- Barnett Cost Reduction Diamondback aims to cut Barnett well costs from $1,000 to $800 per foot, improving competitiveness against Midland's $510–$520 per foot.
- 2026 Budget Allocation $3.75B total CapEx with $150M allocated to Barnett, reflecting strategic investment in the play's growth potential.
- Surfactant Uplift 60 wells tested with surfactant treatments showed 100 BPD production gains, enhancing existing asset value.
- Drilling Efficiency Achieved 4,500 lateral feet per day in Q4 2025, targeting further improvements via continuous pumping and lateral length extensions.
- Inventory Longevity 20-year inventory at 2026 CapEx pace, supported by 75 BOEURs per foot in Barnett, similar to core Midland zones.
Operational Highlights
The company's operational performance was a key highlight, with the Barnett play showing significant promise. The company has 900 gross locations in the Barnett, with initial results indicating strong productivity, and expects to reduce costs to $800 per foot from $1,000 per foot. The Barnett wells have outperformed expectations, with 60% better oil production in the first year compared to the core Midland development.
Cost Reductions and Efficiency Gains
Diamondback Energy is focused on driving cost reductions and efficiency gains across its operations. The company aims to decrease its average drilling time from 8.5-9 days to 7 days, which would drive meaningful cost savings. On the completion side, it's working on improving efficiency through continuous pumping and optimizing its supply chain. These efforts are expected to lead to cost reductions, with the goal of offsetting inflation and driving costs down.
Valuation Metrics
Looking at Diamondback Energy's valuation metrics, the company's P/E Ratio stands at 29.58, indicating a relatively high valuation compared to its earnings. The EV/EBITDA ratio is 6.21, suggesting a reasonable valuation relative to its earnings before interest, taxes, depreciation, and amortization. The company's ROE is 4.34%, and ROIC is 6.04%, indicating a decent return on equity and invested capital, respectively.
Growth Prospects
The company's growth prospects are driven by its strong position in the Permian Basin and the evolving Barnett play. With a solid DUC backlog to support its program, Diamondback Energy expects to maintain a similar level of activity as in previous years. The company's 2026 capital expenditure guide implies a flat or potentially reduced spend compared to previous years, with a focus on efficiency improvements and cost reductions.
Barnett Play Update
The Barnett play is expected to contribute significantly to Diamondback Energy's growth, with estimated ultimate recoveries (EURs) of around 75 BO a foot, comparable to the company's core zones in the Midland Basin. The company is allocating a separate rig to the Barnett program and expects to drill about 30 wells this year, with plans to increase activity to around 100 wells in 2027.