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What changed in Diamondback Energy's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Diamondback Energy's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+622 added−644 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-22)

Top changes in Diamondback Energy's 2024 10-K

622 paragraphs added · 644 removed · 156 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+36 added−146 removed2 unchanged
Biggest changeThe following table shows the net gain (loss) on derivative instruments and the net cash received (paid) on settlements of derivative instruments for the years ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Gain (loss) on derivative instruments, net $ (259) $ (586) Net cash received (paid) on settlements (1) $ (110) $ (850) (1) The year ended December 31, 2022 includes cash paid on commodity contracts terminated prior to their contractual maturity of $138 million.
Biggest changeThe following table shows the net gain (loss) on derivative instruments and the net cash received (paid) on settlements of derivative instruments for the years ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Gain (loss) on derivative instruments, net $ 137 $ (259) Net cash received (paid) on settlements (1) $ (51) $ (110) (1) The year ended December 31, 2024 includes cash paid on interest rate swaps terminated prior to their contractual maturity of $37 million and cash paid for the early settlement of treasury lock contracts of $25 million The change from a loss to a gain on derivative instruments in 2024 compared to 2023 primarily reflects (i) a $374 million increase in the value of our unsettled natural gas contracts due to a decrease in market prices for natural gas compared to our contract prices, (ii) a $129 million increase in cash received on the settlement of natural gas contracts, and (iii) a $10 million increase in the value of our interest rate swap contracts primarily due to a decline in expected future interest rates.
Item 1A. Risk Factors and Cautionary Statement Regarding Forward-Looking Statements of this report. Overview We are an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. As of December 31, 2023, we have one reportable segment, the upstream segment.
Item 1A. Risk Factors and Cautionary Statement Regarding Forward-Looking Statements of this report. Overview We are an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. As of December 31, 2024, we have one reportable segment, the upstream segment.
In order to mitigate this volatility, we enter into derivative contracts with a number of financial institutions, all of which are participants in our credit facility, to economically hedge a portion of our estimated future crude oil and natural gas production as discussed further in Note 12— Derivatives in Item 8. Financial Statements and Supplementary Data and Item 7A.
In order to mitigate this volatility, we enter into derivative contracts with a number of financial institutions, all of which are participants in our credit facility, to economically hedge a portion of our estimated future crude oil and natural gas production as discussed further in Note 13— Derivatives in Item 8. Financial Statements and Supplementary Data and
(2) Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting. Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts. Production Data.
(2) Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting. Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts. 52 Table of Contents Production Data.
See Note 11— Income Taxes in Item 8. Financial Statements and Supplementary Data of this report for further discussion of our income tax expense.
See Note 12— Income Taxes in Item 8. Financial Statements and Supplementary Data of this report for further discussion of our income tax expense.
In the Delaware Basin, we continued to target the Wolfcamp and Bone Spring formations across our primary development areas located in Pecos, Reeves and Ward counties. Collectively, the Delaware Basin accounted for approximately 15% of our total development in 2023, and we expect a similar portion of our total development to be focused in these areas in 2024.
In the Delaware Basin, we continued to target the Wolfcamp and Bone Spring formations across our primary development areas located in Pecos, Reeves and Ward counties. Collectively, the Delaware Basin accounted for approximately 5% of our total development in 2024, and we expect a similar portion of our total development to be focused in these areas in 2025.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10- K for the year ended December 31, 2022 (filed with the SEC on February 23, 2023), which is incorporated in this report by reference from such prior report on Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 (filed with the SEC on February 22, 2024), which is incorporated in this report by reference from such prior report on Form 10-K.
Net Sales of Purchased Oil . Beginning in the third quarter of 2023, we entered into purchase transactions with third parties and separate sale transactions with third parties to satisfy certain of our unused oil pipeline capacity commitments.
Beginning in the third quarter of 2023, we entered into purchase transactions with third parties and separate sale transactions with third parties to satisfy certain of our unused oil pipeline capacity commitments.
See Note 1— Description of the Business and Basis of Presentation and Note 17— Segment Information in Item 8.
See Note 1— Description of the Business and Basis of Presentation and Note 18— Segment Information in Item 8.
Our primary uses of capital have been for the acquisition, development and exploration of oil and natural gas properties and repayment of debt and returning capital to stockholders. At December 31, 2023, we had approximately $2.2 billion of liquidity consisting of $556 million in standalone cash and cash equivalents and $1.6 billion available under our credit facility.
Our primary uses of capital have been for the acquisition, development and exploration of oil and natural gas properties and repayment of debt and returning capital to stockholders. At December 31, 2024, we had approximately $2.6 billion of liquidity consisting of $134 million in standalone cash and cash equivalents and $2.5 billion available under our credit facility.
The following table presents the net sales of purchased oil from third parties for the year ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Sales of purchased oil $ 111 $ — Purchased oil expense 111 — Net sales of purchased oil $ — $ — Other Revenues.
The following table presents the net sales of purchased oil from third parties for the year ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Sales of purchased oil $ 923 $ 111 Purchased oil expense 921 111 Net sales of purchased oil $ 2 $ — Other Revenues.
Liquidity and Capital Resources Overview of Sources and Uses of Cash Historically, our primary sources of liquidity have included cash flows from operations, proceeds from our public equity offerings, borrowings under our revolving credit facility, proceeds from the issuance of senior notes and sales of non-core assets.
Liquidity and Capital Resources Overview of Sources and Uses of Cash Historically, our primary sources of liquidity have included cash flows from operations, proceeds from our public equity offerings, issuances of common stock in connection with acquisitions, borrowings under our revolving credit facility, proceeds from the issuance of senior notes and sales of non-core assets.
The following table provides information on the mix of our production for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Oil (MBbls) 59 % 58 % Natural gas (MMcf) 20 % 21 % Natural gas liquids (MBbls) 21 % 21 % 100 % 100 % 52 Table of Contents See Items 1 and 2.
The following table provides information on the mix of our production for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Oil (MBbls) 56 % 59 % Natural gas (MMcf) 21 % 20 % Natural gas liquids (MBbls) 23 % 21 % 100 % 100 % See Items 1 and 2.
In the Midland Basin, we continued to have positive results across our core development areas located within Midland, Martin, Howard, Glasscock and Andrews counties, where development has primarily focused on drilling long-lateral, multi-well pads targeting the Spraberry and Wolfcamp formations.
We also remain focused on our long-term priority to return cash to our stockholders. In the Midland Basin, we continued to have positive results across our core development areas located within Midland, Martin, Ector, Glasscock, Reagan, Andrews and Howard counties, where development has primarily focused on drilling long-lateral, multi-well pads targeting the Spraberry and Wolfcamp formations.
The following table shows production and ad valorem tax expense for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In millions, except per BOE amounts) Amount Per BOE Percentage of oil, natural gas and natural gas liquids revenue Amount Per BOE Percentage of oil, natural gas and natural gas liquids revenue Production taxes $ 380 $ 2.32 4.6 % $ 483 $ 3.43 5.0 % Ad valorem taxes 145 0.89 1.8 128 0.91 1.3 Total production and ad valorem expense $ 525 $ 3.21 6.4 % $ 611 $ 4.34 6.3 % In general, production taxes are directly related to production revenues and are based upon current year commodity prices.
The following table shows production and ad valorem tax expense for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In millions, except per BOE amounts) Amount Per BOE Percentage of oil, natural gas and natural gas liquids revenue Amount Per BOE Percentage of oil, natural gas and natural gas liquids revenue Production taxes $ 462 $ 2.11 4.6 % $ 380 $ 2.32 4.6 % Ad valorem taxes 176 0.80 1.7 145 0.89 1.8 Total production and ad valorem expense $ 638 $ 2.91 6.3 % $ 525 $ 3.21 6.4 % In general, production taxes are directly related to production revenues and are based upon current year commodity prices.
Further, significant additional capital expenditures will be required to more fully develop our properties. Prices for our commodities are determined primarily by prevailing market conditions, regional and worldwide economic activity, weather and other substantially variable factors. These factors are beyond our control and are difficult to predict. See Item 1A. Risk Factors of this report above.
Prices for our commodities are determined primarily by prevailing market conditions, regional and worldwide economic activity, weather and other substantially variable factors. These factors are beyond our control and are difficult to predict. See Item 1A. Risk Factors of this report above.
As of December 31, 2023, we had an estimated 7,905 gross horizontal locations that we believe to be economic at $50.00 per Bbl WTI. In addition, our publicly traded subsidiary, Viper, owns mineral interests underlying approximately 1,197,638 gross acres and 34,217 net royalty acres in the Permian Basin.
As of December 31, 2024, we had an estimated 9,188 gross horizontal locations that we believe to be economic at $50.00 per Bbl WTI. In addition, our publicly traded subsidiary, Viper, owns mineral interests underlying approximately 987,861 gross acres and 35,671 net royalty acres in the Permian Basin.
Financial Statements and Supplementary Data of this report for further details regarding outstanding borrowings, interest expense and gain (loss) on extinguishment of debt.
See Note 9— Debt in Item 8. Financial Statements and Supplementary Data of this report for further details regarding outstanding borrowing, interest expense and gain (loss) on extinguishment of debt.
The following table shows lease operating expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE Lease operating expenses $ 872 $ 5.34 $ 652 $ 4.63 Lease operating expenses increased by $220 million, or $0.71 per BOE for the year ended December 31, 2023 as compared to the same period in 2022.
The following table shows lease operating expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE Lease operating expenses $ 1,286 $ 5.87 $ 872 $ 5.34 Lease operating expenses increased by $414 million, or $0.53 per BOE in 2024 as compared to 2023.
Prices for these commodities are determined primarily by prevailing market conditions, which are influenced by regional and worldwide economic activity, weather and other substantially variable factors. These factors are beyond our control and are difficult to predict.
Regional and worldwide economic activity, extreme weather conditions and other substantially variable factors, influence market conditions for these products. These factors are beyond our control and are difficult to predict.
The following table sets forth selected historical operating data for the periods indicated: Year Ended December 31, 2023 2022 Revenues (in millions): Oil sales $ 7,279 $ 7,660 Natural gas sales 262 858 Natural gas liquid sales 687 1,048 Total oil, natural gas and natural gas liquid revenues $ 8,228 $ 9,566 Production Data: Oil (MBbls) 96,176 81,616 Natural gas (MMcf) 198,117 176,376 Natural gas liquids (MBbls) 34,217 29,880 Combined volumes (MBOE) (1) 163,413 140,892 Daily oil volumes (BO/d) 263,496 223,605 Daily combined volumes (BOE/d) 447,707 386,005 Average Prices: Oil ($ per Bbl) $ 75.68 $ 93.85 Natural gas ($ per Mcf) $ 1.32 $ 4.86 Natural gas liquids ($ per Bbl) $ 20.08 $ 35.07 Combined ($ per BOE) $ 50.35 $ 67.90 Oil, hedged ($ per Bbl) (2) $ 74.72 $ 86.76 Natural gas, hedged ($ per Mcf) (2) $ 1.48 $ 4.12 Natural gas liquids, hedged ($ per Bbl) (2) $ 20.08 $ 35.07 Average price, hedged ($ per BOE) (2) $ 49.98 $ 62.85 (1) Bbl equivalents are calculated using a conversion rate of six Mcf per Bbl.
The following table sets forth selected historical operating data for the periods indicated: Year Ended December 31, 2024 2023 Revenues (in millions): Oil sales $ 9,067 $ 7,279 Natural gas sales 89 262 Natural gas liquid sales 944 687 Total oil, natural gas and natural gas liquid revenues $ 10,100 $ 8,228 Production Data: Oil (MBbls) 123,325 96,176 Natural gas (MMcf) 275,680 198,117 Natural gas liquids (MBbls) 49,700 34,217 Combined volumes (MBOE) (1) 218,972 163,413 Daily oil volumes (BO/d) 336,954 263,496 Daily combined volumes (BOE/d) 598,284 447,707 Average Prices: Oil ($ per Bbl) $ 73.52 $ 75.68 Natural gas ($ per Mcf) $ 0.32 $ 1.32 Natural gas liquids ($ per Bbl) $ 18.99 $ 20.08 Combined ($ per BOE) $ 46.12 $ 50.35 Oil, hedged ($/Bbl) (2) $ 72.68 $ 74.72 Natural gas, hedged ($/Mcf) (2) $ 0.91 $ 1.48 Natural gas liquids, hedged ($/Bbl) (2) $ 18.99 $ 20.08 Average price, hedged ($/BOE) (2) $ 46.38 $ 49.98 (1) Bbl equivalents are calculated using a conversion rate of six Mcf per Bbl.
For additional information on our interest rate swaps, see Note 12— Derivatives in Item 8. Financial Statements and Supplementary Data of this report.
See Note 13— Derivatives in Item 8. Financial Statements and Supplementary Data of this report for further details regarding our derivative instruments and interest rate swaps. Other Income (Expense).
Beginning in the first quarter of 2024, our board of directors approved a reduction to our return of capital commitment to our shareholders to at least 50% from 75% of our quarterly free cash flow (as defined in “ — Capital Requirements ”).
As a result, we expect significant free cash flow growth in 2026 and beyond with minimal capital deployment through this accelerated development plan. Beginning in the first quarter of 2024, our board of directors approved a reduction to our return of capital commitment to our shareholders to at least 50% (down from 75%) of our quarterly free cash flow.
The increase primarily consists of (i) $119 million in lease operating expenses incurred on production volumes from the FireBird Acquisition and the Lario Acquisition, (ii) $33 million in additional costs incurred for water services as a result of divesting the Deep Blue Water Assets in the third quarter of 2023, and (iii) increases in other individually insignificant costs due primarily to inflationary pressures. 53 Table of Contents Production and Ad Valorem Tax Expense.
The increase primarily consists of (i) $220 million in lease operating expenses related to the Endeavor Acquisition, (ii) $66 million in additional costs incurred for water services as a result of divesting the Deep Blue Water Assets in the third quarter of 2023, (iii) $65 million due to an increase in legacy production volumes, (iv) $48 million due to an increase in workover expense, (v) $12 million due to an increase in electrical generation costs, and (vi) other individually insignificant changes.
Financial Statements and Supplementary Data of this report for further discussion. 2023 Financial and Operating Highlights • We recorded net income of $3.1 billion. • Increased our annual base dividend to $3.60 per share of common stock, paid dividends to stockholders of $1.4 billion during 2023 and declared a combined base and variable dividend payable in the first quarter of 2024 of $3.08 per share of common stock. • Repurchased $838 million of our common stock, leaving approximately $1.6 billion available for future purchases under our common stock repurchase program at December 31, 2023. • Our cash operating costs were $10.90 per BOE, including lease operating expenses of $5.34 per BOE, cash general and administrative expenses of $0.59 per BOE and production and ad valorem taxes and gathering, processing and transportation expenses of $4.97 per BOE. • Redeemed or repurchased an aggregate of $140 million in principal amount of our 5.250% Senior Notes due 2023, 3.250% Senior Notes due 2026 and 3.500% Senior Notes due 2029. • Our average production was 447,707 MBOE/d. • Drilled 350 gross horizontal wells (including 315 in the Midland Basin and 35 in the Delaware Basin). • Turned 310 gross operated horizontal wells (including 263 in the Midland Basin and 47 in the Delaware Basin) to production. • As of December 31, 2023, we had approximately 493,769 net acres, which primarily consisted of 349,707 net acres in the Midland Basin and 143,742 net acres in the Delaware Basin.
Financial Statements and Supplementary Data of this report for further discussion. 2024 Financial and Operating Highlights • We recorded net income of $3.3 billion. • Increased our annual base dividend to $4.00 per share of common stock in the fourth quarter of 2024, paid dividends to stockholders of $1.6 billion during 2024 and declared a base cash dividend payable in the first quarter of 2025 of $1.00 per share of common stock. • Increased our common stock repurchase program authorization to $6.0 billion, excluding excise taxes, and repurchased $959 million of our common stock, leaving approximately $2.7 billion available for future purchases under our common stock repurchase program at December 31, 2024. • Our cash operating costs were $11.09 per BOE, including lease operating expenses of $5.87 per BOE, cash general and administrative expenses of $0.68 per BOE and production and ad valorem taxes and gathering, processing and transportation expenses of $4.54 per BOE. • Issued the April 2024 Notes for an aggregate of $5.5 billion in proceeds and incurred $1.0 billion in initial borrowings under the Tranche A Loans (as defined below in “— Transactions and Recent Developments ”) to fund a portion of the cash consideration for the Endeavor Acquisition. • Our average production was 598,284 MBOE/d. • Drilled 372 gross horizontal wells (including 342 in the Midland Basin and 30 in the Delaware Basin). • Turned 410 gross operated horizontal wells (including 391 in the Midland Basin and 19 in the Delaware Basin) to production. • As of December 31, 2024, we had approximately 860,719 net acres, which primarily consisted of 737,181 net acres in the Midland Basin and 123,218 net acres in the Delaware Basin.
Because we will add debt to fund the cash portion of the Endeavor Acquisition, we are going to allocate more free cash flow to pay down our debt, with a near-term goal to get pro forma net debt below $10 billion through free cash flow generation and potential non-core asset sales.
Because we added debt to fund the cash portion of the Endeavor Acquisition and expect to add additional debt upon completion of the pending Double Eagle Acquisition, we are allocating more free cash flow to pay down our debt, with a near-term goal to reduce net debt to $10 billion.
The following table provides the components of our depreciation, depletion and amortization expense for the years ended December 31, 2023 and 2022: Year Ended December 31, (In millions, except BOE amounts) 2023 2022 Depletion of proved oil and natural gas properties $ 1,669 $ 1,250 Depreciation of other property and equipment 56 77 Other amortization 6 3 Asset retirement obligation accretion 15 14 Depreciation, depletion, amortization and accretion expense $ 1,746 $ 1,344 Oil and natural gas properties depletion rate per BOE $ 10.21 $ 8.87 Depreciation, depletion, amortization and accretion per BOE $ 10.68 $ 9.54 The increase in depletion of proved oil and natural gas properties of $419 million for the year ended December 31, 2023 as compared to the same period in 2022 resulted primarily from (i) $129 million in additional depletion on production from the FireBird Acquisition and the Lario Acquisition, (ii) $71 million from the increase in other production volumes, and (iii) $219 million due to an increase in the depletion rate resulting from the addition of leasehold costs and reserves from the FireBird Acquisition, the Lario Acquisition and the GRP Acquisition. 54 Table of Contents General and Administrative Expenses.
The following table shows the components of our depreciation, depletion and amortization expense for the years ended December 31, 2024 and 2023: Year Ended December 31, (In millions, except BOE amounts) 2024 2023 Depletion of proved oil and natural gas properties $ 2,759 $ 1,669 Depreciation of other property and equipment 61 56 Other amortization 8 6 Asset retirement obligation accretion 22 15 Depreciation, depletion, amortization and accretion expense $ 2,850 $ 1,746 Oil and natural gas properties depletion rate per BOE $ 12.60 $ 10.21 Depreciation, depletion, amortization and accretion per BOE $ 13.02 $ 10.68 The increase in depletion of proved oil and natural gas properties of $1.1 billion in 2024 as compared to 2023 consists of an additional (i) $567 million from the growth in production volumes, and (ii) $523 million due to applying a higher depletion rate in 2024.
See Note 4— Acquisitions and Divestitures in Item 8. Financial Statements and Supplementary Data of this report for further discussion of our acquisitions and divestitures.
See Note 4— Acquisitions and Divestitures and Note 5— Endeavor Energy Resources, LP Acquisition in Item 8. Financial Statements and Supplementary Data of this report for further definition and discussion of Viper’s GRP Acquisition, the Viper Tumbleweed Acquisitions and the Endeavor Acquisition. Net Sales of Purchased Oil .
ESG metrics represent 25% of our annual short-term incentive compensation plan to motivate our executives and our employees to advance our environmental responsibility goals. 50 Table of Contents 2024 Guidance The following table presents our current estimates of certain financial and operating results for the full year of 2024, as well as production and cash tax guidance for the first quarter of 2024: 2024 Guidance Net production - MBOE/d 458 - 466 Oil production - MBO/d 270 - 275 Q1 2024 oil production - MBO/d (total - MBOE/d) 270 - 274 (458 - 464) (Unit costs $/BOE): Lease operating expenses, including workovers $6.00 - $6.50 General and administrative expenses - cash $0.55 - $0.65 Non-cash stock-based compensation $0.40 - $0.50 Depreciation, depletion, amortization and accretion $10.50 - $11.50 Interest expense (net of interest income) $1.05 - $1.25 Gathering, processing and transportation $1.80 - $2.00 Production and ad valorem taxes (% of revenue) ~7% Corporate tax rate (% of pre-tax income) 23% Cash tax rate (% of pre-tax income) 15% - 18% Q1 2024 cash taxes (in millions) $150 - $190 51 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 For a discussion of the results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, please refer to Part I I, Item 7.
As of December 31, 2024, we were operating 19 drilling rigs and four completion crews and currently intend to operate between 13 and 19 drilling rigs and between four and six completion crews in 2025 on average across our current acreage position in the Midland and Delaware Basins. 50 Table of Contents 2025 Guidance The following table presents our current estimates, which give effect to the estimated contribution related to the pending Double Eagle Acquisition, of certain financial and operating results for the full year of 2025, as well as production and cash tax guidance for the first quarter of 2025: 2025 Guidance Net production - MBOE/d 883 - 909 Oil production - MBO/d 485 - 498 Q1 2025 oil production - MBO/d (total - MBOE/d) 470 - 475 (860 - 875) (Unit costs $/BOE): Lease operating expenses, including workovers $5.90 - $6.30 General and administrative expenses - cash $0.60 - $0.75 Non-cash stock-based compensation $0.25 - $0.35 Depreciation, depletion, amortization and accretion $14.00 - $15.00 Interest expense (net of interest income) $0.25 - $0.50 Gathering, processing and transportation $1.20 - $1.40 Production and ad valorem taxes (% of revenue) ~7% Corporate tax rate (% of pre-tax income) 23% Cash tax rate (% of pre-tax income) 17% - 20% Q1 2025 cash taxes (in millions) $280 - $340 51 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 For a discussion of the results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, please refer to Part II, Item 7.
The following table shows gathering, processing and transportation expense for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE Gathering, processing and transportation $ 287 $ 1.76 $ 258 $ 1.83 The increase in gathering, processing and transportation expenses for the year ended December 31, 2023 compared to the same period in 2022 is primarily attributable to the growth in production volumes discussed above.
The following table shows gathering, processing and transportation expense for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE Gathering, processing and transportation $ 356 $ 1.63 $ 287 $ 1.76 Gathering, processing and transportation expense increased by $69 million in 2024 compared to 2023 primarily due to an increase in our production from legacy wells as well as an increase in our contractual rates throughout the year.
The following table shows general and administrative expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE General and administrative expenses $ 96 $ 0.59 $ 89 $ 0.63 Non-cash stock-based compensation 54 0.33 55 0.39 Total general and administrative expenses $ 150 $ 0.92 $ 144 $ 1.02 The increase in general and administrative expenses for the year ended December 31, 2023 compared to the same period in 2022 was primarily due to $6 million in additional professional services and legal costs in the current year and to a lesser extent, additional payroll and other employee driven costs.
The following table shows general and administrative expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In millions, except per BOE amounts) Amount Per BOE Amount Per BOE General and administrative expenses $ 148 $ 0.68 $ 96 $ 0.59 Non-cash stock-based compensation 65 0.30 54 0.33 Total general and administrative expenses $ 213 $ 0.98 $ 150 $ 0.92 The increase in general and administrative expenses of $52 million in 2024 compared to 2023 was primarily due to (i) a $41 million increase in employee compensation and benefit costs related to additional headcount largely from the Endeavor Acquisition and annual compensation adjustments, (ii) a $12 million increase in software costs, and (iii) offsetting changes in other individually insignificant items.
Ad valorem taxes are based, among other factors, on property values driven by prior year commodity prices.
Production taxes as a percentage of oil, natural gas and natural gas liquids revenues remained consistent during 2024 compared to 2023. Ad valorem taxes are based, among other factors, on property values driven by prior year commodity prices.
Recent Developments On February 11, 2024, we entered into the Merger Agreement to acquire Endeavor for consideration consisting of a base cash amount of $8.0 billion, subject to adjustments under the terms of the Merger Agreement, and approximately 117.27 million shares of our common stock.
Transactions and Recent Developments 2025 Transactions Pending Double Eagle Acquisition On February 14, 2025, we entered into a definitive securities purchase agreement with Double Eagle to effect the pending Double Eagle Acquisition for consideration of $3.0 billion in cash and approximately 6.9 million shares of our common stock, subject to customary adjustments.
The following table shows the provision for (benefit from) income taxes for the years ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Provision for (benefit from) income taxes $ 912 $ 1,174 The change in our income tax provision for the year ended December 31, 2023 compared to the same period in 2022 was primarily due to the decrease in pre-tax income resulting largely from the decline in revenues from oil, natural gas and natural gas liquids and was partially offset by the discrete income tax benefit recognized for the year ended December 31, 2022 related to a reduction in Viper’s valuation allowance against its deferred tax assets.
The following table shows the provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Provision for (benefit from) income taxes $ 800 $ 912 The change in our income tax provision for 2024 compared to 2023 was primarily due to a lower effective annual tax rate following the release of Viper’s $156 million valuation allowance in the fourth quarter of 2024.
The decrease from lower average prices was partially offset by an increase of $1.7 billion attributable to the 16% growth in our combined volumes. Approximately 65% of the growth in combined production volumes is attributable to the FireBird Acquisition and the Lario Acquisition, with the remainder primarily attributable to new wells drilled on previously existing acreage.
Approximately 72% of the increase in combined production volumes is attributable to the Endeavor Acquisition, 4% is attributable to Viper’s GRP Acquisition and 1% is attributable to Viper’s Tumbleweed Acquisitions. The remainder of the change is attributable to new wells drilled on previously existing acreage.
The following table shows other income and expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Interest expense, net $ (175) $ (159) Other income (expense), net $ 68 $ (5) Gain (loss) on extinguishment of debt $ (4) $ (99) Income (loss) from equity investments, net $ 48 $ 77 The increase in net interest expense for the year ended December 31, 2023 compared to the same period in 2022, reflects (i) a net increase of $62 million in interest expense on our senior notes which consisted of $108 million in additional interest costs on senior notes issued during 2023 and 2022, partially offset by a reduction of $46 million from the impact of retirements of various other senior notes in 2023 and 2022, and (ii) an $11 million increase in interest expense on our and 55 Table of Contents Viper’s revolving credit facilities due primarily to higher weighted average interest rates and borrowings to fund the cash portion of acquisitions and other corporate expenses.
The following table shows other income and expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Interest expense, net $ (135) $ (159) Other income (expense), net $ 80 $ 52 Gain (loss) on extinguishment of debt $ 2 $ (4) Income (loss) from equity investments, net $ 21 $ 48 Interest expense, net decreased $24 million in 2024 compared to 2023 primarily due to (i) an additional $165 million in capitalized interest costs, which reduce interest expense, (ii) an increase in interest income of $138 million due to holding proceeds from the April 2024 Notes in short-term interest bearing accounts until the close of the Endeavor Acquisition, and (iii) a $12 million decrease in interest expense on our revolving credit facility due to lower average borrowings outstanding in 2024.
As discussed below, our capital budget for 2024 is $2.30 billion to $2.55 billion. As of December 31, 2023, we have no debt maturities until 2026. Future cash flows are subject to a number of variables, including the level of oil and natural gas production and volatility of commodity prices.
Future cash flows are subject to a number of variables, including the level of our oil and natural gas production and the volatility of commodity prices. Further, significant additional capital expenditures will be required to more fully develop our properties.
As a result of the Endeavor Acquisition, the Endeavor Stockholders are expected to hold, at closing, approximately 39.5% of our outstanding common stock. See Note 16— Subsequent Events in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the Endeavor Acquisition.
See Note 5— Endeavor Energy Resources, LP Acquisition in Item 8. Financial Statements and Supplementary Data of this report for further details regarding expenses incurred the Endeavor Acquisition.
The following table shows the other operating costs and expenses for the year ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Merger and integration expenses $ 11 $ 14 Other operating expenses $ 140 $ 112 The increase in other operating expenses for the year ended December 31, 2023 compared to the same period in 2022 primarily resulted from additional midstream services expenses incurred for activity on leasehold acreage obtained in the FireBird Acquisition and Lario Acquisition.
The following table shows the other operating costs and expenses for the year ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Merger and integration expenses $ 303 $ 11 Other operating expenses $ 103 $ 140 Merger and integration expenses in 2024 include costs incurred in connection with the Endeavor Acquisition primarily for severance and accelerated incentive compensation payments to former Endeavor employees as well as investment banking and legal costs.
Other income (expense), net for the year ended December 31, 2023 includes a $53 million gain on the sale of our equity method investment in Gray Oak and a $35 million gain on the sale of our equity method investment in OMOG as discussed further in Note 4— Acquisitions and Divestitures in Item 8.
Other income (expense), net for 2024 includes a gain recorded on the WTG Midstream Transaction of approximately $74 million compared to 2023 including a $53 million gain on the sale of our equity method investment in Gray Oak Pipeline, LLC (“Gray Oak”), partially offset by various other insignificant activity.
Additionally, OPEC and its non-OPEC allies, known collectively as OPEC+, continues to meet regularly to evaluate the state of global oil supply, demand and inventory levels. Outlook During 2023, we had total capital expenditures of $2.7 billion, which was consistent with our guidance presented in November 2023.
Outlook During 2024, we had total capital expenditures of $2.9 billion, which was consistent with our guidance presented in November 2024. In 2025, we expect production and capital expenditures to increase as a result of the Endeavor Acquisition the Viper Tumbleweed Acquisitions, and the pending Double Eagle Acquisition, if consummated.
These factors are beyond our control and are difficult to predict. During 2023, 2022 and 2021 the NYMEX WTI prices averaged $77.60, $94.33 and $68.11 per Bbl, respectively, and the NYMEX Henry Hub prices averaged $2.66, $6.54 and $3.71 per MMBtu, respectively.
During 2024, 2023 and 2022 the NYMEX WTI prices averaged $75.76, $77.60 and $94.33 per Bbl, respectively, and the NYMEX Henry Hub prices averaged $2.41, $2.66 and $6.54 per MMBtu, respectively. 49 Table of Contents For additional information around risks related to commodity prices, see Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk—Commodity Price Risk .
Ad valorem taxes for the year ended December 31, 2023 compared to the same period in 2022 increased by $17 million, which consisted of $20 million in additional ad valorem taxes for properties acquired in the FireBird Acquisition and the Lario Acquisition, partially offset by a decrease in tax rates for multiple taxing authorities. Gathering, Processing and Transportation Expense.
Ad valorem taxes increased by $31 million in 2024 compared to 2023 primarily due to $28 million of ad valorem taxes accrued on properties acquired as part of the Endeavor Acquisition and other individually insignificant changes. Gathering, Processing and Transportation Expense.
We have currently budgeted 2024 total capital spend of $2.30 billion to $2.55 billion, which at the midpoint is a reduction of 10% year over year due to a combination of lower well costs and lower activity expected in 2024.
Giving effect to the pending Double Eagle Acquisition, we have currently budgeted 2025 total capital spend of $3.80 billion to $4.20 billion, which at the midpoint is an increase of 36% year over year.
We expect to make aggregate payments of approximately $252 million for these commitments during 2024. See Note 6— Asset Retirement Obligations and Note 15— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report for further discussion of these and other contractual obligations and commitments.
See Note 10— Stockholders' Equity and Earnings (Loss) Per Share in Item 8. Financial Statements and Supplementary Data of this report for further discussion of the Viper 2024 Equity Offering.
Financial Statements and Supplementary Data of this report for further discussion of the estimated fair value of assets acquired and liabilities assumed in the GRP Acquisition, Lario Acquisition, FireBird Acquisition, QEP Merger and Guidon Acquisition including any significant changes in these estimates from the date of acquisition.
Financial Statements and Supplementary Data of this report for further discussion of the Endeavor Acquisition.
The following table shows the other insignificant revenues for the year ended December 31, 2023 and 2022: Year Ended December 31, (In millions) 2023 2022 Other operating income $ 73 $ 77 Lease Operating Expenses.
The following table shows the other revenues for the year ended December 31, 2024 and 2023: Year Ended December 31, (In millions) 2024 2023 Other operating income $ 43 $ 73 Other operating income decreased by $30 million in 2024 compared to 2023 primarily due to (i) a $37 million reduction in midstream service revenues following the sale of the Deep Blue Water Assets in the third quarter of 2023, (ii) a $5 million increase in midstream service revenues resulting from the Endeavor Acquisition and (iii) other individually insignificant changes. 53 Table of Contents Lease Operating Expenses.
Our oil, natural gas and natural gas liquids revenues decreased by approximately $1.3 billion, or 14%, to $8.2 billion for the year ended December 31, 2023 from $9.6 billion for the year ended December 31, 2022, primarily due to a reduction of $3.0 billion attributable to lower average prices received for our oil production and to a lesser extent, our natural gas and natural gas liquids production.
This net increase consisted of an additional $2.5 billion attributable to the 34% growth in our combined production volumes, and a reduction of $596 million attributable to lower average prices received for our oil, natural gas and natural gas liquids production.
Removed
We operate approximately 49% of these net royalty acres. • Incurred capital expenditures, excluding acquisitions, of $2.7 billion. 2023 Transactions and Recent Developments Acquisitions On November 1, 2023, Viper closed on the GRP Acquisition, which included 4,600 net royalty acres in the Permian Basin, plus an additional 2,700 net royalty acres in other major basins in exchange for approximately 9.02 million Viper common units and $760 million in cash, including customary closing adjustments.
Added
We operate approximately 52% of these net royalty acres. • Incurred capital expenditures, excluding acquisitions, of $2.9 billion.
Removed
On September 1, 2023, we contributed the Deep Blue Water Assets with a net carrying value of $692 million in exchange for $516 million in cash, a 30% equity ownership and voting interest in the newly formed Deep Blue joint venture and certain contingent consideration. 48 Table of Contents On January 31, 2023, we closed on the Lario Acquisition, which included approximately 25,000 gross (16,000 net) acres in the Midland Basin and certain related oil and gas assets in exchange for 4.33 million shares of our common stock and $814 million, including certain customary post-closing adjustments.
Added
The pending Double Eagle Acquisition consists of approximately 67,700 gross (40,000 net) acres, which are primarily located in the Midland Basin, and approximately 407 gross (342 net) horizontal locations in primary development targets.
Removed
Divestitures On July 28, 2023, we divested our 43% limited liability company interest in OMOG for $225 million in cash received at closing and recorded a gain on the sale of equity method investments of approximately $35 million in the third quarter of 2023 that was included in the caption “Other income (expense), net” on the consolidated statement of operations.
Added
We intend to fund the cash portion of the pending Double Eagle Acquisition through a combination of cash on hand, borrowings under our credit facility or proceeds from term loans and senior notes offerings.
Removed
On April 28, 2023, we divested non-core assets with an unrelated third-party buyer consisting of approximately 19,000 net acres in Glasscock County for total consideration of $269 million, including customary post-closing adjustments.
Added
The pending Double Eagle Acquisition is expected to close in the second quarter of 2025, subject to the satisfaction of customary closing conditions and regulatory approval. 47 Table of Contents Viper 2025 Equity Offering On February 3, 2025, Viper completed an underwritten public offering of approximately 28.34 million shares of its Class A common stock (the “Viper 2025 Equity Offering”), which included 3.70 million shares issued pursuant to an option to purchase additional shares of its Class A common stock granted to the underwriters at a price to the public of $44.50 per share.
Removed
On March 31, 2023, we divested non-core assets consisting of approximately 4,900 net acres in Ward and Winkler counties to unrelated third-party buyers for $72 million in net cash proceeds, including customary post-closing adjustments.
Added
Viper received total net proceeds for the Viper 2025 Equity Offering of approximately $1.2 billion after the underwriters’ discount and estimated transaction costs.
Removed
On January 9, 2023, we divested our 10% non-operating equity investment in Gray Oak for $172 million in cash proceeds and recorded a gain on the sale of equity method investments of approximately $53 million in the first quarter of 2023 that was included in “Other income (expense), net” on the consolidated statement of operations.
Added
Pending 2025 Drop Down Transaction On January 30, 2025, EER LP and the Endeavor Subsidiaries, each of which is our subsidiary, entered into a definitive equity purchase agreement with Viper and Viper LLC to divest the Endeavor Subsidiaries to Viper in exchange for consideration consisting of (i) $1.0 billion in cash and (ii) the issuance of 69.63 million Viper LLC units and an equal number of shares of Viper’s Class B common stock (which securities are exchangeable for an equal number of Viper’s Class A common stock), in each case subject to customary closing adjustments, including for net title benefits.
Removed
The Endeavor Acquisition is expected to close in the fourth quarter of 2024, subject to the satisfaction or waiver of customary closing conditions, including the approval of the issuance of our common stock in the Endeavor Acquisition by our stockholders and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Added
The pending 2025 Drop Down is expected to close in the second quarter of 2025, subject to the approval by Viper’s stockholders, regulatory clearance and the satisfaction or waiver of other closing conditions. Viper intends to fund the cash consideration for the pending 2025 Drop Down with the net proceeds from the Viper 2025 Equity Offering discussed above.
Removed
Commodity Prices and Inflation Prices for oil, natural gas and natural gas liquids are determined primarily by prevailing market conditions. Regional and worldwide economic activity, including any economic downturn or recession that has occurred or may occur in the future, extreme weather conditions and other substantially variable factors, influence market conditions for these products.
Added
The mineral and royalty interests owned by the Endeavor Subsidiaries being divested in the pending 2025 Drop Down represent approximately 22,847 net royalty acres located primarily in the Permian Basin. The Endeavor Subsidiaries being sold in the pending 2025 Drop Down were acquired by us in the recently completed Endeavor Acquisition. See Note 17— Subsequent Events in Item 8.
Removed
The war in Ukraine and the Israel-Hamas war, rising interest rates, global supply chain disruptions, concerns about a potential economic downturn or recession and measures to combat persistent inflation and instability in the financial sector have contributed to recent economic and pricing volatility and may continue to impact pricing throughout 2023.
Added
Financial Statements and Supplementary Data of this report for further discussion of the pending Double Eagle Acquisition, the Viper 2025 Equity Offering and the pending 2025 Drop Down. 2024 Diamondback Acquisitions and Divestitures Endeavor Acquisition On September 10, 2024, we completed the Endeavor Acquisition for consideration consisting of $7.3 billion in cash, subject to certain customary post-closing adjustments, and approximately 117.27 million shares of our common stock.
Removed
Although the impact of inflation on our business has been insignificant in prior periods, inflation in the U.S. has been rising at its fastest rate in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in the energy industry and other sectors, which is contributing to labor and materials shortages across the supply-chain.
Added
The Endeavor Acquisition included approximately 500,849 gross (361,927 net) acres, which are primarily located in the Permian Basin.
Removed
In 2024, we expect to maintain flat production throughout the year with less capital and activity than 2023, thereby promoting our commitment to capital efficiency.
Added
The cash consideration for the Endeavor Acquisition was funded through a combination of cash on hand, the net proceeds of the Company’s $5.5 billion April 2024 Senior Notes offering and $1.0 billion in borrowings under the Tranche A Loans (as defined and discussed below). See Note 5— Endeavor Energy Resources, LP Acquisition in Item 8.
Removed
Our long-term priority is to 49 Table of Contents return cash to stockholders, and we believe using free cash flow to pay down newly-added debt is in the best long-term interest of our stockholders.
Added
TRP Energy, LLC Asset Exchange On December 20, 2024, we completed an exchange agreement with TRP Energy, LLC (“TRP”), in which we exchanged approximately 47,034 gross (35,673 net) acres located in the Delaware Basin and $325 million in cash, subject to customary post-closing adjustments, for certain of TRP’s assets consisting of approximately 21,582 gross (15,421 net) acres located in the Midland Basin (the “TRP Exchange”).
Removed
As of December 31, 2023, we were operating 15 drilling rigs and four completion crews and currently intend to operate between 12 and 15 drilling rigs and between three and four completion crews in 2024 on average across our current acreage position in the Midland and Delaware Basins.
Added
The TRP Exchange was valued at approximately $1.4 billion. WTG Midstream Transaction On July 15, 2024, Remuda Midstream Holdings LLC, (the “WTG joint venture”) sold its WTG Midstream LLC subsidiary (the “WTG Midstream Transaction”), resulting in proceeds to us of 10.1 million common units of Energy Transfer LP and $190 million in cash, subject to customary closing adjustments.
Removed
We expect to drill approximately 275 wells and turn approximately 310 wells to production, with almost 30% of those wells expected to be turned to production in the first quarter of 2024. Should commodity prices weaken, we intend to act responsibly and, consistent with our prior practices, reduce capital spending.
Added
At the closing of the WTG Midstream Transaction, the value attributable to us for the 10.1 million common units was approximately $135 million, of which we received approximately $81 million with the remaining $54 million held in escrow pursuant to an escrow agreement entered into by the WTG joint venture.
Removed
If commodity prices strengthen, we intend to maintain flat oil production, pay down indebtedness and return cash to our stockholders. Environmental Responsibility Initiatives and Highlights In September 2022, we announced our medium-term goal to reduce Scope 1 and Scope 2 greenhouse gas (“GHG”) intensity by at least 50% from our 2020 level by 2030.
Added
A gain of approximately $74 million was recognized for the WTG Transaction in the third quarter of 2024. 48 Table of Contents 2024 Viper Acquisitions Viper Tumbleweed Acquisitions On October 1, 2024, Viper and Viper LLC completed the Viper TWR Acquisition, for which the consideration consisted of approximately (i) $464 million in cash, (ii) 10.09 million Viper LLC units, including transaction costs and certain customary post-closing adjustments, (iii) the TWR Class B Option, and (iv) contingent cash consideration of up to $41 million payable in January of 2026.
Removed
In May 2022, we announced our short-term goal to implement continuous emission monitoring systems (“CEMS”) on our facilities to cover at least 90% of operated oil production by the end of 2023. As of December 31, 2023, we had installed CEMS that cover approximately 96% of our operated oil production.
Added
The mineral and royalty interests acquired in the Viper TWR Acquisition represent approximately 3,067 net royalty acres located primarily in the Permian Basin.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls, and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, train or otherwise assist with aspects of our security controls; • security tools deployed in the IT environment for protection against and monitoring for suspicious activity; • cybersecurity awareness training of our employees, including incident response personnel and senior management; • cybersecurity tabletop exercises for members of our cybersecurity incident response team and legal department; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers, and vendors. 44 Table of Contents Cybersecurity Governance Our cybersecurity governance program is led by the Vice President and Chief Information Officer, with support from the internal information technology department.
Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT and operational technology, or OT, environments; • a security team principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls, and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test, train or otherwise assist with aspects of our security controls; • security tools deployed in the IT and OT environments for protection against and monitoring for suspicious activity; • cybersecurity awareness training of our employees, including incident response personnel and senior management; • cybersecurity tabletop exercises for members of our cybersecurity incident response team and legal department; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for service providers, suppliers and vendors.
Further, our code of business conduct and ethics expects all employees to safeguard our electronic communications systems and related technologies from theft, fraud, unauthorized access, alteration or other damage and requires them to report any cyberattacks or incidents, improper access or theft to our Chief Legal and Administrative Officer and the Vice President and Chief Information Officer.
Further, our code of business conduct and ethics expects all employees to safeguard our electronic communications systems and related technologies from theft, fraud, unauthorized access, alteration or other damage and requires them to report any cyberattacks or incidents, improper access or theft to our Chief Legal and Administrative Officer and the Senior Vice President and Chief Information Officer.
The Vice President and Chief Information Officer and his team, which consists of individuals who hold designations as Certified Information Systems Security Professional (CISSP), Certified Information Systems Auditor (CISA), CompTIASecurity+, and Department of Defense (DoD)-Cybersecurity General, are responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture and processes.
The Senior Vice President and Chief Information Officer and his team, which consists of individuals who hold designations as Certified Information Systems Security Professional (CISSP), Certified Information Systems Auditor (CISA), CompTIASecurity+, and Department of Defense (DoD)-Cybersecurity General, are responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture and processes.
The Vice President and Chief Information Officer has over 20 years of technological leadership experience in the oil and gas industry, providing oversight of all information technology disciplines, including cybersecurity, networking, infrastructure, applications, and data management and protection.
The Senior Vice President and Chief Information Officer has over 20 years of technological leadership experience in the oil and gas industry, providing oversight of all information technology disciplines, including cybersecurity, networking, infrastructure, applications, and data management and protection.
Board members receive presentations on cybersecurity topics from the Vice President and Chief Information Officer as part of the board’s continuing education on topics that impact public companies.
Board members receive presentations on cybersecurity topics from the Senior Vice President and Chief Information Officer as part of the board’s continuing education on topics that impact public companies.
We have engaged third-party consultants to conduct penetration testing and risk assessments. Our cybersecurity program is informed by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework and measured by the Maturity and Risk Assessment Ratings associated with the NIST Cybersecurity Framework and the Capability Maturity Model Integration.
We have engaged third-party consultants to conduct penetration testing and risk assessments. Our cybersecurity program is informed by the National Institute of Standards and Technology (“NIST”) Cybersecurity 42 Table of Contents Framework and measured by the Maturity and Risk Assessment Ratings associated with the NIST Cybersecurity Framework and the Capability Maturity Model Integration.
Risk Factors of this report for additional information regarding cybersecurity risks we face and their potential impact on our business strategy, results of operations and financial condition.
Risk Factors of this report for additional information regarding cybersecurity risks we face and their potential impact on our business strategy, results of operations and financial condition. 43 Table of Contents
Our cybersecurity governance program also includes processes to assess cybersecurity risks related to third-party vendors and suppliers. Risks from cybersecurity threats have not materially affected, and are not currently anticipated to materially affect, our Company, including our business strategy, results of operations or financial condition. See, however, Ite m 1 A.
Risks from cybersecurity threats have not materially affected, and are not currently anticipated to materially affect, our Company, including our business strategy, results of operations or financial condition. See, however, Item 1A.
Added
Cybersecurity Governance Our cybersecurity governance program is led by the Senior Vice President and Chief Information Officer, with support from the internal information technology department.
Added
Our management team takes steps to remain informed about and monitor efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including third-party consultants engaged by us; and alerts and reports produced by security tools deployed in our IT and OT environments.
Added
While our board of directors is ultimately responsible for enterprise-wide risk oversight, the board’s committees assist the board in fulfilling its oversight responsibilities in certain areas of risk.
Added
In particular, the board’s audit committee is responsible, among other things, for risk management relating to legal and regulatory requirements, including cybersecurity, which plays an integral role in our risk management strategy and continues to be an area of increasing focus for our board, the audit committee and our management team.
Added
Our cybersecurity governance program also includes processes to assess cybersecurity risks related to third-party service providers, suppliers and vendors. Our vendor management process may include reviewing the cybersecurity practices of such provider, contractually imposing obligations on the provider, conducting security assessments and conducting periodic reassessments during their engagement.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS We are a party to various routine legal proceedings, disputes and claims arising in the ordinary course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, employment claims, claims alleging violations of antitrust laws, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.
Biggest changeWe are a party to various routine legal proceedings, disputes and claims arising in the ordinary course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, employment claims, claims alleging violations of antitrust laws, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.
For additional information regarding environmental matters, see Note 15— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report.
For additional information regarding environmental matters, see Note 16— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report.
Added
ITEM 3. LEGAL PROCEEDINGS Diamondback has elected to use a $1 million threshold for disclosing certain environmental proceedings to which a federal, state or local governmental authority is a party .

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Repurchases of Equity Securities Our common stock repurchase activity for the three months ended December 31, 2023 was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2)(4) Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (3)(4) ($ In millions, except per share amounts, shares in thousands) October 1, 2023 - October 31, 2023 226 $ 147.27 218 $ 1,731 November 1, 2023 - November 30, 2023 99 $ 149.88 99 $ 1,716 December 1, 2023 - December 31, 2023 556 $ 148.31 556 $ 1,634 Total 881 $ 148.22 873 (1) Includes 8,495 shares of common stock repurchased from executives in order to satisfy tax withholding requirements.
Biggest changeIssuer Repurchases of Equity Securities Our common stock repurchase activity for the three months ended December 31, 2024 was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2)(4) Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (3)(4) ($ In millions, except per share amounts, shares in thousands) October 1, 2024 - October 31, 2024 951 $ 180.35 944 $ 2,907 November 1, 2024 - November 30, 2024 443 $ 177.79 443 $ 2,828 December 1, 2024 - December 31, 2024 939 $ 163.06 939 $ 2,675 Total 2,333 $ 172.90 2,326 (1) Includes 6,454 shares of common stock repurchased from executives in order to satisfy tax withholding requirements.
All dollar amounts presented exclude such excise taxes, as applicable. 46 Table of Contents Stock Performance Graph The following performance graph includes a comparison of our cumulative total stockholder return over a five-year period with the cumulative total returns of the Standard & Poor’s 500 Stock Index, or the S&P 500 Index, and the SPDR S&P Oil & Gas Exploration and Production ETF, or XOP Index.
All dollar amounts presented exclude such excise taxes, as applicable. 45 Table of Contents Stock Performance Graph The following performance graph includes a comparison of our cumulative total stockholder return over a five-year period with the cumulative total returns of the Standard & Poor’s 500 Stock Index, or the S&P 500 Index, and the SPDR S&P Oil & Gas Exploration and Production ETF, or XOP Index.
Such shares are cancelled and retired immediately upon repurchase. (2) The average price paid per share includes any commissions paid to repurchase stock. (3) On July 28, 2022, our board of directors approved an increase in our common stock repurchase program from $2.0 billion to $4.0 billion, excluding excise tax.
Such shares are cancelled and retired immediately upon repurchase. (2) The average price paid per share includes any commissions paid to repurchase stock. (3) On September 18, 2024, our board of directors approved an increase in our common stock repurchase program from $4.0 billion to $6.0 billion, excluding excise tax.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Listing and Holders of Record Our common stock is listed on the Nasdaq Global Select Market under the symbol “FANG”. There were 5,207 holders of record of our common stock on February 16, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Listing and Holders of Record Our common stock is listed on the Nasdaq Global Select Market under the symbol “FANG”. There were 4,721 holders of record of our common stock on February 21, 2025.
Beginning in the first quarter of 2024, our board of directors has approved a reduction in our return of capital commitment to our shareholders to at least 50% from 75% of our quarterly free cash flow through repurchases under our share repurchase program, base dividends and variable dividends.
Beginning in the first quarter of 2024, our board of directors has approved a reduction in our return of capital commitment to our shareholders to at least 50% (down from 75%) of our quarterly free cash flow through repurchases under our share repurchase program, base dividends and variable dividends to facilitate the repayment of indebtedness incurred in connection with the Endeavor Acquisition.
The graph assumes an investment of $100 on December 31, 2018, and that all dividends were reinvested. As of December 31, Calculated Values 2018 2019 2020 2021 2022 2023 Diamondback Energy, Inc. $100.00 $100.91 $54.49 $123.93 $167.93 $200.88 S&P 500 $100.00 $131.47 $155.65 $200.29 $163.98 $207.04 XOP $100.00 $90.56 $57.67 $96.18 $139.78 $144.74
The graph assumes an investment of $100 on December 31, 2019, and that all dividends were reinvested. As of December 31, Calculated Values 2019 2020 2021 2022 2023 2024 Diamondback Energy, Inc. $100.00 $54.00 $122.81 $166.41 $199.06 $219.68 S&P 500 $100.00 $118.39 $152.34 $124.73 $157.48 $196.85 XOP $100.00 $63.69 $106.21 $154.35 $159.83 $158.18

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. [RESERVED.] 47 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto in Item 8 . Financial Statements and Supplementar y Data of this report.
Biggest changeITEM 6. [RESERVED.] 46 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto in Item 8. Financial Statements and Supplementary Data of this report.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(2) Production data includes Eagle Ford Shale, Appalachia, Barnett, Denver-Julesburg, Mid-Con, and Williston beginning November 1, 2023, the effective date on which the properties were acquired. 8 Table of Contents The following table sets forth certain price and cost information for each of the periods indicated: Year Ended December 31, 2023 2022 2021 Average Prices: Oil ($ per Bbl) $ 75.68 $ 93.85 $ 66.19 Natural gas ($ per Mcf) $ 1.32 $ 4.86 $ 3.36 Natural gas liquids ($ per Bbl) $ 20.08 $ 35.07 $ 28.70 Combined ($ per BOE) $ 50.35 $ 67.90 $ 49.25 Oil, hedged ($ per Bbl) (1) $ 74.72 $ 86.76 $ 52.56 Natural gas, hedged ($ per Mcf) (1) $ 1.48 $ 4.12 $ 2.39 Natural gas liquids, hedged ($ per Bbl) (1) $ 20.08 $ 35.07 $ 28.33 Average price, hedged ($ per BOE) (1) $ 49.98 $ 62.85 $ 39.87 Average Costs per BOE: Lease operating expenses $ 5.34 $ 4.63 $ 4.12 Production and ad valorem taxes 3.21 4.34 3.10 Gathering, processing and transportation expense 1.76 1.83 1.55 General and administrative - cash component 0.59 0.63 0.69 Total operating expense - cash $ 10.90 $ 11.43 $ 9.46 General and administrative - non-cash component $ 0.33 $ 0.39 $ 0.37 Depreciation, depletion, amortization and accretion per BOE 10.68 9.54 9.31 Interest expense, net 1.07 1.13 1.45 Merger and integration expense 0.07 0.10 0.57 Total operating expense - non-cash $ 12.15 $ 11.16 $ 11.70 Production Costs (2) $ 7.10 $ 6.46 $ 5.67 (1) Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting.
Biggest change(3) Our current location count is based on 880 foot to 1,320 foot spacing. 8 Table of Contents Oil and Natural Gas Production and Price History The following tables set forth information regarding our net production of oil, natural gas and natural gas liquids by basin for the fields containing 15% or more along with other production from fields containing less than 15% of our total proved reserves: Midland Basin Delaware Basin Other Total Production Data: Year Ended December 31, 2024 Oil (MBbls) 104,875 18,325 125 123,325 Natural gas (MMcf) 222,574 52,349 757 275,680 Natural gas liquids (MBbls) 41,559 8,084 57 49,700 Total (MBOE) 183,530 35,134 308 218,972 Year Ended December 31, 2023 Oil (MBbls) 75,859 20,246 71 96,176 Natural gas (MMcf) 140,721 57,129 267 198,117 Natural gas liquids (MBbls) 25,899 8,296 22 34,217 Total (MBOE) 125,212 38,064 138 163,413 Year Ended December 31, 2022 Oil (MBbls) 58,803 22,681 132 81,616 Natural gas (MMcf) 116,579 59,338 459 176,376 Natural gas liquids (MBbls) 20,800 9,016 64 29,880 Total (MBOE) 99,033 41,587 273 140,892 The following table sets forth certain price and cost information for each of the periods indicated: Year Ended December 31, 2024 2023 2022 Average Prices: Oil ($ per Bbl) $ 73.52 $ 75.68 $ 93.85 Natural gas ($ per Mcf) $ 0.32 $ 1.32 $ 4.86 Natural gas liquids ($ per Bbl) $ 18.99 $ 20.08 $ 35.07 Combined ($ per BOE) $ 46.12 $ 50.35 $ 67.90 Oil, hedged ($ per Bbl) (1) $ 72.68 $ 74.72 $ 86.76 Natural gas, hedged ($ per Mcf) (1) $ 0.91 $ 1.48 $ 4.12 Natural gas liquids, hedged ($ per Bbl) (1) $ 18.99 $ 20.08 $ 35.07 Average price, hedged ($ per BOE) (1) $ 46.38 $ 49.98 $ 62.85 Average Costs per BOE: Lease operating expenses $ 5.87 $ 5.34 $ 4.63 Production and ad valorem taxes 2.91 3.21 4.34 Gathering, processing and transportation expense 1.63 1.76 1.83 General and administrative - cash component 0.68 0.59 0.63 Total operating expense - cash $ 11.09 $ 10.90 $ 11.43 General and administrative - non-cash component $ 0.30 $ 0.33 $ 0.39 Depreciation, depletion, amortization and accretion 13.02 10.68 9.54 Interest expense, net 0.62 0.97 1.09 Merger and integration expense 1.38 0.07 0.10 Total operating expense - non-cash $ 15.32 $ 12.05 $ 11.12 Production Costs (2) $ 7.50 $ 7.10 $ 6.46 9 Table of Contents (1) Hedged prices reflect the effect of our commodity derivative transactions on our average sales prices and include gains and losses on cash settlements for matured commodity derivatives, which we do not designate for hedge accounting.
However, on August 13, 2020, in response to an executive order by former President Trump to review and revise unduly burdensome regulations, the EPA amended the 2012 and 2016 New Source Performance standards to ease regulatory burdens, including rescinding standards applicable to transmission or storage segments and eliminating methane requirements altogether.
However, on August 13, 2020, in response to an executive order by President Trump to review and revise unduly burdensome regulations, the EPA amended the 2012 and 2016 New Source Performance standards to ease regulatory burdens, including rescinding standards applicable to transmission or storage segments and eliminating methane requirements altogether.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, including the domestic and foreign supply of oil and natural gas; the level of prices and expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports; political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia; the potential impact of the war in Ukraine and the Israel-Hamas War on the global energy markets and macroeconomic conditions; the continued threat of terrorism and the impact of military and other action, including U.S. military operations in the Middle East; the ability of members of the OPEC+ to agree to and maintain oil price and production controls; speculative trading in crude oil and natural gas derivative contracts; the level of consumer product demand; extreme weather conditions and other natural disasters; risks associated with operating drilling rigs; technological advances affecting energy consumption; the price and availability of alternative fuels; domestic and foreign governmental regulations and taxes, including the Biden Administration’s energy and environmental policies; global or national health concerns, including the outbreak of pandemic or contagious disease; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; and overall domestic and global economic conditions.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, including the domestic and foreign supply of oil and natural gas; the level of prices and expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports; political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia; the potential impact of the war in Ukraine, the Israel-Hamas War and other conflicts in the Middle East on the global energy markets and macroeconomic conditions; the continued threat of terrorism and the impact of military and other action, including U.S. military operations in the Middle East; the ability of members of the OPEC+ to agree to and maintain oil price and production controls; speculative trading in crude oil and natural gas derivative contracts; the level of consumer product demand; extreme weather conditions and other natural disasters; risks associated with operating drilling rigs; technological advances affecting energy consumption; the price and availability of alternative fuels; domestic and foreign governmental regulations and taxes, including the new administration’s energy and environmental policies; global or national health concerns, including the outbreak of pandemic or contagious disease; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; and overall domestic and global economic conditions.
The Agreement went into effect on November 4, 2016. On April 21, 2021, the United States announced that it was setting an economy-wide target of reducing its greenhouse gas emissions by 50-52 percent below 2005 levels in 2030.
The Paris Agreement went into effect on November 4, 2016. On April 21, 2021, the United States announced that it was setting an economy-wide target of reducing its greenhouse gas emissions by 50-52 percent below 2005 levels in 2030.
These factors may make drilling and completion activity in the affected parts of the Permian Basin less economical and adversely impact our business, results of operations and financial condition.
These factors may make drilling activity in the affected parts of the Permian Basin less economical and adversely impact our business, results of operations and financial condition.
Our technical staff uses historical information for our properties such as ownership interest, oil and natural gas production, well test data, commodity prices and operating and development costs. Ryder Scott performed an independent analysis during its audit of our estimated reserves for 2023 and any differences were reviewed with our Executive Vice President and Chief Engineer.
Our technical staff uses historical information for our properties such as ownership interest, oil and natural gas production, well test data, commodity prices and operating and development costs. Ryder Scott performed an independent analysis during its audit of our estimated reserves for 2024 and any differences were reviewed with our Executive Vice President and Chief Engineer.
Undeveloped Acreage Expirations As of December 31, 2023, the following gross and net undeveloped acres are set to expire over the next five years based on their contractual lease maturities unless (i) production is established within the spacing units covering the acreage or (ii) the lease is renewed or extended under continuous drilling provisions prior to the contractual expiration dates.
Undeveloped Acreage Expirations As of December 31, 2024, the following gross and net undeveloped acres are set to expire over the next five years based on their contractual lease maturities unless (i) production is established within the spacing units covering the acreage or (ii) the lease is renewed or extended under continuous drilling provisions prior to the contractual expiration dates.
We also utilize independent contractors and consultants involved in land, technical, regulatory and other disciplines to assist our full-time employees. Diversity, Inclusion, Recruiting and Retention Equal employment opportunity is one of our core tenets and, as such, our employment decisions are based on merit, qualifications, competencies and contributions.
We also utilize independent contractors and consultants involved in land, technical, regulatory and other disciplines to assist our full-time employees. Equal Opportunity, Recruiting and Retention Equal employment opportunity is one of our core tenets and, as such, our employment decisions are based on merit, qualifications, competencies and contributions.
RISK FACTORS The nature of our business activities subjects us to certain hazards and risks. The following is a summary of some of the material risks relating to our business activities. Other risks are described in Item 1. “Business and Properties,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A.
RISK FACTORS The nature of our business activities subjects us to certain hazards and risks. The following is a summary of some of the material risks relating to our business activities. Other risks are described in Items 1 and 2. “Business and Properties,” Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A.
The final rules seek to achieve a 95% reduction in volatile organic compounds emitted by requiring the use of reduced emission completions or “green completions” on all hydraulically-fractured wells constructed or refractured after January 1, 2015. The rules also establish specific new requirements regarding emissions from compressors, controllers, dehydrators, storage tanks and other production equipment.
The final rules seek to achieve a 95% reduction in volatile organic compounds emitted 16 Table of Contents by requiring the use of reduced emission completions or “green completions” on all hydraulically-fractured wells constructed or refractured after January 1, 2015. The rules also establish specific new requirements regarding emissions from compressors, controllers, dehydrators, storage tanks and other production equipment.
These seasonal anomalies can pose challenges for meeting our well drilling objectives and can increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay operations. 12 Table of Contents Regulation Oil and natural gas operations such as ours are subject to various types of legislation, regulation and other legal requirements.
These seasonal anomalies can pose challenges for meeting our well drilling objectives and can increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay operations. Regulation Oil and natural gas operations such as ours are subject to various types of legislation, regulation and other legal requirements.
Furthermore, several federal agencies have asserted regulatory authority over certain aspects of the process. For example, the EPA has taken the position that hydraulic fracturing 15 Table of Contents with fluids containing diesel fuel is subject to regulation under the Underground Injection Control program, specifically as “Class II” Underground Injection Control wells under the Safe Drinking Water Act.
Furthermore, several federal agencies have asserted regulatory authority over certain aspects of the process. For example, the EPA has taken the position that hydraulic fracturing with fluids containing diesel fuel is subject to regulation under the Underground Injection Control program, specifically as “Class II” Underground Injection Control wells under the Safe Drinking Water Act.
In addition, it is not uncommon for neighboring landowners and other third parties to file 13 Table of Contents claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state statutes.
In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state statutes.
Information contained on, or connected to, our website is not incorporated by reference into this Annual Report and should not be considered part of this or any other report that we file with or furnish to the SEC. Reports filed or furnished with the SEC are also made available on its website at www.sec.gov. ITEM 1A.
Information contained on, or connected to, our website is not incorporated by reference into this Annual Report and should not be considered part of this or any other report that we file with or furnish to the SEC. Reports filed or furnished with the SEC are also made available on its website at www.sec.gov. 22 Table of Contents ITEM 1A.
We cannot reasonably predict whether production levels will remain at current levels or the full extent of the impact of the events above and any subsequent recovery may have on our industry and our business. If commodity prices fall below current levels, we may be required to record impairments in future periods and such impairments could be material.
We cannot reasonably predict whether production levels will remain at current levels or the full extent of the impact of the events above and any subsequent recovery may have on our industry and our business. 24 Table of Contents If commodity prices fall below current levels, we may be required to record impairments in future periods and such impairments could be material.
A loss not fully covered by insurance could have a material adverse effect on our financial position, results of operations and cash flows. See I tem 1A. Risk Factors of this report for additional information regarding operating hazard and uninsured risks. We reevaluate the purchase of insurance, policy terms and limits annually.
A loss not fully covered by insurance could have a material adverse effect on our financial position, results of operations and cash flows. See Item 1A. Risk Factors of this report for additional information regarding operating hazard and uninsured risks. We reevaluate the purchase of insurance, policy terms and limits annually.
In some instances, forced pooling or unitization may be implemented by third parties and may reduce our interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production.
In some instances, forced pooling or unitization may be implemented by third 18 Table of Contents parties and may reduce our interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production.
For additional information regarding our customer concentrations, see Note 3— Revenue from Contracts with Customers in Item 8. Financial Statements and Supplementary Data of this report. Delivery Commitments Certain of our firm sales agreements include delivery commitments that specify the delivery of a fixed and determinable quantity of oil.
For additional information regarding our customer concentrations, see Note 3— Revenue from Contracts with Customers in Item 8. Financial Statements and Supplementary Data of this report. 12 Table of Contents Delivery Commitments Certain of our firm sales agreements include delivery commitments that specify the delivery of a fixed and determinable quantity of oil.
However, in April 2019, the EPA concluded that revisions to the federal regulations for the management of oil and natural gas waste are not necessary at this time. Any changes in such laws and regulations could have a material adverse effect on our capital expenditures and operating expenses.
However, in April 2019, the EPA concluded that revisions to the federal regulations for the management of oil and natural gas waste were not necessary at that time. Any changes in such laws and regulations could have a material adverse effect on our capital expenditures and operating expenses.
The effect of these regulations may be to limit the amount of oil and natural gas that may be produced from our wells and to limit the number of wells or locations we can drill. The petroleum industry is also subject to compliance with various other federal, state and local regulations and laws.
The effect of these regulations 20 Table of Contents may be to limit the amount of oil and natural gas that may be produced from our wells and to limit the number of wells or locations we can drill. The petroleum industry is also subject to compliance with various other federal, state and local regulations and laws.
The rules took effect in January 2014. Additionally, on October 28, 2014, the Texas Railroad Commission adopted disposal well rule amendments 16 Table of Contents designed, among other things, to require applicants for new disposal wells that will receive non-hazardous produced water and hydraulic fracturing flowback fluid to conduct seismic activity searches utilizing the U.S. Geological Survey.
The rules took effect in January 2014. Additionally, on October 28, 2014, the Texas Railroad Commission adopted disposal well rule amendments designed, among other things, to require applicants for new disposal wells that will receive non-hazardous produced water and hydraulic fracturing flowback fluid to conduct seismic activity searches utilizing the U.S. Geological Survey.
Beginning in 2023, we began purchasing third-party volumes to fulfill a certain delivery commitment to a pipeline in the Permian Basin. For additional information regarding commitments, see Note 15— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report.
In 2023, we began purchasing third-party volumes to fulfill a certain delivery commitment to a pipeline in the Permian Basin. For additional information regarding commitments, see Note 16— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report.
The SS&CR Committee receives regular updates from our executive leadership, senior management and third-party consultants on human capital trends and other key human capital matters impacting our business. As of December 31, 2023, we had 1,023 full time employees. None of our employees are represented by labor unions or covered by any collective bargaining agreements.
The SS&CR Committee receives regular updates from our executive leadership, senior management and third-party consultants on human capital trends and other key human capital matters impacting our business. As of December 31, 2024, we had 1,983 full time employees. None of our employees are represented by labor unions or covered by any collective bargaining agreements.
We also lease additional office space in Dallas, Texas and Oklahoma City, Oklahoma.
We also lease additional office space in Midland, Texas, Dallas, Texas and Oklahoma City, Oklahoma.
If endangered species, such as the recently listed lesser prairie chicken, are located in areas where we operate, our operations or any work performed related to them could be prohibited or delayed or expensive mitigation may be required.
If endangered species, such as the recently listed lesser prairie chicken or dunes sagebrush lizard, are located in areas where we operate, our operations or any work performed related to them could be prohibited or delayed or expensive mitigation may be required.
For 2023, our reserve auditor’s estimates of our proved reserves did not materially differ from our estimates by more than the established audit tolerance guidelines of ten percent.
For 2024, our reserve auditor’s estimates of our proved reserves did not materially differ from our estimates by more than the established audit tolerance guidelines of ten percent.
Federal and state regulations govern the price and terms for access to oil and natural gas pipeline transportation. FERC’s regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas. 17 Table of Contents Although oil and natural gas prices are currently unregulated, the U.S.
Federal and state regulations govern the price and terms for access to oil and natural gas pipeline transportation. FERC’s regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas. Although oil and natural gas prices are currently unregulated, the U.S.
The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to the Oil and Natural Gas Industry and Our Business • Market conditions and particularly volatility in prices for oil and natural gas may continue to adversely affect our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves. • Our commodity price derivatives could result in financial losses, may fail to protect us from declines in commodity prices, prevent us from fully benefiting from commodity price increases and may expose us to other risks, including counterparty credit risk. • The IRA and other risks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us. • Climate change-related regulations, policies and initiatives may have other adverse effects, such as a greater potential for governmental investigations or litigation. • We may be unable to obtain needed capital or financing on satisfactory terms or at all to fund our acquisitions or development activities, which could lead to a loss of properties and a decline in our oil and natural gas reserves and future production. • Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings, and title defects in the properties in which we invest may lead to losses. • Our identified potential drilling locations are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. • If production from our Permian Basin acreage decreases, we may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contract, which may adversely affect our operations. • The inability of one or more of our customers to meet their obligations, or loss of one or more of our significant purchasers, may adversely affect our financial results. • Our method of accounting for investments in oil and natural gas properties may result in impairment of asset value. 22 Table of Contents • Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. • We are vulnerable to risks associated with our primary operations concentrated in a single geographic area. • If transportation or other facilities, certain of which we do not control, or rigs, equipment, raw materials, oil services or personnel are unavailable, our operations could be interrupted and our revenues reduced. • Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive and may impose restrictions on our operations. • U.S. tax legislation, including recently adopted IRA, may negatively affect our business, results of operations, financial condition and cash flow. • Drilling for and producing oil and natural gas are high-risk activities with many uncertainties that may result in a total loss of investment and adversely affect our business, financial condition or results of operations. • A terrorist attack or armed conflict could harm our business and could adversely affect our business. • A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.
The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to the Oil and Natural Gas Industry and Our Business • Market conditions and particularly volatility in prices for oil and natural gas may adversely affect our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves. • Our commodity price derivatives could result in financial losses, may fail to protect us from declines in commodity prices, prevent us from fully benefiting from commodity price increases and may expose us to other risks, including counterparty credit risk. • The IRA and other risks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us. • Climate change-related regulations, policies and initiatives may have other adverse effects, such as a greater potential for governmental investigations or litigation. • We may be unable to obtain needed capital or financing on satisfactory terms or at all to fund our acquisitions or development activities, which could lead to a loss of properties and a decline in our oil and natural gas reserves and future production. • Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings, and title defects in the properties in which we invest may lead to losses. • Our identified potential drilling locations are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. • If production from our Permian Basin acreage decreases, we may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contract, which may adversely affect our operations. • The inability of one or more of our customers to meet their obligations, or loss of one or more of our significant purchasers, may adversely affect our financial results. • Our method of accounting for investments in oil and natural gas properties may result in impairment of asset value. • Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. • We are vulnerable to risks associated with our primary operations concentrated in a single geographic area. • If transportation or other facilities, certain of which we do not control, or rigs, equipment, raw materials, oil services or personnel are unavailable, our operations could be interrupted and our revenues reduced. • Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive and may impose restrictions on our operations. • U.S. tax legislation, including recently adopted IRA, may negatively affect our business, results of operations, financial condition and cash flow. • Drilling for and producing oil and natural gas are high-risk activities with many uncertainties that may result in a total loss of investment and adversely affect our business, financial condition or results of operations. • We rely on a few key employees whose absence or loss could adversely affect our business. • A terrorist attack or armed conflict could harm our business and could adversely affect our business. • A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss. • Following the closing of the Endeavor Acquisition, the Endeavor equityholders have the ability to significantly influence our business, and their interest in our business may be different from that of other stockholders.
For the year ended December 31, 2021, three purchasers each accounted for more than 10% of our revenue. We do not require collateral and do not believe the loss of any single purchaser would materially impact our operating results, as crude oil and natural gas are fungible products with well-established markets and numerous purchasers.
For the year ended December 31, 2022, two purchasers each accounted for more than 10% of our revenue. We do not require collateral and do not believe the loss of any single purchaser would materially impact our operating results, as crude oil and natural gas are fungible products with well-established markets and numerous purchasers.
We have obtained title opinions on substantially all of 11 Table of Contents our producing properties and believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the oil and natural gas industry.
We have obtained title opinions on substantially all of our producing properties and believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the oil and natural gas industry.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors. 18 Table of Contents Safety and Maintenance Regulation. In our midstream operations, we are subject to regulation by the U.S.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors. Safety and Maintenance Regulation. In our midstream operations, we are subject to regulation by the U.S.
(2) Our current location count is based on 660 foot to 880 foot spacing in Midland and Howard counties, depending on the prospect area and 880 foot spacing in all other counties. (3) Our current location count is based on 880 foot to 1,320 foot spacing.
(2) Our current location count is based on 660 foot to 880 foot spacing in Midland and Howard counties, depending on the prospect area and 880 foot spacing in all other counties.
The Pipeline Safety and Job Creation Act doubles the maximum administrative fines for safety violations from $100,000 to $200,000 for a single violation and from $1.0 million to $2.0 million for a related series of violations (now increased for inflation to $266,015 and $2,660,135, respectively), and provides that these maximum penalty caps do not apply to civil enforcement actions, establishes additional safety requirements for newly constructed pipelines, and requires studies of certain safety issues that could result in the adoption of new regulatory requirements for existing pipelines, including the expansion of integrity management, use of automatic and remote-controlled shut-off valves, leak detection systems, sufficiency of existing regulation of gathering pipelines, use of excess flow valves, verification of maximum allowable operating pressure, incident notification, and other pipeline-safety related requirements.
The Pipeline Safety and Job Creation Act doubles the maximum administrative fines for safety violations from 19 Table of Contents $100,000 to $200,000 for a single violation and from $1.0 million to $2.0 million for a related series of violations (now increased for inflation to $272,926 and $2,729,245, respectively), and provides that these maximum penalty caps do not apply to civil enforcement actions, establishes additional safety requirements for newly constructed pipelines, and requires studies of certain safety issues that could result in the adoption of new regulatory requirements for existing pipelines, including the expansion of integrity management, use of automatic and remote-controlled shut-off valves, leak detection systems, sufficiency of existing regulation of gathering pipelines, use of excess flow valves, verification of maximum allowable operating pressure, incident notification, and other pipeline-safety related requirements.
These new standards, to the extent implemented, as well as any future laws and their implementing regulations, may require us to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions, impose stringent air permit requirements, or mandate the use of specific equipment or technologies to control emissions.
These new standards, to the extent implemented, as well as any future laws and their implementing regulations, may require us to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions, impose stringent air permit requirements, or mandate the use of specific equipment or technologies to control emissions, which may increase our compliance or operating costs.
Marketing and Customers We typically sell production to a relatively small number of customers, as is customary in the exploration, development and production business. For the year ended December 31, 2023, four purchasers each accounted for more than 10% of our revenue. For the year ended December 31, 2022, two purchasers each accounted for more than 10% of our revenue.
Marketing and Customers We typically sell production to a relatively small number of customers, as is customary in the exploration, development and production business. For the years ended December 31, 2024 and 2023, four purchasers each accounted for more than 10% of our revenue.
The Executive Vice President and Chief Engineer is a petroleum engineer with over 20 years of reservoir and operations experience and our geoscience staff has an average of approximately 15 years of industry experience per person.
The Executive Vice President and Chief Engineer is a petroleum engineer with over 21 years of reservoir and operations experience and our geoscience staff has an average of approximately 16 years of industry experience per person.
The CWA and regulations implemented thereunder also prohibit the discharge of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit. The scope of waters regulated under the CWA has fluctuated in recent years. On June 29, 2015, the EPA and the U.S.
The CWA and regulations implemented thereunder also prohibit the discharge of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit. The scope of waters regulated under the CWA has fluctuated in recent years. On January 18, 2023, the EPA and the U.S.
We actively seek to attract and retain an increasingly diverse workforce and continue to cultivate our respectful work environment. We value the perspectives, experiences and ideas contributed by our employees from a diverse range of ethnic, cultural and ideological backgrounds.
We actively seek to attract and retain top talent and continue to cultivate our respectful work environment. We value the perspectives, experiences and ideas contributed by our employees from a diverse range of ethnic, cultural and ideological backgrounds.
Risks Related to Our Indebtedness • Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness, and we and our subsidiaries may be able to incur substantial additional indebtedness in the future. • Implementing our capital programs may require, under some circumstances, an increase in our total leverage through additional debt issuances, and any significant reduction in availability under our revolving credit facility or inability to otherwise obtain financing for our capital programs could require us to curtail our capital expenditures. • Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities. • We depend on our subsidiaries for dividends and other payments. • If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit. • Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk.
Risks Related to Our Indebtedness • Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness, and we and our subsidiaries may be able to incur substantial additional indebtedness in the future. • The significant additional indebtedness incurred in connection with the Endeavor Acquisition may limit our operating or financial flexibility relative to our current position and make it difficult to satisfy our obligations with respect to our other indebtedness. 23 Table of Contents • Implementing our capital programs may require, under some circumstances, an increase in our total leverage through additional debt issuances, and any significant reduction in availability under our revolving credit facility or inability to otherwise obtain financing for our capital programs could require us to curtail our capital expenditures. • Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities. • We depend on our subsidiaries for dividends and other payments. • If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit. • Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk.
The internal control procedures utilized in the preparation of our proved reserve estimates are intended to ensure reliability of reserve estimations, and include the following: • review and verification of historical production data, which is based on actual production as reported by us; • preparation of reserve estimates by the primary reserve engineers or under their direct supervision; • review by the primary reserve engineers of all of our reported proved reserves at the close of each quarter, including the review of all significant reserve changes and all new proved undeveloped reserves additions; • review of historical realized commodity prices and differentials from index prices compared to the differentials used in the reserves database; • direct reporting responsibilities by our Executive Vice President and Chief Engineer to our Executive Vice President—Operations; • prior to finalizing the reserve report, a review of our preliminary proved reserve estimates by our Chief Executive Officer, President and Chief Financial Officer, Executive Vice President and Chief Operating Officer, Executive Vice President and Chief Engineer and our primary reserves engineers takes place on an annual basis; • review of our proved reserve estimates by our Audit Committee with our executive team and Ryder Scott on an annual basis; • verification of property ownership by our land department; and • no employee’s compensation is tied to the amount of reserves booked.
The internal control procedures utilized in the preparation of our proved reserve estimates are intended to ensure reliability of reserve estimations, and include the following: • review and verification of historical production data, which is based on actual production as reported by us; • preparation of reserve estimates by the primary reserve engineers or under their direct supervision; • review by the primary reserve engineers of all of our reported proved reserves at the close of each quarter, including the review of all significant reserve changes and all new proved undeveloped reserves additions; • review of historical realized commodity prices and differentials from index prices compared to the differentials used in the reserves database; • direct reporting responsibilities by our Executive Vice President and Chief Engineer to our Executive Vice President—Operations; • prior to finalizing the reserve report, a review of our preliminary proved reserve estimates by our Chief Executive Officer, President and Chief Financial Officer, Executive Vice President and Chief Operating Officer, Executive Vice President and Chief Engineer and our primary reserves engineers takes place on an annual basis; • review of our proved reserve estimates by our Audit Committee with our executive team and Ryder Scott on an annual basis; • verification of property ownership by our land department; and • no employee’s compensation is tied to the amount of reserves booked. 7 Table of Contents For estimates and further discussion of our proved developed and proved undeveloped reserves, see Note 19— Supplemental Information on Oil and Natural Gas Operations in Item 8.
In 2023, we took various actions to increase the diversity of job applicants and expand our recruitment efforts, particularly in our college recruitment and internship programs. We collaborated with several student organizations to reinforce this inclusive initiative, which will continue in the future. In addition, we have focused on recruiting experienced hires to target and retain top industry talent.
In 2024, we took various actions to expand our recruitment efforts, particularly in our college recruitment and internship programs. We collaborated with several student organizations to reinforce this inclusive initiative, which will continue in the future. In addition, we have focused on recruiting experienced hires to target and retain top industry talent.
We use commodity price derivatives, including swaps, basis swaps, swaptions, roll hedges, costless collars, puts and basis puts, to reduce price volatility associated with certain of our oil, natural gas liquids and natural gas sales. Currently, we have hedged a portion of our estimated 2024 and 2025 production.
We use commodity price derivatives, which have historically included swaps, basis swaps, swaptions, roll hedges, costless collars, puts and basis puts, to reduce price volatility associated with certain of our oil, natural gas liquids and natural gas sales. Currently, we have hedged a portion of our estimated 2025 and 2026 production.
Also, the EPA has proposed ambitious rules to reduce harmful air pollutant emissions, including greenhouse gases, from light-, medium-, and heavy-duty vehicles beginning in model year 2027.
Also, in March 2024, the EPA finalized ambitious rules to reduce harmful air pollutant emissions, including greenhouse gases, from light-, medium-, and heavy-duty vehicles beginning in model year 2027.
Through our subsidiary Viper, we own an average 2.5% net revenue interest in 14,893 of the total 20,852 gross productive wells. Productive wells consist of producing wells and wells capable of production, including natural gas wells awaiting pipeline connections to commence deliveries and oil wells awaiting connection to production facilities.
Through our subsidiary, Viper, we own an average 2.7% net revenue interest in 14,707 of the total 30,928 gross productive wells. Productive wells consist of producing wells and wells capable of production, including natural gas wells awaiting pipeline connections to commence deliveries and oil wells awaiting connection to production facilities.
However, the designation of previously unprotected species, such as the dunes sagebrush lizard (proposed as endangered on July 3, 2023), in areas where we operate as threatened or endangered could result in the imposition of restrictions on our operations and consequently have a material adverse effect on our business. Other Regulation of the Oil and Natural Gas Industry.
However, the designation of previously unprotected species in areas where we operate as threatened or endangered could result in the imposition of restrictions on our operations and consequently have a material adverse effect on our business. Other Regulation of the Oil and Natural Gas Industry.
Further, by using commodity derivative instruments, we expose ourselves to credit risk if we are in a positive position at contract settlement and the counterparty fails to perform under the terms of the derivative contract.
Further, by using commodity derivative instruments, we expose ourselves to credit risk if we are in a positive position at contract settlement and the counterparty fails to perform under the terms of the derivative contract. We do not require collateral from our counterparties.
At an assumed price of approximately $50.00 per Bbl WTI, we currently 7 Table of Contents have approximately 7,905 gross (5,826 net) identified economic potential horizontal drilling locations on our acreage based on our evaluation of applicable geologic and engineering data.
At an assumed price of approximately $50.00 per Bbl WTI, we currently have approximately 9,188 gross (7,130 net) identified economic potential horizontal drilling locations on our acreage based on our evaluation of applicable geologic and engineering data.
Potential Drilling Locations We have identified a multi-year inventory of potential drilling locations for our oil-weighted reserves that we believe provides attractive growth and return opportunities.
Financial Statements and Supplementary Data of this report. Potential Drilling Locations We have identified a multi-year inventory of potential drilling locations for our oil-weighted reserves that we believe provides attractive growth and return opportunities.
Over 28% of our employees are women and over 35% of our employees self-identify as ethnic minorities as of December 31, 2023. We disclosed our 2022 Equal Employment Opportunity (EEO-1) data as of December 31, 2022 in our 2023 Corporate Sustainability Report in an effort to provide additional transparency into the Company’s workforce demographics.
Over 24% of our employees are women and over 42% of our 21 Table of Contents employees self-identify as ethnic minorities as of December 31, 2024. We disclosed our 2023 Equal Employment Opportunity (EEO-1) data as of December 31, 2023 in our 2024 Corporate Sustainability Report in an effort to provide transparency into the Company’s workforce demographics.
Additionally, on December 2, 2023, the EPA announced a final rule that would expand and strengthen emission reduction requirements for both new and existing sources in the oil and natural gas industry by requiring increased monitoring of fugitive emissions, imposing new requirements for pneumatic controllers and tank batteries, and prohibiting venting of natural gas in certain situations.
Additionally, on March 8, 2024, the EPA published a final rule to expand and strengthen emission reduction requirements for both new and existing sources in the oil and natural gas industry by requiring increased monitoring of fugitive emissions, imposing new requirements for pneumatic controllers and tank batteries, and prohibiting venting of natural gas in certain situations.
Risks Related to Our Common Stock • The corporate opportunity provisions in our certificate of incorporation could enable affiliates of ours to benefit from corporate opportunities that might otherwise be available to us. • The declaration of dividends and any repurchases of our common stock are each within the discretion of our board of directors, and there is no guarantee that we will pay any dividends on or repurchases of our common stock in the future or at levels anticipated by our stockholders. • A change of control could limit our use of net operating losses. • We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock. • Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of the company, which could adversely affect the price of our common stock.
Risks Related to Our Common Stock • The declaration of dividends and any repurchases of our common stock are each within the discretion of our board of directors, and there is no guarantee that we will pay any dividends on or repurchases of our common stock in the future or at levels anticipated by our stockholders. • The market value of our common stock could decline if large amounts of our common stock are sold following the Endeavor Acquisition. • A change of control could limit our use of net operating losses. • We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock. • Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of the company, which could adversely affect the price of our common stock.
Our board of directors, through its Safety, Sustainability and Corporate Responsibility Committee, which we refer to as the SS&CR Committee, provides an important oversight of our human capital management strategy, including diversity, equity and inclusion.
We challenge them to identify new ways to foster a better future for themselves and for us. Our board of directors, through its Safety, Sustainability and Corporate Responsibility Committee, which we refer to as the SS&CR Committee, provides an important oversight of our human capital management strategy, including diversity, equity and inclusion.
From 2019 through 2023, we had no employee work-related fatalities. Our employee OSHA recordable cases, comprising work-related injuries and illnesses that require medical treatment beyond first aid, totaled three in 2023, down from six in 2022.
Since inception, we have had no employee work-related fatalities. Our employee OSHA recordable cases, comprising work-related injuries and illnesses that require medical treatment beyond first aid, totaled 11 in 2024, up from three in 2023.
If the prices of oil and natural gas decline, our operations, financial condition and level of expenditures for the development of our oil and natural gas reserves may be materially and adversely affected. We expect to maintain our fourth quarter 2023 production levels in 2024.
If the prices of oil and natural gas decline, our operations, financial condition and level of expenditures for the development of our oil and natural gas reserves may be materially and adversely affected.
Most recently, at the 28th Conference of the Parties in the United Arab Emirates, world leaders agreed to transition away from fossil fuels in a just, orderly and equitable manner and to triple renewables and double energy efficiency globally by 2030. Furthermore, many state and local leaders have stated their intent to intensify efforts to support the international climate commitments.
At the 28th Conference of the Parties in the United Arab Emirates, world leaders agreed to transition away from fossil fuels in a just, orderly and equitable manner and to triple renewables and double energy efficiency globally by 2030.
Further, on May 18, 2023, PHMSA published a proposed rule to reduce methane emissions from new and existing gas pipelines, underground natural gas storage facilities, and liquefied natural gas facilities.
Further, on January 17, 2025, PHMSA issued a final rule to reduce methane emissions from new and existing gas pipelines, underground natural gas storage facilities and liquefied natural gas facilities.
We have committed to reduce injuries and fatalities in our business and are focused on safety culture improvements, safety leadership actions and human performance principles.
We also strive to comply with all applicable health, safety and environmental standards, laws and regulations. We have committed to reduce injuries and fatalities in our business and are focused on safety culture improvements, safety leadership actions and human performance principles.
On December 13, 2016, the EPA released a study examining the potential for hydraulic fracturing activities to impact drinking water resources, finding that, under some circumstances, the use of water in hydraulic fracturing activities can impact drinking water resources.
Furthermore, there are certain governmental reviews either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. On December 13, 2016, the EPA released a study examining the potential for hydraulic fracturing activities to impact drinking water resources, finding that, under some circumstances, the use of water in hydraulic fracturing activities can impact drinking water resources.
The following table presents the number of gross identified economic potential horizontal drilling locations by basin: Number of Identified Economic Potential Horizontal Drilling Locations Midland Basin Lower Spraberry (1) 899 Middle Spraberry (1) 944 Wolfcamp A (2) 565 Wolfcamp B (2) 694 Other 2,150 Total Midland Basin 5,252 Delaware Basin 2nd Bone Springs (3) 582 3rd Bone Springs (3) 836 Wolfcamp A (3) 294 Wolfcamp B (3) 530 Other 411 Total Delaware Basin 2,653 Total 7,905 (1) Our current location count is based on 660 foot to 880 foot spacing in Midland, Martin and northeast Andrews counties, depending on the prospect area and 880 foot spacing in all other counties.
The following table presents the number of gross identified economic potential horizontal drilling locations by basin: Number of Identified Economic Potential Horizontal Drilling Locations Midland Basin Lower Spraberry (1) 1,226 Middle Spraberry (1) 1,512 Wolfcamp A (2) 1,091 Wolfcamp B (2) 1,338 Wolfcamp D (3) 1,182 Other 1,639 Total Midland Basin 7,988 Delaware Basin 2nd Bone Springs (3) 376 3rd Bone Springs (3) 363 Wolfcamp A (3) 141 Wolfcamp B (3) 302 Other 18 Total Delaware Basin 1,200 Total 9,188 (1) Our current location count is based on 660 foot to 880 foot spacing in Midland, Martin and northeast Andrews counties, depending on the prospect area and 880 foot spacing in all other counties.
Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts. (2) Average production costs exclude production and ad valorem taxes.
Hedged prices exclude gains or losses resulting from the early settlement of commodity derivative contracts. (2) Average production costs is comprised of lease operating expenses and gathering, processing and transportation expense.
Liability under such laws and regulations is often strict (i.e., no showing of “fault” is required) and can be joint and several. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment.
Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal 13 Table of Contents injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment.
The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled, quantities of reserves found or economic value. Productive wells are those that produce commercial quantities of hydrocarbons, whether or not they produce a reasonable rate of return.
Each of these wells was drilled in the Permian Basin of West Texas. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled, quantities of reserves found or economic value.
These regulations apply to any process which involves a chemical at or above specified 19 Table of Contents thresholds, or any process which involves flammable liquid or gas, pressurized tanks, caverns and wells in excess of 10,000 pounds at various locations.
These regulations apply to any process which involves a chemical at or above specified thresholds, or any process which involves flammable liquid or gas, pressurized tanks, caverns and wells in excess of 10,000 pounds at various locations. Flammable liquids stored in atmospheric tanks below their normal boiling point without the benefit of chilling or refrigeration are exempt from these standards.
At December 31, 2023, we have a short term goal of maintaining an employee TRIR of 0.25 or less. 21 Table of Contents Training and Development We support employees in pursuing training opportunities to expand their professional skills. Our internal course offerings in 2023 included a wide array of topics in addition to extensive safety and other compliance training sessions.
Training and Development We support employees in pursuing training opportunities to expand their professional skills. Our internal course offerings in 2024 included a wide array of topics in addition to extensive safety and other compliance training sessions.
Generally, we also require our third-party vendors to sign master service agreements in which they agree to indemnify us for property damage and injuries and deaths of the service provider’s employees as well as contractors and subcontractors hired by the service provider. 20 Table of Contents Human Capital We have developed a culture grounded upon the solid foundation of our core values—leadership, integrity, excellence, people and teamwork—that are adhered to throughout our company.
Generally, we also require our third-party vendors to sign master service agreements in which they agree to indemnify us for property damage and injuries and deaths of the service provider’s employees as well as contractors and subcontractors hired by the service provider.
We are subject to a number of requirements and must prepare Federal Response Plans to comply. We must also prepare Risk Management Plans under the regulations promulgated by the EPA to implement the requirements under the CAA to prevent the accidental release of extremely hazardous substances.
We must also prepare Risk Management Plans under the regulations promulgated by the EPA to implement the requirements under the CAA to prevent the accidental release of extremely hazardous substances. We have an internal program of inspection designed to monitor and enforce compliance with safeguard and security requirements.
However, on May 25, 2023, the Supreme Court issued an opinion substantially narrowing the scope of “waters of the United States” protected by the CWA. On September 8, 2023, the EPA and the Corps published a final rule conforming their regulations to the decision. These recent actions have provided some clarity.
On September 8, 2023, the EPA and the Corps published a final rule 14 Table of Contents conforming their regulations to the decision. These recent actions have provided some clarity.
We do not require collateral from our counterparties. 24 Table of Contents For additional information regarding our outstanding derivative contracts as of December 31, 2023, see Note 12— Derivatives in Item 8. Financial Statements and Supplementary Data, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and
For additional information regarding our outstanding derivative contracts as of December 31, 2024, see Note 13— Derivatives in Item 8. Financial Statements and Supplementary Data, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 7A. Quantitative and Qualitative Disclosures About Market Risk —Commodity Price Risk of this report.
States do not regulate wellhead prices or engage in other similar direct economic regulation, but we cannot assure you that they will not do so in the future.
States may regulate rates of production and may establish maximum daily production allowables from oil and natural gas wells based on market demand or resource conservation, or both. States do not regulate wellhead prices or engage in other similar direct economic regulation, but we cannot assure you that they will not do so in the future.
We believe that our low attrition rate is in part a result of our corporate culture focused on diversity and inclusion, teamwork and commitment to employee development and career advancement discussed in more detail below. Health and Safety Protecting employees, the public and the environment is a top priority in our operations and in the way we manage our assets.
We have historically had a low annual attrition rate, representing approximately 15% in 2024, despite the challenging labor market and increased competition for talent. We believe that our low attrition rate is in part a result of our corporate culture focused on diversity and inclusion, teamwork and commitment to employee development and career advancement discussed in more detail below.
These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty. During 2023, 2022 and 2021, NYMEX WTI prices ranged from $47.62 to $123.70 per Bbl and the NYMEX Henry Hub price of natural gas ranged from $1.99 to $9.68 per MMBtu.
These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty.
We are focused on minimizing the risk of workplace incidents and preparing for emergencies as an ingrained element of our corporate responsibility. We also strive to comply with all applicable health, safety and environmental standards, laws and regulations.
Health and Safety Protecting employees, the public and the environment is a top priority in our operations and in the way we manage our assets. We are focused on minimizing the risk of workplace incidents and preparing for emergencies as an ingrained element of our corporate responsibility.
Army Corps of Engineers, or the Corps, jointly promulgated final rules expanding the scope of waters protected under the CWA.
Army Corps of Engineers, or the Corps, jointly promulgated final rules expanding the scope of waters protected under the CWA. However, on May 25, 2023, the United States Supreme Court issued an opinion substantially narrowing the scope of “waters of the United States” protected by the CWA.
The methane emissions charge would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025 and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA.
The methane emissions charge must be paid no later than August 31 of the year following the reporting period and starts at $900 per ton of methane in 2024, increases to $1,200 in 2025 and will be set at $1,500 for 2026 and each year after.
Acres Expiring Midland Delaware Total Gross Net Gross Net Gross Net 2024 10,839 8,805 3 2 10,842 8,807 2025 4,143 3,366 — — 4,143 3,366 2026 2,862 2,325 428 347 3,290 2,672 2027 5 4 — — 5 4 2028 59 48 — — 59 48 Total 17,908 14,548 431 349 18,339 14,897 Title to Properties Prior to the drilling of an oil or natural gas well, it is the normal practice in our industry for the person or company acting as the operator of the well to obtain a preliminary title review to ensure there are no obvious defects in title to the well.
Acres Expiring Midland Delaware Total Gross Net Gross Net Gross Net 2025 5,515 4,290 — — 5,515 4,290 2026 8,159 6,459 302 249 8,461 6,708 2027 9,171 6,921 276 227 9,447 7,148 2028 6,004 4,918 — — 6,004 4,918 2029 337 245 — — 337 245 Total 29,186 22,833 578 476 29,764 23,309 Title to Properties Prior to the drilling of an oil or natural gas well, it is the normal practice in our industry for the person or company acting as the operator of the well to obtain a preliminary title review to ensure there are no obvious defects in title to the well.
States also regulate the method of developing new fields, the spacing and operation of wells and the prevention of waste of oil and natural gas resources. States may regulate rates of production and may establish maximum daily production allowables from oil and natural gas wells based on market demand or resource conservation, or both.
Texas currently imposes a 4.6% severance tax on oil production and a 7.5% severance tax on natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells and the prevention of waste of oil and natural gas resources.
On January 12, 2024, the EPA announced a proposed rule to implement the methane emissions charge. The methane emissions charge could increase our operating costs, which could adversely impact our business, financial condition and cash flows.
In addition, the IRA imposes the first ever federal fee on the emission of greenhouse gases through a methane emissions charge, which could increase our operating costs and thereby adversely impact our business, financial condition and cash flows.
We have an internal program of inspection designed to monitor and enforce compliance with safeguard and security requirements. We believe that we are in compliance in all material respects with all applicable laws and regulations relating to safety and security. State Regulation.
We believe that we are in compliance in all material respects with all applicable laws and regulations relating to safety and security. State Regulation. Texas regulates the drilling for, and the production, gathering and sale of, oil and natural gas, including imposing severance taxes and requirements for obtaining drilling permits.
Flammable liquids stored in atmospheric tanks below their normal boiling point without the benefit of chilling or refrigeration are exempt from these standards. Also, the Department of Homeland Security and other agencies such as the EPA continue to develop regulations concerning the security of industrial facilities, including crude oil and natural gas facilities.
Also, the Department of Homeland Security and other agencies such as the EPA continue to develop regulations concerning the security of industrial facilities, including crude oil and natural gas facilities. We are subject to a number of requirements and must prepare Federal Response Plans to comply.
Our employee total recordable incident rate (TRIR) was 0.30 in 2023 down from 0.68 in 2022, and lost-time incident rate (LTIR) was 0.10 in 2023 down from 0.23 in 2022.
Our employee total recordable incident rate (TRIR) was 0.88 in 2024 up from 0.30 in 2023, and lost-time incident rate (LTIR) was 0.40 in 2024 up from 0.10 in 2023. At December 31, 2024, we have a short term goal of maintaining an employee TRIR of 0.25 or less.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe use the unweighted arithmetic average first day of the month price for oil and natural gas for the 12-month period preceding the calculation date in estimating discounted future net revenues. No impairments were recorded on our proved oil and natural gas properties for the years ended December 31, 2023, 2022 and 2021. See Item 7.
Biggest changeNo impairments were recorded for our proved oil and gas properties during the years ended December 31, 2024, 2023 and 2022. Based on the historical 12-month average trailing SEC prices for oil and natural gas throughout 2024 and into 2025, we are not currently projecting a full cost ceiling impairment in the first quarter of 2025.
Beginning in the first quarter of 2024, our board of directors approved a reduction to our return of capital commitment to at least 50% from 75% of free cash flow to be distributed quarterly to our stockholders in the primary form of a base dividend with additional return of capital expected to be in the form of a variable dividend and through our stock repurchase program.
Return of Capital Commitment Beginning in the first quarter of 2024, our board of directors approved a return of capital commitment of at least 50% (down from 75%) of our quarterly free cash flow to our stockholders through repurchases under our share repurchase program, base dividends and variable dividends.
Joint interest receivables arise from billing entities that own partial interests in the wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we wish to drill. We are generally unable to control which co-owners participate in our wells.
Joint interest receivables arise from billings to entities that own partial interests in wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we intend to drill. We have little ability to control whether these entities will participate in our wells.
In September 2021, our board of directors approved a stock repurchase program to acquire up to $2.0 billion of our outstanding common stock, and on July 28, 2022, approved an increase in the repurchase program to $4.0 billion.
On September 18, 2024, our board of directors approved an increase in our common stock repurchase program from $4.0 billion to $6.0 billion, excluding excise tax.
Numerous changes over time to the assumptions on which our reserve estimates are based, as described above, often result in the actual quantities of oil and natural gas that we ultimately recover being different from our reserve estimates.
As a result, material revisions to existing reserve estimates occur from time to time, and reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered.
The amount of cash available to return to our stockholders, if any, can vary significantly from quarter to quarter for a number of reasons, including commodity prices, liquidity, debt levels, capital resources and other factors.
Future base and variable dividends are at the discretion of our board of directors, and the board of directors may change the dividend amount from time to time based on our outlook for commodity prices, liquidity, debt levels, capital resources, free cash flow and other factors.
In addition to credit risk related to receivables from commodity derivative contracts, our principal exposure to credit risk is through receivables from joint interest owners on properties we operate (approximately $122 million at December 31, 2023) and receivables from purchasers of our oil and natural gas production (approximately $654 million at December 31, 2023).
Counterparty and Customer Credit Risk Our principal exposures to credit risk are due to the concentration of receivables from the sale of our oil and natural gas production (approximately $1.4 billion at December 31, 2024), and to a lesser extent, receivables resulting from joint interest receivables (approximately $188 million at December 31, 2024).
Factors that may impact our credit ratings include debt levels, planned asset purchases or sales and near-term and long-term production growth opportunities, liquidity, asset quality, cost structure, product mix and commodity pricing levels. A ratings downgrade could adversely impact our ability to access financings or trade credit and increase our borrowing costs.
In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels, cost structure, planned asset sales and production growth opportunities.
Removed
Item 7A. Quantitative and Qualitative Disclosures About Market Risk —Commodity Price Risk of this report. The IRA and other risks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk —Commodity Price Risk of this report. The level of our hedging activity and duration of the financial instruments employed depend on our desired cash flow protection, available hedge prices, the magnitude of our capital program and our operating strategy.
Removed
Governmental and regulatory bodies, investors, consumers, industry and other stakeholders have been increasingly focused on climate change matters in recent years.
Added
Cash Flow Our cash flows for the years ended December 31, 2024 and 2023 are presented below: Year Ended December 31, 2024 2023 (In millions) Net cash provided by (used in) operating activities $ 6,413 $ 5,920 Net cash provided by (used in) investing activities (11,221) (3,323) Net cash provided by (used in) financing activities 4,387 (2,176) Net change in cash $ (421) $ 421 Operating Activities Our operating cash flow is sensitive to many variables, the most significant of which is the volatility of prices for the oil and natural gas we produce.
Removed
This focus, together with changes in consumer and industrial/commercial behavior, preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in; (i) the enactment of climate change-related regulations, policies and initiatives by governments, investors, and other companies, including alternative energy or “zero carbon” requirements and fuel or energy conservation measures; (ii) technological advances with respect to the generation, transmission, storage and consumption of energy (including advances in wind, solar and hydrogen power, as well as battery technology); (iii) increased availability of, and increased demand from consumers and industry for, energy sources other than oil and natural gas (including wind, solar, nuclear, and geothermal sources as well as electric vehicles); and (iv) development of, and increased demand from consumers and industry for, lower-emission products and services (including electric vehicles and renewable residential and commercial power supplies) as well as more efficient products and services.
Added
The increase in operating cash flows for the year ended December 31, 2024 compared to the same period in 2023 primarily resulted from (i) an increase of $1.8 billion in total revenue, excluding sales of purchased oil, (ii) an additional $138 million in interest income, and (iii) a reduction of $59 million in cash paid on settlements of derivatives.
Removed
Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us.
Added
These cash inflows were partially offset by an increase in our cash operating expenses, excluding purchased oil expense, of 57 Table of Contents approximately $903 million related primarily to merger and integration costs incurred in connection with the Endeavor Acquisition and additional lease operating expenses, (ii) an increase of $253 million in cash paid for taxes, (iii) an increase of $123 million in cash paid for interest, net of capitalized amounts, and (iv) fluctuations in other working capital balances due primarily to the timing of when collections were made on accounts receivable and payments were made on accounts payable.
Removed
If any of these developments reduce the desirability of participating in the oilfield services, midstream or downstream portions of the oil and gas industry, then these developments may also reduce the availability to us of necessary third-party services and facilities that we rely on, which could increase our operational costs and adversely affect our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategy.
Added
See “ — Results of Operations ” for discussion of significant changes in our revenues and expenses.
Removed
The enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation. In recent years, federal, state and local governments have taken steps to reduce emissions of greenhouse gases.
Added
Investing Activities The majority of our net cash used for investing activities during the year ended December 31, 2024 and 2023 was for drilling and completion costs in conjunction with our development program as well as the purchase of oil and gas properties including the Endeavor Acquisition and Viper’s Tumbleweed Acquisitions in 2024 and the Lario Acquisition and Viper’s GRP Acquisition in 2023.
Removed
For example, the Infrastructure Investment and Jobs Act and the IRA include billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration.
Added
These cash outflows were partially offset by proceeds received from the divestitures of various oil and gas properties and other assets, which are discussed further in Note 4— Acquisitions and Divestitures in Item 8. Financial Statements and Supplementary Data of this report.
Removed
Also, the EPA has proposed ambitious rules to reduce harmful air pollutant emissions, including greenhouse gases, from light-, medium-, and heavy-duty vehicles beginning in model year 2027.
Added
Capital Expenditure Activities Our capital expenditures excluding acquisitions and equity method investments (on a cash basis) were as follows for the specified period: Year Ended December 31, 2024 2023 (In millions) Drilling, completions and non-operated additions to oil and natural gas properties $ 2,632 $ 2,429 Infrastructure additions to oil and natural gas properties 221 153 Additions to midstream assets 14 119 Total $ 2,867 $ 2,701 For further discussion regarding our development program, please see Items 1 and 2.
Removed
These incentives and regulations could accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for, and in turn the prices of, the oil and natural gas that we produce and sell and adversely impact our business.
Added
Business and Properties —Oil and Natural Gas Data—Wells Drilled and Completed in 2024 of this report.
Removed
In addition, the IRA imposes the first ever federal fee on the emission of greenhouse gases through a methane emissions charge, which could increase our operating costs and thereby adversely impact our business, financial condition and cash flows.
Added
Financing Activities During the year ended December 31, 2024, net cash used in financing activities was primarily attributable to $5.5 billion of proceeds from the issuance of the April 2024 Notes, $900 million in borrowings on our Tranche A Loans, net of repayments, $476 million in proceeds from the Viper 2024 Equity Offering, $451 million in proceeds from the sale of our shares of Viper’s Class A common stock and $2 million in borrowings on our credit facilities, net of repayments.
Removed
In addition to potentially reducing demand for our oil and natural gas and potentially reducing the availability of oilfield services and midstream and downstream customers, any of these developments may also create reputational risks associated with the exploration for, and production of, hydrocarbons, which may adversely affect the availability and cost to us of capital.
Added
These cash inflows were partially offset by (i) $1.6 billion of dividends paid to stockholders, (ii) $959 million of repurchases as part of the share repurchase program, (iii) $227 million in dividends to non-controlling interest, (iv) $99 million of debt issuance costs primarily associated with the April 2024 Notes, Term Loan Agreement and Bridge Facility, and (vi) $39 million in cash paid for tax withholdings on vested employee stock awards.
Removed
For example, a number of prominent investors have publicly announced their intention to no longer invest in the oil and gas sector in response to concerns related to climate change, and other financial institutions and investors may decide to do likewise in the future.
Added
Net cash used in financing activities for the year ended December 31, 2023 was primarily attributable to (i) $1.4 billion of dividends paid to stockholders, (ii) $935 million of repurchases as part of the Diamondback and Viper share repurchase programs, (iii) $134 million paid for the retirement of outstanding principal on certain senior notes, and (iv) $129 million in distributions to non-controlling interest.
Removed
If financial institutions and other investors refuse to invest in or provide capital to the oil and gas sector in the future because of these reputational risks, that could result in capital being unavailable to us, or only at significantly increased costs.
Added
The cash outflows were partially offset by (i) $394 million in net proceeds from the issuance of the Viper 2031 Notes and an additional $111 million in borrowings under credit facilities, net of repayments. Capital Resources Our working capital requirements are supported by our cash and cash equivalents and available borrowings under our revolving credit facility.
Removed
For further discussion regarding the risks to us of climate change-related regulations, policies and initiatives, please see the section entitled Items 1 and 2. Business and Properties —Regulation—Climate Change of this report. 25 Table of Contents Continuing political and social concerns relating to climate change may result in significant litigation and related expenses.
Added
We may draw on our revolving credit facility to meet short-term cash requirements, or issue debt or equity securities as part of our longer-term liquidity and capital management program and to finance the pending Double Eagle Acquisition.
Removed
Increasing attention to global climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs or otherwise adversely affect us.
Added
Because of the alternatives available to us, we believe that our short-term and long-term liquidity are adequate to fund not only our current operations, but also our near-term and long-term capital requirements. 58 Table of Contents As we pursue our business and financial strategy, we regularly consider which capital resources, including cash flow and/or equity and debt financings, are available to meet our future financial obligations, planned capital expenditure activities and liquidity requirements.
Removed
For example, shareholder activism has recently been increasing in our industry, and shareholders may attempt to effect changes to our business or governance to deal with climate change-related issues, whether by shareholder proposals, public campaigns, proxy solicitations or otherwise, which may result in significant management distraction and potentially significant expense.
Added
Our future ability to grow proved reserves and production will be highly dependent on the capital resources available to us. Any prolonged volatility in the capital, financial and/or credit markets and/or adverse macroeconomic conditions may limit our access to, or increase our cost of, capital or make capital unavailable on terms acceptable to us or at all.
Removed
Additionally, cities, counties, and other governmental entities in several states in the U.S. have filed lawsuits against energy companies seeking damages allegedly associated with climate change. Similar lawsuits may be filed in other jurisdictions.
Added
Revolving Credit Facilities and Other Debt Instruments As of December 31, 2024, our debt, including the debt of Viper, consisted of approximately $12.0 billion in aggregate outstanding principal amount of senior notes, $900 million in aggregate outstanding short-term borrowings under the Tranche A Loans and $261 million in aggregate outstanding borrowings under revolving credit facilities.
Removed
If any such lawsuits were to be filed against us, we could incur substantial legal defense costs and, if any such litigation were adversely determined, we could incur substantial damages.
Added
As of December 31, 2024, the maximum credit amount available under our credit agreement was $2.5 billion, which may be increased to a total maximum commitment amount of $2.6 billion, with no outstanding borrowings and $2.5 billion available for future borrowings. Our credit agreement matures on June 2, 2029.
Removed
Any of these climate change-related litigation risks could result in unexpected costs, negative sentiments about our company, disruptions in our operations, and increases to our operating expenses, which in turn could have an adverse effect on our business, financial condition and results of operations.
Added
Viper LLC’s Credit Agreement The Viper LLC credit agreement, as amended to date, matures on September 22, 2028 and provides for a revolving credit facility in the maximum credit amount of $2.0 billion, with a borrowing base and elected commitment amount of $1.3 billion.
Removed
Our targets related to sustainability and emissions reduction initiatives, including our public statements and disclosures regarding them, may expose us to numerous risks. We have developed, and will continue to develop, targets related to our environmental, social and governance (“ESG”) initiatives, including our emissions reduction targets and strategy.
Added
At December 31, 2024, there were $261 million of outstanding borrowings and $1.0 billion available for future borrowings under the Viper LLC credit agreement. For additional discussion of our outstanding debt as of December 31, 2024, see Note 9— Debt in Item 8. Financial Statements and Supplementary Data of this report.
Removed
Statements in this and other reports we file with the SEC and other public statements related to these initiatives reflect our current plans and expectations and are not a guarantee the targets will be achieved or achieved on the currently anticipated timeline.
Added
Debt Ratings We receive debt ratings from the major ratings agencies in the U.S which impact the interest rates we receive on our variable rate debt and interest rate swaps.
Removed
Our ability to achieve our ESG targets, including emissions reductions, is subject to numerous factors and conditions, some of which are outside of our control, and failure to achieve our announced targets or comply with ethical, environmental or other standards, including reporting standards, may expose us to government enforcement actions or private litigation and adversely impact our business.
Added
In September, we received an upgrade from two of the three major ratings agencies in the U.S., Standard and Poor’s Global Ratings Services and Fitch Investor Services. Currently, our credit ratings from the three main credit rating agencies are as follows: • Standard and Poor’s Global Ratings Services (BBB); • Fitch Investor Services (BBB+); and • Moody’s Investor Services (Baa2).
Removed
Further, our continuing efforts to research, establish, accomplish and accurately report on these targets may create additional operational risks and expenses and expose us to reputational, legal and other risks. ESG expectations, including both the matters in focus and the management of such matters, continue to evolve rapidly.
Added
Any rating downgrades may result in additional letters of credit or cash collateral being posted under certain contractual arrangements.
Removed
For example, in addition to climate change, there is increasing attention on topics such as diversity and inclusion, human rights, and human and natural capital, in companies’ own operations as well as their supply chains.
Added
Capital Requirements In addition to future operating expenses and working capital commitments discussed in “— Outlook ”, our primary short and long-term liquidity requirements consist primarily of (i) capital expenditures, (ii) payments of principal and interest on our revolving credit agreements, Tranche A Loans and senior notes, (iii) payments of other contractual obligations, (iv) cash commitments for dividends and repurchases of securities, and the pending Double Eagle Acquisition. 2025 Capital Spending Plan We currently estimate that our 2025 capital budget, which gives effect to the pending Double Eagle Acquisition, will be $3.80 billion to $4.20 billion, including $3.13 billion to $3.44 billion for horizontal drilling and completions, $280 million to $320 million for non-operated activity and capital workovers and $390 million to $440 million spent on infrastructure, midstream and environmental capital expenditures.
Removed
In addition, perspectives on the efficacy of ESG considerations continue to evolve, and we cannot currently predict how regulators’, investors’ and other stakeholders’ views on ESG matters may affect the regulatory and investment landscape and affect our business, financial condition, and results of operations.
Added
We currently expect to drill approximately 446 to 471 gross (406 to 428 net) horizontal wells and complete approximately 557 to 592 gross (526 to 560 net) horizontal wells across our operated and non-operated leasehold acreage in the Northern Midland and Southern Delaware Basins, with an average lateral length of approximately 11,500 feet. 59 Table of Contents The amount and timing of our capital expenditures are largely discretionary and within our control.
Removed
If we do not, or are perceived to not, adapt or comply with investor or stakeholder expectations and standards on ESG matters, we may suffer from reputational damage and our business, financial condition and results of operations could be materially and adversely affected.
Added
We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including but not limited to the success of our drilling activities, prevailing and anticipated prices for oil and natural gas, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners.
Removed
Any reputational damage associated with ESG factors may also adversely impact our ability to recruit and retain employees and customers. In March 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks and other information.
Added
We will continue monitoring commodity prices and overall market conditions and can adjust our rig cadence and our capital expenditure budget up or down in response to changes in commodity prices and overall market conditions.
Removed
To the extent this rule is finalized as proposed, we and/or our customers could incur increased costs related to the assessment and disclosure of climate-related information. Enhanced climate disclosure requirements could also accelerate any trend by certain stakeholders and capital providers to restrict or seek more stringent conditions with respect to their financing of certain carbon intensive sectors.
Added
Payments of Principal and Interest on Senior Notes and Tranche A Loans At December 31, 2024, we have total principal payments due on our outstanding senior notes, including those of Viper, of $764 million in 2026, $1.3 billion in 2027, $73 million in 2028, $915 million in 2029 and $9.0 billion thereafter.
Removed
Investor and regulatory focus on ESG matters continues to increase. If our ESG initiatives do not meet our investors’ or other stakeholders’ evolving expectations and standards, investment in our stock may be viewed as less attractive and our reputation, contractual, employment and other business relationships may be adversely impacted.
Added
Additionally, we expect to incur future cash interest costs on these senior notes of approximately $612 million in 2025, $1.2 billion cumulatively in the years from 2026 through 2027, $1.0 billion cumulatively in the years from 2028 and 2029, and $7.1 billion cumulatively between 2030 and 2064.
Removed
Conservation measures and technological advances could reduce demand for oil and natural gas. Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas.
Added
In addition to the senior notes, we have $900 million in aggregate outstanding borrowings under the Tranche A Loans due in 2025. See Note 9— Debt in Item 8. Financial Statements and Supplementary Data of this report for further discussion on the Tranche A Loans.
Removed
The impact of the changing demand for oil and natural gas services and products may have a material adverse effect on our business, financial condition, results of operations and cash flows. 26 Table of Contents A significant portion of our net leasehold acreage is undeveloped, and that acreage may not ultimately be developed or become commercially productive, which could cause us to lose rights under our leases as well as have a material adverse effect on our oil and natural gas reserves and future production and, therefore, our future cash flow and income.
Added
Other Contractual Obligations and Commitments At December 31, 2024, our other significant contractual obligations consist primarily of (i) minimum transportation commitments totaling $2.8 billion, (ii) electrical power purchase commitments totaling $365 million (iii) asset retirement obligations totaling $592 million, (iv) electric fracturing fleet and related power generation services commitments totaling $199 million and (v) minimum purchase commitments for quantities of sand used in our drilling operations totaling $66 million.
Removed
A significant portion of our net leasehold acreage is undeveloped, or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.
Added
We expect to make aggregate payments of approximately $442 million for these commitments during 2025. See Note 7— Asset Retirement Obligations and Note 16— Commitments and Contingencies in Item 8. Financial Statements and Supplementary Data of this report for further discussion of these and other contractual obligations and commitments.
Removed
In addition, many of our oil and natural gas leases require us to drill wells that are commercially productive and to maintain the production in paying quantities, and if we are unsuccessful in drilling such wells and maintaining such production, we could lose our rights under such leases.
Added
We and Five Point Energy LLC currently anticipate collectively contributing $500 million in follow-on capital to fund future growth in our Deep Blue Midland Basin LLC joint venture projects and acquisitions.
Removed
Our future oil and natural gas reserves and production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage.
Added
The remainder of our free cash flow will be used primarily to reduce debt. On February 21, 2025, our board of directors declared a base cash dividend for the fourth quarter of 2024 of $1.00 per share of common stock. Free cash flow is a non-GAAP financial measure.
Removed
Our development and exploration operations and our ability to complete acquisitions require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could lead to a loss of properties and a decline in our oil and natural gas reserves. The oil and natural gas industry is capital intensive.
Added
As used by us, free cash flow is defined as cash flow from operating activities before changes in working capital in excess of cash capital expenditures and other adjustments as determined by us.
Removed
We make and expect to continue to make substantial capital expenditures in our business and operations for the exploration for and development, production and acquisition of oil and natural gas reserves. In 2023, our total capital expenditures, including expenditures for drilling, completion, infrastructure and additions to midstream assets, were approximately $2.7 billion.
Added
We believe that free cash flow is useful to investors as it provides a measure to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis.

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