Diamondback leaning on organic growth and ‘betting on the need to refill inventories’
Diamondback Energy Inc., Midland, will lean on efficiency to slightly boost its production in the rest of 2026, chief executive officer Kaes Van't Hof told investors and analysts on Aug. 4.
Diamondback’s output has risen about 4% since the beginning of the year as the company’s teams stepped up their work on some of their drilled but uncompleted wells after the start of the Iran war. In the second quarter, oil production grew to 525,000 b/d and total production averaged nearly 1.02 million boe/d, the latter being the first time in Diamondback history that output has reached seven digits.
Van’t Hof and his team aren’t ramping capital spending, which is on pace to total $3.9 billion this year, to grow quickly from here. Instead, Van’t Hof wrote in a note to investors, they will “be on the front foot” when it comes to technical innovations that will improve oil recovery from the company’s nearly 9,000 locations on 902,000 acres in the Permian basin. The goal is to have Diamondback be a player in the push to replenish inventories that have been lost to the disruptions from the conflict in the Middle East.
“Right now, the model spits out some form of low single-digit organic growth while maintaining capital efficiency and running five frac crews consistently throughout the year,” Van’t Hof said on a conference call discussing Q2 results. “Betting on the need to refill inventories, that’s probably where our head is today. As you’ve seen in the past, Diamondback can react quickly to the positive or the negative. I think in this environment, it’s prudent to be able to do that.”
Also betting on the steady demand that will replenish inventories is Amin Nasser, president and chief executive officer of Saudi Aramco. He told investors on Aug. 4 that, even if the Strait of Hormuz were to fully reopen today, returning inventories to their pre-war levels would take 18 months of adding 2.1 million b/d to various stockpiles. This idea, Nasser added after reporting Aramco’s Q2 results, “will materially add to calls on crude oil through 2027 and likely beyond.”
Diamondback produced a net profit of $1.88 billion, up from $699 million in the same period of last year, on total revenues of $5.56 billion. The company’s teams completed 168 wells during the quarter, up from 147 in the first three months of the year, and drilled another 97.
Because of the increase in production, Van’t Hof and his team have lifted their full-year total production guidance about 3% to a little more than 1 million boe/d from 972,000 boe/d. Oil production is now expected to be about 522,000 b/d, up a tick from the previous guidance of 520,000 b/d.
Shares of Diamondback (Ticker: FANG) were down more than 3% to roughly $191.50 in midday trading Aug. 4, a day when many oil-and-gas stocks slipped on chatter around reported progress in Iran peace talks. They are still up more than 10% over the past six months, a move that has pushed the company’s market capitalization to more than $54 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.