Diamondback Energy Inc

In addition to future operating expenses and working capital commitments discussed in “—Outlook”, our primary short and long-term liquidity requirements consist primarily of (i) capital expenditures, (ii) payments of principal and interest on our revolving credit agreements, Tranche A Loans and senior notes, (iii) payments of other contractual obligations, (iv) cash commitments for dividends and repurchases of securities, and the pending Double Eagle Acquisition.

2025 Capital Spending Plan

We currently estimate that our 2025 capital budget, which gives effect to the pending Double Eagle Acquisition, will be $3.80 billion to $4.20 billion, including $3.13 billion to $3.44 billion for horizontal drilling and completions, $280 million to $320 million for non-operated activity and capital workovers and $390 million to $440 million spent on infrastructure, midstream and environmental capital expenditures. We currently expect to drill approximately 446 to 471 gross (406 to 428 net) horizontal wells and complete approximately 557 to 592 gross (526 to 560 net) horizontal wells across our operated and non-operated leasehold acreage in the Northern Midland and Southern Delaware Basins, with an average lateral length of approximately 11,500 feet.

The amount and timing of our capital expenditures are largely discretionary and within our control. We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including but not limited to the success of our drilling activities, prevailing and anticipated prices for oil and natural gas, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners. We will continue monitoring commodity prices and overall market conditions and can adjust our rig cadence and our capital expenditure budget up or down in response to changes in commodity prices and overall market conditions.

Payments of Principal and Interest on Senior Notes and Tranche A Loans

At December 31, 2024, we have total principal payments due on our outstanding senior notes, including those of Viper, of $764 million in 2026, $1.3 billion in 2027, $73 million in 2028, $915 million in 2029 and $9.0 billion thereafter. Additionally, we expect to incur future cash interest costs on these senior notes of approximately $612 million in 2025, $1.2 billion cumulatively in the years from 2026 through 2027, $1.0 billion cumulatively in the years from 2028 and 2029, and $7.1 billion cumulatively between 2030 and 2064.

In addition to the senior notes, we have $900 million in aggregate outstanding borrowings under the Tranche A Loans due in 2025. See Note 9—Debt in Item 8. Financial Statements and Supplementary Data of this report for further discussion on the Tranche A Loans.

Other Contractual Obligations and Commitments

At December 31, 2024, our other significant contractual obligations consist primarily of (i) minimum transportation commitments totaling $2.8 billion, (ii) electrical power purchase commitments totaling $365 million (iii) asset retirement obligations totaling $592 million, (iv) electric fracturing fleet and related power generation services commitments totaling $199 million and (v) minimum purchase commitments for quantities of sand used in our drilling operations totaling $66 million. We expect to make aggregate payments of approximately $442 million for these commitments during 2025. See Note 7—Asset Retirement Obligations and Note 16—Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report for further discussion of these and other contractual obligations and commitments.

We and Five Point Energy LLC currently anticipate collectively contributing $500 million in follow-on capital to fund future growth in our Deep Blue Midland Basin LLC joint venture projects and acquisitions.

Return of Capital Commitment

Beginning in the first quarter of 2024, our board of directors approved a return of capital commitment of at least 50% (down from 75%) of our quarterly free cash flow to our stockholders through repurchases under our share repurchase program, base dividends and variable dividends. The remainder of our free cash flow will be used primarily to reduce debt. On February 21, 2025, our board of directors declared a base cash dividend for the fourth quarter of 2024 of $1.00 per share of common stock.

Free cash flow is a non-GAAP financial measure. As used by us, free cash flow is defined as cash flow from operating activities before changes in working capital in excess of cash capital expenditures and other adjustments as determined by us. We believe that free cash flow is useful to investors as it provides a measure to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis.

Future base and variable dividends are at the discretion of our board of directors, and the board of directors may change the dividend amount from time to time based on our outlook for commodity prices, liquidity, debt levels, capital resources, free cash flow and other factors. We can provide no assurance that dividends will be authorized or declared in the future or as to the amount and type of any future dividends. Any future dividends, whether base or variable, if declared and paid, will by their nature fluctuate based on our free cash flow, which will depend on a number of factors beyond our control, including commodity prices.

On September 18, 2024, our board of directors approved an increase in our common stock repurchase program from $4.0 billion to $6.0 billion, excluding excise tax. Since the inception of the stock repurchase program, we have repurchased an aggregate 25.84 million shares of our common stock for a total cost of $3.5 billion, excluding excise tax, as of February 21, 2025. Subject to regulatory restrictions and other factors discussed elsewhere in this report, we intend to continue opportunistically purchasing shares under this repurchase program primarily with funds from cash flow from operations and liquidity events such as the sale of assets while maintaining sufficient liquidity to fund our capital expenditure programs. See Note 10—Stockholders' Equity and Earnings (Loss) Per Share in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the repurchase program.

Guarantor Financial Information

Diamondback E&P is the sole guarantor under the indentures governing the outstanding Guaranteed Senior Notes.

Guarantees are “full and unconditional,” as that term is used in Regulation S-X, Rule 3-10(b)(3), except that such guarantees will be released or terminated in certain circumstances set forth in the indentures governing the Guaranteed Senior Notes, such as, with certain exceptions, (i) in the event Diamondback E&P (or all or substantially all of its assets) is sold or disposed of, (ii) in the event Diamondback E&P ceases to be a guarantor of or otherwise be an obligor under certain other indebtedness, and (iii) in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the relevant indenture.

Diamondback E&P’s guarantees of the Guaranteed Senior Notes are senior unsecured obligations and rank senior in right of payment to any of its future subordinated indebtedness, equal in right of payment with all of its existing and future senior indebtedness, including its obligations under its revolving credit facility, and effectively subordinated to any of its existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.

The rights of holders of the Guaranteed Senior Notes against Diamondback E&P may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law. Each guarantee contains a provision intended to limit Diamondback E&P’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent conveyance. However, there can be no assurance as to what standard a court will apply in making a determination of the maximum liability of Diamondback E&P. Moreover, this provision may not be effective to protect the guarantee from being voided under fraudulent conveyance laws. There is a possibility that the entire guarantee may be set aside, in which case the entire liability may be extinguished.

The following tables present summarized financial information for Diamondback Energy, Inc., as the parent, and Diamondback E&P, as the guarantor subsidiary, on a combined basis after elimination of (i) intercompany transactions and balances between the parent and the guarantor subsidiary, and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor. The information is presented in accordance with the requirements of Rule 13-01 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations or financial position had the guarantor subsidiary operated as an independent entity.