Diamondback Energy, Inc.

5. PROPERTY AND EQUIPMENT

Property and equipment includes the following as of the dates indicated:

(1) Unevaluated properties not subject to depletion under full cost accounting.

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter which determines a limit, or ceiling, on the book value of proved oil and natural gas properties. No ceiling test impairment was recorded for the three months ended September 30, 2026. However, the Company recorded an impairment of approximately $1.4 billion during the nine months ended September 30, 2026, which is included in the caption “Accumulated depletion, depreciation, amortization and impairment” on the condensed consolidated balance sheet. No impairment expense was recorded for the three and nine months ended September 30, 2025.

In addition to commodity prices, the Company’s production rates, levels of proved reserves, future development costs, transfers of unevaluated properties and other factors will determine its actual ceiling test calculation and impairment analysis in future periods. If the future trailing 12-month commodity prices decline as compared to the commodity prices used in prior quarters, the Company may have material write downs in subsequent quarters. It is possible that circumstances requiring additional impairment testing will occur in future interim periods, which could result in potentially material impairment charges being recorded.