Diamondback Energy, Inc.

12. INCOME TAXES

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

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

On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the “Act”), was enacted. The Act included multiple provisions applicable to U.S. income taxes for businesses, including immediate expensing of research or experimental expenses, bonus depreciation for qualified tangible property, deductible intangible drilling costs for purposes of the corporate alternative minimum tax, and enhancements to limits on business interest expense deductions. The Company accounted for the Act in the period of enactment and materially reduced its estimate of current tax expense for 2025, primarily offset by an increase in estimated deferred tax expense for 2025, with no material net impact on the effective tax rate for the quarter.

In connection with the Sitio Acquisition, Viper acquired prepaid income tax balances of approximately $14 million and deferred tax assets of $5 million related to loss carryforwards. Viper also recognized a deferred tax liability of approximately $122 million.

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

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

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