Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Diamondback Energy Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Adam Lawlis, VP of Investor Relations. Adam, go ahead.

Adam Lawlis

Eric. you, Thank welcome call. and Energy's quarter fourth Good to conference XXXX morning, Diamondback

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

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

certain GAAP release the In measures. non-GAAP addition, afternoon. we measures be earnings our Reconciliation appropriate will issued in yesterday found to reference can of make

over the Stice. I'll call now to Travis turn

Travis Stice

executed another of accelerated and will XXXX strong Thank for to generated we Diamondback. year you, forward earnings plan proud capital flow. quarter Adam, record successfully for to able were company. believe call. the that our look what fourth and and cash be to I'm year great return I Diamondback's of on very capital all another was welcome We accomplish our program,

XXXX. at by as right day, Midland when X% the our year, well the which oil barrels exceeding Looking performance, improved is to in XXX,XXX back the normalized nearly per last direction of result year-over-year we to production XX% our oil Basin This of over produced compared primarily production expectations. our continues and in trend

our zones designs, the which our we to pandemic spacing co-development assumptions We continue by to pivoted strategy, landing to prior optimize maximize returns. and multi-zone to frac tweaking our

When a across $XX per out you position. Halliburton than challenges crew. operations efficiencies substantial and casing, one approximately the seeing consistently water was just zipper from completions the our pressures, significant we can foot. XX type from additional us allows with not infrastructure, its a particularly wells we're frac year also year add approximately downtime. with to are complete weather-related more because This of implement in equipment availability efficient simul-frac traditional e-fleet, is Last savings design built inflationary which our completion completion our we've On without side,

However, operational best-in-class always what team did our it execution. does, deliver

original ability Our while after our also capital deliver quarter our is and our as to push results you within guidance Diamondback production exceeding to flat should expect stay differentiated hold budget something from target we quarter. range

for year both return cash in of EBITDA repurchase growth and plan, Financially, X.X at capital additional or cash we we returned and In we in outstanding our base a XXXX, total, our nearly with flow per in free In was dividends. Xx average September our X% and flow $XXX of at our billion XXXX. XXXX. announced of total on free buying XX% to $XX program to variable return total middle We in an through $X our increasing compared to of in $X.X of a significant returned per of nearly the commitment generated base cash $X the returned of of and company. combination share shares the of over in billion dividend flow $X.X return million when dividend total, billion made $X.X least share, $XX.XX dividend represents An share price share per we records variable our This progress stockholders. equates cash of which billion. program, when back shares nearly to free the through XX% our billion for

$X.XX, to $X.XX growth. over now our $XXX $X.XX included yield dividend of dividend share total This quarter we per the alone, share increase nearly or year-over-year of XX% $X.XX X%. a per representing returned quarter, fourth per million an In or annual annually with base

We also which XXX the long net are term. and our for execute quarter the seamlessly to integrated now fourth high-quality added as strategic flow, come. our along giving our Basin closed portfolio. XX,XXX multiple We the of the cash position decades programs the associated made on that and has and production acres us and better to that inventory, us acquisitions, solidified opportunities strategic This in over both Lario a transactions additional size Basin, and FireBird, in scale announced for capital two advantage with Midland we Midland

us business we monetize about and the bought assets or additional than summer, to portfolio. to strategically trade upstream use multiple additional our a midstream our the We existing Last all think in now proceeds at of sheet the assets. that acquire balance gives upstream our strengthen flexibility which have to Rattler, units outstanding higher ability

capital The the and fund partially first crude Oak used of pipeline the to achieved Gray example proceeds sale our Lario interest of of invested our oil the a cash this acquisition. on Enbridge. was XX% the in X.XX multiple the portion to We

As we assets multiple Rattler equity upstream also investments, we've positions. noncore our monetized and evaluated both operated method

million for have last two in Southeast deals includes the and our upstream nearly assets counties. recent These and Winkler Glasscock $XXX since did not immediate which now in assets year, portfolio. We divested capital simply Ward compete of third within quarter

below we coupon end noncore to of years, over tenor Last $X by Xx, below the asset nearly XX% our XXXX our at of increased pushed in debt year. leverage our from target X billion million now sales least the $X ratio, with $XXX of year, improved and past an this the billion X%. now due also of have average We at

our to profile, from debt our improving continue asset overall free continually our and lower financial proceeds sales flow to position. We noncore will use cash

rigs into XX forma and running XXX,XXX year and $X.X of contribution, CapEx, oil expect to production our deliver flat guidance of year-over-year. for you full the production X move of pro we reflects When account XXXX, in FireBird Lario we relatively a As a barrels months crews. simul-frac and billion XX while day

produce record an nearly distributed continue flow and industry. margin We it one XXXX inventory XX% the the highest to in outstanding cash to our free closing, balance of sheet, of our shareholders, was strengthened In the runway year our generated company. for barrels and extended

Looking and ahead, in outlook our we and peer-leading continue our to stockholders. generating is working, model for ongoing ability are confident our our business returns XXXX

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

Operator

[Operator Instructions]

first question Our Truist comes Neal from Dingmann Securities.

Neal Dingmann

year of return Thanks ago, for just years that the the or first on what I'm thought potentially My question environment more -- supply return mentioned ago, you today? in drive continue demand sort in other than macro Travis. investor growth. more just More of changed even than we once is you the all has maybe continued to details, was it's way shareholder factors been topic. back know balance, two consider thinking now that you'd certainly, a wondering, based more the on shareholder

Travis Stice

Fed currently. Neal, production still uncertain I think macro are mean have Yes, don't the an growth I kind any you conditions of action. dictating

got You've demand COVID, uncertainty China around recovery.

Russian got still barrels still the You've finding are that their into way market.

appear a us doesn't have to me certainly, most it And to and macro more. the changed. the are perhaps, our we -- to embrace fundamentally continue conditions shareholder importantly, shareholders return encouraging feedback that get feedback So from the

Kaes Van't Hof

Yes.

and share Neal, I production be of on significantly acquisitions buybacks a going oil XXXX. we're two significant that, think well-timed top to in amount in per also XXXX through of growing

So per to metrics continue share improve.

The basis now. not on that price. to is a continue change having our has it's plan, to produced working activity need We trying to to plan projects high-return while monthly change state results right the steady while this invest the crude plan date and of follow in no activity good and to

Neal Dingmann

leads really might That to just capital Kaes. point, on efficiency. Good my follow-up

out free is the seem some that Specifically, wondering, when talked about? all all when largely any barrel hitting capital -- at maybe calculation, Travis co-development is consider I it I'm of cash Kaes, I'm E&P. right you driven of of or more on driver, just metric, you this this be when this recently wondering the most flow wondering, drivers you look that. just based at numbers. you, at efficiency? But -- And per you important what pump would look to that that Is all I I'm by oil all look than our just

Travis Stice

difficult Yes. It's Certainly, to comes that's in output to we strategy but very productivity on well program. zone we two day multi-zone that, best combination embrace XXXX when the a thing, certainly of that a times not focus It's multiple add of seeing just Neal. kind really executing full our the it we're a made things development one strategy, enhancements of the decision of all really from which to really an today. development pivot and away section benefits

on You put us talk combined, only -- margin LOE, also but producer things, structure where cost of structure side side of is the the cost variable made side with and us efficiency the the that our on expense whether or And things of also doing about continue particularly efficient not top the envelope, frequently up think, we capital less. where it's consistently G&A on cost those most the all the push towards basin. to simply more hear in I

Operator

from comes Sachs. Our next question Neil from Mehta Goldman

Neil Mehta

more from the year-end market noncore billion around give you was bit asset by to looks question natural color around are billion now? I us asset had the and for right what sales little your bump first sales assets? what $X.X The did And strategic a target you XXXX. $X like Can

Kaes Van't Hof

question. great Neil, Yes,

a in And with the what that buyer those I planning. our looking assets announced But and plan looks the capital noncore of this asset right of little E&P faster to generally, quarter don't now. I market PDP bit for think those capital for associated that assets that's compete is that years assets. many sales, than we a like two a sales develop we're fit many, lot asset think mold

are capital assets aggressive these allocation right two from two perspective. which buyers And away, these in just it's our get so going the developing to capital the allocators, good deals,

to into assets sell midstream E&P it, we Going expected assets. than more

our a we should that still point Oak, I target, some that's all was the monetized. So they retained We pipeline it midstream transaction. financial it have strategic and But to be worked, of that from and barrels nearing just of Gray think, the we We great partners. where was are example. our great the why a the a bumped investments Gulf we move benefits the commercial investment the Coast. monetize to and still perspective,

and did prudent from a midstream to for be perspective So midstream the when we to it going We have selling what we're patient but the side. in assets. expect time, first comes the I'd highlight on deck more

Neil Mehta

Yes, that's is QX little softer. follow-up was for And volume guide the great a the full perspective. year solid. the bit oil then

of could just cadence you for particular production talk how path just the XXXX? be we oil maybe the in about over thinking the So production course of in the about and should year

Kaes Van't Hof

as Good Yes. question well.

Firebird when XX,XXX that day to oil I guided we the the We day. year a XXXX. XX,XXX was plan a asset oil acquired Firebird, of of producing think producing barrels barrels for

asset immediately a to we're acquisition QX barrels on adds see the that from on benefit we net to barrels sorry, January that, didn't or volumes those And that in X,XXX that day growth QX. of already -- subtracts on QX seeing, going So into the of January. net but XX, obviously, some closing clearly, get we'll because a X,XXX majority then day Lario count top

steadily So to got base to is projects plan and up. QX grow back QX, we the from that case through

Operator

Securities. Jayaram And JPMorgan our from next question comes from Arun

Arun Jayaram

targets. great Travis, could detail lateral thoughts today? you a remarks if but the well maybe bit know, provide and of optimized you was the I you the multi-zone mitigate parent-child two, of you're interference you're into future. understand impact what some more footage three you we're of to of zone, your last in your issues really what how on on us year its level I And mentioned doing in Slide of gains the from the that gave net kind to over little years. lot on industry XX, co-development doing delayed the sustaining terms the seeing company prepared I couple of a wanted detail generated strategy just last some around has productivity amount wondering by

Travis Stice

of upon you're to significant strategy depletion this each from subsequently get you when that Good we each well these operations, pressure of depletion efficiency go which volume, an was profile. you the later, if initial you'll them they question, back sharing all zones and that have also Arun. that if some the production means in of that communication analysis those degrades stimulated which reserves zones -- experienced your is And observation rock ultimately the find which made to that Yes. co-development In have talk really studying were means as XXXX, kind talk don't intently, XXXX changes our that you development the produced we initial individual the during the actually early other, and and other. essentially, fracking

a order to zones both spread examined made and And we but and assumptions, that, to and frac side minimize adjustments section section below wells the this was then pressure lot above all to And painful our into zones one completed to a so went on time -- bottom, essentially out of further, a and easier. and those decision time brought them side try our top interferences. further, all half some at strategy development it's spacing in was at that because to Spread address one time. some

I've results for on strategy, fact, -- drilling in out in XXXX. right we well the XXXX. but Slide as we that in But that some wasn't the equivalent before you zone, to the seeing some alluded it best take -- from put XX, -- been actually Midland We're In you we I've said our in can very that, development found our see, as took criticism are things what I'll Basin, were and to. we details that

through So when and and about development team courage that stay then the of try the difficult decision we with periods to very very questioned their were crack proud to strategy. problem a that technical to diligence

question, answers I your that Arun. So hope

Arun Jayaram

your helpful. A, thoughts I you FireBird. assessment maybe on transaction, get based just of some gross I was of initial think XXX And thoughts guys that wanted original in some from but I upside highlighted believe you follow-up. results the on a in part over potential that don't of you for. locations, I well initial some the of opportunities. Wolfcamp That's to some locations just paid underwrote results the maybe wondering was co-development which on

Kaes Van't Hof

Yes, great question, Arun.

at team a results we position, the in Lower their Diamondback have have the the confirm others a good it's tested future the a end and sand Spraberry. in know vary in the FireBird, posted and of Wolfcamp sorry, with that you couple And basin West past. upside we on A think the recent and the have position Lower the you test West on date think you underwrote, this portion probably the with in closely they to co-development of but back prospect. the and follow -- A day, and with have things, some us Wolfcamp where Spraberry of four Far of two-wells couple there's like the couple West. corners farthest an communicating give a Wolfcamp FireBird upside deal, may looking was This Far West hand you side. Wolfcamp space A not Southern have Lower area and the prospect, we quintessential then and And central position. been the have I of the our across Spraberry across the the very result more than the of we also A central And can results underwrote I wells as is further that hope like And

sign the line. across work our team's deal, yet, FireBird deal that the in getting definitely technical So positive finish and early days a from but

Operator

next Deckelbaum David comes Cowen. Our question from from

David Deckelbaum

question. first you're your on of year? zones us current a The question year. Maybe just [indiscernible] wells a follow-up this XXX thematic inventory? [indiscernible] you've peers to testing of really sense doing is additional can seen XXX the you a this give Arun's

Kaes Van't Hof

a bit little up breaking Yes, you're David, there.

which development So is, try we across outside to what that basin. you our I what I'm the are Is of repeat testing thought going to zones zones said, other correct? traditional

David Deckelbaum

correct. That's

about that. Sorry

Kaes Van't Hof

problem. no Yes,

Central is County sale kind year Ranches majority A the the of best of co-development. to of in the to Robertson going Martin right, allocated and area. development big capital generally, be So the this zones, our

going capital the deployed. that's getting So throughout the deeper Certainly, majority there is tests are where on of basin.

is X the Prospect, Limelight year. it's X we're our Generally, have this developing wells be going XX think or Woodford that from plus, drill and our mineral forever on in the some but of earth We we mineral to Midland significantly large lot across the basin deeper the be eastern a a promising I the which those center of of zones, those zones. the owns hold rights to to we of and Basin, structure position think tariff probably there we're generally, covers and those company going results have XX, going where I all the that benefit zones, zones deeper to that deeper a don't side Barnett.

So if a Diamondback-FireBird the zones relationship. it's benefit to start those getting leased up, great

David Deckelbaum

low-growth how And or of mode 'XX now noticeable you year improved third maintenance [indiscernible] seen or [indiscernible] declines? base relatively have a differences from on does then in And in year-over-year 'XX? benefits decline mode, perhaps being

Kaes Van't Hof

a up declines. little base about but Yes, again, bit, breaking talking

I base lot in did add mode and acquisitions decrease to a continued from quickly. since have where decline XXXX. they very obviously, think built the being maintenance rate the a of base business, Lario, two We FireBird

deals the rate business, And I how but two position. decline we've that think in pro to forma that across wells in than so going we're and complete also those managed have manage guidance a our higher the base

oil but bigger coming certainly $XX that now. So growth plan Shale plan decline become while best certainly, we can environment base our down, every with benefit development is lower this longer the right to having change is grow has per right? in not pads. really of price, The share cycle plan move these think is with I the metrics

around ops $X we're so, moves And a put or stress oil teams having to $XX to not on pads barrel. move if the a

Operator

of comes the from question line from Jeanine Our Barclays. next Wai

Jeanine Wai

think, we efficiency there XX turned your great and wells, and up great. about just you wells maybe net on Capital when like hit following question XX in question so QX, oil implied you guidance, on that's net sales David's first to Our capital looked efficiency.

have higher we to the just little you we looks of amount a sales FireBird Lario bit wells did wells. expected, and in would use what then in we For if the the and 'XX of than XXXX, add the wells number deal

math any for the we're priority And conservative, and including on looks outlook color is you helpful would have not the 'XX we the divestitures, volumes. and be looking we So to that since are think XXXX? still assuming at correctly that beat CapEx would really

Kaes Van't Hof

Yes, all certainly, be Diamondback impact, going December. right? winter quarter but of into a here. the our winter storm obviously, think was impact storm great announce things, -- couple winter production. to we not Jeanine, a We QX had did the a had going storm I did

the about where POPs. we the a therefore, going and It's a sat capital we And XX good some is we to quarter, hit number POP head on QX felt start So where a last of huge days we from first but very production. from moved to of wells a impact, get into into QX still guide not guidance. kind perspective, it

So QX QX XXXX there's amount good we ahead were in POPS schedule of started feeling this where QX in a because about we year. good and of

Jeanine Wai

just And Great. Okay. to then going capital. maybe return of back

the buyback the just buyback we just how in in the amount just two that was those. Is Or opportunistic more Looking of just this variable really is it you're future? what at rough any of should the the expecting plus for split in change be checking about every the of buyback. viewing really quarter. indicative there's versus the XX% variable kind between quarter, if We're

Kaes Van't Hof

now of is in going a Yes, we to There's back this we are for a five be four gone no buy buyback lot that kind back Really, the weaker. of step a you can particular didn't the and the volatility opportunistic. period through think been when that We're now. of things how volatility see through output And is space. right still going or I change, still in quarters, of in we've Jeanine. that and buy very many the variable quarter, shares

buyback you like bought having the plus of and buyback a in can back that hard October the in variable so in look quarter And you back dividend doesn't November, to output the us QX, particular December. then less I base shares what and be a keep think get at hit quarter. expect doing through very but And

Operator

our Derrick question. Whitfield has from next Stifel

Derrick Whitfield

on a Congrats year-end. Good strong morning, all.

Travis Stice

you, Derrick. Thank

Kaes Van't Hof

Derrick. Thanks,

Derrick Whitfield

on your well Building on I question, earlier to productivity. an wanted focus

from explain in development to all improvement one there Aside two sequencing are would the drivers impacts, that you observed the performance primary year-over-year?

Kaes Van't Hof

from tough transaction, assets assets the deal guide to I We biggest right? think have in you're Derrick, acquired on, a business what done prior we those at is and time hit benefit, allocate only not we I allocated capital while the to that QEP exactly more looking think a would to that the the for deals.

benefit come on where side little with pads on in there. even are So of having high mineral in three or a the so five interest have development, we're areas you seeing four zone we're high-return position. also or with and that benefit massive Viper assets a Those little bit a areas across

a that basin, quickly earlier to spacing, close So paying space mentioned what call, to and into do the dividends. at look in other -- as very Travis do and the in learning what operators taking implementing not is from plan our

Derrick Whitfield

where Perfect. And focus program. environment, headwinds are commodity XXXX on your and a to greatest were I a follow-up, to cost from price assume for your If capital service perspective? tailwinds my we flat wanted

Kaes Van't Hof

headwind biggest The the six casing costs. has quarters been last over

let's Now we we a foot. our not $XX moved a I'm X well seeing that's has certainly that from, going until see now, some significant a and can foot it, softening call or on corner It's maybe Basin it count it, of quarters. there. cost casing Midland headwind XX% the but last the $XX $XXX up to to see we're around over

to control little things simul-frac going it's right probably of that headwind from are have by crews not, four But versus think the crews, on gained top ease. If year, less the and conventional crews use QX efficiencies operations. Waha going I but is of our running of out We'll the can bit that, control. to be simul-frac this a we two those And are foot those of Halliburton Zeus gas the which run also $XX is crews. saves efficient, about highly a cheap fuel, on now. e-fleet

or $XX So a foot. that another saves $XX

environment. cut low to as an what and inflationary costs doing as can possible keep So in we costs we're

Operator

Our question Read Fargo Roger from from Securities. comes Wells next

Roger Read

dive -- basis how to part, this into not gas to the just I'd at of flow are most understand maybe the can assurance the next positioned and year takeaway question you you and to how in looking for extent what I you're risk like year? you're but say have terms Waha

Kaes Van't Hof

I is flow be for how assurance contracts of us, an we written. based exposed when issue are on we we've Waha think going don't Through Roger. things, been Diamondback, to contracts. acquisitive, history but to acquire very are the the and question, Good the price it comes with

private And gatherers so, public are contracts the all basin. of and those with or in some processors equity the backed

the really feel up I tightness gone our some about issue basin assurance or gone we've the on in what price. be is our going and So flow of over the when is coming good seen Waha have down contracts, basin the and pipelines And that there's out to the processors. capacity now I Basin early coming two our And to downstream. gatherers is a of further of last Midland XXXX, think part lot But six with particularly on really, months. move generally that's processing issue the of in going

prices good but going well protect aren't as will it's tight move, from the financially Hub a that to obviously gas Henry helping hedged So in downside. and Permian. we're the to well, market that gas we be feel

Roger Read

presumably where page, is Appreciate has QX summary. in really for coming, a what on the of just just dispositions wanted back becomes want you, to am the you'd of less little this ultimately for thoughts overall in? question look reasonable hedged Any follow at XX more similar, do half as the -- coming right hedge that? And sheet, to that more on do the going hedged, the draw the that. I on of more other closer to kind -- a and at little financially if are QX year Page given looking the these point, Or cash structure it we I we yes, balance up with comfortable

Kaes Van't Hof

no Great I think, believe question, is a sheet Roger. balance in hedges, We primarily our because don't hedge.

now dividend want It's today And we million a are but right? our base is to $XXX $XX structures cost but a our that well at way. dividend it's consider base debt, We harm's protected share. barrel don’t put $X.XX year. hedged, in a Our of we think almost outflows

puts quarters and We down or the XX% out. extend three five buy insurance, we particular out. X% try as quarters to So quarter be four hedge into oil front a basically hedged duration going to fire we quarter to to use XX% four, on

to I continue that XXX% expect grow think and us you we observations that, in So correct back go your through year, of as do to can it year. the half are will the the

Operator

from Our [Jeoffrey from Weinberg [Perella next Partners.] question comes Lambujon]

Unidentified Analyst

year-over-year what couple I for changes appreciate first, what specifically. read-through to for service could on and Diamondback all terms But environment to you're on cost the and me, comments Diamondback a guess, is in can Just follow-ups I control. inflation. maximize I positioned broadly what wonder a expecting the if of how on you you're watching you really speak little more

should earnings? then basis foot and in we speak just the cost is, for the full are year mid-November CapEx think on what guess the for well of to relative so this snapshot a looking balance one part quarter's a relative I to year that think materials guide XX% seeing tracking compares base last question leading-edge how really per my snapshot of the is, to a basis? guide on got And I And context? that of range last then the to as the that we the about case in more you're and second also today how

Kaes Van't Hof

Jeoff. question, Good

in today. things of from versus service in we're four Delaware I probably in costs, to upper But guided of for year-over-year cost generally, ran generally, and well would another Zeus and around three being what this today. XX% would year spot Halliburton the year, Midland we highlighted we I November. half say, I crew. well say, our simul-fracs we those e-fleet And both think, cost coming sub-XX% numbers fit guidance our outside there some moving to way deflation that's generally, last a are still

And this simul-frac the that last adds of year. budget two I put kind some So ways efficiency.

some half But lower think the we going everything service are if deflation, not be unlike our to stay we'll anecdotes from think things higher year, to midpoint last we're the that of -- the end. way in a if to the we coming not to generally, I see AFE. I in every cost closer guide. flat, heading And be perspective. will our item up go And are line

Operator

next Gruber Citigroup. from comes our Scott And question from

Scott Gruber

to But in benefits. what e-frac E-frac I the the the diesel ESG circle back pretty from a times you're beyond do comments. and will gas above think want and cycle obviously, improvement brings here efficiency to you good given fuel spread additive on simul-frac? seeing completion savings obviously be associated additions

Kaes Van't Hof

as I a generally, amount that, a time. but simul-frac of a on the the lateral on of complete type fuel feet positive crews surprise. they been basis, top But just early has fuel, of seeing used the efficiency as we're not the efficiency fuel Scott, similar of think, e-fleets

I that is add would operate a much smaller on think it footprint. the last thing does I

you So have maybe want some that? electrical smaller, your but add with anything moves do associated to fleets. are do infrastructure Dan, you those on

Danny Wesson

Yes.

be about kind the the been been we've widen on do We only in the will other maintenance far. around measurable. really thus really performance It's that of margin, running that our the with too time, first required performance, crew believe see believe you'll less. we've six and months, equipment think fleets gap for the I not just e-fleet that but impressed over outperformed substantially

fuel learn as savings top Halliburton through some we go added that efficiencies So of with we're and just recognize on excited to forward.

Scott Gruber

in of costs contracts do starts half? an service crews do Or place Permian Haynesville to slip in XXXX the and your that pivot hit out costs? rigs coming to your the second migrating with you over, talk start about that kind frac given here D&C at If quickly in how near think will really that if to there is for kind you the realize this in of the benefit future, just we ability juncture? And

Danny Wesson

on and like that down agreements certainly this market a we have into Yes. of to our pretty have pretty we'll particularly certainly have We part on cycle but pressure the pricing we is trickle any protections we've I the help on the really a oil of in kind across some we're services pricing and in quiet, inflation and consumables, through second hopefully, which things of feel we pricing year. market It's start today, side see if long-term mean seen think here seeing place place. likelihood in gas drilling don't we soften, of the upward good And I basins, contracts some quarter. the first. start seeing been on exposed the some lot the where shorter generally, not third first front board, we with prices should of

Operator

from Pickering MacCurdy Our comes question Partners. from Energy next Kevin

Kevin MacCurdy

any under you what the cash and lower, I Congratulations It wonder driving cash taxes taxes from looks cash if below about and the acquisitions? quarter. cash can free for came on in expectations was talk our model. be may like benefits well great the you taxes XXXX flow guidance is receiving

Kaes Van't Hof

Kevin. Yes. Good fourth the question, obviously, in to came quarter-over-quarter, The quarter, prices commodity benefit receive biggest QX. down QX did we

deferral assets hurts other that on right more taxes. closed so us positive fixed taxes midstream to that you and to defer biggest I assets into able cash a $XXX that of with deal FireBird we guess about we for was some surprise that So got when depreciate the allowed XXXX. and was came But million overall. away, the the we're

As about FireBird Lario XXXX, or exhausted that, billion we've and of year. the well. also added closing midstream the transaction, NOL will of on $X we which top assets this as have that some fixed be modeled still But

it's taxpayer. of deals, cash. So we benefit. year two why About little last push cash is well a nice but it's deals before this full allowed out do generally, kind to timed a Obviously, not reason the tangential our more the a being us

Operator

Leo ROTH from Mariani comes question MKM. from next Our

Leo Mariani

talk you a about hoping little bit could was trends. LOE I

at expecting 'XX? here. of the are what little a you Maybe to seeing a you're little guide In looking 'XX, of Just kind LOE guys around was in up color versus it there. where sort bit come just

Travis Stice

Yes.

just are I think you've got things LOE. a that impacting couple

year through last power First, here. gas we're and rode kind seen XXXX you've stay half kind a little -- we the through pricing, fairly unhedged exposed of we're prices the our impacted fairly real-time the really through to part elevated the that of first real-time and market, power and of of in power up pricing back

to impact ourselves, another got we're And to protect another to to wells, two going dime so hedged or trying LOE. XXX have with you've power respect that's land acquisition but so vertical guess had to And an from where get consolidated the opportunity a with then and dime. about our FireBird which -- about adding to

things guide but the between come probably be So And our the quarter, potentially and we those not lower our into think way, some we today. think guidance. end at we could baking running see under two things, we're of that in you're we if a looking the guide, we're about

Leo Mariani

of might that give terms Okay. around Are on kind that seeing? I in were comments how those of hoping there's chance sense was available of would bolt-ons to the Just in a you think M&A, obviously, speaking, color you sellers of of mention reasonable get generally asset of just noncore little go there not helpful just could what pick some guys guys here you something a your days? Appreciate in did that us market up proceeds there you whether base? expectations asset could sales, I are terms kind think in now? are a that. about trying these your but talking to perhaps, you're and decent in bolt-ons characterize prepared 'XX? these of from Do or the some And you in space. then out And you

Kaes Van't Hof

$X into because year the right? structure and happen if $X going that the know cheaper half differential guys think I is don't pricing. cost Diamondback's I wells in transactions two you're drilling not generally, reasonable, Basin $X in oil and XXXX, ever strip of Leo. underwrite PUDs, Yes. But to million drives are Midland when million, value larger than the million, even running peers, that the good if you sellers do We're did the was second

the generally, There's happened. less two think opportunities large we and that's fall. I less that what's announced last like So

that quiet with tend trend smaller that to we're and sold. That's that a blocking the at deals things moment. the kind But of and the stuff couple right focused we're some other they of it's on So now. tackling, Lario on relatively working the of when the large Firebird like deals

Operator

Cheng Our Paul Scotiabank. next from from comes question

Paul Cheng

show the and you gas presentation, a of pipeline number the energy your ownership In processing. in that

that of lateral over Just question any own it, will length, importance you their curious them say, strategically mean, call strategic I important you that you? at that you if those consider Or mean consider have to for is that when equity -- any just those ownership? whether that X,XXX. of we're for trying to that XX,XXX see backlog, looking inventory feet, roughly Second your you to I

Just think you for do those want wells to a see bit opportunity whether an that, drill maybe if swap into more we may actually to you X-miles? And improve trade be able there's can on little and percentage can that what and you that? of

Kaes Van't Hof

first Great. We did JVs. Thank you, Paul. I'll on one these all highlight the JVs. take of the

the we piece. behind is But what and benefits generally, think consolidating strategy we before that got I they're a than all paid think commercial I monetized agreements at the financial things in good will these eventually our value it. these at entity be perspective, sat put why investments from with financial did in. higher what locked Generally, Rattler we -- all that we

a the Oak on our we the We -- it's space pipeline, whether interest got barrels equity that's XXX,XXX changing though Gray like pipe. pipeline, So right? sold of even in day the not

day partners gas issues lot XXX closing gas the side, that plants the million a We and processing and Northern the in of is cryo alleviating we the On WTG. decided Midland gas to flaring processing build our Basin. and invested immediately deal, a after XX% into

So some these makes we try to monetize to value but sense committed at through them. molecules it generally, point, to drive investments,

XX,XXX On we the side, we try can. inventory to drill wherever feet

from locked pretty perspective. land length the lateral in of I our think a most Midland Basin up is

drill North four we drill North we would And sections, if we South, I we South, laterals. sets five generally, laterals we would laterals. XX,XXX over would If through if laterals. rare, we which X,XXX-foot had is three sections think of XX,XXX-foot two XX,XXX-foot sections drill foot to had to had two

the in competitors lot we side, XX,XXX the And the deal of with a that So is Lario, of lot County footers a center a because underwrote contiguous around. pretty Martin of big FireBird other with on landlocked block.

had So we of the to with lateral length kind they live were as presented.

Operator

from comes from America. question next of Our Doug Leggate Instructions] [Operator Bank

Doug Leggate

just was ask, I'll case. So think I the it

you whether did could you more, sight. that you little if that if main the how into business? exposure? weighted? on think touch wonder are I to M&A midstream are sales back E&P midstream that And rated? of I a of your basically particularly trying of those flow pay to guess the the opportunities I asset and bit just are dig additional so, understand line really cash on Do you I'm remaining looking I front impacts in see

Kaes Van't Hof

be deck will sold rest those highlighted versus we noncore say operated to surprised midstream non-op I come Yes. to the of harder initial assets for to our Good that generally, expectations question, the going you like raised say, of $X us Doug. we if assets or in sell JVs it's at would back asset midstream of billion. inferred, they're the of were assets to we -- assets. at the but E&P like that on -- from of because midstream the and an of most cash most $XXX million we amount from impact do a asset of the relative million LOE you impact I It's $XXX distributions parent sales We're $XXX assets, do operated million as midstream from comes date. more logical noncore Whereas assets have non-operated meaningful have financials. not to co. flow assets, that from less those to

the the more for I non-op table. be is right that operated logical value, but some top So it's of mind, stuff on stuff would think

do cognizant of what to be would metrics. our that we'd operating Just

Doug Leggate

we'll a the is raise guess I watch and see obviously how Okay. -- positive.

of out the tax for cash because clarification. Guys, apologize consecutive $XX three for bit presumably X/X a myself have it's tax honest. about conditions what XX% of put But the Is to flow, an be in question it's you I'm for a the sort were think if tax, E&P level answer? deferred easy the what be it's trying $X loop, back of bigger the P&L in bit of than of would the what year little your free through cash you'll be to do billion I the normalized to thanks had guess because earnings we that would predictable. about question to when the go kicks deferred years, So million in, is, perfectly cross-hairs I same? tax. to of are of going which figure And being this and end the a

Kaes Van't Hof

be, going to Yes. in all I NOL XXXX. we're the I would mean, of get answer guess our through

be a to we cash defer able So be and respect spend mentioned, we although the business. intangible full on and taxpayer, to costs with CapEx some drilling exhausted, we'll the that be will as you will

where I we're dependent I prices to continue will are in second where is, that, spending obviously, make. to in And commodity we less upon be to spend going it world a where than be -- we're CapEx XXXX. So guess think -- where obviously

it's that now there logical to burden. a be will variables right just XXXX. So many tax There's too predict

Operator

CEO, to for hand to remarks. Chairman back it like Travis With no further I and Travis? questions, would Stice, closing

Travis Stice

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

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

Operator

program. This conclude for That's the it today's does Okay. conference.

disconnect. you. now You may Thank

Diamondback Energy (FANG) 22 Feb 232022 Q4 Earnings call transcript