Diamondback Lifts Output to 520 MBO/d, Capex $3.9B

Diamondback Energy raised its 2026 production guidance and capital budget after first-quarter output blew past the company's own forecast range, with chief executive Kaes Van't Hof telling investors on the May earnings call that "if this isn't the time to grow now, then I don't know when it is."

The Midland, Texas-based producer reported Q1 2026 oil production of 521 thousand barrels per day and total output of 979.4 thousand barrels of oil equivalent per day, roughly 1.4 percent above the high end of prior guidance. Oil, gas and natural gas liquids sales reached $3.825 billion. Adjusted free cash flow came in at $1.737 billion, of which Diamondback returned $859 million to shareholders through dividends and buybacks.

Full-Year Guidance Reset to 520 Thousand Barrels Per Day of Oil

Diamondback now expects 2026 oil production of at least 520 thousand barrels per day, up from a prior range of 500 to 510, and total production of at least 972 thousand barrels of oil equivalent per day, up from 926 to 962. The company also raised 2026 capital expenditures to about $3.9 billion from $3.75 billion, citing the addition of two to three drilling rigs in the Midland Basin Barnett interval and a fifth completion crew.

At the new midpoint, Diamondback's organic oil production growth is running near 5 percent year over year, with internal calculations from the company's investor presentation placing 2026 adjusted free cash flow above $8.3 billion, almost double the $4.7 billion projected in February when oil was trading closer to $70 a barrel.

Base Dividend Raised to $1.10 as Permian Realizations Hold

The board increased the base dividend to $1.10 per share quarterly, a 5 percent sequential and 10 percent year-over-year raise. Diamondback also bought back 3.3 million shares for approximately $548 million during the quarter. Realized prices were $73.47 per barrel for oil, $0.18 per thousand cubic feet for natural gas, and $16.68 per barrel for natural gas liquids, blending to a combined $43.40 per barrel of oil equivalent.

Operationally, Diamondback drilled 118 gross wells and completed 147 gross wells in the Midland Basin during the quarter, with average completed lateral lengths of 11,332 feet. The company is the second-largest Permian producer after ExxonMobil, which acquired the basin's largest position through its Pioneer Natural Resources purchase.

Viper Energy Royalty Stream Adds to Cash Conversion

Diamondback's publicly-traded subsidiary Viper Energy (NASDAQ: VNOM) closed its acquisition of Sitio Royalties Corp. in 2025 in an all-equity deal valued at approximately $4.1 billion including assumed debt. Viper now holds mineral and royalty interests across a meaningful share of Diamondback's pro forma acreage, providing the parent with a high-margin revenue layer that does not require capital reinvestment. The Sitio integration is one reason analysts at TIKR calculated Q1 EPS at 13 percent above consensus.

Debt Reduction Continues Alongside Capex Increase

Diamondback also completed a tender offer retiring approximately $777 million in principal of 2051 and 2052 notes for $632 million, and fully repaid a remaining $550 million term loan. Pro forma gross debt stood at $12.7 billion as of late April 2026. The capital structure work, paired with the production raise, signals that management views the current Brent and WTI environment as durable enough to invest into rather than harvest cash, contrary to the more cautious tone struck by majors including ExxonMobil and Chevron in their April earnings releases.