor water business eds.

John Freeman: If that business were to monetize.

Speaker Change: That's great and then just a follow up on Neal's earlier question on the docks, Ken can you just remind us just rough numbers, where do you all sort of stood on docs, you know kind of pro forma for the double Eagle transaction.

John Freeman: Into our deep Blue JV.

John Freeman: That would reduce our capex burn depending on the timing of that.

John Freeman: That deal I think second to that.

John Freeman: We have some kind of accelerated environmental capex.

John Freeman: This year, and probably a little bit next but to the tune of $60 million to $70 million.

Speaker Change: Yeah. We were we were carrying around you know just like little over 200 dogs totaled 200, 250 Ducks total pro.

John Freeman: At one time this year, so couple of things going away in the future.

Speaker Change: Pro forma the double Eagle transaction and double Eagles coming over with with about 50, you know.

John Freeman: I'd say.

In general.

John Freeman: We'd like to get that midstream, we're sorry that infrastructure and other budget down to kind of 5% to 7% of total capital from where it is today and the teams we put it in Travis as letter the teams have already worked.

Speaker Change: With that as you know what you would add to that number that.

Speaker Change: We call you know work in place wells that we don't we don't expect that will be doctor there'll be there'll be brought online kind of you know sometime between now and close.

John Freeman: Best in class combined facility design that we expect will save us $1, five or about 10% or so per facility and that will add up over the years as we develop the asset base.

Speaker Change: That's great. Thanks, guys I appreciate it.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of David <unk> with TD Cowen Your line is open.

Neal Mehta: That's great and then just a follow up on Neal's earlier question on the docks, Ken can you just remind us just rough numbers.

David: Hi, Thanks for taking my questions guys and just to Echo everyone's congrats to you Travis cases Jerry.

Speaker Change: I was hoping just to step.

Speaker Change: Where do you all sort of stood on docs kind of pro forma for the double Eagle transaction.

Speaker Change: To step back a second just to revisit I mean, obviously case you made some comments about the attractiveness of the valuation of the shares right now.

Neal Mehta: Yes.

Speaker Change: You know in the context of Steven's family as well.

Neal Mehta: We're carrying around.

Neal Mehta: Well over 200 Ducks totaled 200 $250 total.

Speaker Change: Have this one and a half billion commitment on asset sales and I think you bridge that with free cash down to almost 10 billion of net debt by the end of the year.

Neal Mehta: Pro forma the double Eagle transaction that double Eagles coming over with about 50.

Neal Mehta: With that.

Speaker Change: I guess, how how do you think about the flexibility of getting above that 50% return of capital. This year Oh, we need to appreciate where your share is your shares are now relative to how you see valuation work.

Neal Mehta: What you would add to that number that.

Neal Mehta: We call it work in place wells that we don't we don't expect that will be there'll be there'll be brought online kind of sometime between now and close.

Speaker Change: Should we be looking for that net debt.

Neal Mehta: That's great. Thanks, guys appreciate it.

Speaker Change: Trigger before kind of getting away from that 50% at least 50% commitment.

Neal Mehta: Thank you.

Neal Mehta: Please standby for our next question.

Speaker Change: I mean, David I think you know I think that at least 50% commitment is going to remain regardless of the situation now the execution of that whether it's above 50% or not I think will depend on.

Speaker Change: Our next question comes from the line of David <unk> with TD Cowen Your line is open.

Speaker Change: Thanks for taking my questions guys and just to Echo everyone's congrats to you Travis cases Jerry.

Speaker Change: The market conditions and I think we are.

Speaker Change: I was hoping just to.

Speaker Change: You know in Q4 for instance, we leaned in a little bit I think free cash flow beat even our internal expectations, but we were fully prepared to go over 50% of free cash returned in Q4, given the volatility we saw in in December.

Speaker Change: Step back a second just to revisit I mean, obviously case you made some comments about the attractiveness of the valuation of shares right now.

Speaker Change: So in the context of Steven's family as well.

Speaker Change: You guys have this $1 5 billion commitment on asset sales and I think you bridge that with free cash down to almost $10 billion of net debt by the end of the year.

Speaker Change: I'd, probably lean against going to 75 or 100, and these market conditions I don't think we're there I think we gotta get these noncore asset sales done in that down but.

Speaker Change: I guess, how do you think about the flexibility of getting above that 50% return of capital this year.

Speaker Change: We've got a lot of levers to pull in any way.

Speaker Change: When you appreciate where your share is your shares are now relative to how you see valuation or.

Speaker Change: Saw more volatility.

Speaker Change: And then we're seeing right now would we'd be we'd be leaning in.

Speaker Change: Should we be looking for that net debt.

Speaker Change: I appreciate that.

Speaker Change: Trigger before kind of getting away from the 50% at least 50% commitment.

Speaker Change: Just a follow up on the infrastructure spend obviously, a trajectory coming down with some of the synergies facility design you talked about the potential with.

Speaker Change: I mean, David I think I think that at least 50% commitment is going to remain regardless of the situation now the execution of that whether it's above 50% or not I think it will depend on.

Speaker Change: The sale to deep Blue, but just also wanted to bring up like the slide around surface acreage in power generation.

Speaker Change: The market conditions.

Speaker Change: How do you feel you know or how do you think about sort of financing your own internal powered needs you know, how how sort of you know.

Speaker Change: I think we.

Speaker Change: In Q4 for instance, we leaned in a little bit I think free cash flow beat even our internal expectations, but we were fully prepared to go over 50%.

Speaker Change: Imminent are these needs in terms of spends too to expand what you would you would need just to service your own wells.

Speaker Change: Our free cash returned in Q4, given the volatility we saw in December.

Speaker Change: And when when do you think we would expect to hear some announcements around some of those solutions whether it includes third party commercial opportunities are or just incremental spend to build out for your own operations.

Speaker Change: Yes.

Speaker Change: Probably lean against going to $75 100, and these market conditions I don't think we are there and I think we got to get these noncore asset sales.

Speaker Change: Yeah, I'd say internally, we've spent probably on average $70 million to $100 million.

Speaker Change: And that down but.

Speaker Change: We've got a lot of levers to pull in.

Speaker Change: Saw more volatility.

Speaker Change: A year on power for the last five or six years. So I think there's 70 or $75 million in the budget. This year for our power needs, that's just poles and wires in the field.

Speaker Change: Than we're seeing right now would we'd be we'd be leaning in.

Speaker Change: Okay appreciate that and just the follow up on the infrastructure spend obviously, a trajectory coming down with some of the synergies facility design you talked about the potential.

Speaker Change: Kind of a separate that from our power JV, we're looking at and I think there's.

Speaker Change: Theres been a lot of a lot of discussions around power in the basin. You know obviously, we're short power in the basin I think what we're trying to pull together with.

Speaker Change: The sale to deep Blue, but just also wanted to bring up like the slide around surface acreage in power generation.

How do you feel or how do you think about sort of financing your own internal power needs.

Speaker Change: A large IPP is can we build a large behind the meter gas plant gas power plant in the basin using diamondback gas, but also having diamondback perceive you know some of that power back with Hyperscale or a data center operator, taking on the lion's share of that of that power. So.

How sort of.

Speaker Change: Imminent are these needs in terms of spend to expand what you would you would need just to service your own wells.

Speaker Change: And when do you think we would expect to hear some announcements around some of those solutions whether it includes third party commercial opportunities are for just incremental spend to build out for your own operations.

Speaker Change: That's in the works we're still up.

Speaker Change: Confidentially discussing it with the hyperscale or just getting feedback.

Speaker Change: Yes, I would say internally, we've spent probably on average 70% to $100 million.

Speaker Change: What separates diamondback from others in this space as you know our flexibility and how nimble we are and how quickly we can move to get get something done let alone how much gas we have that need a better market. So two separate things, but we'll continue to build out power in the field because it increases uptime as well as.

Speaker Change: A year on power for the last five or six years, So I think theres 70 or $75 million in the budget. This year for our power needs Thats, just poles and wires in the field.

Speaker Change: Kind of a separate that from our power JV, we're looking at and I think theres been a lot of a lot of discussions around power in the basin. Obviously were short power in the basin I think what we're trying to pull together with.

Speaker Change: Reduces all OE.

Speaker Change: I appreciate the color guys.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line around Jairam with J P. Morgan Securities. Your line is open.

A large IPP is can we build a large behind the meter gas fire gas power plant in the basin using diamondback gas, but also having diamondback perceive.

Speaker Change: Yeah.

Speaker Change: Good morning, Mike.

Speaker Change: My first question Travis in case I was wondering if you could talk about the asset sale divestiture program.

Some of that power back with Hyperscale data center, operator, taking on the lion's share of that.

Speaker Change: Of that power. So that's in the works we're still up.

Speaker Change: Anticipate to execute on.

Speaker Change: In terms of the double Eagle transaction are these going to represent primarily midstream assets, but give us a sense of what your what your plans are in terms of monetization.

Speaker Change: Confidentially discussing it with the hyperscale or skin feedback.

Speaker Change: What separates diamondback from others in this space is.

Speaker Change: Our flexibility and how nimble we are and how quickly we can move to get get something done let alone how much gas we have that need a better market. So two separate things, but we'll continue to build out power in the field because it increases uptime as well as reduces Ella.

Ryan: Yeah Ryan.

Ryan: What we've been telling the market is that we think we can get these noncore asset sales done without selling operated acreage and yeah. I think the lion's share of the value will come from a couple of our equity method investments that we list in our in our deck.

Speaker Change: Appreciate the color guys.

Ryan: They've kind of been built out now near monetization and.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Ryan: On top of that our midstream.

Speaker Change: Our next question comes from the line of Jairam with J P. Morgan Securities. Your line is open.

Ryan: Midstream business that we acquired from endeavor. The E. D. S water business likely has some synergies to emerge into our deep blue JV, which is doing very very well and winning a lot of third party business in the basin.

Speaker Change: Okay.

Speaker Change: Good morning.

Speaker Change: My first question Travis in case I was wondering if you could talk about.

Ryan: I think most of that that gets you most of the way there.

Speaker Change: The asset sale divestiture program.

Ryan: You know we started to uncover a lot of assets from endeavor that we acquired them that are all over the country, but the biggest one is probably a sizeable non op position in the Delaware Basin and that's likely a you know your last kind of monetization candidate to get to that $1 5 billion.

Speaker Change: Anticipate to execute on.

Speaker Change: In terms of the double Eagle transaction are these going to represent primarily midstream assets, but give us a sense of what your what your plans are in terms of monetization.

Speaker Change: Yes.

Speaker Change: What we've been telling them.

Speaker Change: Market is that we think we can get these noncore asset sales done without selling operated acreage and.

Ryan: Great.

Ryan: And maybe the follow up.

Ryan: You know your overall top down our capital efficiency.

Speaker Change: I think the lion's share of the value will come from a couple of our equity method investments that we list in our in our deck.

Ryan: Screens quite well relative to our model and the street's expectation.

Ryan: In terms of the you know the Capex.

Speaker Change: <unk> been built out in our Nir monetization and.

Ryan: For a unit of oil output.

Speaker Change: On top of that are.

Ryan: Metric you mentioned in the shareholder letter.

Speaker Change: Midstream business that we acquired from endeavor, the eds water business likely has some synergies to emerge into our deep blue JV, which is doing very very well and winning a lot of third party business in the basin.

Ryan: One kind of question is that.

Ryan: The Capex number is accompanied by more you know kind of gross chose and did feel a few questions around what are some of the implications for well productivity as we think about the twenty-five program versus last year.

Speaker Change: I think most of that that gives you most of the way there.

Speaker Change: We started to uncover a lot of assets from endeavor that we acquired.

Ryan: Yeah, I think I think overall, what product productivity is going to be as good as any year. This year, we've got a pretty a couple pretty banner years last few years, you know I think until number while a lot of other peers don't don't even give that number and we put it out there for transparency purposes, but theres.

Speaker Change: They're all over the country, but the biggest one is probably a sizeable non op position in the Delaware basin and Thats likely.

Speaker Change: Your last kind of monetization candidate to get to that $1 $5 billion.

Speaker Change: Great.

Speaker Change: And maybe the follow up.

Ryan: A lot of things that can move around it until number right at 120, well pad is completed on.

Speaker Change: Your overall.

Speaker Change: Our capital efficiency screens quite well relative to our model and the street's expectation.

Ryan: December 30 of last year, you know, there's a count for last year or this year. So you know there's some noise in that in that number I think a true run rate and we kind of guided the street 500 wells a year ish before double Eagle and double Eagle adds about 30 wells a year of development, So I think somewhere in that.

Speaker Change: In terms of the.

Speaker Change: The capex.

Speaker Change: Per unit of oil output metric you mentioned in the shareholder letter.

Speaker Change: Kind of question is that.

Speaker Change: The Capex number is accompanied by more kind of gross chose and did feel a few questions around what are some of the implications for well productivity as we think about the 25 program versus last year.

Ryan: 525 to $5 40 wells.

Wells per year, assuming flat capital efficiency is this kind of an apples to apples number.

Ryan: And I think your other question on on capital efficiency.

Speaker Change: Yes.

Speaker Change: <unk>.

Ryan: We have posted this dollars of Capex per Boe produced.

Speaker Change: I think overall, what product productivity is going to be as good as any year. This year, we've got a pretty a couple pretty banner years last few years I think.

Ryan: That's a number that we want to hold ourselves to that in the future, it's going to be tough to replicate the efficiency of 2025, given the DUC drawdown, but that's the that's.

Speaker Change: Until number while a lot of other peers don't don't even give that number and we put it out there for transparency purposes, but theres a lot of things that can move around it until number right at 120, well pad is completed on.

Ryan: That's the mission to the team I think there's a lot of ancillary capex, that's going to come down.

Ryan: To replace that and capital efficiency is going to remain strong.

Speaker Change: At December 30 of last year, there was accounted for last year. This year. So there is some noise in that in that number I think a true run rate and we kind of guided the street 500 wells a year.

Ryan: As a particularly on a relative basis to where the market is today.

Ryan: Great. Thanks, a lot.

Ryan: Thank you.

Ryan: Please standby for our next question.

Speaker Change: Before double Eagle and double Eagle adds about 30 wells a year of development, So I think somewhere in that.

Speaker Change: Our next question comes from the line of Derrick Whitfield with Texas Capital. Your line is open.

Speaker Change: $525 to $5 40.

Derrick Whitfield: Good morning, I'll Echo everyone's congrats as well.

Speaker Change: Wells per year, assuming flat capital efficiency is this kind of an apples to apples number and I think your other question on on capital efficiency.

Speaker Change: Thank you Derek.

Speaker Change: With regard to the double Eagle transaction, how should we think about the capital and production impacts from your agreement with double Eagle to celebrate noncore Southern Midland Basin development, and when would that start to or could that start to meaningfully impact your financials.

Speaker Change: We have posted this dollars of Capex per <unk> produced and I think thats, a number that we want to hold ourselves to in the future, it's going to be tough to replicate the.

Speaker Change: Yeah, Eric on the capital side, there's zero capital you know, we're getting a carry.

Speaker Change: The efficiency of 2025, given the DUC drawdown.

Speaker Change: That's the.

Speaker Change: So no impact us kind of you know part of the rationale for that for.

Speaker Change: Our submission to the team I think theres a lot of ancillary capex, that's going to come down.

Speaker Change: For that part of the deal is we were going to have to move a few rigs.

Speaker Change: To replace that and capital efficiency is going to remain strong.

Speaker Change: Down south to.

Yes.

Speaker Change: Secure some leasehold.

Particularly on a relative basis to where the market is today.

Speaker Change: Lower working interest in and needed some horizontal wells to maintain the lethal than.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Well, obviously have a good relationship with the double Eagle guys in.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Neither a place where there are a couple of rigs to go and so theyre going to accelerate some development down there yeah I think the <unk>.

Speaker Change: Our next question comes from the line of Derrick Whitfield with Texas Capital. Your line is open.

Speaker Change: Color, we've given the the market is that it's about $100 million of free cash flow on a consolidated basis and in 2026 and.

Derrick Whitfield: Good morning.

Speaker Change: Everyone's congrats as well.

Derrick Whitfield: Thank you Derek.

Speaker Change: With regard to the double Eagle transaction, how should we think about the capital and production impacts from your agreement with double Eagle to celebrate noncore Southern Midland Basin development, and when would that start to or could that start to meaningfully impact your financials.

Speaker Change: No I would probably say that 50% of that is for Viper.

Speaker Change: Talk about it on the Viper call, but.

Speaker Change: The Reagan County piece was the second largest from an acreage perspective piece of the dropdown. So this is kind of non modeled upside for the dropdown that.

Speaker Change: Yes, Eric on the capital side, there's zero capital, we're getting a carry.

Speaker Change: Churn benefits diamondback through Vipers outperformance.

Speaker Change: So no impact to us.

Speaker Change: The rationale for that.

Speaker Change: That's great and then regarding your commentary on modeled synergies, where do you see the greatest remaining opportunities now that your organizations are fully integrated.

Speaker Change: For that part of the deal is we were going to have to move a few rigs down south to <unk>.

Speaker Change: Secure some leasehold.

Speaker Change: Lower working interest in and needed some horizontal wells to maintain the leasehold.

Speaker Change: You know I think we've we've really you know.

Speaker Change: We obviously have a good relationship with the double Eagle guys in.

Speaker Change: <unk> talked a lot about synergies or around the drill bit and completions.

Needed a place where there are couple of rigs to go and so theyre going to accelerate some development down there I think the color we've given the the market is that it's about $100 million.

Speaker Change: And in the capital synergies I think theres some longer dated synergies in the in the you know in the field in the production world as we get the teams integrated.

Speaker Change: Free cash flow on a consolidated basis and in 2026 and.

Speaker Change: And continue to share learnings and best practices.

Speaker Change: From from the operating teams in the field and and you know on the production in PDP side, you know, what where can we see improvements.

Speaker Change: I would probably say that 50% of that is for Viper.

Speaker Change: We will talk about it on the Viper call but.

Speaker Change: The Reagan County piece was the second largest from an acreage perspective.

Speaker Change: You know shared resources.

Speaker Change: These things take a little longer than just converting a drilling rig or a completion crew over to a program.

Speaker Change: So the dropdown. So this is kind of non modeled upside for the dropdown.

Speaker Change: That in turn benefits Diamondback through Vipers outperformance.

Speaker Change: <unk>.

Speaker Change: We're still in the middle of all that and you know.

Speaker Change: The integration of the field organization really is going to be.

Speaker Change: That's great and then regarding your commentary on modeled synergies, where do you see the greatest remaining opportunities now that your organizations are fully integrated.

Speaker Change: The hot heavy this year end and we're excited to.

Speaker Change: It'll be it'll be smaller things that are hard to measure, but it would be a lot of a lot of a lot of things that will occur.

Speaker Change: I think.

Speaker Change: Really.

Sure.

Speaker Change: Crew, hopefully to do our LOE and Opex budgets.

Speaker Change: <unk> talked a lot about synergies are around the drill bit and completions.

Speaker Change: In future years.

Speaker Change: And the capital synergies I think theres.

Speaker Change: Thanks, that's great.

Speaker Change: Some longer dated synergy then.

Thank you.

Speaker Change: <unk>.

Speaker Change: In the field in the production world as we get the teams integrated.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Kevin Mccarthy with Pickering Energy Partners. Your line is open.

Speaker Change: And continue to share learnings and best practices.

Speaker Change: From from the operating teams in the field and on the production in PDP side.

Kevin Mccarthy: Hey, Good morning, do you have a breakdown of the 2025 Capex plan for the legacy assets versus the Capex for double Eagle just trying to get a feel for how much lower the new legacy guide as compared to the prior commentary.

Speaker Change: Where can we see improvements.

Speaker Change: Shared resources.

Speaker Change: Those things take a little longer than just converting a drilling rig or a completion crew over to a program.

Kevin Mccarthy: Yeah, Kevin we gave out double eagle to 200 million of Capex.

Speaker Change: No.

Speaker Change: We're still in the middle of all that in.

Speaker Change: The integration of the <unk>.

Kevin Mccarthy: For Q2 to Q4 for 27000 barrels a day of oil you know their assets a little earlier, so it's kind of a 40 something like that 1000 Boe's a day.

Speaker Change: Old organization really is going to.

Speaker Change: The hard heavy this year and we're excited to.

Speaker Change: It'll be it'll be smaller things that are hard to measure, but it will be a lot a lot of a lot of things that will occur.

Kevin Mccarthy: So if you look at our three eight to four two.

Kevin Mccarthy: You take 200 off that on each side your three six to four it kind of ties 3636 4 billion for the full year.

Speaker Change: Crew hopefully to our low opex budgets.

Speaker Change: In future years.

Kevin Mccarthy: As to where we guided Q1 of 2025, which is 900 million to $1 billion for 470 oil to 475 oil.

Speaker Change: Thanks, that's great.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Kevin Mccarthy with Pickering Energy Partners. Your line is open.

Kevin Mccarthy: Ironically, it looks a lot like Q4, 2024, so we're kind of moving towards.

Kevin Mccarthy: Hey, Good morning, do you have a breakdown of the 2025 Capex plan for the legacy assets versus the Capex for double Eagle just trying to get a feel for how much lower the new legacy guide as compared to the prior commentary.

Kevin Mccarthy: Given the volatility we've seen over the last quarter last year and certainly some you know.

Kevin Mccarthy: More headlines and volatility this year to kick things off we figured.

Kevin Mccarthy: You know cutting capital.

Kevin Mccarthy: And in growing less or you know growing zero.

Kevin Mccarthy: Yes, Kevin we gave out double eagle $208 million of Capex.

Kevin Mccarthy: Near to the double Eagle deal made a lot of sense and so.

You know Q1 is a pretty good look at what we were planning to do prior to be in.

For Q2 to Q4 for 27000 barrels a day of oil.

Kevin Mccarthy: We certainly had to change our plans pretty quickly is that deal move quickly, but I think in general what are you seeing a more capital efficient play in that expectation.

That's a little earlier, so it's kind of a 40 something like that 1000 Boe's a day.

Kevin Mccarthy: So if you look at our three eight to four two.

Kevin Mccarthy: You take 200 ophthalmic side year three to six months before.

Yeah.

Kevin Mccarthy: Great I appreciate that detail and just as a follow up is there any capex associated with the assets that you might sell this year both on the.

Kevin Mccarthy: $366 billion to $4 billion for the full year.

Kevin Mccarthy: Ties to where we guided Q1 of 2025, which is $900 million to $1 billion for 470 oil to 475 oil.

Kevin Mccarthy: The JV in the non op.

Kevin Mccarthy: I think the only the only thing.

Kevin Mccarthy: We highlighted this.

Kevin Mccarthy: Midstream Capex number.

Kevin Mccarthy: Ironically, it looks a lot like Q4 2000.

Which as you know $60 million or so there's certainly some capex associated with the non op in the Delaware, but it's not a it's not a meaningful overall number.

Kevin Mccarthy: So we're kind of moving towards.

Kevin Mccarthy: Given the volatility we've seen over the last quarter last year and certainly some.

Kevin Mccarthy: More headline volatility this year to kick things off we figured.

Kevin Mccarthy: I appreciate it thank you.

Kevin Mccarthy: Thank you.

Kevin Mccarthy: Cutting capital.

Kevin Mccarthy: Please standby for our next question.

Kevin Mccarthy: And growing less.

Speaker Change: Our next question comes from the line of Paul Cheng with Scotiabank. Your line is open.

Kevin Mccarthy: One zero.

Kevin Mccarthy: Prior to the double Eagle deal made a lot of sense and so.

Speaker Change: Thank you good morning.

Kevin Mccarthy: Q1 is a pretty good look at what we were planning to do prior to Ian.

Speaker Change: And first congratulations to shop us and Keith and Jeremy.

Kevin Mccarthy: We certainly had to change our plans pretty quickly is that deal move quickly, but I think in general are you seeing in more capital efficient plan that expectation.

Uh huh.

Speaker Change: Maybe it does.

Speaker Change: Can you tell us that we have.

Speaker Change: It's all about how much you have somebody at the same thing in Capex on those I'm doing 20, Homegoods do I D.

Kevin Mccarthy: Yeah.

Great I appreciate that detail and as a follow up is there any capex associated with the assets that you might sell this year both on the.

Speaker Change: Yes.

Speaker Change: Yeah, Paul you know basically.

Kevin Mccarthy: The JV in the non op.

Speaker Change: Gross basis drilling right now is about $220 a foot so on a net basis, our average working interest of about $200 a foot.

Kevin Mccarthy: I think the only the only thing.

Kevin Mccarthy: We highlighted this.

Kevin Mccarthy: Midstream Capex number which is $60 million or so theres certainly some capex associated with the non op in the Delaware, but it's not a it's not a meaningful overall number.

Speaker Change: Basically as you know two two to $2 4 million as well so I'd say overall, it's probably about a $200 million savings this year and I think our as I mentioned earlier in the call that the golf and the team is gonna be how can we offset that in 2026.

Kevin Mccarthy: I appreciate it thank you.

Kevin Mccarthy: Thank you.

Kevin Mccarthy: Please standby for our next question.

Speaker Change: Capex elsewhere.

Speaker Change: Our next question comes from the line of Paul Cheng with Scotiabank. Your line is open.

Speaker Change: Okay.

Speaker Change: Just curious that the case.

Speaker Change: That's off the program I mean definitely put double.

Thank you good morning.

Speaker Change: And first congratulations to Charlotte and Kate and Gerry.

Speaker Change: A couple of Google that's fine so we assume that you're welcome to your Bowl parade.

Speaker Change: Okay.

Speaker Change: Maybe it does.

Speaker Change: Each quarter, the same number of wells that coming on stream.

Speaker Change: Keith.

Speaker Change: That was that.

Speaker Change: Because when we're looking at the number of wells that you expect to bring one would think given your strong productivity that production will be somewhat higher than what you would guide. So just curious that you have that anything we should be away in terms of the timing of the world or anything.

Speaker Change: Jonathan.

Speaker Change: How much you have somebody at the same thing in Capex on those 120 <unk>.

Speaker Change: Bob.

Bob: Yes, Paul basically.

Bob: On a gross basis drilling right now is about $220 a foot so on a net basis. Our average working interest is about $200 a foot. So you basically two two to $2 4 million as well. So I'd say overall, it's probably about a $200 million savings this year and I think as I mentioned earlier in the call the golfer.

Speaker Change: No I think we kind of said that you know.

Speaker Change: Wells are brought into this year from last year, who really knows whats going to happen at the end of this year, but I think this is kind of a low five hundreds before double eagle wells per year run rate is a pretty good number.

Bob: Team is going to be.

Bob: Can we offset that in 2026.

Bob: <unk> Capex elsewhere.

Speaker Change: With 30 added wells from from double Eagle, but.

Bob: Okay.

Speaker Change: The program of 500 wells a year you know.

Bob: And just.

Bob: Just curious.

Speaker Change: Wells moving forward or backward across the calendar line is not something we actively think about.

Bob: That's off the program I mean definitely put double double Eagle that's fine. So we assume that you're welcome to your Bowl parade.

Speaker Change: Okay, I see alright.

Speaker Change: Thanks, Paul Thanks, Paul please.

Bob: This quarter the St.

Bob: Oh Wow, that's coming on stream.

Speaker Change: Standby for our next question.

Bob: Because when we're looking at the number of wells that you expect to bring.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of meal Mariano with Ralph Your line is open.

Bob: One would think.

Bob: Given your strong productivity that production will be somewhat higher than what you guide. So just curious there.

Speaker Change: Hi, guys I was hoping to dig a little bit more into the double Eagle a deal here in the synergies.

Bob: Yes.

Bob: We should be aware in terms of the timing of the wells or anything.

Speaker Change: You guys, obviously spoke about all of it on the call and kind of alluded to some of this in the press release, but you know clearly Fang is a low cost operator in terms of being able to drill and complete wells are nicely under $600 per but and the Midland do you kind of have a number for those guys. In terms of what are you know they were kind of run rate was just trying to get a sense.

Bob: No.

Bob: Kind of said that.

Bob: 20 wells are brought into this year.

Bob: Last year.

Bob: Really knows whats going to happen at the end of this year, but yes, I think thats kind of a low five hundreds before double eagle.

Bob: Miles per year run rate.

Bob: Pretty good number.

Speaker Change: Well cost savings over time here and I'm also gonna have probably assume that maybe your L O.

Bob: With 30 added wells from from double Eagle, but.

Bob: Graham on 500 wells a year.

Speaker Change: It's also a bit lower than they are so maybe you can kind of quantify kind of the DNC in L. O numbers, there to give us a sense of maybe some potential savings over time.

Bob: Wells moving forward or backward across the calendar lines is not something we actively think about.

Bob: Okay.

Bob: Alright, thank you.

Speaker Change: For our group known as the land prowess those guys are actually pretty good operators over there double eagle there, they're doing they're doing a pretty good job there.

Bob: Thanks, Paul Thanks, Paul.

Bob: Please standby for our next question.

Speaker Change: Our next question comes from the line of Neil Mariano with Ralph Your line is open.

Speaker Change: Probably in the 625 to 650 range, but a private deal we're going to model that with our cost structure and you know, we put that new kind of well costs out last year wasn't it.

Bob: Yeah.

Neil Mariano: Hi, guys I was hoping to dig a little bit more into the double eagle.

Bob: Deal here in the synergies.

Speaker Change: So when we when we announced the trade. So that's probably the biggest number we've put out I think second to that because of the Adjacencies. You know, we're not gonna have to build as much infrastructure to service those those assets.

Bob: You guys, obviously spoke about a little bit on the call and kind of alluded to some of this in the press release, but clearly bang as a low cost operator in terms of being able to drill and complete wells nicely under $600 per but.

Bob: Midland do you kind of have a number for those guys in terms of what.

Speaker Change: And.

Speaker Change: Yes, I mean, I think I think from a timing perspective.

Bob: They are kind of run rate was just trying to get a sense.

Speaker Change: Those guys have been running five or six rigs and they ran them all in the southern portion of their asset and we're about to move four or five rigs up to the north.

Bob: Well cost savings over time here and I'm also going to have probably assume that maybe your LOE.

Bob: It's also a bit lower than there is I was hoping you could kind of quantify kind of the D&C in low numbers there to give us a sense of maybe some potential savings over time.

Speaker Change: And chewed through that inventory very very quickly and so we decided to move on the deal because.

Speaker Change: So often in this business you've seen.

Bob: Yes.

Bob: We've known for a land prowess those guys are actually pretty good operators over there at double Eagle.

Speaker Change: Companies by deals that have high decline curves and have to chase that decline curve with too much too much capital and too many rigs and the outcome of that is.

Bob: They're doing a pretty good job there.

Bob: We're probably in the.

Bob: $625 $650 range.

Speaker Change: Inventory duration being shortened rather than lengthens, so we timed it well where.

Bob: I'm a private deal we're going to model it with our cost structure, and we put that new kind of well costs out last year.

Speaker Change: No we didn't acquire too much production and instead acquired a lot of upside that fits in well with our plan over the next over the next 10 years.

Bob: If and when we when we announced the trade. So that's probably the biggest number we've put out I think second to that because of the adjacencies, we're not going to have to build as much infrastructure to service those those assets.

Speaker Change: Okay. That's helpful.

Mike: Thanks, Mike.

Speaker Change: On the capital side here. So certainly noticed figure you capitalize interest has kind of been going up the last few quarters I'm sure a lot of that is related to the.

Bob: And.

Bob: Yes, I mean, I think I think from a timing perspective.

Bob: Those guys have been running five or six rigs and they ran them all in the southern portion of their asset and we're about to move four to five rigs up to the north.

Mike: The endeavor deal, but just wanted to kind of chicken on that.

Mike: It is the capitalized interest included when you when you lay out the budget.

Bob: And chewed through that inventory very very quickly and so we decided to move on the deal because.

Mike: For 2025 here on the capital side.

Speaker Change: Yeah, no. So capitalized interest seems to be the hot topic I don't know if we've gone down to capitalize interest is something that's interesting in this business but.

Bob: So often in this business you've seen companies.

Bob: Companies by deals that have high decline curves and have to chase that decline curve with too much too much capital activity rigs and the outcome of that is.

Speaker Change: At the end of the day, we don't make the accounting rules. When you do a deal with a lot of undeveloped acreage. If you raise debt dollars to pay for it you know those go into capitalized section for us that runs through additions to oil and gas properties and which is not in our capex budget, we kind of put our Capex budget is you know what it takes to run the business.

Bob: Inventory duration being shortened rather than lengthened so we timed it well where.

Bob: We didn't acquire too much production set acquired a lot of upside that.

Bob: <unk> World our plan over the next over the next 10 years.

Speaker Change: But.

Speaker Change: Shareholder commitments and return commitments in all the math, we do on our side. It does include that but from a free cash flow definition perspective, we excluded and I think over the coming a couple of years as we pay down a significant amount of that that that issue will be put to us.

Speaker Change: Okay. That's helpful.

Speaker Change: Thanks, Mike.

Speaker Change: On the capital side here, so certainly noticed that your capitalized interest has kind of been going up the last few quarters I'm sure a lot of that is related to.

Speaker Change: The endeavor deal, but just wanted to kind of chicken on that.

Speaker Change: Thank you.

Speaker Change: Is the capitalized interest included when you when you lay out the budget.

Speaker Change: Thank you.

Speaker Change: As a reminder, ladies and gentlemen that start one one to ask a question. Please standby for our next question.

Speaker Change: For 2025 here on the capital side.

Speaker Change: Yeah, no. So capitalized interest seems to be the hot topic I don't know if we've gone down to capitalize interest as something thats interesting in this business but.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Doug Leggate with Wolfe Research. Your line is open.

Speaker Change: At the end of the day, we don't make the accounting rules. When you do a deal with a lot of undeveloped acreage. If you raise debt dollars to pay for those go into capitalized section for us that runs through additions to oil and gas properties.

Speaker Change: Hey, gentlemen, good morning, this is actually carloads in for Doug.

Speaker Change: He most definitely extend congratulations to you tried to vary in any case.

Speaker Change: Look what we're trying to figure out is you talk about a decade of inventory either.

Speaker Change: Which is not in our Capex budget, we kind of put our capex budget is what it takes to run the business but.

Speaker Change: And that's pursue presumably associated to your highest return on the screen.

Speaker Change: Our shareholder commitments and return commitments.

Speaker Change: What would that look like.

Speaker Change: All the math, we do on our side. It does include that but from a free cash flow definition perspective, we excluded and I think over the coming couple of years as we pay down a significant amount of that that that issue will be put to us.

Speaker Change: We applied the current strip these kind of returns would that number change and how much though.

Speaker Change: Okay.

Speaker Change: Yeah, you know I think I think the gold standard in the industry right now is sub 40 breakeven and that's what we've been focused on and saying you know the decade.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Referenced obviously inventory expand significantly as commodity prices go up I think for us that number.

Speaker Change: As a reminder, ladies and gentlemen, Thats star one to ask a question. Please standby for our next question.

Speaker Change: <unk> put in our in our deck on slide 12, we show kind of a $50 breakeven, though plus 10% rate of return at $50 a barrel right, we're not going to be wanting to drill that many wells are in that situation instead, we'd like to have the balance sheet strength to be buying back shares in that in that situation, but.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Doug Leggate with Wolfe Research. Your line is open.

Speaker Change: Hey, gentlemen, good morning, this is actually carloads in for Doug.

Speaker Change: Most definitely extend congratulations to you try that here yet in case.

Speaker Change: From an overall strategy perspective, you know the inventories there. It's just about you know at what time do you have to prosecute that inventory and we've tried to position ourselves to be the last person to ask to drill the lower returning inventory, but also have the lowest cost structure to be able to do it.

Speaker Change: Look guys. We're trying to figure out is if you can talk about a decade of inventory.

Speaker Change: And thats pursue presumably associated to your highest return on the screen.

Speaker Change: What would that look like.

Speaker Change: We applied the current strip and.

Speaker Change: Returns would that number change and how much so thanks.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Yes, I think I think the.

Speaker Change: Got you that's very helpful.

Speaker Change: And not to beat the dead horse here, but in terms of your ducks and the capital associated with that.

Speaker Change: The gold standard in the industry right now is sub 40 breakeven and that's what we've been focused on and saying the decade.

Speaker Change: How much of that capital benefit or.

Speaker Change: Referenced obviously inventory expand significantly as commodity prices go up I think for us that number's put in our in our deck on slide 12, we show kind of a $50 breakeven plus 10% rate of return at $50 a barrel right, we're not going to be wanting to drill that many wells in that situation.

Speaker Change: Or is it what.

What rate do you expect that capital to come back throughout 2026, what's the cadence.

Speaker Change: She added with.

Speaker Change: The capital benefit reverting back to normal levels.

Speaker Change: It's you know it's pretty level loaded we we have a very.

Speaker Change: Good.

Speaker Change: Forward visibility into what we're completing and what we're drilling.

Speaker Change: <unk> instead, we'd like to have the balance sheet strength to be buying back shares in that in that situation, but I think from an overall strategy perspective. The inventories there. It's just about at what time do you have to prosecute that inventory and we've tried to position ourselves to be the last person to ask that drilled the lower returning them.

Speaker Change: I think I think we also went into this year, you know running 18 or 19 rigs and realized that we were going to have a pretty sizeable DUC balance we could draw down. So you know we're gonna be down kind of 15 rigs here in the next couple of weeks and we'll probably keep that.

Speaker Change: That pace for most of the year I think as mentioned earlier, if things are going well on the year and were towards the lower half of guidance, we'll probably drill 30 to 50 more wells in and you know keep.

Speaker Change: Venturi, but also have the lowest cost structure to be able to do it.

Speaker Change: Okay.

Got you that's very helpful.

Speaker Change: And not to beat the dead horse here, but in terms of your subs and the capital associated with that.

Speaker Change: A relatively high DUC balance, we really like that because it gives us operational flexibility, particularly with the size of these pads and the size of the development. So it's good to have somewhere to go when things go you know.

Speaker Change: Much of that capital benefit.

Speaker Change: Or at what rate do you expect that capital to come back throughout 2026, what's the cadence.

Speaker Change: Go south and that DUC balance allows us to do that.

Speaker Change: She added with the.

Speaker Change: Our capital benefit reverting back to normal levels.

Speaker Change: Okay. Thank you guys and congrats again.

Speaker Change: It's pretty level loaded we have a very good.

Speaker Change: Thanks.

Speaker Change: Please standby for our next question.

Speaker Change: Ford visibility into what we're completing and what we're drilling.

Speaker Change: Our next question comes from the line of Cagny I combine with Bank of America. Your line is open.

I think I think we also went into this year running 18, or 19 rigs and realized that we were going to have a pretty sizeable DUC balance we could draw down so we're going to be down kind of 15 rigs here in the next couple of weeks and we'll probably keep that.

Speaker Change: Hey, good morning, guys on slide 28, you're breaking out acres in the Permian for the first time kind of suggests that you're getting close dates occurring maybe in the Permian Its first data center deal.

Speaker Change: How should we think about how the financial benefits are going to flow back and I'm thinking in terms of land land sale revenues, but it will be maybe a fixed price for gas could you can be paid in kind or through discounted power prices.

Speaker Change: That pace for most of the year I think as mentioned earlier, if things are going well on the year and were towards the lower half of guidance, we'll probably drill 30% to 50 more wells in and keep.

Speaker Change: A relatively high DUC balance, we really like that because it gives us operational flexibility, particularly with the size of these pads.

Speaker Change: Yeah good questions.

Speaker Change: Thank the land payment in my mind is the least important of all the payments given the size of the land needed you know, it's not a huge piece of property.

Speaker Change: The size of the development. So it's good to have somewhere to go when things go.

Speaker Change: Go south and that DUC balance allows us to do that.

Speaker Change: But it's been about 1000 acres and you can buy a lot of surface out here in the Permian cheap. Unfortunately, we have we have a lot of it but.

Speaker Change: Awesome. Thank you guys and congrats again.

Speaker Change: But I think the benefits to us would be you know participation from an equity perspective and in the plants, you know and on the power side, but also and also.

Speaker Change: Thanks.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Kelly <unk> with Bank of America. Your line is open.

Speaker Change: You know contributing all of the gas needed for the plant and the debate is on between us and our partners on how we want to.

Speaker Change: Hey, Good morning, guys on Slide 28, you are breaking out acres in the Permian for the first time kind of suggests that youre getting close to securing maybe at the Permian first data center deal.

Speaker Change: Structure that you could look at things on a fixed price basis, you could look at our caller you could look at a <unk>.

Speaker Change: How should we think about how the financial benefits are going to flow back and I'm thinking in terms of land land sale revenues will there will be maybe a fixed price for gas could you can be paid in kind or through discounted power prices.

Speaker Change: Index. So I think what we're trying to do is kind of be more flexible than than most here because in our situation. We're looking to take back a good amount of power ourselves, which I think will.

Speaker Change: Yes, good questions.

Speaker Change: Maintain our best.

Speaker Change: Best in class low east structure, particularly as power gets more scarce in the basin. So yeah, a lot of moving parts, but what we're we're very act.

Speaker Change: The land payment in my mind is the least.

Speaker Change: <unk> of all the payments given the size of the land needed it's not a huge piece of property.

Speaker Change: Actively working on it on it today and I think it could be exciting for the Permian and exciting for for Diamondback shareholders.

Speaker Change: But it's been about 1000 acres and you can buy a lot of surface out here in the Permian cheap. Unfortunately, we have we have a lot of it but.

Speaker Change: I appreciate that color for my next question I'm thinking about the endeavor sheer overhang kind of goes back to Neil's question Post dropdown you guys are a lot longer than on the stock do you think theres any opportunities maybe to read if at least smart bed in tears, where the sellers years and Bang.

Speaker Change: But I think the benefits to us would be participation from an equity perspective in the plants.

Speaker Change: And on the power side, but also and also.

Speaker Change: Contributing all of the gas needed for the plant and the debate is on between us and our partners on how we want to structure that you could look at things on a fixed price basis, you could look at a caller you could look at an index. So I think what we're trying to do is kind of be more flexible than most here.

Yeah, probably not something I can I can comment on it.

Speaker Change: But.

Speaker Change: I think diamondback from <unk> perspective is happy with our ownership in van I think.

Speaker Change: The stocks at a good run I think the world is kind of waking up to the value of minerals and Diamondback has.

Speaker Change: Because in our situation, we're looking to take back.

Speaker Change: Now seven and a half a billion dollars stake in inbound that I think is a truly unique but.

Speaker Change: A good amount of power ourselves, which I think will.

Speaker Change: Maintain our.

Speaker Change: Best in class low cost structure, particularly as power gets more scarce in the basin. So yeah, a lot of moving parts, but we're very.

Speaker Change: We structured that deal because we are with as much equity as we did because we.

Speaker Change: You know look at that on a net debt on a consolidated basis and in our mind it didn't make sense to lever up Viper in exchange for after tax debt dollars at the parent. So we did a highly advertised trade, but you know I think from the Diamondback side.

Speaker Change: Actively working on it today and I think it could be exciting for the Permian and exciting for <unk> shareholders.

Speaker Change: I appreciate that color for my next question I'm thinking about the endeavor share of overhang kind of goes back to Neil's question Post dropdown you guys are a lot longer been on stock do you think theres any opportunities maybe to easily swap that in tiers for the sellers here is in <unk>.

Speaker Change: Is back over 50% ownership of Viper and lease Viper under lever to continue to consolidate its market because I think that the mineral consolidation will.

Speaker Change: Hum.

Speaker Change: B pretty significant over the coming years relative to upstream.

Speaker Change: Yes.

Speaker Change: I can comment on.

Speaker Change: Thanks, guys I'm trying to scan Ids Congrats you guys.

Speaker Change: But.

Speaker Change: I think diamondback from <unk> perspective is happy with our ownership environment.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back over to CEO Travis Stice for closing remarks.

Speaker Change: The stock's had a good run I think the world is kind of waking up to the value of minerals.

Speaker Change: And Diamondback has.

Speaker Change: Now $758 billion stake.

Speaker Change: Thanks to everyone for listening in this morning, and appreciate your attention if you've got any follow up questions. Please reach out to the numbers provided.

Speaker Change: In them that I think is.

Speaker Change: Truly unique but.

Speaker Change: We structured that deal because we with as much equity as we did because we.

Speaker Change: Again, you'll have a great day.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Look at that.

Speaker Change: Net debt on a consolidated basis in.

Speaker Change: In our mind that didn't make sense to lever up Viper in exchange for after tax debt dollars at the parent. So we did a highly appetite trade, but I think from the diverse side gives us back over 50% ownership of Viper and lease Viper under lever to continue to consolidate its market because I think that the mineral consolidation will.

Speaker Change: B pretty significant over the coming years relative to upstream.

Speaker Change: Thanks, guys trying to scans congrats you guys.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, im showing no further questions in the queue.

Speaker Change: I'd now like to turn the call back over to CEO Travis Stice for closing remarks.

Speaker Change: Thanks to everyone for listening in this morning, and appreciate your attention.

Any follow up questions. Please reach out to the numbers provided thanks again youll have a great day.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

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