Diamondback dropping three rigs, takes 10% bite out of 2025 capex
The leaders of Diamondback Energy Inc., Midland, have cut back 2025 capital spending plans by $400 million, or 10% of the previous midpoint estimate, and similarly lowered the target for wells drilled and completed. The company also is dropping three of its 15 rigs.
As several other exploration and development-company executive teams have in recent days, chairman and chief executive officer Travis Stice and his team say they’re pulling back due to the combination of slowing demand, oversupply—with OPEC’s recently announced 1 million b/d production increase adding to that variable—and volatility in the energy market (OGJ Online, May 5, 2025).
“We are taking our foot off the accelerator as we approach a red light,” Stice wrote in a note to investors. “If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed.”
Stice, who is preparing to hand the chief executive role to Kaes Van’t Hof, was clear about what will constitute a green light: The price of a barrel of West Texas Intermediate, which has slid from nearly $80/bbl below $60/bbl since mid-January, must climb back to nearly $70/bbl before Diamondback will “bring some capital back.”
Making it easier to trim spending until that happens is that the price of casing, which accounts for nearly a third of Diamondback’s average $2 million in costs to drill a well. On a May 6 conference call, Van’t Hof said Diamondback’s casing cost has risen 12% in the past quarter due to tariffs and their consequences.
New 2025 targets
In this year's first quarter, Diamondback produced nearly 476,000 b/d from its operations in the Permian basin, where it is the second-larger operator. Van’t Hof told analysts that number topped 500,000 b/d thanks in part to the acquisition of assets from Double Eagle IV Midco LLC but that the company is now on pace to average a little less than 495,000 b/d this quarter and 485,000 b/d in the third quarter (OGJ Online, Feb. 18, 2025).
Executives’ full-year production guidance now sits at 480,000-495,000 b/d, down only slightly from about 500,000 b/d after the Double Eagle deal thanks to efficiency gains. At the midpoint, the operator plans to drill 410 gross wells and complete about 513 wells. In February, those targets were 460 and 575, respectively.
Capital spending for the year is now forecast to be $3.4-3.8 billion, down from $3.8-4.2 billion in February. Executives expect Diamondback’s costs per lateral foot in the Midland basin to average $550-590 this year, down from the previous estimate of $555-605.
Diamondback’s roughly 10% cut to its previous capex and well count looks to be larger than the moves made by some of its peers. On the Apr. 30 earnings conference call of equipment provider Nabors Industries Ltd., chairman, president, and chief executive officer, Tony Petrello, said his team’s recent survey of 14 operators in the Lower 48 showed that those companies planned to reduce their rig count by 4%. Larger operators, Petrello added, were working on plans that would trim their rig count 7% by year’s end.
For the first quarter, Diamondback’s net profit was nearly $1.5 billion, up from $809 million early last year, on revenues of $4.05 billion, which were up from $2.23 billion year over year.
Shares of Diamondback (Ticker: FANG) were changing hands right around $133 in midday trading May 6 and were flat from the previous day’s close. Over the past six months, they have lost more than 25% of their value, which has cut the company’s market capitalization to about $39.1 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.