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FANG Diamondback Energy

Participants
Adam Lawlis VP, IR
Travis Stice CEO & Director
Kaes Van’t Hof CFO & EVP, Business Development
Arun Jayaram JPMorgan Chase & Co.
David Deckelbaum Cowen and Company
Gail Nicholson Stephens Inc.
Neal Dingmann Truist Securities
Nitin Kumar Wells Fargo Securities
Derrick Whitfield Stifel, Nicolaus & Company
Asit Sen Bank of America Merrill Lynch
Scott Gruber Citigroup
Jeffrey Grampp Northland Capital Markets
Scott Hanold RBC Capital Markets
Charles Meade Johnson Rice & Company
Brian Singer Goldman Sachs Group
Leo Mariani KeyBanc Capital Markets
Jeffrey Lambujon Tudor, Pickering, Holt & Co.
David Amoss Heikkinen Energy Advisors
Jeanine Wai Barclays Bank
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Diamondback Energy Third Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference to your speaker today, Adam Lawlis, Vice President of Investor Relations. Please go ahead, sir.

Adam Lawlis

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

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

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

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

Travis Stice

in continued to LOE call. trend and you, new of third quarter all-time continuing near per Thank earnings capital reductions records. third to to Diamondback's lows cost and lateral with our Adam, G&A remaining the foot Diamondback decline quarter, welcome cost and with

the lower drilling XXXX current well XX% efficiencies completion levels operations and beginning mirror. Our are Basin. programs now rearview in the continued gain costs benefits impact the of We're the Delaware of the from and the to Midland latest both also see downturn and quarter than grading and our in have all since well curtailments high development started to results in our second from

day XXX,XXX expect as fourth quarter momentum of production we're baseline grading to improved into XXXX. for development efficiency, our plan carry track of and our between barrels on this to target high result in meet maintenance oil this per and a XXX,XXX and the XXXX As capital average capital

discipline industry ratios clear, reinvestment extended is But by and on plan capital plan shifted further sufficient towards at base be we industry and capital if commodity currently that this touting oil. $XX sustain has case conversation for on activity weaken an exhibit the an corporate capital plan this not creating present a To net moved for implies for through further. maintenance away development shareholders. levels will capital breakevens, scenario but generating the And The XX% operator's execute less question reinvestment period, prices XX% that XXXX. whether with of to of cutting answering and from of weakness expect about our operations ratio than XXXX. to this company's is returns and We XX% and has the or value capital leadership end

will than need maintenance not dividend breakeven to less capital that While debt. If to and simply, we're our spending XXs shareholders be our has breakeven before preserve and Put scenario XXXX we operating philosophy corporate conserve near best-in-class, will maintenance to paying upside down pay cash WTI be pay instead our will our not should low flow to or for capital happen. capital allocation of at dividend forward changed. considered very our

maintenance debt. is spend will we dividend, use cash capital pay excess expected to flow most ensure If cut capital dividend, protect We to our then down flow at cash our will our cover not free dividend and will our free protected.

consolidated The which most we free as preview $XXX debt used quarter quarter, to million. $XXX consolidated net of flow operating a generated third XXXX model the of by new this was in of provided reduce cash of million

next due maturity one in ahead, $XXX we that outstanding Looking debt material term the remains years, million maturity. only on our X have XXXX

After further outstanding this by any do note the obligations of reduce debt. have to to hand expect early material end absolute until not cash XXXX. on to We we this maturity, retire XXXX have

providing optionality gross callable legacy high-yield a debt have reduction. also We for due that's future currently bond XXXX in

ESG. reducing and committed our briefly carbon footprint. Turning stewardship to performance to environmental best-in-class delivering is and Diamondback

contracts With a to ready year, of to produced completed And low and XX% commodity be stockholders, global are own proceeds case. environmental year-to-date, but expense commitment on operate routine and per also have respective positioned contract persona that if not emissions so eliminate have our cost Diamondback's We've not each supply recognize end gas of X also are important greenhouse important the well net the our gas to XX% is Diamondback also end that our our responsibility. long we a While us our our of will that oil and to assets excuse gatherer to to curve the Flaring puts it's must over flow emissions together supports to is continue restructured of positioned the contributions demonstrating sheet assets flaring cost been midstream to connected operating Scope to flaring contract flaring our low down of from policies curve. owning and as the not on all oil on is proactive of gas fixed the most segments gatherer. a of consider converting the that's that supply economic to we in take This public balance industry. Diamondback safety this our well, flared. as does Scope all issue protect flaring from development infrastructure declined work exposure the the not address every ensure flaring using by those responsible our of contracts has to was reducing our processing at X ensures by not Upstream operations fee and back midstream gas. operator, and BOE emissions in policies materially an for as industry. gathering for the the operators XXXX. build

U.S. as cost to and our scale and Diamondback changed efficiencies. hundreds and sector by on costs in from realizing drilled millions our avenue fragmented, as is well anticipated shale and has were believe leader A the we been previous necessary efficiency. M&A, consolidation we've The and long is improve Next, be the quicker, operated and cost been business. of today acquisitions in topic touted rapidly. cost Today, the consolidation expensive too a consolidation to operators. but than that create the less industry lower dollars driven of success Permian is of sector the has the in returns executed higher that's Industry in in Basin structure Diamondback will through of of largely savings by date with an lowest

we need So capital and the to industry. increase further scale structure. barrels lowest day in the our per cash cost our at not reduce XXX,XXX We produced to do costs

adds be access industry. first were this that contracts pandemic. always are will this be investment-grade better. to is availability metrics. or both we the something, and transaction in an anything mean even -- a for to right sheet in matter service is piece inventory this compete chain shareholders through from balance the day, only have at cap company structure that we'll do buying than better do. cycle. not midstream relevant improved coming our translate it to being translate to in means is market getting fact in and metrics not the and what Better the bigger numbers that of To are out those we selling we and today a the Better that and of value Diamondback if own case, that's for or away what who MOE asset asset-based If not be This make the must finish, at scale characteristics an with our self-serving. don't company. have operate as through or to for the commentary is better not based then and not a should And for be a not history, relative has patient our at supply proven such downturn accretive the weather size, in upcycle. as prolonged access this specious year. to downturn capital. capital We decisions to transaction would the shareholders. capital a sheet, These to base sheet, acquirer to business. of Diamondback deemed that production brutal with balance we we ride operational as thrive targets. Getting balance Diamondback level bigger does inevitable asset Whether bottom acquirer scale, been the competes companies that have proven be. if as to may space not we financial is end arbitrary rash while industry prefer better has quality There's rewarded shareholders, the also severe is necessary investors and structure arbitrary should is and getting the facts to to we to as to Touting and does today, that's prove the any of behind in Patience cost the the downturn cyclical the a left the cost and in

and cash commodity our current until generating from free flow debt prices allocate expect and to free are cash recover we to to will that flow, continue and We levels. reduction generate dividend meaningfully

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

Operator

[Operator Instructions].

JPMorgan from come the Jayaram Arun of question first Chase. Our from line will

Arun Jayaram

have peers a it A&D us be sufficient on said, could transacted Travis, if the to a it's which without believe clear in I as that from Because scale market? recently appear wondering was the what buyer's commentary characterized a We effectively Permian, several obviously, PVXX was to give you have being of valuation. M&A. your gas saw you views That your compete natural does not in Permian deal, market. the you your at

on maybe market? seeing the thoughts start in So just A&D with your you're what

Travis Stice

point and -- you're service Well, company not hey, to single to enough. let calling you not back that's We're just big us going circle scale. to on able be up a do with my you. There's business not reemphasized saying, me

metrics. to for size a scale should to laid pretty Diamondback balance sheet think terms But I forecast and how for case in M&A. about out hard execution of pertains it think good M&A, and and me we've it's as you

to always every grow going drive same day, our of focus only do. been that in it comes done, it value. the that and we in October think like through said, the took when I go for public, that's we or M&A, asset is got the And we value. I just back how what thinking drive work comes -- has that -- XXXX show on we'll about shareholder when we we if can that's it And we've what can come you just can we're base execution words to company through shareholder to the since

Arun Jayaram

maybe lower just Travis, that, if LOE of you lift And has the your guidance wondering from the artificial rates? has is gas go-forward lift of and I was evolved in how LOE. a that articulate cost and been And drivers cash towards strategy some for your could any my think of was reduction follow-up one ESPs. I just shift implications decline

Travis Stice

proud particularly, our lift tribute Diamondback's using of came our and legacy They really And legacy how on lift Sure. could it's opposed set practice guys. those lift I'm with ESPs. accomplish skill was this gas Energen organization. to really what we us a through as showed folks, operations the mechanism gas operation to

we've the it, at a still But happen from an if back we're in motor making something way ESPs the the significant things extension performance, seeing And response gas just cost the while or crank At pretty ground. on in we and lot hanging nothing to we're there's down an that the just in a end going but Now electric to savings. volume all mean, up really ESPs, detrimental ground from the in X.X you're we're needs. excited fundamental I day, water, not have impact to And easy these time, scenario. you wrist about. any seeing so it's lift, a of on shift in with can step the same and ESPs cord, been mile in of reduction bad

on the be LOE in we return the we're be with excited a to And we're cost got still that So we've it's operating shareholders cash focus leading-edge lift. or ESPs million whether basin. our about Permian deploying G&A, flow some lowest whatever. of we $X there's expense that part or of always in been listen, for side, every of the will that $X.XX to going has really our But an gas technologies to to operating just organization be. that But plan, can translates that understands save costs,

So delivers you Diamondback focused cost from when organization, mindset consistently Boardroom, up to our field that's what is the have a on. out ultimately that's structures, you which pennies, on driving end how best-in-class

Operator

David of from Our the from Cowen. Deckelbaum question will come line next

David Deckelbaum

Curious, into million you about referenced the has, cash plan? 'XX program pegged think how you you seeing long, you about XXXX you you influencing seeing for? high you're this further talk high that maintenance Diamondback $XXX sort see Are at I at You of now benefits $XX. right guess, as grading? how 'XX you plan. at of benefits -- that high grading grading how Can scale free going execution on flow this And emphasize long graded sustain think could from high do a you the level this

Kaes Van’t Hof

David, I QX XX X some think ramped we we down very and Yes, the as from at rigs of into decisions made QX today. tough to end

on while the of focus a Basin difficult Midland we're X rigs, be and a the of move schedule than worst first. to While we world drilling put obligations where capital. us Delaware basin lease completing rigs might in year drill you're did did XXX year. and higher and running that, now stuff today, when our wells our XX the and completing We've little we more a of can And percentage kind completing in running total less a behind that best we're wells than XXX

moving quarter the and seeing the for interest, and with finally and the productivity percentage this results basin midstream of to combined results you a lower higher Midland in improvements capital Viper infrastructure from as So high spend. saw well Viper

your levels of and sustain capital how And can in what the for like. our heading exact as our decline as number second little So had years a long what happens a price on story this at from well Midland -- and stay is. but down on capital a activity, as of all we've next multiple result with been depends years or that? well to come for a period. and comment, flat I and we're the that down know productivity up. I year. rates can are costs setup think XXXX industry can our less on nice It I they We've in results then into location we anybody confident don't with today, goes multiyear coming transparent forward count oil with stay productivity more efficiency, where we think looks rate in Basin it last decks going above what X change

Travis Stice

fired or my from Basin, for Midland plan on I forward really ever kind out looking capital next, can mean don't all I've our David, in execution, be X/X, allocation in and deliver as and confident quarters, been. X/X to what I that shareholders forward to XX%, to at know, you I plan the looking this reductions tell able on we're chair confident our expect. this cost of six X/X cylinders, Delaware on very four as I'm

David Deckelbaum

just my 'XX the I is And that. appreciate follow-up on plan.

or those back infrastructure the evolving out you creation benefits value FANG spending a Viper next Rattler clarify of maybe think talk mentioned to comments see Can about and holders? I bit of you and midstream coming little more and year. some down you

Kaes Van’t Hof

David. Yes,

we've know kind year's down you two and of look levels XXXX. about or we infrastructure another or And -- be midstream said had years that XX% XX% that's the from think So in I that next back ago, you of so levels. if what, this XX% to that year will

the infrastructure on the benefit of drill with of the because It we're a cost capacity a to utilizing capacity a ancillary oil new So reduce our disposal more that batteries we're or But allows having does easy slowdown, does stuff structure. add have existing efficiently. or spend not gathering bit lot down. to lot all capital coming of our us that's versus and

And the in businesses to XXXX. continuing mentioned, Rattler leverage those the that cash Both Viper you're decrease. to the distributions. from up and up to you the going a are parent to those So still looking cash of parent companies forward X even And of fine of in very then more strategic lot free X on form perspective. from are a as than us. them get side, provide to XXXX flow to They therefore,

Travis Stice

playing go, Kaes of the capital XX-plus your I'm Midland translates maybe things. we goes. to years in doesn't the talked next in confident the more of to we when that next of When that the per want we're of the -- here mean not Permian. on were just And the only quarters, to we've out the not maintenance I'm wells circle David, life just year slower back at on got about that I we inventory. were That we rigs. and year I future we're burn question just because the XXX,XXX industry last same XXX pace going several side inventory. articulated confidence years. Basin extends just that It perception several inventory extends through is, whatever it acres towards it the running in

clarifies that hope bit. I So a that little

Operator

come next Gail from Our the question Nicholson from Stephens. line will of

Gail Nicholson

You oil very free debt phase at amount paydown, cash versus on immediate price appropriate if you sure prices, volatile? the attractive a have be generation the cash debt myriad of entering making to when you paydown is on of balance continues sheet the guys are a look of commodity what

Kaes Van’t Hof

Yes, Gail.

we need former the we September of our foremost, as Travis sheet a and have XXXX bond pay note. that we of to fortune callable. his cash first next that, by in year. high-yield balance to top of think, QX And on plan $XXX in mentioned our off early to our opening bond have remarks, On that's have having million I XXXX do

should it. next going have I we step. of than as I up but the have happen, the the bond cash, not that the bullet more a think well have big given cash hoarders we volatility in don't we that while down with in we're logical flexibility do overall, know balance we that's outstanding the calling unlike issues some that of as to bonds that's are come maturities. when maturities, IG past keep bullet And by So that paying

got handle cushion is financing to make You've on I those. be to sure bank have plan to to rely sheet balance overall. on a cash And able think our less and the more we have little

Gail Nicholson

be scenario by volumes of pricing. free XX% of using believe I X looking the your on flow guys presentation, And a then are cash should XX% you Brent quarter, there. WTI fourth realization at the getting Page your

was I XX% for what So WTI realization? that you're just differential using curious Brent-WTI

Kaes Van’t Hof

Yes.

there. right now. via a to $X That we our And is more should narrower pipeline a little using spread we're Brent Brent-WTI the do Coast. ourselves in we'll ownership I'm Brent-WTI pay But or because Gulf the hurt ratio bit. the spread tighter we're fact us little naturally exposed get that benefit. ignoring widen, the Brent, that So to has Midland to

think the MEH I less Brent So of a Midland $X our you're pricing, or for or price for direct realizing rest, $X. realized on a kind we're now. And Brent realizing an price

Operator

line And from question Neil our of next comes Tourist from the Deman Securities.

Neal Dingmann

you what efficiencies? now kind It or the for driver largest just that you operational talking wondering, more all and confidence? productivity the confidence, of -- about And for few this the that kind your is would of say you next is driven of all it and Kaes, you Or by of the were like Travis, just I I'm mean, asset productivity? the have gives sounds just quarters. above? location it you is

Kaes Van’t Hof

Diamondback's above, And think our curves think side. we're mean, the I ability overall, does the to I the hope And intently. of on I Neal. I on the look on cost rate I questioned if Yes, think up execute over Street anyone's the think ever structure, drive capital of all these quarters, side, But at -- that Street well. the we've do it's positive seen Basin change Street, not out Midland we focused that on and picks years. curves the stories better next putting few as particularly some don't

Neal Dingmann

Okay. believe Travis, lot saying scale. of we you to a continue you what hear And Do follow-up, then just on were to chatter. --

areas to out I like You more have know, that comment having around don't mean, having peers might could it in around around color but more all a -- pads, more have chatter turning design more optimal maybe some -- still that. optimal of the -- of versus to say folks scale. plays. things? your Is Maybe I when of hear you lot I when a I've it heard more that? bit to I wanted to and have scale, a that again, you more about seems of you it comes view comes sort more again, others just guess those there's optimal how sort maybe

Travis Stice

not the as completing commentary in the that simul-frac end is listen, these fact. at I of with in just fast these that's there same Neal, time we're with -- is out day, X anybody based mean Diamondback it's as wells at operations. Yes, -- the pads the basin

commentary chain All I tight. not cost are people scale. Diamondback's of cost structure. based any some at structures our on because size disadvantage think supply and And is from is wider the We're disconnected of with struggling

the hearing. I commentary perspective, to so need navigates faster. it's it's our scale to because are comments down we're why so -- certainly, what you and why they're so people do can to size And difficult I not shareholders' don't I know, those if seeing nor that's much making comments cheaper perspective my making the shareholders' mean, towards those from much and because it that ask point

Operator

of from comes from the question Kumar line next Wells Our Fargo. Nitin

Nitin Kumar

talked I A not just of but your would operate consolidation. of tough to the mentioned of bit maybe revisit like a concept about lot only whole commentary, scale, their industry little to environment in. in a peers

you the suggest go alone? a crystal you're kind that of and bit optimism knowing about just talk have gives confidence ball, maybe of view seeing it your macro to what you from Your that don't here comments a

Travis Stice

or the We've an uncertainty to -- policy mean and some -- to election changes, still global that's change. still We've then to now. the recovery? contain does got administration overhang is easing space I December anytime about whether OPEC+ on those how vaccine right start And and certainly a headwinds be COVID got meeting they there's we've maintain there. to there's got there inventory we've supply still and to if cuts, that soon, cuts significant a looming mean talk demand we're in commodity got Well, struggling that. what going the that's

those to base the that do is and structure can demonstrate control, on how confidence our we issues continue and But in execute take in how All commodity world, macro already focus right advantage on can't we program. our of we're plan, cost can't we are increasing how and I of improving our We've influence. we what issue returns now. addressed -- we dividend shareholder-friendly an price addressing our debt development

at this clear, the confident We consistently business be we'll we're the way event, And in So feel has if we our slow adult global like plan execute feel have that that now in deliver we large, and certainly our they here, let's very we're place. from this business look change look, a XXXX at to of and our -- get ability preserve and for for point very capital. industry. enough on at plan. only but we feel in we'll also citizens we where down an worse been confident not a in that things, apocalyptic And behaviors,

our shareholders about the not I'm accomplish. is world. uncertainty for at the And of me trying So what But have Diamondback, it to with price in we communication to we in confident confident I'm confident ahead there we're there's have us and in. be nothing in is people the commodity

Kaes Van’t Hof

denying this to but business at we're the now. no easy not capitulate Nitin, There's the that, that right doesn't going of bottom is cycle. And Yes. mean

prepared happens, I bigger, the of not have the get remarks not at This ride storm. think to decision to that we're not business. anything to necessarily is in said means cycle. bottom easy Travis better, make And it his a of that going an rash out you

Travis production on get XXXX plenty XXXX. the worse, We like decisions to have we and things tough already of the as have downside we'll said, if in in have our hedged make

Travis Stice

in completely Diamondback the know cycle in Nitin, one company. even this is don't have cycle, which But the worth the free bottom We're is Look, been profitable yielding of we're our as $XXX bottom the if dividend, of We bottom which cycle. as quarter. at At still a above we're third at the reducing base the generated cash I and point. S&P million of bad XXX, just of the things debt XXXX, flow paying now. other

And the for bottom things world to the so we of like can is side at cycle, what of our about think we profitable when. But and We this we're good. increase the future. the of inevitable, on know in if don't oil the price that the coming we side. will is know just all the other And -- bottom as if like we're cycle. look we out shareholders which accomplish know the at going of that the those other very We're cycle, start of

Nitin Kumar

Maybe quarter, In for DUCs you a you importantly, turning here. a ago. to it's appreciate you've done job a need just D&C you're great to in Every tough better from D&C think think slightly job. to XXXX, help costs. great costs? report year that costs have comments. what that certainly, a that to XX% what point mean, might down but And those add at do I you about market, more I And efficiencies. XXX But at you to those do 'XX, point? do your you XXX cap second

Kaes Van’t Hof

a think, completion as on Basin a tailwind upward while we're do versus drilling helping with a is in have Certainly, Midland And how sign us all-time design permanent many for savings well long focus about I a DUC that Basin been cost overall, we savings pressure XX simul-frac of in temporary, no XXXX, design we and costs we today. on these to Yes. the nice us. the savings we the are crews the temporary. of terms in well term. these what lot cost out as D&C But low I amount there's to XXXX. good got Delaware of mean to learned that those have costs, going not guide have keep That'll going be to in if there's we're to real Nitin, benefit

are cycle service up, counting we So guys some are. at recognize costs go prices while down those with prices. tough not we're that And will service we commodity a anytime soon, increasing dealing as very but on higher with just coincide probably point, would

Operator

the of will question Stifel. next from Our Whitfield line come Derek from

Derrick Whitfield

Kaes, you cost versus between D&C how comment your and comments. improvement perhaps on much the staying 'XX with structural Could of you market? current on

Kaes Van’t Hof

and Yes. X/X been side, curve, is I Basin Basin We've in and on Midland market. probably the market. low if we been cost in significant that is I in the XX% I'd a where days, cementing well implementing. second is mean, on then Midland have XX spring some But improvements some the XX the technology pretty progress. I'd already Basin, downturn, Pecos the mean, probably going say County. in And this bone X/X made with well Delaware we've XX% we're has we made not drilled under simul-frac structural say in into the and days lowest XX,XXX-foot structural Delaware and under

that XX-plus our I in first think area were wells consistently.

to the up things are savings And term. phone are and -- on those focus we costs. rather the reducing those the the service going to the our long shareholders that picking accrue So are than

Derrick Whitfield

XXXX first least could half it there backdrop with of assume forward for time year? to to be XXXX will achieved for next bias likely you've walk that not your and projections the reductions Understood. costs change And fair in the date be then the through capital in significant maintenance downward macro at would equation we capital shifting outlook, in a your to as this

Kaes Van’t Hof

to and commodity or I a going at keep just is kept think, we to to maintenance the turn Yes. your conversation the to the on those year. it that of are for discussion XX% side, the the closer we've rather there we needs you generating range Derek, in than to, lot there's corporate uncertainty stay But certainly, changing right So NPV prices? to capital positive due think headwinds scenario? I it this I XX% lowering through be out there, we're and to the our breakeven and it out shareholders if think mid-XXs needs get

Travis Stice

and Delaware savings, those about cost Midland X/X some Derrick, just the of follow-up I Basin. to the wanted in Kaes on comments of permanent made XX%

already on You cost those shouldn't of are sight execution lose or in best-in-class structural the measures. and those -- It's lowest improvements point the the operated. that

already to our of what not from exercise I'm really to been it's just accomplish. they're leading out, continue operations So they've to when drive a costs able but proud organization casual

Operator

America. Our the from of Sen Bank from question will line of next Asit come

Asit Sen

Scope X and emission pretty reduction of over XX% significant year-over-year was impressive.

the Just framework policy hanging wondering looks -- fruits the the you with plans potential and what And handling are the going change regulatory Are to you lower plan your emissions changing? forward? that how new been how thinking like on about administration navigate already it's addressed. are

Kaes Van’t Hof

XX% I'll of thing. let about down talk Scope XX% one up emission. handle XX% sorry, is flaring And little year-to-date. or Flaring I regulatory -- or over after -- makes Travis X clarify XX% a our

versus XX% probably XX% of Scope think to realistic overall, a I So number. down XXXX in X, more XXXX is

targets. We have made progress out in to our put report sustainability

environmental I year. have of matter little scorecard, our that a overall. all think just I makes reduce years with those come next levels to a we'll targets that's operator effort between But we a a portion long-term which on our X Scope activity with X metrics this well we'll of smaller targets, versus of or the concerted us overall, flaring bit think as out up and probably tailwind implemented which emissions. to lower And X prior, midstream year

Travis Stice

Yes.

the think also, got we've believe to general got of producers, climate global but Asit, role time, reductions, energy security an important this promote got challenge as economic, to it's American to energy policy emissions gas statement, challenge. environmental solutions greenhouse meeting and to meaningful we've climate And has innovation facilitate same at needs. change. the balance climate got in We that a I

we we highlighted, of adopted in And bonus same year, plan. compensation executive emissions targets. Kaes our of that this -- share part employees, And as Diamondback, of all XXX plan. also employees As uniquely, they our

bonus. So are of part measures those environmental cash their

our hope on can comp to of this comp we've take a energy all continue we're and producers is stand -- I So step targets. accomplish. as of going likely -- trying XXXX, you, listen, reduction I'd we're plans, also emissions and kind tell what while that to to to included a forth multiyear finalized industry the it all hope I take in the and challenge not incentive targets to set for are be And emissions

comment, And again, don't in -- that. it environmental and our that work, big we're be position an leadership doing to in the just scale have and and to do to to this stand We trying we to We're license -- Diamondback's trying up live scale. take doing we're back operate have social current doing to this. the and We're it. areas a at

accomplish that's proven the case. to accomplish to again, that we've big goals, environmental getting not So

time XX%. From flaring XX-some-odd you we're almost I our year ago, at we're look ago, if even percent. a this think down a down time year this year-to-date, from

until expect with be So we've than to as and eliminated routine we've that we needed to rather providers. to continue later done can we our all flaring. what that long collaboratively we'll as sooner lean do, into we work midstream And

Asit Sen

inevitable to cycle Travis. are talked on about confidence And tough industry. talked you want the now. you Just And the facing the Travis that your upcycle? in Appreciate a upcycle. cycle, down on get we right yet, an about that, an medium-term you thoughts What gives

Travis Stice

grow. is continuing in that's striving the than don't there's supply I to to occur later. does, energy a mean, couple -- know come. the the like I that's many, rather sooner going going it's rebalance. to going going lead probably population occur. demand from when expert in rise the term, to world that's to I I But it positioned we're going for inevitable to price. There's for to that commodity best But But when am years demand I of And said, near on thing the long-term fundamentals. things. been. and be to continue storm, going supply weather brutal do forecaster. our constructive pick energy many I understand And because shareholders. this world for continue need commodity it's what's the to our as to We'll liquid to energy of to transition. But price your as mean is Sure. is hydrocarbons We think

Operator

line Scott Gruber from will of Group. from Citi question come next the Our

Scott Gruber

as So you guys realizing have incremental from figures? Or And wells? on completed a any few simul-frac that wells still now. is What there sit we is D&C in level you come of now? incorporated simul-frac your fully savings simul-fracs the benefit are

Kaes Van’t Hof

cost, on push those with I envelope quarter, same And recently put push mean and completed Midland I we -- simul-frac. in apart. are Yes, leading-edge think D&C the well our the third X,XXX I time pads pads simul-frac I two the which feet about at mean, even pads, the we foot. separate into well at think continuing $X.XX it's are Scott, fully a we baked to crew

from certainly, feat efficient. more day. lateral We're team. can X,XXX Overall, it -- that's engineering So pretty the get feet a about completing

we're of lateral days, upwards X,XXX Some getting up day. a feet to

there. can So -- the period with think that envelope as production, area those production an get for and a ancillary I get area crews time. a to also get of out more particular benefit is quickly you efficient, watered so existing continue push out shorter complete large pad But how watered we'll is into of out your the that

$XX of the estimate So about has side. efficiency, cost side, we the unseen savings or a since that's for simul-frac completion on implementing us change the well rate an been but on it's that And positive something a of crews. per foot $XX

Scott Gruber

it. Got

networks benefit see lot obviously, the well operational So two Do in of from two at the same any a performance of the fracture creation given wells you aggregate on side-by-side savings. time?

Kaes Van’t Hof

fair at and, same have path wells you're on certainly put you more tank a parent-child large that the I not And number not can't dollars larger spending logical in better completing is reservoir. as effect. at do there. place, assume completed large I facilities a infrastructure mean, Then it, same that you're It's time the it's if the we therefore, a the but time agree forward. having to of a and for

Travis Stice

twice that have which the of the and more almost Scott, these that wells more gotten has and the much of something in we its now. as the faster, its modeling complex really these effect. do, effect much I'll we benefits fast, has knock-on over length effect off but kind terms water tell to that -- completing is out we overall been really that because on and other the faster. contemplated we started and of is wells because But so impact seen what we're you, impacted simul-frac, positively getting is we've years call of so Not we're water that out duration when

Operator

Our will next Capital. Jeff line the from come Northland Grampp from question

Jeffrey Grampp

are low on and you like the cash front, seems the next guys certainly given prices dividend at projecting seems year, free flow safe. Curious that it fundable

growing that? obviously is competitive. Travis, time on like, it So how yield the are seems the you assessing pointed It you guys look as right at to maybe out, very

of before So dividend kind Or perhaps you be kind organically that looking that's needs would to of something growth? rectified there just at thoughts get great.

Travis Stice

made that what, was Yes, our that's that the fact the -- yield reason at I earlier was over a good that X%. is already, point

dividend reduce debt above and committed yield base well we So that. is about now, to I'll things -- just then And free rises, tried as shareholder the pay strategy dividend every frequently tell right debt. be our form it's and is at our have to I've than more the price do what reduction. dividend excess above our it we I've that that you that very But if right been Board is not XXX -- least talk S&P quarter, flow now, with commodity clear an to And return to program. it's of primary at options cash

Kaes Van’t Hof

back Yes. cycle. through earlier in we And the that it's year it took dividend Jeff, easy conviction doubled at the particularly of this I cycle was to think not and down look That or important the dividend decision, down to maintain an the February. the worst after

do. return to hearing of and So forward going what I about people are capital keep

to have dividend, maintain their our cut should think others reviewed and by it looking our while leaned history theirs, sold into that be at what or even order either companies I suspended we've in shareholders.

Jeffrey Grampp

guys Slide of I guide. you looking know XQ. XX -- That's the X suggesting in a that. kind just here that's my Yes. at point, Appreciate new the based I on are implied completions And deck, Good the on XX follow-up, think Kaes. to

fewer it's wells a guys many you 'XX can world maintenance guys expect us just XQ that you of So in do the range? an think wondering if how to for 'XX, of in completions give 'XX? get kind related completed where in point, you And versus fall indication maybe

Kaes Van’t Hof

Yes.

bit above upon production. dependent I those think if probably is when at the for is to midpoint, completions a are now. turned overall, It wells QX not

year. the of of You end the do have at days X holidays

So XXXX, then there Midland guide. good And in midpoint-ish is in be are do we the wells, think certainly, moving more noise but I could some to amount a of the Basin.

particular Delaware. So you Midland to they year. produced less, do Those wells production the less more the Basin in than need in flat that in keep cost significantly do you wells but

range is a to high get likely, year all the think around I engineering the grading So what we development of plan numbers out. those still and this but we're doing upper the half put

Operator

[Operator Instructions]. Capital Hanold Markets. from RBC Scott

Scott Hanold

well of of couple Q&A But you going more recently. us that, that and a seeing that feel tell few confident follow-ups are that's specific the to some some a you occurred. how forward? you better of some performance expect Just that already what Can times talked you quantify about

Kaes Van’t Hof

results as every day, every we Delaware, pads a the in outperforming we're Yes, our And Scott, look I area, Basin that expectations as coming pads mean, expectations. and seeing on we individual and our look are the really the also at few Vermejo are exceeding production is particularly in what listen, Midland some in well well that at day. good

And rigs in XXXX while of tough increased wells of has confidence. a not were the lot completed in to where So then running had a and wells I'm the I curtail XX year, going Southern been QX we QX. and think in give Delaware is number a lot out, to message a

expect to So capital and that that continue benefits plan starting QX we're the XXXX. I reallocated think finally in and of to into QX see

Scott Hanold

do us pay amount flow look the through gets or back, topic about you point the And oil of a what guys at I to relevant Okay. a from or can that to and Can long happen? maybe a to comes to does going walk down. where like but it talk like beyond, but what and -- like you shareholder conversation Or debt prioritizing does And XXXX certainly, give us return think is you dividend obviously, then how cash obviously that that you in free things Fair or of enough. those? that how about price kind it's plan it one we're know like work? there, growth? of feels way both

Kaes Van’t Hof

think clarify that highest has in returning the return, need we form an the shareholder the yield to are already Because shareholders to capital right? which base space. Well, it's I our of we in dividend, increased

high at then ever I forward an of WTI the some to we're think, comfortably can this in against $XX a industry the So got with to outlook. that I and have been. But things And the think into today. think $XX that strip is say once us some those today. get a And have safely stability in $XXs see going clarity, that gets of But as in working I and about recovery shuffle commentary don't analyst lost that right we demand range, want as Scott, I conversation. as let's now, they have many to conversation we there's that

Scott Hanold

Yes. need you to first? that Is level leverage a there see

Kaes Van’t Hof

No. gross debt. both is function a Because leverage and EBITDA of

gross the debt return So exclusive reducing as I reduce comfortable consistently, is capital that are debt. as long to we're to think our ability gross not mutually additional of we

reducing base stock is dividend the one I growing cash, this And of But as is want days a table and they the those probably think to thing want shareholders equity going improve are our the to significant that off as issue us. think bigger cost price. it leverage do anybody therefore, we're now. industry. the grower behind our And reduce I capital in also that been therefore, through growth. We've and

Operator

Meade from our comes question from Rice. next Johnson Charles And

Charles Meade

there? front until add interpretation? little right interpreting will in it's looking presentation, the were push a but over we to it investment $XX further there, guys is at to on CapEx look right of message then get Scott to Slide your the WTI. I me, you the but X try table I part of for on way. else ran guys the a just wouldn't I'm there the at slide, over kind see I that growth-directed your that Or the something question have is graph left-hand I any bit by that $XX, framework Is and your little if want my When you bit this

Kaes Van’t Hof

Yes, really mean a good versus last that Charles, day been would I be we've X over months. the where

even that hard think that X put not to on a think of certain happy be I'd how if this over a going until say the prices. we given that muted is. make And past. handle we growth today sorry, I it had double box, But lot conversation industry rather to crude. in can that a growth teens somewhere that off then will to or us the is companies digits I higher I -- a that start and to amount. volatile be the seen double in have digits see single-digit you've low pledge that than And table in we significantly high the So But range they're a we've it's grow see oil for

Travis Stice

And I return that think should the if XXXX beyond asked operators touting are more and germane future shareholders. question be to this those

to that be, I think $XX $XX at do the we're does a opposed what as more look how important barrel. world question going when a is oil should to

Charles Meade

tried your appreciated I've on themes amplify comments Right, front. you've in the that to Travis.

these why to do aren't get big people the really involved space, to answer the well, invest of one we CapEx flat? a I is of the -- what attractive of to to -- flat, familiar If other production kind think you try pushbacks it's And picture your is you'd they that think want you seem in to invest can? question are grow maybe if say, don't to I question territory. more pieces and sense. this put picture why it's who not maintenance that to I out important to plans your volumes when keep volumes, But this there is make about this talk keep

Travis Stice

Yes.

to maintenance I in That's you're then returns do on and decline. cut question returns -- I generally, that that question. is no are you why much answer even our what it your $XX to kind fast to it's you a volumes capital think If you I And read capital bound should a range be be, would the little $XX how to tried we returns barrel. Just a about point how remarks. remain generating what in raising the right raise do keep tried capital, investors, should The around of what kind be right if Look, conversation the program? generate of if my should and volume flat? prepared barrel, $XX, you not growth,

Kaes Van’t Hof

cash? of lost is on And been said companies to are what And that of this I are top the rate answering you breaking returning of return in actually price other is, program? question what's environment. even? I forward that, that, commodity that Travis think Or and look you

Operator

next line from Singer of from Sachs. Our come question Goldman the Brian will

Brian Singer

year and follow-up to for wanted capital next plan by maintenance times wanted of you come your execute up the an of decline the How call, pure on see and company. capital from perspective I model brought your see, it to topic especially the of oil year up but basis, on and to a decline couple ability a rates I in confidence BOE was a this It's returns that on another Permian rates. cash consolidation given the reason free a as in play?

Kaes Van’t Hof

I a is know as I very it's reducing things. going It's for they slowing I'm our Brian, do down topical, And have to Diamondback. Yes, have question. as good that companies decline. why we very right? much And only think about base speak reasons

can as down up, high long target that. and at around really pace generating oil we're and running go that that capital, mid-XXs XXXX. going levels we're me, $XXs you're from oil free base smart BOE is But consistently Our And as moving activity this down treadmill as a and making below to not generating cash sure consistently is business model right the in as setting to long above decline told cash. all work. slightly that investor the free

I be and think sufficient capital pay you successful and U.S. to to to can are in people going generate that attention shale. return returns prove that

Travis Stice

to acquisition but on or I I and think the about decline it's And rate. that. behind I'll an look articulated get Kaes think the justify way It's -- decline math it rates, try we unlikely just to there. a merger stop really difficult with at But

Brian Singer

discussion, my M&A a follow-up bit a more look but perspective, you've little is And before, back then done M&A on Energen. the from diamondback also

that done you a or I -- that. some M&A impacted that the think for the look set the little how than Energen you closed about you highlighted other little back a And bit and as or from what pitfalls how the X buyer maybe less And you've years I But what may within and bit you so, benefits ago, makes you wondered, good or look to today? and applicable others? framework do that it at ESPs of some then see may as you've maybe the not Diamondback you the be learned for deals learnings.

Travis Stice

And the lot of industry's every a a on delivered ahead and could things. what investors including things, look, we post-Energen we those time, becoming accountable us those we dollar the of delivered Brian, was of on delivering hold acquisition how amount. And on our that on first we year investment created time quarterly spent were one full grade basis synergy our progress a what articulate on scorecard [indiscernible]. to so synergies

well from control, of could all worked So these the acquisitions out for things us. that have we

some today. day, that, been think Now control. development accelerated because that and And the the some able the been have got decelerated time those to deliver on have that the still in certainly at we we've and learnings? means price played look, Have the acquisitions at what do But cases. XXXX. plans we those, end oil of and I made we've demonstrating in of of adjusted the assumptions Well we're can cases not in out? Yes, to that

acquisition have of from think that other back done commodity listen, off look backs by the of -- those, of us and we Should shareholders hedging couple -- have just those away some our we've our scorecard about our, time we we've synergy what a our you and G&A quarters and at to on all and delivered accountability But I go it, can those call and bottom price towards relative line, on come do kind with all strategy price can you different table think, it. portion reductions, on you talked our measures, as And of if for commodity you can't, these delivering a we on if And take things, things realized deliver those. acquisitions. the I to Brian, up excuses. our measures, LOE we of look we cost-saving doing that, all the at operational the hedges. than risk moved

And shareholders, to so promised we we'll accountable on go-forward a hold as ourselves for basis we what and do well. our always that

Operator

the Our will of next line come KeyBanc. Leo from question from Mariani

Leo Mariani

wanted follow-up grading a on high I the to comment. bit little

resources to I the in some if clock IRR you development plan into properly a wind we have think time left back behind. zones lower bit not be I to were our basically sure guys XXXX, said captured will little those working that over make and

oil indicated of environment the get near maybe in price from we're just Just here? the of your grading wanted that that you're given comments that some moving to doing a lower sense high kind away term, of recent about in

Kaes Van’t Hof

you So, think should co-development time, think XX-XX really Basin zones I downturn, assumptions about have XX-XX, or that barrel, think X/X, Midland more between And Basin, moved margin. Midland accelerated developed. they're and high Delaware us to developing don't of a and a We than we're a those XX-XX. but do prices we Basin cost. or should at going it were Basin, at to downturn the a the deliverability rock all. zones the same the I certainly X/X I mean, widen at weaken. more today, Spacing grading at certainly low to be before at the consistency shifting change think get as zones look and But together more commodity abandoning is economic at to $XX Midland I can the this

Leo Mariani

And I your guess next maintenance range just for follow-up on year. CapEx a

certainly -- confident seem this XX% You a budget. at guys execute are you XX% to lower can

lower And Is get have you quite come versus about what recently? guys leading XX% a you to well on it gets the bit wanted the costs Just edge down articulated really of well just that clarity a bit XX% obviously, lower? here costs? little

Kaes Van’t Hof

Yes.

the I of think and costs it's completed. number well wells

a in not plan XXXX, particularly We XXXX also rig need today, from are while we're you -- count to for do thinking it about perspective.

it over months. few So looking next to finalize keep as that guidance today plan the narrow we live development and our

Operator

come from Our question Lambujon next Pickering, Jeffrey Holt. will from line Tudor,

Jeffrey Lambujon

Just one to from me on Rattler. the corporate specific structure

Just looking at relative opportunity valuation an that or structure between potentially Diamondback internally and Rattler? Just to curious there any if in? there's consideration pull

Kaes Van’t Hof

getting Certainly, a I its other see looking Rattler cash. we're rash The the X bottom to of of M&A. rash on But looking through has even multiples a I from all free new we've Rattler method at are E&P Jeff, ties the very, commentary and the infancy. make growth equity partners And the on phase each very generating land credit not market. is as studied GP in Those at of a think large LPs investments. company it. relationships business trading though today. are Yes. kind the And cycle. going us, we us. aren't of decision, is behind throughout not think for through therefore, our lot We're LP It's a this top our of closely. think to gone do I of anything to certainly

Operator

David from Heikkinen Energy. And from come question of the line Heikkinen our will next

David Amoss

commitment. volumes be producing, your overpiped be somewhere you XXX,XXX versus thinking all Permian that The question our just and I would had or the about gross XXX,XXX being clearly, we're are estimate will was, a the as whole, 'XX? into you just But through as your us we get give thinking so we gross what industry the can for whole third quarter can volumes are start

Kaes Van’t Hof

a range perspective. Yes, question. production from We're to the XXX,XXX David, a in probably that's gross XXX,XXX good

way the is which up pipeline half I that acreage the we contracts So not of commitments, take-or-pay in other think take-or-pay and dedication. to a space having half from our set those is

today. arrangements. take-or-pay outflows the So trying piped for to avoid cash is commitments and marketing over Permian Certainly

exit the phone Midland think has last long-term pipelines hit while volatility the I Brent water our has to these make and in commitments move this and commitments of some of or pipelines. as see policies, storage we April know space is quarters, that we because on dramatic. against to gone And and March industry us insurance for that are our barrels the been our to the there those going and could in calls floating couple

get but reduce I pipelines piped, basin that before on, legacy hit more. over to lower pipes certainly So the tariff the are which need ours in their we're think the tariffs

David Amoss

Thinking recontracting? we... about sub reasonable that of is the tariffs, new for some until dollar

Kaes Van’t Hof

Yes.

I be think that could fair.

we're while spreads involved -- will like. the dictate will market tariffs not what process, the certainly, not look I'm new While market that in and dictate

Operator

Wai Last of line Barclays. will the call Jeanine from come from

Jeanine Wai

on the first is is My Capex. My maintenance second question spacing. question on

to terms the the be job at year-over-year. well you've would think I about pieces great of down moving say meaningfully or CapEx that done in maintenance And For here, -- sorry, reducing a understand in Capex, on call just XX% midstream all maintenance the well trying year. infrastructure earlier that I heard as you costs next really

prices, reduced can are at expense? workovers, of And XX% these how respond you terms as costs CapEx split workover and different may before that as X costs just year rigs operating in and by on I number between comment of how think at So to so mentioned workover the the oil you much point prices? you to next trend

Kaes Van’t Hof

distinct and of your Jeanine, rigs which then I is which final converting capital between rod difference pump. usually ESPs a workovers, what form lift, are Yes, which that our to used is for there's mean Opex, a we basically is workover call ROE traditional their very

into always completed lift. completed XXX pro are you capital move to think to about But form if in prior more XXXX heading continue XXXX, XX and and wells going final forma, to So of so wells ago, the their those X budget than we lift, bit years expand. years our do to $X.XX spend piece a final or us we've It's big part because little of budget well will be a of its or the big that and budget. never been that for form issue capital, a of of goes wells million back we XXXX per

Jeanine Wai

is my second And helpful. on very spacing. That's question

going the and at probably in oil either heard development thinking is I to between and of change lower vertical forward? noticed think then earlier slight or and slide. terms change that like inventory widen how you're about a basins i should the In interlateral prices, any the mentioned spacing we there strategy, you spacing zones

just check-in? we to So wanted

Kaes Van’t Hof

Yes. more I you getting horizontal both versus in are I spacing Howard Midland versus spacing Northern have assumptions Basin, we're the that smarter County County Martin vertical vary mean, those County. and Midland and where getting think economic zones versus about co developed,

continuing Delaware -- the refine I'd return. are zones secondary zones of widening In wider and issue primary than that Basin, get significantly, say, will the be have not Midland, go you think comparable in Delaware less to So for it's the refining today. highest because But program, that compete our or I wider are of spaced less it's development we rate zones prices are as the should in capital spacing, oil economic that or secondary lower. zones while an

Operator

questions the I'd further Travis turn And call remarks. showing for to not at this I'm CEO, to any Stice, any back closing time. like over

Travis Stice

can next weeks Thank reminded electing And one we can't as everyone, listening questions. today be and move for for was that election milestone but of It's you. the peaceful days and for in enduring country another made us help leader. the as I a we calm these Thank process in left founding And fathers you, of our this that remain pray through of system upcoming good transfer power. legacies our our day. for today's a

you've additional or questions to If information well. just provided. any you, the stay reach follow-ups, contact out us Thank got and using

Operator

today's call. conference this and Thank concludes Ladies you participating. for gentlemen,

You disconnect. may now