Diamondback Energy, Inc.
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
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14. Fair Value Measurements
- FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As discussed in Note 14—Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, certain financial instruments of the Company are reported at fair value on the Company’s condensed consolidated balance sheets. The net amounts of derivative instruments are classified as current or noncurrent based on their anticipated settlement dates. The Company has an immaterial investment that is reported at fair value using observable, quoted stock prices and is included in “Other assets” on the Company’s condensed consolidated balance sheets at September 30, 2025, and December 31, 2024.
Viper LLC’s 2026 WTI Contingent Liability is reported at fair value using observable market data inputs and a Monte Carlo pricing model, which are considered Level 2 inputs within the fair value hierarchy. The 2026 WTI Contingent Liability was recorded in “Other accrued liabilities” on the Company’s condensed consolidated balance sheet at September 30, 2025, and in “Other long-term liabilities” on the Company’s consolidated balance sheet at December 31, 2024. The change in fair value of the 2026 WTI Contingent Liability is recognized in “Gain (loss) on derivative instruments, net” on the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2025.
The following table provides the fair value of financial instruments that are recorded at fair value in the condensed consolidated balance sheetsas of September 30, 2025, and December 31, 2024:
| As of September 30, 2025 | ||||||
|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total Gross Fair Value | Gross Amounts Offset in Balance Sheet | Net Fair Value Presented in Balance Sheet | |
| (In millions) | ||||||
| Assets: | ||||||
| Current assets- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $327 | $— | $327 | $(153) | $174 |
| Non-current assets- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $66 | $— | $66 | $(65) | $1 |
| Non-current assets- Other assets: | ||||||
| Investment | $44 | $— | $— | $44 | $— | $44 |
| Liabilities: | ||||||
| Current liabilities- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $154 | $— | $154 | $(153) | $1 |
| Interest rate swaps | $— | $9 | $— | $9 | $— | $9 |
| Current liabilities- Other accrued liabilities: | ||||||
| 2026 WTI Contingent Liability | $— | $27 | $— | $27 | $— | $27 |
| Non-current liabilities- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $149 | $— | $149 | $(65) | $84 |
| Interest rate swaps | $— | $22 | $— | $22 | $— | $22 |
| As of December 31, 2024 | ||||||
|---|---|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total Gross Fair Value | Gross Amounts Offset in Balance Sheet | Net Fair Value Presented in Balance Sheet | |
| (In millions) | ||||||
| Assets: | ||||||
| Current assets- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $274 | $— | $274 | $(106) | $168 |
| Non-current assets- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $19 | $— | $19 | $(17) | $2 |
| Non-current assets- Other assets: | ||||||
| Investment | $8 | $— | $— | $8 | $— | $8 |
| Liabilities: | ||||||
| Current liabilities- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $121 | $— | $121 | $(106) | $15 |
| Interest rate swaps | $— | $28 | $— | $28 | $— | $28 |
| Non-current liabilities- Derivative instruments: | ||||||
| Commodity derivative instruments | $— | $27 | $— | $27 | $(17) | $10 |
| Interest rate swaps | $— | $96 | $— | $96 | $— | $96 |
| Non-current liabilities- Other long-term liabilities: | ||||||
| 2026 WTI Contingent Liability | $— | $30 | $— | $30 | $— | $30 |
Assets and Liabilities Not Recorded at Fair Value
The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets:
| September 30, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Carrying Value | Fair Value | Carrying Value | Fair Value | |
| (In millions) | ||||
| Debt | $16,242 | $16,239 | $12,975 | $12,564 |
The fair values of the Company’s borrowings under the Credit Agreement, the Viper LLC Revolving Credit Facility, the 2025 Term Loan, Viper Term Loan and Tranche A Loans (prior to repayment and termination) approximate their carrying values based on borrowing rates available to the Company for bank loans with similar terms and maturities and are classified as Level 2 in the fair value hierarchy. The fair values of the outstanding notes were determined using the quoted market price at each period end, a Level 1 classification in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include those acquired in a business combination, inventory, proved and unproved oil and natural gas properties, equity method investments, asset retirement obligations and other long-lived assets that are written down to fair value when impaired or held for sale. Refer to Note 4—Acquisitions and Divestitures, Note 5—Endeavor Energy Resources, LP Acquisition and Note 6—Property and Equipment for additional discussion of nonrecurring fair value adjustments.
Fair Value of Financial Assets
The carrying amount of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, funds held in escrow, accounts payable and other accrued liabilities approximate their fair value because of the short-term nature of the instruments.
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