Thank you, Corey. Good morning, and welcome to Diamondback Energy's first quarter 2026 conference call.

During our call today, we will reference an updated investor presentation and letter to stockholders, which can be found on Diamondback's website. Representing Diamondback today are Kaes Van't Hof, CEO; Danny Wesson, COO; Jere Thompson, CFO; and Al Barkmann, Chief Engineer.

During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors.

Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures.

The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon. I'll now turn the call over to Kaes.

Thanks, Adam, and welcome, everyone. As with the last few years, we're going to go straight into Q&A.

Operator, please open the line for questions.

Good morning, Kaes, and good morning, team. I guess the big development here today that you've been signaling is the move to a green light framework from yellow light, adding the two to three rigs and moving to the fifth completion crew.

Kaes, maybe you just take a moment for the investors online to talk about the thought process that went into this decision and just how you're thinking about where and when to add activity.

Neil, it's a good question. I think there's some macro elements as well as some micro elements, and we'll go through both of those.

I think from a macro perspective, obviously there's a clear market signal. We're two months into the world's largest oil supply disruption in history.

I think Diamondback and Diamondback shareholders very fortunate that we're solely based in West Texas. We're kind of tourists in this situation, but it's obviously a very serious situation with a lot of oil supply off the market.

If that isn't a signal to grow production in an advantaged area like the Permian Basin, then I don't know what is. We hope there's a resolution to the conflict, but even if there is, there's a lot of noise in the system and a lot of barrels that have been taken off the market.

That's kind of the macro signal that we've been looking at as a board and a management team. Obviously, global inventories are starting to decline very rapidly, and we're going to do our small part to add some production into the mix.

Then you go down to the micro level or the Diamondback level. Listen, with the best inventory quality and depth in North America being executed at the best cost structure, if this isn't the time to grow now, then I don't know when is.

That decision at a micro level was honestly fairly easy. I think the last piece about it is we're able to do this in a very capital-efficient manner and get it done very quickly, because we have this backlog of DUCs and we prepare our business for up, down, or sideways.

We're able to just make one decision and add a frac crew a lot earlier in the year and get that production up immediately. I think it's a testament to the team's preparation, everybody in the organization working together and being able to do this very, very quickly, whereas I think in other organizations, it might take a little longer to make that decision.

Thanks, Kaes. Then the follow-up is just on the return of capital framework.

You didn't move away from the fixed framework. You bumped the dividend.

You indicated that you might be slowing down the buyback a little bit. Can you talk a little bit about that, what you intended to communicate with that?

Then there is a very concentrated seller ownership base here, and if the family ultimately is going to sell into the market or sell down their stake, do you still view Diamondback as a logical buyer to help offset that potential risk on the stock?

Listen, let's take it a little higher level, right? I think allocating capital is the most important job we have to do as a management team.

The history of the return of capital program for both ourselves and the industry was put in place after the COVID near-extinction event of the industry. Investors said, "Hey, I want my money back, and I want it in a formulaic manner."

I think that's worked very, very well over the last few years. I don't expect our ability to return capital to stockholders to change.

We just want the flexibility to make more cyclical moves versus moves within a 90-day window within a quarter. We have a really, really good track record of buying back our own stock.

We've bought back 42 million shares for $6 billion to date at $148 a share. Clearly with the stock where it is today, that's a very positive rate of return for our stockholders, and I expect that to continue.

We recognize we also have a large shareholder that we found a way to help monetize their stake in a very efficient manner. I think outside of their stake, they're most focused on us creating long-term value and allocating a ton of free cash to the balance sheet in times of extremely high oil prices does create long-term value with, in our mind, a higher floor for the stock long-term.

I wouldn't expect anything to change. We have a great relationship with the family.

I think we have the ability to help them monetize, and if we use kind of excess free cash flow over the next couple quarters to pay down debt, we can help monetize their stake actually more efficiently coming out of this. They're long-term holders, and they want the stock higher.

That makes sense. Thank you, Kaes.

Thanks, Neil.

Thanks. You all had some pretty robust production performance in 1Q, and based on our chat last night, it sounds like your completions were as planned.

Can you just walk through some of the specifics, why performance was so strong? It sounds like it was a lot more well performance just versus any other kind of dynamic.

Just give us a little bit of color on that. Is that something we should anticipate moving forward and what's embedded in guidance?

Scott, I'll give a couple high-level and then let Danny talk about some of the details. High-level, our well performance year to date looks up relative to last year.

I think that is probably a surprise even to us internally. We've always continued to try new things in terms of completion design and efficiency that I think is starting to pay dividends.

I think that's helping. That's one thing.

I think the other side of the business, the production side of the business, which we've been talking a lot about over the last couple quarters, there's just kind of a lot of good things happening in the field in terms of less downtime, more automation, call it AI, call a lot of automation impacting that side of the business. I think better wells and lower downtime, that's a good recipe for a production beat.

Scott, Kaes alluded to it, but post the Endeavor merger and getting the teams together, we started trading a lot of ideas on what we were doing to really optimize primary completions as well as the base. We talked about it over the past few quarters, but some of the things we're seeing on the completion optimization side with perforating strategies, rate, design, and sand loadings, we think we're seeing some uplift in the wells and time will tell as we continue to implement that completion design.

Also on the production side, some of the stuff we're doing on the workover side, the acid jobs, the chlorine dioxide jobs, the surfactant jobs, we're starting to see that pay dividends and really layering on that machine learning, as we continue to look at our data streams and processes and layered on machine learning and trying to start working towards implementing AI into our field operations, we're seeing that downtime come down and it's been a big part of the beat in Q1. Just really that little bits of optimization across the board starting to show through to the top-line number.

Great. As my follow-up, and when you guided oil, it looks like you're pointing greater than 10 to 520 a day.

Can you just talk through, if you continue to see this macro environment, how much desire is there to kind of continue to let that oil production grow versus curtail it? Is there a scenario where you'd actually even look to step it up even higher if the macro continues to be heightened?

It's great questions, Scott. I think it's a very fluid situation, and I think the board's wanted us to take this kind of quarter by quarter.

Obviously, if there's outperformance and we still have triple-digit oil prices and the market's still calling for oil to come to market, then I think that this is a year where instead of pulling back activity, you kind of just keep the efficiencies going and production continuing to climb. Listen, it's going to be fluid, right?

We're only two months into this conflict, and it could be resolved today, and who knows what happens to the macro. I think we're just ready to react.

We still have some things in our back pocket to grow further, but for now, this kind of 520-plus thousand barrels a day on oil is the new baseline.

Thank you.

morning, Kaes and team. Thanks for fitting me in.

My question is also on your activity, specifically, Kaes, how much, if any, will negative Waha prices impact what you might or might not do? Then the same question with oil service prices and maybe ask about are you expecting OFS inflation given what's going on with prices?

Neal, on the Waha side, obviously the pricing is deeply negative. We're well protected with financial and physical hedges.

Our mix of physical to financial is going to be moving more towards physical when these two new pipes come on, hopefully second half of the year. I think we're pretty well protected to get through this tight spot from a financial perspective where we can continue to add oily inventory, right, where we're drilling some of the oiliest stuff in the basin.

I think we're pretty well protected there. We'll continue to work on our physical protection on the gas side.

We've worked on a power project now for almost a year, and we'll see if we can get that done. We've talked at length about monetizing our gas, and we're kind of on the cusp of that starting to happen here when these pipes come on.

Danny, on the service side, what are you seeing?

We haven't really seen much pressure to date on the service inflation or service pricing side of the story. It's really a capacity question.

What does the service capacity look like? Haven't seen industry activity ramp aggressively through these first couple months of this conflict.

There's still quite a bit of capacity out there in the rig space and in the completion space. The calendars are not squeezed enough yet for then I feel like to be able to push pricing onto the guys when they go out and look for this additional equipment.

We have seen obviously some inflation in some of the consumables, and things that are tied directly to the commodity price. Those have been pretty minimal thus far, and we'll just have to see what activity does not only in the Permian, but in the Lower 48 to see what we anticipate service inflation to do through the rest of the year.

Thanks, Danny. Then second question, just on capital allocation, especially given the continued record free cash flow growth per share you'll likely have.

Kaes, wondering specifically, how do you believe capital for M&A stacks up, maybe against buybacks or simply the near-term debt repayment? Do you factor that in, or maybe just talk about capital allocation?

Neil, I think my first day in my first finance job in New York City, I was asked the question, "What can a company do with their free cash flow?" If we're going to go through all the options, you can grow, right, either organically or inorganically.

Organic growth, we've decided to hit that lever today in a small way by going to the top end of our CapEx guidance. Inorganic growth, M&A, we've obviously been very, very good at M&A over the years.

I think this volatility is kind of difficult to get deals done, private or otherwise. I think, generally, M&A is probably fairly quiet at Diamondback for the foreseeable future.

Then you go down the other options of what you can do with your free cash. You can pay a base dividend, which we did and decided to increase today, or you can pay down debt, buy back shares, or you can just put the cash in the balance sheet.

I think with the oil prices where they are, I don't know if investors are capitalizing this price environment yet today, and so for us, the bigger use of free cash is going to be to pay down debt rapidly and convert that debt value to equity value in our NAV and keep some cash for a rainy day, because this is a very volatile environment and it can flip pretty quickly.

Makes sense. Thanks, Kaes.

Thanks, Danny.

Thanks, Neal.

Good morning, gentlemen. Kaes, the calendar '26 and '27 strips are around 90 and 75.

How do you think about your approach to development in a much stronger oil price than we sat just call it 90 days ago? I was wondering if you could just maybe highlight for the two to three incremental rigs how are you thinking about capital allocation across your asset base and is the deeper benches now an area that are now competing with capital as you get down some of those well costs in the Barnett?

I'll let Danny and Al talk about latest Barnett developments, but just from a capital allocation perspective, even with higher commodity pricing, we're still going to hold to the vast majority of our spacing assumptions throughout the basin. We always kind of look at each project, and that's kind of on a DSU by DSU level basis, and kind of say, "Hey, let's get as many wells in this section as possible to where the incremental well, the last well that we add, generates a 40% rate of return at $60 oil."

We think that provides prudent spacing, but also a solid rate of return to our shareholders despite the commodity price volatility. I think drilling our best stuff first and sticking to that knitting in terms of spacing is going to continue.

Clearly the Barnett, particularly with the size of these wells from a production perspective, generates more PV today, so that's getting more attention. Al, you want to give anything on the latest Barnett?

I think that's right, Arun. Looking at the acceleration of the plan coming in with these two rigs, really that's the acceleration of the Barnett plan.

We're focused on that development and really it's just kind of getting ahead of the Barnett obligations that we talked about last quarter.

I'll just add that the Barnett activity and the obligation activity is almost entirely focused on the JV area that we have with another partner. Those wells are not as high a working interest.

They're about roughly half-and-half, a little bit heavier weighted on the Diamondback side. The two or three rigs were picking up on the Barnett activity to get ahead on the JV area is really like 1.5 net rigs to Diamondback.

While the top line looks like we're adding a bunch of activity in the back of the year, net to us, it won't be nearly as impactful.

Great. My follow-up is maybe for Jere.

You guys have taken call it pro forma net debt down to $12.7 billion. Jere, I was wondering if you could highlight, given the intention to pay down more debt in a higher commodity price environment, what are some of the targets you're looking for for the balance sheet from either a gross or a net debt perspective?

Arun, great question. I think we've talked previously about hitting that $10 billion net debt figure sometime in the next 12 to 18 months.

Obviously, with where we are from a commodity pricing standpoint and some excess free cash flow generation, it looks like we'll be able to hit that much earlier, to the tune of a couple months from now. Then as we move into the back end of the year, I think we'll have an opportunity to not only reduce net debt, but also gross debt, likely build cash on the balance sheet through the fourth quarter.

Then once we get into the fourth quarter, take a look at, obviously, calling our $750 million of '26s outstanding. Then as we move into 2027, take a look at maybe doing a larger liability management exercise with additional cash on the balance sheet with the idea of trying to take out as much as we can from a near-term maturity perspective, particularly as it relates to anything that matures prior to 2030.

I think we're in a really advantaged position to move our balance sheet from a position of strength to really kind of an adjective of fortress, and we can do that in the very near term.

Great. Thank you.

Thank you. Good morning, guys.

Even after increasing activity, the reinvestment rate for y'all still fell pretty sharply from what y'all originally planning last quarter from 44% to 34% at the current strip. Obviously y'all had the ability if you wanted to even increase activity more and still would have likely had kind of an industry-leading kind of low reinvestment rate.

I know that returns ultimately drive y'all's decisions, but is there a reinvestment rate that y'all just want to stay below regardless of kind of the commodity environment?

John, that's a good question. I think I'd probably take it a little different direction where obviously we've been polling investors that own the stock to get their opinion on how they feel about growth and ramping activity.

I think the general consensus was, "Yeah, I think a little growth in the plan will differentiate Diamondback and makes a lot of sense. I just don't want you to do it in a capital-inefficient manner."

If you think about what we're basically doing here, we were going to run somewhere between four and five frac crews in the model to hit our original guide. That fifth frac crew was going to go away for five or six months and then come back.

It's a Halliburton e-fleet simulfrac, as efficient as it gets crew. We're just bringing that crew back and going to run the five crews essentially consistently.

I think that will ensure we maintain capital efficiency in the field versus trying to go too fast, too soon, which sometimes has driven some inefficiencies in E&P's plans and Diamondback's plans in years past. I think trying to learn from the history of development in this basin, staying capital-efficient is probably the priority, and I think the reinvestment rate becomes the output of that.

That's great. Then just along those same lines, I know the original 2026 plan didn't forecast sort of any meaningful DUC draws or builds.

Can you just give us a rough idea kind of how that looks now with the new plan?

It's kind of a story of through the year, right? We're going to draw down the DUCs in Q2 and backfill that with two rigs' worth of activity to make sure we build our DUC balance back up.

We basically peaked at a little over 200 DUCs in Q1. That number is going to come down over Q2, and then the backfill rigs start to build that back up.

In general, and Danny can opine, but we're going to have to keep a little bit higher DUC balance than we would running four crews because we like to have two projects behind each crew ready to go. Because if something bad happens, then we just move to another project, and it looks like everything's going great at Diamondback on a quarterly basis.

Probably need to maintain somewhere in the high 100s, around 200 DUCs, and that's kind of where we are today, but there's going to be some movement throughout the year.

We like to keep kind of a quarter to a quarter and a half worth of inventory ahead of each crew just so that we can have flexibility if we run into an issue on a pad with takeaway constraints or something like that. If you think about each of these crews will do about 100-ish wells a year, or maybe a little more, and so to Kaes' point, he hit the nail on the head, a couple hundred wells ahead of these five fleets is kind of the right carry number of the DUC balance.

Obviously, the more efficient we get, and the guys are always chasing the efficiency curve, and you can see it in I think it's slide 9 in our deck today, the improvement quarter over quarter. As the crews get more efficient and get more wells done, it either means we've got to release crews to keep the same well count, or we've got to build more DUCs to stay ahead of them.

It's a dynamic and fluid situation, but I think where we're talking about adding 20 to 30 wells to the year in total, so, and still being able to stay within our original guidance window, which we took the momentum from Q1's beat and just kind of kept it going through the rest of the year.

Thanks, guys. Appreciate it.

Thanks, John.

Hi, good morning. Thank you for taking my question.

I actually want to ask about your crude oil marketing. So 1Q pricing was a bit stronger.

Can you just remind us your exposure to premium price indices and yeah, the marketing strategy in general on the oil side?

Listen, from a strategy perspective, Betty, we learned from the kind of the Permian takeaway crisis in 2018 that we needed to use our balance sheet to get our crude to the biggest markets. For us, that was, let's get more crude down to Corpus Christi and as well as Houston.

We have, if you remember, we invested in three pipelines: EPIC, Gray Oak, and Wink to Webster, all of which made our investors a lot of money, but also protected Diamondback from a commercial perspective. We have about 300,000 barrels a day going down to Corpus on EPIC and Gray Oak, and then we have about another 100,000 a day going down Wink to Webster, feeding kind of Refinery Row in Houston.

We're kind of pretty exposed to, call it water-based pricing, even have one small contract that has some dated Brent exposure. That's been really helping us out.

I think that's a good playbook for what we're going to try to do on the gas side, right? I think we're a little behind because oil is 90-plus percent of our revenue and we've done a good job there, but the next trend is to improve that on the gas side.

Got it. That makes sense.

Then I want to ask about the acquisition line item in 1Q, there just a few hundred million. Are you guys doing any organic acquisitions and maybe picking up bolt-on things that's at good pricing?

Can you just speak to that?

Betty, this is Jere. There's a couple of small acquisitions that are in our backyard in the Midland Basin.

As a reminder, in that line item, we do have capitalized interest and capitalized G&A, and that made up the vast majority there. That plus a couple of small acquisitions, and then let's call it $50 to $75 million in leasehold bonus as well.

That's helpful. Thank you.

Thanks, Betty.

Thanks, good morning. Can you talk about how you're viewing Viper ownership and what's optimal for Diamondback, just because you did sell some in the quarter, but still own 39%?

The company's free cash flow outlook's obviously stronger, less need for divestitures, but is there any minimum level of ownership you'd kind of look to maintain, and how does that play into the overall capital allocation decisions?

We did sell down a little bit of ownership in Viper, kind of a follow-on from the drop-down where the Diamondback side took a lot of stock from Viper in that deal. We could have probably taken more cash, but instead decided to wait and then sell a little bit here last quarter.

I would say we're done selling Viper shares at Diamondback. I do think the growth opportunity set for Viper is pretty significant, could there be a world where Diamondback's ownership is reduced through dilution?

I think that's possible. No desire today to monetize any more shares.

I think if you just think about where both companies are going to be from a balance sheet perspective, in another few months, they're going to be well positioned to kind of do anything from an M&A perspective, and that's where we wanted to be.

Great. Then in the 2022-2023 upcycle, private operators, they did drive an outsized share of rig additions, overall oil growth.

You guys have a unique view here being based in Midland. Just wondering how you'd characterize the ability of privates in the Permian to respond to what we're now seeing as far as higher oil prices versus a couple of years ago, just because it also has implications for tightening of OFS markets.

No, that's a very important question and has gone into our calculus on thinking about the market and thinking about adding activity. If you go back to that 2022 upcycle, you had a company like Endeavor that's now part of Diamondback, they went from two rigs to 15 rigs.

CrownRock went from two rigs to eight rigs, that's now part of Oxy. EnCap North, which is now part of Ovintiv, went from two rigs to six rigs.

Double Eagle, which is now part of us, combination of us and Exxon, went from one rig to six rigs. These were big moves on the private side, and back then, there was still a lot of private activity growth, particularly in the Midland Basin that has now been consolidated.

I think there's going to be private growth. The private model has shifted to more of smaller asset packages that they develop very, very quickly, farm in to larger operators' positions.

There's been a big growth in kind of that northern New Mexico area. By our math, right, that's 20, 30 rigs.

It's not 100 rigs like it was in 2022. I think they're going to move very quickly.

I just don't think the volume impact will be nearly what we saw in that 2022 timeframe.

Great. Thanks, guys.

Thank you.

Yes, good morning. Maybe I'll extend upon the last line of inquiry.

Kind of in light of what you just mentioned about the impact of the privates, Kaes, how do you think about Diamondback's volumes, say over the next 5 to 10 years on an organic basis? Do you think about Diamondback kind of being in modest kind of growth mode over the next 5 to 10 years?

This may happen, kind of step-wise when called upon by the market, but do you step higher during periods of elevated prices like today and then maintain that new level, so that net-net you're growing? Or when commodity prices are soft, do you pare back on activity and let production fade back down?

Just curious on how you think about the longer-term trajectory.

Listen, Scott, I think I think I'll go back to my earlier comment that, the the operator with the best inventory quality and the lowest cost structure with the longest inventory depth probably has the right to grow organically and and the right to do that and creates shareholder value. I I think, we've been talking about trying to hit the organic organic growth accelerator for, for a while now.

We just haven't had the macro conditions to support it. I think in a world of, and and who knows what's going to happen, where, mid-cycle pricing is a little higher, call it $70-plus on WTI, $75-plus, well, I think that's a world where from a total shareholder return perspective, a couple percentage points of organic growth, really adds to the NAV of the business and adds to the, long-term free cash generation.

That's kind of, one of the important points that we ran in the model this year was that this this new plan generates more free cash flow in 2026 per share than than any other than sorry, more free cash flow per share at any oil price above $60 oil. A $70-plus world, this is this is advantageous to to shareholders long term.

No, it certainly helped differentiate Diamondback. Then turning back to the capital efficiency of the investment program, it does appear to improve on the margin with the updated plan, but it's hard to separate the DUC draw impact from adding rigs in the Barnett where you're still ramping on learnings and efficiency.

Just in general, how would you describe the kind of underlying trend in capital efficiency, especially as you lap the impact of the DUC draw, say kind of into 2027? Do you think you'll be able to try to show improvement kind of relative to the initial program this year?

Listen, I think things like DUC draws and bringing back DUCs and the Barnett, when you develop, I think that's all kind of noise, right? Below that noise, the team is executing flawlessly.

We've set records on the drilling side on two-, three-, four-mile laterals. Wolfcamp D development, we gave the team a goal of 300 $300 a foot for drilling, down from $360 a foot drilling last year.

They're already at $300 a foot. Barnett drilling, we said the drilling guys need to be below $400 a foot to be able to get to $800 a foot to make the Barnett competitive with the base program.

We already put a well in the ground under $400 a foot. I think at the highest level, the business is firing on all cylinders, efficiencies continue to improve above ground.

The big move also is going to be, are we drilling and completing actually better wells subsurface? Those are all the drivers that separate the noise of are you drawing down DUCs this quarter or this month versus years past.

That's the long-term benefit to capital efficiency.

That's great. Appreciate the color.

Thank you, Kaes.

Thanks, Scott.

Good morning all, and thanks for taking my questions. Kaes, perhaps for you, just regarding your share buyback and its guiding principles, where do you view mid-cycle pricing now in light of the current Middle East conflict and the risk premium associated with that?

Could you speak to what you're seeing in degradation of inventory quality across the Permian, clearly beyond Diamondback?

I'll take the macro question first, Derrick. If I wasn't long-term bullish, I'd be out of a job, right?

I guess we have to be long-term bulls, but also think about in practical terms where the situation is right now. Within 3 months, we went from the projected largest oversupply in history, which I think we can debate was not going to be the case, to now the largest undersupply in history.

We're only 2 months in. I think it's hard for us to move off our mid-cycle pricing environment, which is kind of a mid-$60s TI, kind of mid-teens NGLs, and $3 gas, obviously with Waha diffs.

There's certainly a case to be made for energy security becoming a much more important thing for countries around the world to think about. I guess wearing my oil hat, that probably means more storage, more landed storage versus storage that you can buy somewhere that's in a riskier geopolitical area.

I think that means the US barrel is more important than it's ever been. Again, I think it's early for us to say mid-cycle pricing has gone up by X.

The way we do think about kind of our positioning relative to US shale and where US shale's mid-cycle pricing is going is that we do believe the cost curve is going up. We do think operators have done a really good job with efficiencies, longer laterals, better development.

Geologic time catches up to you and there's clearly signs of degradation throughout the US in terms of productive quality. We just try to keep ourselves at the low end of that cost curve, and I think we've done a very good job on that front, both from a inventory depth and quality perspective, but also the costs at which we execute on that inventory.

I think we're very well positioned, and I think it's a little too early for us to go higher on mid-cycle pricing today.

Fair enough. Then as my follow-up, I wanted to shift over to the Barnett, referencing the play outline on page 16.

How large could you reasonably grow this position beyond 200,000 that you're highlighting on slide deck? You clearly have one of the most prolific buyers of assets in Midland working with you, certainly have that in your favor.

We did announce this position after we thought we had a pretty solid position on what we could get. We have continued to add to the position in Q1 on a small basis, but I think what's exciting is now we're starting to do a lot of trades, a lot of the big operators have their Barnett positions and we're all now looking at how can we block up to three-mile laterals, four-mile laterals.

There's obviously a lot of private equity, kind of the small Midland-based private equity that's looking to build 6-, 7-, 8- 8-section positions. Those probably come to market.

I think it's going to happen. I think the position's going to grow.

I think we have the sizable base we need to continue to grow it.

Great update. Thanks for your time.

Thanks, Derrick.

Hey, good morning. Can you provide any color on the cadence of the net lateral footage per quarter throughout the year and also the lateral length per well?

We would assume the additional two 200,000 lateral feet is back-half weighted, but any color there would help.

I think it's going to be pretty evenly weighted here towards the back half looking at that six we went up to kind of that 6.2 million lateral feet, right? We're looking probably at 1.5 to 1.6 per quarter for the back half of the year there.

Great. Lateral lengths per well should increase throughout the year too.

Is that right?

Looking at Q1, I think that was probably one of our lighter quarters I think we were 11,500 for Q1, and so for the full year of 2026, we still expect to be at 12,900. We expect that to ramp kind of going through the back half of the year.

Got it. Appreciate that.

Maybe as a follow-up, any updates on the surfactant tests?

We had a big push towards the end of the year last year. Really wanted to get some tests in the ground and try some different surfactant combinations with some different rock types and understand what was driving the well performance there.

We've got those tests in the ground. We're looking at it.

Team's studying it. We're refining the process and plan to move forward with our next deployment kind of early this quarter.

Kevin, one thing I'd add to that, we tested 50 wells or so last year. On average, I think we got 100-barrel-a-day uplift, but some wells were up by 4-500 barrels a day, and some wells were zero.

Now we're trying to figure out what did we do right in the 4-500-barrel-a-day wells, and what did we do wrong in the zeros. We're going to figure that out.

This is version 1.0. That's what kind of gets me excited.

I think from a high level, this basin and Diamondback, we're kind of on the cusp of some technological breakthroughs related to increasing recoveries past primary development. I think that's probably going to be a megatheme over the next 4, 5, 6 years that you're going to see a lot of dollars and time spent on.

That's kind of why we've held as much acreage as we have. We have some of the best oil in place in the basin, and got some of the smartest people in the industry working on this to do what I think could be something that extends this basin's life by a decade or two.

That certainly would be very meaningful. Appreciate the update.

Thanks.

Gabe, can't hear you if you're talking.

Hey, sorry about that, guys. Morning.

Thanks for the time. Just going back to the return of capital framework and pursuing growth this year, which obviously makes sense, but just curious if you could maybe talk a little bit about what an upper bound of oil production growth would be for Diamondback, again, assuming you have the green light on the macro.

Is it fair to assume that it's 5% for Diamondback or would there be an environment where it could be even higher than that?

I don't want to get into a specific number. I think right now we've already grown low single digits year to date.

I don't think there's a ton of investor appetite for a large CapEx bump and something more than mid-single digits growth. I think it's early.

I think there's a lot of noise in the system and no one's really sure how this macro is going to unfold. That's why I think we're keeping our cards kind of close to the vest here, coming out with a good forecast in Q1, and we'll see how the rest of the year unfolds.

Just polling investor appetite, I don't think there's a lot of appetite for something like the go-go days of 2017-2018 where you had multiple CapEx increases in a year and mid-double-digit production growth. We're going to keep it steady and capital-efficient, and I think that's what we put out there today and kind of take this macro kind of quarter by quarter.

Got it. Thanks, Kaes.

That's helpful. Then a follow-up for me would just be, is there any update around your surface position in light of maybe new market entry in that regard?

Curious if there's any update on the conversations you're having there. Thanks, guys.

Kaes alluded to it earlier as it relates to our power project, but we're still making pretty meaningful progress with our partners here and really view this power and data center opportunity as something that has a unique opportunity for us to use our natural gas in-basin at advantaged pricing. I think once we do get a project finalized, we'll be able to talk about it in more detail, but it continues to move forward.

Got it. That's helpful.

Thanks, guys.

good morning, Kaes, to you and your team there. I'd like to go back to I think the big question this morning of the acceleration of CapEx.

Can you give us kind of an inside baseball account of how you came to that decision and I can imagine it could be the case that your board left you with a certain amount of latitude. Or alternatively, is this the kind of thing where you arranged in short order maybe a telephonic or Zoom board meeting, and you just had a quick 30-minute meeting where you made the case and then acted on it.

I'm not so much interested in the kind of autopsy of your decision, but I'm more trying to get some insight into how the dynamics work for you guys as a fast mover in response in this volatile oil tape.

That's actually a good question. There's a couple things I'd say.

I'd say our board is a very nimble board for its size, right? We have 13 board members, but they are very responsive and they move relatively quickly, particularly when the decision is very obvious.

Second, I would say just some inside baseball, I got some advice from Jamie Dimon last year, which was, "Communicate with your board often and tell them everything." We just decided to overcommunicate with our board through this crisis.

Obviously, the crisis kicked off just a week after earnings, right? We had set the budget.

I think we sent three or four notes to the board in March just to update them on how we're thinking, and then it was a simple meeting to get together ahead of earnings to make this decision. I think the board had resounding support for this plan.

That's a little inside baseball how Diamondback works with our board.

Great. That's all for me.

Thanks, Kaes.

Thanks, Charles.

Hey, everybody. There's been some discussion of some pretty weak Waha prices in 2Q.

Wanted to get a sense whether or not you think that could be some short-term negative volume impact for the company. Are there some wells that have maybe a lower oil cut where you say, "Hey, maybe it's worth shutting some of those wells in for a little period of time here," just given how bad the gas price is, or just any color kind of around that dynamic and how you're thinking about it would be helpful.

Listen, at these NGL prices, we kind of think -$3 Waha basically cuts out the value of your NGLs. Above that or worse than that, -$4, -$5, -$6, you start to eat into the value of your oil production.

Now, oil's $100 a barrel, not $60, it's a little different math on should you shut in oil barrels because of Waha pricing. I do think that that's happening throughout the basin.

I think in an area like New Mexico with tighter restrictions on midstream development and flaring, that's probably a question for others. It's probably something that's happening.

For us, if we go back to October of last year, Waha blew out due to some maintenance issues, we shut in 2,000 or 3,000 barrels a day of production for a period of time, and then Waha came back and we brought that production back. I would bet we're probably around somewhere in that range today with Waha as weak as it is, but it's not impeding new development, particularly with the amount of hedges that we have on the financial side.

That's helpful. Sounds like you still have flow assurance, and it's more of an economic decision for the company.

That's right. Every molecule we've produced has moved, it's just moving at a negative price.

Okay. Then just wanted to follow up a little bit on what you all said on the growth part of it.

Obviously, your guidance for the year on oil, it's a little bit open-ended with a 520,000-plus. Clearly, you guys did the 520 in 1Q, looks like your guide's telling us we're getting 520 again.

You did talk about a little growth, if the oil environment holds here, people should be thinking about probably that plus and a little bit of growth here in the second half of the year? Is that kind of a fair way to look at it?

I think that's fair. Again, we're going to take it quarter by quarter.

I think this is a year where if we're outperforming the plan, we're going to hold activity and produce more oil into a market that needs it.

Makes perfect sense. Thank you.

Thanks, Leo.

Hey, thanks, fellas. I appreciate you having me on.

Guys, I wonder if I could come back to one of the comments earlier about the balance sheet. Jere, is it inconceivable that when we look out with no variable dividend taken out of the capital returns structure, that your net debt balance sheet could basically go to zero over the next 2 or 3 years?

Would you allow it to go to that level?

Doug, listen, that would be a good problem to have. I think generally we're going to be transferring a lot of value from the debt side of the NAV to the equity side over this quarter and who knows what happens after this.

As we've kind of said, we're going to take this quarter by quarter. We're early into this oil price environment.

Should it persist and the stock continue to go up, then we'll allocate less capital to buybacks and continue to put cash on the balance sheet. At the end of the day, we know this is a cyclical business, and in this highly cyclical business, we want to have the ability to pounce on opportunities when the cycle turns.

Those opportunities could be M&A, they could be buying back a ton of stock, it could be leaning on your balance sheet to buy back stock. I think the key term here is flexibility, but also long-term value creation.

Because at the end of the day, we want to get to zero debt, we want to get to one share outstanding, and it's going to be a race between those two with free cash generation over the coming decades.

I appreciate that. My follow-up, fellas, is not so much about your growth than what you're seeing from your non-operated positions.

I guess it might be a Viper question, but obviously we've seen some privates add rigs, and there's a lot of non-op working interest that basically can influence what happens to the growth story for you guys on a consolidated basis. How would you characterize that?

What are you seeing on your non-op, I guess requests for activity?

Diamondback carries very little non-op, but Viper obviously sees half the wells in the basin around numbers. I think we'll talk about on the Viper call, but early signs are nothing major on permitting, but the discussions that we're hearing in the field and in Midland are that rigs are getting picked up on the private side.

I think if we had to give a rig count forecast for the Permian today, by the end of the year, we're probably up 25, 30 rigs from where we are today.

That's helpful. Thanks, fellas.

Thanks, Doug.

thanks, guys. Kaes, I know everything's pretty fluid right now and you're kind of quarter by quarter, but you have to be thinking about a market that's significantly changed in the last 60 days and oil price will be structurally higher.

Understanding you've raised your guidance for this year, but how are you thinking about the out-years and how you want to set up the company to either continue to grow at this mid-single-digit rate or not? '27, '28, '29, not looking for guidance, but just kind of how your longer-term thinking is evolving.

Obviously we have to think about the long term, and I do think if we are in a higher-for-longer world, then an advantaged company with advantaged inventory like Diamondback should answer the call for production growth in that higher-for-longer world. We don't live in a vacuum that's static, but if we did, I think some sort of organic growth in the story, moving this business from a steady-state kind of bond-like free cash generator to a free cash flow per share growth generator over the next few years into the decade, so long as it maintains capital efficiency, I think that's something that investors would support.

Again, it's early. We'll see what the macro holds, but certainly it feels like the world changed a lot since our last conference call.

No, absolutely, that's very helpful. Then as you think about your inventory depth versus your peers, you guys are obviously in a leading position, but what would you consider, and how would you kind of phrase it, your position versus probably the peers in the market today given the huge longevity we think you have?

Listen, we're very fortunate, we have an incredible inventory quality and duration. I'll say that, within Diamondback, we're always looking for that next stick, right, whether it's organic generation in Barnett development, Upper Sprayberry development over the last few years, or inorganic.

This machine is built to do significant transactions like Endeavor, but also, I don't want one unit in the Midland Basin trading hands without Diamondback knowing that that unit could be in our hands. We're set up to do the sub-$20 million deals, and the teams actually do a really good job at those, but also not so small that we're not in the picture for every other deal that transacts in the basin.

Got it. Thanks, Kaes.

Thank you.

Thank you, everybody, for your interest. We're always available to answer any questions.

Just reach out to the number or email on the notices.