Diamondback Energy, Inc.
For the period ended Mar 31, 2026. Filed May 6, 2026.
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Mar 31, 2026 · Filed May 6, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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12. Derivatives
- DERIVATIVES
At March 31, 2026, the Company only had commodity derivative contracts outstanding, which are recorded at fair value in the condensed consolidated balance sheet.
Commodity Contracts
The Company has entered into multiple crude oil and natural gas derivatives, indexed to the respective indices as noted in the table below, to reduce price volatility associated with certain of its oil and natural gas sales. The Company has not designated its commodity derivative instruments as hedges for accounting purposes and, as a result, marks its commodity derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the condensed consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”
By using derivative instruments to economically hedge exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company has entered into commodity derivative instruments only with counterparties that are also lenders under its credit facility and have been deemed an acceptable credit risk. As such, collateral is not required from either the counterparties or the Company on its outstanding commodity derivative contracts.
As of March 31, 2026, the Company had the following outstanding commodity derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed.
| Swaps · Collars | ||||||||
|---|---|---|---|---|---|---|---|---|
| Settlement Month | Settlement Year | Type of Contract | Bbls/MMBtu Per Day | Index | Weighted Average Differential | Weighted Average Sub-Floor Price | Weighted Average Floor Price | Weighted Average Ceiling Price |
| OIL | ||||||||
| Apr. - Jun. | 2026 | Basis Swap(1) | 45,000 | Argus WTI Midland | $0.92 | $— | $— | $— |
| Apr. - Jun. | 2026 | Roll Swap | 135,055 | WTI Cushing | $2.69 | $— | $— | $— |
| Apr. - Dec. | 2026 | Three-Way Collar | 5,000 | Argus WTI Houston | $— | $50.00 | $60.00 | $155.00 |
| Apr. - Dec. | 2026 | Three-Way Collar | 40,000 | WTI Cushing | $— | $50.00 | $60.00 | $121.20 |
| Jul. - Dec. | 2026 | Basis Swap(1) | 70,000 | Argus WTI Midland | $0.97 | $— | $— | $— |
| Jul. - Dec. | 2026 | Roll Swap | 140,000 | WTI Cushing | $2.71 | $— | $— | $— |
| NATURAL GAS | ||||||||
| Apr. - Sep. | 2026 | Basis Swap(1) | 650,000 | Waha Hub | $(1.87) | $— | $— | $— |
| Apr. - Dec. | 2026 | Two-Way Collar | 840,000 | Henry Hub | $— | $— | $2.87 | $6.35 |
| Apr. - Dec. | 2026 | Basis Swap(1) | 100,000 | HSC Hub | $(0.35) | $— | $— | $— |
| Oct. - Dec. | 2026 | Basis Swap(1) | 650,000 | Waha Hub | $(1.75) | $— | $— | $— |
| Jan. - Dec. | 2027 | Two-Way Collar | 720,000 | Henry Hub | $— | $— | $2.88 | $6.37 |
| Jan. - Dec. | 2027 | Basis Swap(1) | 360,000 | Waha Hub | $(1.26) | $— | $— | $— |
| Jan. - Dec. | 2027 | Basis Swap(1) | 280,000 | HSC Hub | $(0.30) | $— | $— | $— |
(1) The Company has fixed price basis swaps for the spread between the Cushing crude oil price and the Midland WTI crude oil price as well as the spread between the Henry Hub natural gas price, the Waha Hub and the HSC Hub natural gas price. The weighted average differential represents the amount of reduction to the Cushing, Oklahoma oil price and the Waha Hub and HSC Hub natural gas price for the notional volumes covered by the basis swap contracts.
| Put Spread | ||||||||
|---|---|---|---|---|---|---|---|---|
| Settlement Month | Settlement Year | Type of Contract | Bbls Per Day | Index | Strike Price | Deferred Premium | Floor Price | Short Put Price |
| OIL | ||||||||
| Apr. - Jun. | 2026 | Put | 37,000 | Brent | $52.50 | $1.70 | $— | $— |
| Apr. - Jun. | 2026 | Put | 115,000 | Argus WTI Houston | $50.00 | $1.57 | $— | $— |
| Apr. - Jun. | 2026 | Put | 190,000 | WTI Cushing | $51.64 | $1.60 | $— | $— |
| Apr. - Jun. | 2026 | Basis Put | 115,000 | WTI - Brent | $(41.09) | $1.16 | $— | $— |
| Jul. - Sep. | 2026 | Put | 20,000 | Brent | $52.50 | $1.60 | $— | $— |
| Jul. - Sep. | 2026 | Put | 85,000 | Argus WTI Houston | $50.00 | $1.42 | $— | $— |
| Jul. - Sep. | 2026 | Put | 160,000 | WTI Cushing | $51.80 | $1.29 | $— | $— |
| Jul. - Sep. | 2026 | Put Spread | 15,000 | WTI Cushing | $— | $— | $50.00 | $55.00 |
| Oct. - Dec. | 2026 | Put | 5,000 | Brent | $55.00 | $1.25 | $— | $— |
| Oct. - Dec. | 2026 | Put | 35,000 | Argus WTI Houston | $50.00 | $1.31 | $— | $— |
| Oct. - Dec. | 2026 | Put | 120,000 | WTI Cushing | $50.00 | $1.29 | $— | $— |
| Jan. - Mar. | 2027 | Put | 15,000 | Argus WTI Houston | $50.00 | $1.28 | $— | $— |
| Jan. - Mar. | 2027 | Put | 35,000 | WTI Cushing | $50.00 | $1.39 | $— | $— |
| Apr. - Jun. | 2027 | Put | 5,000 | Argus WTI Houston | $50.00 | $1.40 | $— | $— |
| Apr. - Jun. | 2027 | Put | 10,000 | WTI Cushing | $50.00 | $1.40 | $— | $— |
Interest Rate Swaps and Treasury Locks
Interest Rate Swaps
The Company hadtwo receive-fixed, pay-variable interest rate swap agreements for notional amounts of $150 million each, which were considered economic hedges of the Company’s 3.500% fixed rate senior notes due 2029. During the three months ended March 31, 2026, the Company fully terminated and settled the remaining aggregate $300 million notional amount of interest rate swaps for cash payments of approximately $27 million. The loss on the termination of interest rate swaps is recognized in the caption “Gain (loss) on derivative instruments, net” on the condensed consolidated statement of operations for the three months ended March 31, 2026.
Balance Sheet Offsetting of Derivative Assets and Liabilities
The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 13—Fair Value Measurements for further details.
Gains and Losses on Derivative Instruments
The following table summarizes the gains and losses on derivative instruments included in the condensed consolidated statements of operations:
| Three Months Ended March 31, | ||
|---|---|---|
| 2026 | 2025 | |
| (In millions) | ||
| Gain (loss) on derivative instruments, net: | ||
| Commodity contracts | $117 | $214 |
| Interest rate swaps | — | 11 |
| 2026 WTI Contingent Liability | — | 2 |
| Treasury locks | — | (1) |
| Total | $117 | $226 |
| Net cash received (paid) on settlements: | ||
| Commodity contracts | $160 | $86 |
| Interest rate swaps | (27) | — |
| Treasury locks | — | (1) |
| Total | $133 | $85 |
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