‘If this isn’t the time to grow:’ Diamondback lifts 2026 production, capex targets
The leaders of Diamondback Energy Inc., Midland, have raised their 2026 production guidance by about 3% and added roughly $150 million to their capital spending plans to take advantage of “a legitimate supply-demand imbalance” caused by the Iran war.
In the first 3 months of this year, Diamondback produced 979,400 boe/d, of which 521,000 b/d was oil. The former number was 1.4% above the high end of the range executives led by chief executive officer Kaes Van’t Hof had outlined in late February. Oil production from the company’s more than 8,800 locations in West Texas was nearly 2% above high end of guidance.
Van’t Hof said that 520,000 b/d and change mark is “the new baseline” for production even as his teams “still have some things in our back pocket” to push that number higher if conditions warrant it.
“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,” Van’t Hof said on a May 5 conference call with analysts and investors before pointing out Diamondback’s inventory and cost structure and adding, “If this isn’t the time to grow now, then I don’t know when it is.”
To fund the additional activity, executives recalibrated the 2026 capex budget to about $3.9 billion, up from $3.6-3.9 billion. The plan, they told analysts, is to bring online some of the company’s inventory of drilled-but-uncompleted (DUC) wells this quarter before rebuilding the DUC count to about 200 by yearend.
Maintaining oil production at 521,000 b/d for the year would grow Diamondback’s output nearly 5% higher than 2025. It also would produce a windfall for the company’s coffers: Van’t Hof and his team now are forecasting Diamondback’s 2026 adjusted free cash flow will top $8.3 billion compared with the February estimate of $4.7 billion.
Van’t Hof’s commentary and Diamondback’s plans are the most aggressive so far from leaders of publicly traded exploration and production companies during the first-quarter earnings season. Executives at Chevron Corp., ConocoPhillips and ExxonMobil Corp. were more cautious after their reports last week, saying they’re not willing—or at least not yet—to significantly ramp production because of the uncertainty around the situation in the Middle East and the possible resumption of supply from Gulf nations.
Diamondback’s plans now call for the addition of 2-3 rigs that will allow the operator to ramp up Midland basin Barnett assets as well as a fifth completion crew. But Van’t Hof also told analysts his team isn’t ready to adjust its mid-cycle pricing assumptions because of the Iran war. Instead, he said, he’s more focused on positioning Diamondback as a low-cost producer with plenty of inventory because “there’s certainly a case to be made for energy security becoming a much more important thing.”
“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,” he added. “I think that means the US barrel is more important than it’s ever been.”
Shares of Diamondback (Ticker: FANG) were down about 2% to roughly $208 in early-afternoon trading May 5, when crude prices were off about 4% on the latest Iran headlines. Over the past 6 months, the shares are still up more than 50%, however, a surge that has grown Diamondback’s market value to more than $58 billion.
About the Author
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.