FANG - Earnings call transcript Q1 2021 | Diamondback Energy, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Diamondback Energy First Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker, Adam Lawlis, Vice President of Investor Relations. Please go ahead.

Adam Lawlis

Thank you, Phyllis. to First welcome Call. XXXX and morning Diamondback Quarter Energy's Conference Good

Diamondback Stice, our reference CFO. found can Representing will today, on are updated website. During we which an call Van't and CEO; Kaes investor presentation, Diamondback's today Hof, Travis be

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

can will certain Travis earnings reference to our we I'll reconciliations release non-GAAP issued addition, yesterday with turn make to found GAAP over be the call afternoon. in The In measures now Stice. measures. the appropriate

Travis Stice

effectively you, Thank successful able first to earnings near while first are Operationally, closed were very lows. progressing. with costs keeping we the generated a navigate call. all in welcome cylinders. had both momentum of the all-time XXXX. in Diamondback continuing off We Diamondback's acquisitions Adam, hitting and on and build how Guidon half QEP back We integration quarter the quarter, cash quarter first operating and once-in-a-generation efforts are a the winter and storm are the costs pleased to well to

By able X Diamondback announced. asset debt manner, advantage divestitures highlighted such and We opportunistic noncore to and a we for anticipate of gross deals reduction. A&D returns the generate excess noncore attractive sales positions a selling strong from shareholders. to announced these proceeds of the these million ahead We the our we acreage $XXX and in proceeds market cost take using $XX combined of noncore for cash schedule in of timely were annual when targets are asset Yesterday, million. expected we synergy achieving were also million to of savings $XX accelerate

from As primarily of purposely we global demand oil oil recovery of pandemic, through the depths even market, signs of from still actions the quarter, discussed the OPEC+. the is last though being withheld has shown supply

As continue and for oil we quarterly and do Due well flat Guidon our to through as pro the growth quarter hold will and need announced we fourth have not production a first forma instituted acquisitions to of production from timing resulting we divestitures, capital the believe QEP the result, XXXX guidance as the XXXX. the production time. complexity

$XXX of months capital spending to to quarter and day. For a from XXX,XXX full and of the asset contribution sales. noncore in range from production approximately This Permian accounts X XXX,XXX the asset anticipate announced quarter, $XXX million for second of producing Williston million barrels we oil QEP's a production

one due are extended of million annual year, of executed our million expense bonds at divestiture, March, profile a year full free million successful to and and free cash this of in X the $XXX all tender Today, $XX This to and by QEP of refinancing maturity offer that years. and approximately of the marking XX%. improve. cash the we significant free due XXXX. at in average generate of a generation. year of cash Looking million approximately flow At existing In $XXX debt $XXX in of we quarter, first refinancing flow $X.X million pre-dividend Williston continues maturities expect cash reinvestment and the for equates In strip Diamondback's the X interest callable of our later debt consecutive XXXX current accounting XXXX, pricing billion end $XXX we bonds. have due savings this quarter free to ratio below we third year: before flow, generated this

absolute to expect to from of well and retire reducing cash generated X these balance as asset our sheet. strengthening our use load tranches hand sales bonds, flow internally proceeds cash on debt from as further We our

to XXXX the level on and at of make flared the acquired to our responsibility on we committed our by as work our environmental We GHG XX% are reducing XXXX. production first with from of initiatives. in move X.XX% from ESG have on decrease levels We've a our COX do recently quarter, we highest also turning of the intensity gross to reduce least continue by positions operating still legacy our importance And to the X over capital as intensity to Scope tank Flaring frame. methane devices is emissions. of batteries the biggest older with ESG. to while same retrofit we progress Now significant XX% gas first our XX% our spending pneumatic We our account In pneumatics quarter, XX% progress for emissions. of time recognize driver our gas air over by methane the our XXXX. continued acreage, of with we happy

signed leaks, maintenance for our our We frequently a quarterly conduct to equipment improving flyovers check practices. also of of to more batteries all contract tank

Net Zero hydrocarbon emissions means to January forward. XXXX X Diamondback initiative anticipated Scope every have X, X Now produced Our from by is carbon which is molecule net also underway,

purchased Scope in will carbon fast productive. busy in generated and and strategy offset the We prudent remaining return here flow in maintenance a still to assets. reduce Tier capital To plan the follower hold to already substantial free our to operating the these and inventory we States emissions in first shareholders directly had investing X we remains sustainable future more and was while, use debt While ultimately projects emissions. quarter flat credits income-generating and remaining flow, and cash costs we added finish, offset a carbon footprint, production our cash same: kept and debt. cash noncore to capital United the All operate down, extended manner, spend free divested a maturities, X be to recognize have that

please comments questions. line complete, the for these With operator, open

Operator

[Operator Instructions].

with of Your first the Neal Dingmann Securities. question comes from Truist line

Neal Dingmann

team, growth and I what bit speaking Quite, any does macro would a the soon. the that really about world anytime emphatic more you not need call oil

all really pace this. to larger of whether believe operational if is optimal you much and in is Do as pertaining this cash question your frac program multi-rig areas more than plan have business my So a impact you several lesser cost? had at your your on

Travis Stice

Sure.

were any quarter, that think look at mean, if look, pressure we the cash that drilling we X or this been our know, pretty XXXX I Neal, you Neal, or frac cost I if that XX printed translated And there's was dramatically with would in just into slippage any were rolling not with don't leakage rate. -- cost actually execution that say has cases, I that year. I've you associated -- before you spreads. at rigs activity into and, lower pandemic the pleased been global last some was reduced, X a That hit, pace. pace as really running quick

year, in Even to to both XX frac activity entered into be rig seem rigs we've spreads as and we and pretty with X efficient this really frontier frac at a X spreads.

if -- numbers And numbers a will the think also, you be keep that certainly, not of we in being I or look indicator really print, first for think efficient. that I So quarter good the strong. watching fourth we're whether the our quarter just

Neal Dingmann

agree. I agree. I No,

you assets? all just Okay. could wondering, specifically, as books, the see comment still rank And and QEP inventory versus do how that existing? or all you if surprised sort different locations? Guidon you you then many are anything or that's from you now believe that quality in I'm there's Maybe Kaes of the And

Travis Stice

all. at changed hasn't narrative that Certainly, Yes.

with QEP gotten probably it's drilling quite some first our water-based April a efficient looking water-based of time the fact, us In is QEP better. mud. and was just little I I'll the QEP's announcement Diamondback were And really tell report at And update. they on And morning, our again, we've second call use we're adopted during team drilling you, acquisition at fluids very that or helping Operationally, our February it this honestly, complementary bit with. things. doing now, and and always well

mud. really, the efficiency And really water-based so with far, using impressed improved

stairstep thought a the was efficient direction. already So that's nice looks Diamondback really to a legacy what to a add team. operations of in been a This bit be little right I

Operator

line question comes of the JPMorgan. Jayaram with Your Arun from next

Arun Jayaram

other on Travis, side this have get the the room data I I the the wanted of shoe you time foot other marketing to with the for Diamondback sale. on assets. guess Bakken your guys is thoughts. Obviously,

to Vitol. activity? sold And wanted And Permian more of I noncore of, assets evaluate is and Diamondback A&D this I sense a Permian do You occurring trades seen the of some see as your guess We've market your will what well. these DoublePoint you that of trades, private-to-public year? large A&D sense criteria get to very use What couple today?

Travis Stice

divestiture Bakken the Certainly, really we interest in pleased the with were process.

deals were Now that commodity granted, previously price in of Bakken and at we wind I put some think some beneficiaries the our run-up the backs. announced

particularly were free we capital the that of referenced, lot in greater. for looking a interest But in you to trades very I piece the divestitures, basis announced than look -- pretty to Diamondback basis, PDP-focused per that right is anyway. top some quality to still on in can now. narrow we So still flow, specific of of what a it's that the A&D on we're be particularly of that. those of as pretty the remain frothy, of continue opportunity But for demonstrate type Diamondback's to per be it's our have while the little ones going think seems go-forward resolute of a on accretive got we're and a quartile are think free that we've that being trades cash long to the that activity a at of coiled some And share return that like accelerating But the return on fewer Basin. free cash basis. when flow, strategy I The Permian it's fit for got assets the prices and flow. accretive combination, as -- And in that the look on were meet recently you got larger probably return -- is to that to internal accelerate might objectives cash set share

Kaes Van’t Hof

our importantly, sense that there the that what bottom existing We capital of perspective. But be returns moved look has about or this has in we makes a terms metrics, an be that in can't right? for think only from when industry inventory while inventory we doesn't and competes towards the at acquisition half to just right sense most make numbers quartile -- away, sticking to us financial inventory bottom of

Arun Jayaram

activity. to inventory by I a just know looks inventory in of over the you A&D wider kind And that on Basin, love give the for the of using It terms updated I'd a inventory of kind and key your your count perhaps -- increased bit Midland us Kaes, the little the here. sense. some updated the But that of thoughts thoughts the you locations. acquired increased a few Makes spacing perhaps, sense some lateral bit just net focusing on of changes do little snapshots, like from declines Delaware on and assets QEP Guidon? get reflect XXX disclosure, quite lengths some the are takeaways. I

Kaes Van’t Hof

We full since beginning right. XXXX. update That's inventory a the hadn't Yes. posted of

So should time first of lot I'd our the update bit can I deals. as well mean, a kind we've zone as ever generally, this which X post still I Basin. think was spacing, is say, of in of And offset zones of our handle realized the development best looking development, the we the the a is Midland particularly at kind as XXX-foot we be spend kind that But as secondary wider. maybe gotten. spaced tight focus

so reflected in that numbers inventory we've And out. that's put

So at are spaced are the getting do, secondary still codeveloped a which X think we to section zone, X than that which the with is is kind best thing zones. to of to wells X, X getting the right primary zones rather

Operator

Goldman of with line Your Sachs. question the from next comes Neil Mehta

Neil Mehta

was some the capital around that this cash script like a also EBITDA shareholders. at flow price before $XX your billion in you here, at perspective dividend and show this you if of around slides excess of perspective look on environment. this type look north curious of returning you this the of in all proceeds driver of then are could But framework free year. burdened this the I your Taking flow use in what sales, hedges. reference free to to asset provide would WTI by year, of a some your open $X.X And cash of

Kaes Van’t Hof

question, million good the Neil. on strip about a of $XXX sitting $XXX of the Yes. sheet. losses That's We're or hedge the for balance year probably rest today million at for

year. So this cash that's the free drag on

where clean to think unhedged number that fortunate can it's we future that cash losing hold on think hedges have on I I to were the pretty a the a what we But free but at back compared an overall, write look if you we to ago, checks. that money unfortunate might you basis. add are year get the number, do

Neil Mehta

think you a that buyback, think That's early different framework great. disposal. at are ties to target, you variable that about leverage can the the your there You Talk it's right? about options could And follow-up you're lot that dividend. a options that quickly can that levels through your targeting. your just until commit about into a how about too hit to walk get around point, And different you capital Recognizing us to returns. debt then of the are at

Travis Stice

Sure, Yes. Neil.

for to us that about that return industry we the I deploy. recouping investors to think money for our it's asked a continue they've good talk

that's targets and at accelerate certain the those you're announcements we can which for to good we out And our about debt that targets. yesterday think I time industry. hit these laid reaching right simply frame debt

work put formula I in think in debt and could is going next our what callable start change. long think I a place, for end step returns that interest to reduction favorable to that business, I a in of going as or But know And in year to capital doesn't capital industry to put our commodity-based and that we talking and to more the allocation lot a change. was us out is formulas how seen also the business by a go go. is. billion has of as world about a the that laying or as $X.X this world of allocation simple our formula shareholders is you industry our wish going does position the

The continue the the trying of of around the is the variable formula level, know a leery delivery we've the Board to, always importantly, is dividend to on lean our most are clear. as change. strategy into to buybacks, little like I'm promise at part going when options a share is future dividend. world So committed discussions to and we base But always very

and a our able accelerate debt pleased So deliver promises with positive very quarters to try number. to we're -- very making of performance us. multiple And we're divestiture targets our that to avoid in going continue of to reduction we're on kind through front

Operator

Leggate Your next question comes America. with from the line Bank of of Doug

Doug Leggate

that after the breakeven your potentially suggested Travis, deal, production sustain QEP would to lower. your you move

of could around wonder Just if comments your you you where give out. to night an update in as that light last settling see synergies

Travis Stice

were certainly, synergies stem refinancing debt. from what Well, promised locked the of the QEP's that the in of we excess

that to this talked think and The down, rate doing of to cost. We breakeven we a time. Guidon higher going announcement cash is both specifics $XX QEP. has synergy acquisition come capital as our didn't I projects with our give higher much even has cost acquired while of know lowering cost acreage, describe and And translate to we do million. do return the into rigs at around breakeven at moving allocation how can't flow-generating I a lower cents you formulaically breakeven dollars that newly

Doug Leggate

to to if maybe Rattler that. drop opportunities to you've as thinking Okay. got Viper. infrastructure or of at by is at can related QEP update some I or just of off-line. seems the to but dropping and the you're and It guess deal the about any royalty you we'll related I'm to look take for down $X, comments some My us about won time how opportunity to you some follow-up $X assets the maybe that share also wondering

Kaes Van’t Hof

not Permian drop landowners Viper company looking around a their been in Diamondback and had sell side the buying that a minerals, a that for sister and to QEP there's Yes. at down ways in a lot a not they, Guidon, minerals. and the today. have to like Guidon Viper long is on on QEP different time was -- lot large the Doug, of

on side, there Rattler a been drop the sourcing and So a And minerals QEP level Guidon on certainly we've down. under on QEP, won't really but Viper at vocal Viper that job QEP good we're pretty side, be did then infrastructure. the acreage, the

learned in on going we've those program down. who's probably quarters from but And and eventually, side that take a I think to them, should significantly. Midland think to I be recycling Rattler, Basin boost going more drop to the all worked recycling eventually, lot it assets few that our then on long for us -- it's a get

Operator

question of next from comes the Your Gail Stephens. with line Nicholson

Gail Nicholson

new that any prove beneficial Every you for quarter, Where could improvements? think to that curve? trying do achieved. you learning efficiency you future in technologies gains are And are be are

Kaes Van’t Hof

be to to add mean, we the recently in in the the QEP best, need want the kind Travis the of call, a lot I brought team just a then we QEP. fold, from we from we Energen fold, but the we just think learned in Gail, earlier just when we lot I Energen, the said Yes. team. don't it like learn and learned from to And people that bringing

was drilling time. drill-out mud that as side, some some on on larger water-based Travis are the mentioning, saving us So techniques pads

team can cement, we've the cementing that think efficiencies, drill getting on the of reduces and I on positive. increases ahead On is time of batch which the which is which the early program time, saves and location side, side and we is I all think this learned us in the kind XXXX year, why batch drilling Danny's

Travis Stice

this this and highlighted, time, let's at on brought as announcement proud for what's already they're team this but checking to when phrase at team that think is Once And I used of we've And I long, the the positive just -- figure inside the making another just egos example do again, the Energen fold the the our your door QEP operations is really door, for they've we Kaes of the shareholders. And egos influence. really board. Energen checked to our at really very the back try done so. best organization. Gail, out had not that way very the we a

Gail Nicholson

then circling And the to back inventory.

Do With primary the see capital the assuming we forward? future? in foreseeable the are improvement in 'XX for in secondary the allocation be that Or uptick the target oil should zones a potential still zone prices,

Kaes Van’t Hof

get and I think on zones, particularly just Midland generally, Basin, the wider. zones we're focused between very a co-development secondary little the in spaced

Gail, and oil spacing at lot of per a outweighs kind EUR NPV inventory and think, And the various prices any we that of I to to benefit going tighter. on found work did IRR foot. we benefit from

no you for So good. too at were one mad wells drilling got that

I to that much strategy, acreage so we're got deals. with think the And QEP Guidon stick with going we with how particularly undeveloped and

Operator

Your from David Cowen. comes next Deckelbaum line the question of with

David Deckelbaum

the curious, now. QEP Just about weeks with closed, only deal guess, I ago X

assets, we versus when point a about have your or county As see development from you're like you're seeing that either we 'XX be a you of so shift areas surprised think what would those could learning might pre-deal that thinking on other line today about activity with decision looks? start how plans towards might where some more we

Kaes Van’t Hof

be of think won't in start production of kind Yes. but you terms 'XX, wells QX terms we're going to of you the that drilling I David, that in 'XX. early it see until see now, to

to efficient rigs development going Central, that now. Robertson South County, big Ranch we direction. headed Rigs area pads get Ranch/Sale as be there and the many we're think trying in Martin I in can are to as right some

done they've team it targets that lot when County, shallower a the our think the the some part line like with review I in QEP in line kind we and in some things we northern done zones of that like, technical Martin team, the of we've and area. county to county of comes

So the Robertson in you'll Lower the more the Wolfcamp A, area then Dean, county Middle in I deeper Wolfcamp line Spraberry, Spraberry and of think Ranch see the of LS work area. more and

David Deckelbaum

just year. this could capital one on ask I the program if And just that. Appreciate

year? like a each going at rate up guys $XXX guess implying that Just we curious, cost end of stairstep program. and it Del, we're seems Because your half-weighted as year, sustaining about quarterly the the like thinking be Midland $XXX Because are into into Does you I the I look should now sort today? on run $XXX expect to like rest in back of that to of the next of certainly quarter relative where going year. guidance to in $XXX footage the to the the

Kaes Van’t Hof

Yes. That's a good question well. as

look really Basin which at think I'll But below We the was Midland million midpoint. a well. well the sample the I put guide, actually think a we low QX in out the well Delaware foot, as of as end of take of just I million costs at in CapEx around costs implying first. think, good the $XXX a was quarter deck. lower put was and did a operationally, little QX, you size $XXX $XXX lot

to to billion Guidon slightly pro top side. back forma So pretty capital and production of start of half But spend Diamondback the will the going vocal middle flat a dollars. that our some quarters grow I true couple the of good half. But non-op infrastructure, throughout environmental, of that CapEx going off QEP we're rather result stuff, and $X the up year. year, second in imply that, certainly would first would half to we're of the ancillary and coming of cut conservatism to activity, a on up more on midstream, the and in than the is spend yes, production year. there's We've say been And in the keep bit the we will pick very in

Operator

line question Stifel. from Derrick comes the with Whitfield of next Your

Derrick Whitfield

improve slightly direction. smaller your a it seller's And transaction further on would to a A&D Congrats if pursue transactions. but the to larger taking tilt following different In sense or for environment did to that earlier on view, so, your Perhaps Travis make Kaes, question, balance divestitures up the market? your it sheet?

Kaes Van’t Hof

for the -- process back has process we in and that, market that's the New minds, of conducive thought have improved we kicked Upton not dramatically, were sale been cash a Certainly, the to our non-op off the good question. candidates that the and years, flow. Mexico That's XX but last months County why selling

Derrick, a think have to the to distributing is tension private their lot buying assets a competitive PDP-heavy cash lot process. in when everyone's has shareholders. that moved that you And the trend, of doing LPs of capital towards or I and that, flow their

so And that that in we're else us competitive happy. competitive I candidate assets, on to has a real the allowed bids PDP-heavy and pretty pretty I we're market But now for anything than get Permian for market. undeveloped think and because value, X that's think is looking us, sale to the right all something less that's not a sell

Derrick Whitfield

my That yesterday. Travis, up to for makes follow-up, I'd sense. a from like pick And comment on my discussion

As your you emissions, to plans industry the longer could projects Diamondback? to term discussion how Scope your X shape speak more invest since that QX in you will at income-generating offset plan and directly of might nature guys progress take that

Travis Stice

Yes.

and about emerging with Specifically, that. for talked technology CCUS trends we Diamondback,

But do or those type figure months -- quarters is to those -- sure. need projects. -- in analogy out ourselves technologies. emerging technology of technologies as participated experts abreast are to I a to would try we taking That subject to an Diamondback don't emerging think you But industry for is and tact soonest. very And extremely experts too, those they're anticipate similar peers, to do a are it. followers well, be there's shareholders try those my see projects, there when expect subject fast pipe. on -- I to Rattler things I We the we're are that and talk lean with for CCUS into experts new emerging, good that to that And matter matter to trend think alongside how aligning it's stay away. our they're needs income-generating be industry and become what it's trying technology long-haul not

Operator

Your Energy from the comes next with Advisors. David of line Heikkinen question Heikkinen

David Heikkinen

on or your drop-down of assets a and that? QEP thoughts QEP timing Midstream into Rattler of Any formerly assets

Kaes Van’t Hof

schedule. it's on the David, certainly Yes.

refinancing and getting the is the doing activity but priority, getting sold The is done other their Bakken team work. took

very think water also and reuse as to half and large the to it across want County, of that the right the build be drop-down, get and recycling you to going store, I we're out a think we in about have block able to so produce Martin engineering Midland infrastructure Basin. across block

on it's I of think but docket. a quarters it's couple the away, So certainly,

Operator

Mariani from KeyBanc. with Your next question Leo of comes the line

Leo Mariani

comments wanted little follow on your to up synergies. around bit I a

maybe see those earnings more numbers you will a guys specifically, come And as those little the to in synergies talked $XX about these year? maybe you expectations come you pointed ahead split. of operational you're provide to show from? half the talk Clearly, and You Perhaps little to just up the out Are going as debt of Do when report? operational synergies. G&A can soon kind second $XX refinance more of second of million. bit we quarter that million the the where a and the of color to on bit the you could start

Kaes Van’t Hof

a operator deal think interest. Yes. QEP low-cost Leo, Diamondback. just the G&A we predicated primarily I and was on like

the QX. today. happened wells out obviously, come to But and has stuff QX didn't foot X,XXX start cheaper." drill to and we G&A And interest Energen, in we're will unlike show going say, a So $XXX the "Hey,

spending there's when think to probably on capital able I extra and an upside -- without be the a could Rattler, that some being add systems midstream of at to upside front connect and capacity all operational if our drop-down surprise. when happens

Travis Stice

as lower of other directly using and cementing just synergies practices now mud, well. to for dollars foot, talked big that's water-based And some QEP adopting what that per direct the we on -- drill-out, from the rigs all about already are call also, is Leo, this translate those Diamondback operational, learnings, those

Leo Mariani

certainly quarter year full quarter. first on to help the guidance Okay. your That's helpful. a, great storm fact LOE in that side, despite your cost but was notice first LOE just quarter. to XXX-year below control that in Certainly we And just the spoke I the couldn't it, guys first the you had guess call

bit an and feel full a guys job year? the doing Or below you're uptick So up guys to you looks in like second like the come -- the LOE in certainly, a to you are you good going Do guidance little here see executing set you guys maybe in of kind quarter? effect QEP once are that take the assets for Guidon field.

Daniel Wesson

QEP lifting The first the Danny. in and year some We increase surprising we've little the that bit a we little what and quarter to saw them a we throughout lifting seen assets. quarter, it's we And Guidon we'll expect like we the first of from integrated, storm. of contracts right their at Diamondback. have kind is LOE traditionally that low get higher during things throughout than assets we'll Leo, and from that as Guidon from of market. cost update other about more number do going But some cost electrical the as the now. where certainly settle Mostly see bit the the assets benefits learn the guide end

Operator

Tullis Capital next Your the One Securities. of with Richard from question comes line

Richard Tullis

fast Just one the comments in investment of following the about mentioned, question And in Travis, opening the for being me, ESG you side. follower earlier kind discussion. on your up

the investment a continue free cash type or or prices flow, given CCUS it develop large X where So How entities in next of looks FANG commodity you certainly and of over X, the say, generated story part into, could strong projects like are. renewables years? that

Travis Stice

don't I'm to but our of comfortable quite going is. the is like what because -- Richard. emerging percentage of answer And capital too much be to don't still know of fair terms Yes. that communicating development. number look that That's what allocated form I I know in -- yet just is that, There's know question, in it's new that's going that towards what we a technology yet. But honestly, I not it's important,

Kaes Van’t Hof

Yes. sourcing And if less have a Scope that tank this put you on move to into renewable XXX important, line we and most I emissions our a in X electricity new year So We're or replace through X moving think think is $XX right? to side field battery and down, generators going going the through I get I towards go some invest Richard, other what's power. side. to we're offset mean is numbers today, incentive how that we're it, sources. need going million out year then to the emissions number Scope down to that the

Travis clean fast dollars in certainly the be to follower of field in intensity we what can we're reduce a control. up be side, a we're while our and says the terms on So going on going to to spending investment leader

Operator

Your next line the of Johnson question comes from Meade Charles Rice. with

Charles Meade

a A one. open-ended maybe for and then more quick one me

is billion guys You sold or but CapEx assets, to -- you've close $X to worth your sell guidance agreed unchanged. of

there had CapEx going on assets some So you does on? reallocation Or you're minimis that divesting? that that de is mean essentially those

Kaes Van’t Hof

good did just does capital these really was noncore, I'd It X key is they non-op acreage assets your that asset No. the were The an say to the asset of Mexico Charles. and some not. not assets, producer. we're acreage. means sale rest But with compete New for of a

shareholders. cash we that ranking, going stuff we're reinvest and down generate in this and to to to So to at it return sold sits debt free inventory time pay lower the

Charles Meade

then comments And in back to remarks. your it. Travis, Got prepared could I if go

until because how but some need supply looking want spike by little artificially inventories, market don't way think if I in maybe still before better, in And we're in are the OPEC+. off-line, has point, global oil your looking to thinking you U.S. also of wait we're a mentioned bit at being that to withheld more of things, a I that OPEC+ scenario. you at at X inventories wait looking long. probably barrels inventories understand -- my and You've looking from oil

can binary it's would thing from about wait be? me of until your threshold maybe thresholds a series looks X. so that tell spare not or view? it any But of point to have OPEC And how what is And you supply you

Travis Stice

yes wish I that I of most were decisions to answer binary, had questions, no Certainly, this the of is those. or not one of Yes. type and

know talking by Just impacted in having effectively oil you negatively in perspective, now, from backdrop fledgling too recovery, signal. of to OPEC+ and There's inventories. macro outbreak the it's just the right a it's an opinion, which demand might market no unfortunate outcome controlling clear reduced early still our India, about -- still against it's the honestly, And a is that be be growth. quite still of

X.X to or answer that, that's need retailed, either. OPEC+ a I coming on. assimilate million likely to know the don't X? back day get being With X got and we million do production right our to still We Now barrels of

evolving seen there's that an question. it's us it's pertains you've year. it But unlikely to as to for and no Diamondback, this signals those signal So volumes, clear grow any of

Operator

[Operator Instructions].

Your next question with comes from the line Scotiabank. of Paul Cheng

Paul Cheng

you or term, Diamondback? debt right for that year, this Longer capital for near-term level the billion. what structure curious the be will debt the just Travis, reduction talked $X.X about

Travis Stice

Yes.

before revolving certainly well get almost we QEP we to there. reduced our as to but evolving were the Guidon well. or I -- debt think were But that's an absolute a wanted as where answer which and acquisitions, certainly, question the

leverage had of of in terms sooner Xx than target, think oil of the IPO, leverage function course, price. has leverage function we'll the us there targets, of Board But since later. and now a a rather be mandate EBITDA, is I below

and X longer-term encouraged going certainly I rate get it's or there, think strategy. but with for the run leverage us multiple looks the plan our outlook quarters retirement probably for below, take forward and is way to debt our to

Paul Cheng

of think balance paper one best sector not for that like of a highly and hedging curious using Just the volatile that's actually is gas. thought I fortress-like a program, oil The sheet. hedge but because market in school

downturn? the away will to to on yourself that have from that to get and to the So so far get more low much you be be really Diamondback the a down drive that can next also interested or program you and position -- consider flexibility net opportunity and debt stronger when totally basis hedging level

Kaes Van’t Hof

answer, like natural hedge, I still did good protection I downturn, know protected. like pretty that's of answer. hedge south insurance or an you're put XXXX, for saying, go the was either/or really also some of that policy big things I I an is at something Travis permanent XXs Paul, And think high a Yes. WTI think and mean, turn a leverage right? if like don't it's if in I they think you sort next but need

a So combination. I think it's

demanding will with part hedges story, growing them. think I investors a of be be particularly returned a and still capital to dividend our

the discussion. You do again, buy paper in might are that cheap. The market, puts But wire that to only pretty kind a can you protect flow. way it's you or I have think, of and collar an cash

Paul Cheng

your with capital assets have an independent yield entity drop X% there, does structure a the gain it anything I really really from than it with benefit does dividend down there? efficiency in for And mean it more standpoint? so Rattler, strategically, you keep as and to

Kaes Van’t Hof

the in we business. XX% had for everything business that sold we of Well,

Diamondback So IPO a shareholders, of the Rattler was certainly for think I win.

the best I look have think of and what's the to the consistently for for the in thing we subsidiaries shareholders subsidiaries. shareholders at what's best of the thing the lens Diamondback

Fortunately, traded of we've than interest. they conflicts without vehicles multiples higher parent. created major these at traditionally, the And

they've been, add. to But yes, investments. those -- I'd we those say, what So value about got successful think what

stock I those I think we'll that. value. shareholders still in two acquisitive now, they're for of companies. have if of the But and sitting lot an we're a added environment, acquiring Diamondback value And right less, we they've to in reassess guess, strategic, have

Paul Cheng

next when future for about wrong, you million be but that we you EBITDA for question the right. discuss able the months, of Can asset Okay. Final are Bakken million. to sell at me. $XXX the All should strip, that sold Bakken we're you $XXX when looking the XX Maybe the to asset? process generate

seems it X.X sell low. like you bit a to So looked for Xx turn. That

to the trying understand just process. So

Kaes Van’t Hof

an be very that capital us. competitive. from was asset going was process the getting think I to This wasn't

the towards said So call, Paul, very saying, PV-XX." that I we financial be can't reason But did lower earlier I role sell the I'm I probably for They noncore NPV matter. asset pleased in personally than sell play were be to going better still price the alone NAV with like held you we anything an acquisition we "Oh, the think vocal ago. and we a sale. in to at move for financial months received. we was when the can't of like was It the Bakken only seems a metrics think, And did industry everyone fall, PDP, looking metrics. very an in past. deem going isn't they than this why couple

Operator

the turn like to this now remarks. over would Stice, time, At I are there to back further for call questions. CEO, no Travis closing

Travis Stice

in for participating you Thank today's call. again, everyone,

have contact you If us information questions, provided. using any please the

Operator

Thank does disconnect. you. and thank you We conference. today's may conclude participating, you for now That

Diamondback Energy (FANG) 4 May 212021 Q1 Earnings call transcript