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FANG Diamondback Energy

Participants
Travis Stice CEO
Kaes Van’t Hof CFO
Daniel Wesson EVP of Operations
Adam Lawlis Vice President of Investor Relations
Arun Jayaram JPMorgan
Neil Mehta Goldman Sachs
Doug Leggett Bank of America
Derrick Whitfield Stifel
David Deckelbaum Cowen and Company
Scott Hanold RBC Capital Markets
Paul Cheng Scotia Bank
Leo Mariani KeyBanc
Charles Meade Johnson Rice
Harry Mateer Barkley
Paul Sankey Sankey Research
Call transcript
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Operator

Good day and thank you for standing by. Welcome to the Diamondback Energy Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please like the conference Instructions] I to hand now would today. [Operator over to your speaker Vice Relations. Investor President Lawlis, Adam of Please go ahead.

Adam Lawlis

Third Good XXXX Diamondback welcome morning Energy and Conference call. to Quarter

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

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

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

Travis Stice

Thank Third Quarter you, Earnings Diamondback 's to Call. and welcome Adam,

the are able operational was continue The were Diamondback. to We as amount generate why cash a quarter record demonstrate we for quarter an of in we exceptional leader free third Permian to Basin. flow an

gains, pressure efficiency of both we've with consumables in been Although and in and many we're through our design seeing labor, inflationary these able pricing areas business, items particularly to execution. offset

days it Basin. of mile by On X And to drilling roughly now nearly alone. the Midland year days from in takes this we're spud laterals the we've number the total XX XX% decreased drill to depth side, in drilling

will are of on -frac seen to we And driver when traditional we've efficiency the our than peers, and And all Midland a year, second the beat primary inflation frac completed year. significant gains of utilizing impact the than year may the the the our our variable wells completion and on be side permanent. nearly capex of the feet insulated faster gains transitioned XX% expenditures we've zipper this simul capital be well-designed, next per in this consecutive while more a depth prices side, decrease design. for change Diamondback the will the over step These The efficiencies drilling our in the cost the days to were lateral drove Basin, on now in completion as day total On completion given control business. side of majority of crews operations completing business. services quarter.

some as well our As a ancillary of efficiency with capital associated as spend. these result gains, timing of

capital We decrease time, billion spend XX% This approximately year, guidance have guidance range $X.X a and to of now the lowered estimated million to $XXX spend capital our $XXX XXXX in of to our quarter. this in initial second includes capex compared for we fourth published when approximately April. a expect

Moving to next production flat year. Permian XXXX, we are committed oil to holding our

next as cash a do Until well to expect see flow accounts run cash flow best We believe not material moderate increase such volumes oil a Permian capital focusing would XXXX for either in of is distributor flat maintain sustainable our this structure plan best-in-class growth quarter gained translates in the this XX% those with of use best soft inflation we our shareholder gas the prices. and which oil committed creation. oil the for of We this and year. fundamentals, the success need us on pressure. benefit to at to levels Diamondback a reason for that growing shareholders and of will flow fourth support to that is the this of inflationary to our significant flow dividend, for long-term Basin share continue potential prices, the various of anticipated our a free plan today. dividends. XXXX position internally, ensuring annualized the global time. have near-term combination we capital, capital return At to to value we to things worth stockholders value well presents return the face return This we of today's see free to both as time, investor efficiencies free we along cash capital variable repurchases to growth, slide on similar where and year, base commodity plan interchangeably, regardless In This repurchases, our guidance. cycle. our order employed shows should and dividends of will in spending an the to level in cash for free and on with current cost cash flow maintain production service on. using by which activity to staged variable is our cost and will we guidance such coupled commodity our would of are basis we've we generation, strip, discipline, XXXX that be generation to able distribute XXXX, At business changes to keeping free at deck, $X We prices flow plan, cash illustrative free moving initiate and billion. we're The depending consumer In net path creation. to equity is to of from capital in XX%

cost particular returned. free we third of After $XX via not board of XX% strategy make a to flow opportunistic for excess program. enough distributing that plan by flexible beyond that and quarter dividend, dividend.This free approved above share gives distributing our announcement, will ability commodity repurchase be our least cash average not we at flow then We mid-cycle assumptions. of mid-September $X which equal under at XX% us investors a see but be case the well to free the shares stock will variable that our at or cost and the when an $XX our of As an to was repurchase base when the quarter, at for of X-year when common our hold we do of budget, we importantly, the pricing we cash of billion share capital in shares oil Which clearly flow rest on set at the repurchasing return over Therefore, If XXX,XXX prices. a pricing strip as underwrite is current average. our expect capital repurchase on cash shares, strip repurchased we will a the acquisition be we the do quarter. based to last a million drill least reminder, acquisitions significantly repurchase of opportunistically same above in wells, when in total underwrite that shares price

Our shareholders. based continues primary of dividend be to capital to our method our returning

XX% our at XXXX. of growth compounded initiation roughly since base dividend We quarterly rate a grown have in

our our This quarter dividend down on cost currently by share we low Due of to an $X basis. to supply, XX% $X.XX raised our dividend barrel. to a a annualized for share a is $XX protected

generated flow, increase have to gross and reduce as billion our cash absolute great As occur of our Year-to-date, debt a by internally and used dividend we dividend $X.XX year times. our we X reduction, as of this before, would our from base well proceeds free example billion $X.X have was debt divestitures, simultaneously that. with said increases to

And continues to leverage. we our Our just Yesterday, million balance notes to end a sheet we XXXX. over redeemed expect of turn at senior in strengthen. XXXX fully of XXX due

performance, supportive strength. Strong backdrop, position none material our without have X. we no macro fourth of result callable is longer a today: the A Increasing Yet we next accelerate direct to I've of mentioned program this this, X. of of of quarter Because a And in returns safe be any and As a to everything maturity XXXX. financial now debt. field combination This our efficient late XXXX. would and result, is the possible X. operations. operational are

have incident recordable employee continue to and quarter. on not our record this safety We a build safety did track

build continued reduce additional with We on legacy out flared assets. our have and to acquired infrastructure volumes our decreased volumes also properties work third-parties flared recently to to our on

addition, with recently XXXX as announced move commitment In Yet, better of flaring our to us our Bakken and by be divestiture. methane Scope reducing intensity routine XX% emissions and reduced commitment XXXX, towards expect by reduce we GHG we our our moving conjunction further of at by least intensity to by continue into reducing and we continue completion and our X striving our -- to our the in XXXX. at we're XX%, least flared volumes

a The barrels pro-energy Texas. to of the in We're most thankful Diamondback. to of state for was environment cleanest operate And are industry. third in a quarter produce in cost-effective and one quarter the record proud

our to country, communities, we local innovate. state, our products, Our the world, fuel, and continue our

where to operate environmental and live, and we our communities our families Justifying work, license the in play.

and to volumes and are of the capital keeping and will discipline, current generating by oil We exercising environment uniquely returns operate reliably continue significant safely our flat, positioned take to shareholders. to macro advantage

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

Operator

A stand Please we Instructions] compile [Operator by while roster. Q& the

from question first from Arun Jayaram comes of Our the line JPMorgan.

Your line is now open.

Arun Jayaram

you. Preliminary now? -- you hear hear can't I me Can

Travis Stice

Arun. you got Yeah, now,

Arun Jayaram

Stice, XX thoughts highlighted billion you flow XX. Travis outlook operating and I that. XXXX $X.X $X.X+ an billion on outlook. to that get preliminary your at wanted deck, In about of the Sorry cash at the

doing that XXX range cash of to sales. gross billion $X free you're oil mentioned price. You $X.X under year, billion This of flow

my million is, interested And flow of guide? cash do rate depends question you be budget? kind what that So in assuming I $X.X of what activity expect that in know you're type free would at XXXX cash to tax

Travis Stice

an drew are a this Basin to DUC and 'XX only the questions. XX quarter rigs rig. or Yes. remember XXXX decided into of XXXX, XX XX% our a downturn to build We those a going wells to in run rigs versus at still to steady-state From of those be XX lot a keep Midland change. in Still in lot's -- levels. XX% we in and docks Good run XXXX The line of we down is turned running about to Thanks, now in activity difference docks. Arun. that, not at of the kind perspective, going have

we on field world low the it some get more from wise, reinitiate sale. spend where and they on depending that XXXX So we commodity problem X-figures, Robert stays XXX prices in have. are. guide development, cash XXXX, in versus to which acquired XX before then in to are, stay taxes. If million DUC cash got in XXXX, in good order the have we hundred-ish and little Hopefully, where headwind and we taxes we as there. the GEP today, a infrastructure is will a a where midstream is oil-price to the

Arun Jayaram

bit little that. wanted for a maybe you're drilling follow-up. just for that more Thanks you around case And the my detail if gains that I seeing. Great. could you efficiency see to provide

I you're maybe now XX on the Midland the highlighted it of Basin, on and lateral describe in mix 'XX. just side XX, in model doing think the [Indiscernible] where perhaps completion you Slide days for frac also X then

Travis Stice

the We more in areas I'll have XXXX Yes, They've with tunnel first ever start second $XX extremely offset our you running $XX crews frac. saves half But picked those about production. since. of tunnel us foot. where been efficient, have importantly, frac in up probably or been a and

us. large You those successful wells, and, effect your in for been get in, which out complete has fields, water can get therefore, and out limit

XXXX. that this spot that, first the the in our So year, you And this next And can can said fourth been drilling we'll Diamondback be drilling that tunnel essentially, incredible drilling anticipate then wells all fully practices. We've of utilizing. probably talked large comments, rigs last we've same see frac drilling on And similar done Midland running crews our in crew. average system XX% and the QEP before best Travis with has in change. year, be there. we and of I organization the here Basin ten this together step wells, pretty organization tunnel kind has X pretty his plus fixed crew quarter a but And TD and and the the the of to we the as frac been been is converted use a And of all to with side days pace we're -- spud putting now finding quarter fluids costs about clear to our but

Kaes Van't Hof

day days that to differentiate with. think per we we fee are completed and lateral ourselves variable TD of certainly costs amount

to reductions do. operations that are seeing, this our costs an CapEx able we're So been that's given been driver the of the oil And inflationary in year. has organization the inflation mitigated and prices which by activity which is controlling environment variable levels,

Travis Stice

And see the to that performance has to year, and the this like step you change Diamondback the just seen to like we going particularly Arun, just future, several us add leader always on a expect before, position an that that drilling I've ahead I look have into in in it's when point, even years. operational But side. been said next to maintain hard

Arun Jayaram

Thanks Great. a lot.

Travis Stice

Arun. you, Thank

Operator

question comes from Neil line Sachs. from next Our Goldman of Mehta the

line Your is open. now

Neil Mehta

team. last was of call relative to sense seller's and buying on the latest Good this a your you M&A, back more the morning, appropriate you capital Travis that's feel stock. thoughts then buyer's you Or the thought you still and a around market comment on made makes provide an prioritize update M&A. strategy your than market. and returning if Can that

Travis Stice

is repurchases. in best think The I way now M&A right share can about

we M&A something true look, now efforts that repurchases related year. said try seller's on make deals you on what it's it's comment market. most been time spending this based I I've But, think that commodity still that's about the probably past, these time and with see at on my M&A. these still there prices. and high underwrite of they've today prices typically don't rocking policy And share seemed not But not commodity in any my of some smaller like the I you regulatory to yeah, like as or the done comments it's spend feels M&A. right

Neil Mehta

we a move to Thanks, And about XX. lot Travis. point. in the just that as some cost how potentially then flush service tightness ' pressure confidence cost you're those inflation to And risks start pencil to out into about some budget talk pumping of talk continue There's you able Can and managing here. market. inflation around to execute being you the of out interval on capital the

Travis Stice

what's costs, gains, steel, of talked mean, traction. little year we kind diesel, -- this the year sand, raw been it's but well tightness up efficiency but I given that We've the to materials going a start have. of benefit the piece service Yeah. the logical it's about on labor get

running it's and lot to them crews Now, the any count Permian running, it's rigs steady-state in guys getting be X boost from push dropping either rigs no margin those, for kind it's We add But next intention way, But in tougher dependent XXX business October. that work we crews if If with find have year for they the and really going service of to with that a kind where to going of of frac price. rig we here. the have profile only then tunnel to we our a the with tighter consistent added goes. now of X Diamondback. on a consistency allows be partners their

Neil Mehta

you. Thank

Travis Stice

Thank you, Neil.

Operator

Doug Our of Leggett next from line America. comes of question from the Bank

is line open. Your now

Doug Leggett

longer on Good had, the given of for [Indiscernible], part or Would like [Indiscernible] that that at the my which based case, the and [Indiscernible] Are morning, I taking look In cost number kind step of fourth some could the I us guidance. guidance of us expect is the Guys, no you if how It everyone. of down right Thanks looks quarter, the it's cash maybe just looks for that guess wonder Bakken you now ask, so give XXXX? portfolio? looking higher a it on because questions. we question a on levels, cost I qualitatively be on. run housekeeping rate to the could in a you've to idea interpretation?

Travis Stice

Bakken from a LOE I probably Good question, contributing. of been couple down last with times where of it's primarily the mean, the Doug, couple quarters comes

and that than moving Bakken little LOE did of the on We So employees the on think transition the and $X a but generally for low liked side. Xs a the longer side. we keep towards BOE the I impacted G&A kind

comes probably and so Bakken. in G&A transportation, higher nickel So or costs certainly then a the down gathering

of to on XXX So GP&T step that you closer range a kind go-forward change a probably down or and step-down basis. to XXX see

that longer we into our it happy we're bit little Unfortunately, a for an comes structure cost when regulatory away. deal I QEP, bought deal, and the asset get QX the bought took to and little a sale XXXX. happy when given we down but we've the generally, with put close, in it, right think environment is So up we with

Doug Leggett

Okay.

was here I'm at just So make that on getting I side. wanted bit than I sure guess cost offset a the side inflation least, at what capital is really looks it correctly. I like of to the an operating interpreting rather on

sounds it I'm So like right there. the on track

Travis Stice

Yes.

Doug Leggett

a distribution want question, clarification tough here. just I Guys, I on little to bit Okay. my second as policy get to the cash of but be hate

So the free probably current a next number let's you're running at $X strip cash assume that billion year.

that to and much sheet. are goes what So back balance saying you currently, half half goes of right? shareholders pretty the of That's to that

Travis Stice

shareholders. Yeah. that At half of least to goes back

Doug Leggett

Okay.

So when -- you wanted you a on rate, rate that, how -- get one for be what the because number like I handle punchy you not numbers just like about buying guys it you do the to what as think about run out when and be the we pretty billion back substantial That's run get amount I'm thinking some could trying buybacks, if over because are to get sounds it really reloaded think, to a stock. I'm we of at could will your trying period? $X buyback point. And to

Travis Stice

you buyback NAV opportunistic, think in of And prices. I oil that's be his not Yes, is remarks, terms is I as up key mean, what Charles buyback the mid-cycle the think prepared in problematic. at said value the going to about

underwrite quarter in end, the one years. than we prices long oil we're going. X where not debate a have last about can oil seen higher to willing prices But mid-cycle are Now we've mid-cycle

in us But buyback cash a disposal. out flow our buybacks if that this I XX% get of in getting are don't think quarter is for the industry. the is ups our with overall cash weapon downs We And key and lots the the at we flows, the in free a to following. hold shareholders buyback as there one the particular quarter quarter, make through there of get going we're through dividend, variable returns. don't

Doug Leggett

got valued. noise. to seems it to Well, stock fairly a [Indiscernible] this way is is actually go long the $XX-oil, before a

So I on should be appreciate just -- buyback to aggressive how assumption, but we wanted I understand the

Travis Stice

And was considering problem it oil when the Yeah. have. where low XX% below XX%, And that's stock is. summer this a good where were we and XX's to had

I now great back after. think on or in a we forward being not think the two getting we're and are position look opportunities I And out right a and buyback day there in to side. blacked

Doug Leggett

the you. guys. appreciate I answers, Thank

Travis Stice

Yes, XX is think when it's was months just good. half price to add today. to just Doug, all to oil back what that, hard of It's it ago

we shareholders still so being generating that volatile to we're industry know to cautious maximum And just and you allocation maximum prudent our run business the were that also the that be in they we in question the capital trying prudent asked way the and flexibility to I and answers providing think a demonstrate is the returns. hope shareholder

Doug Leggett

All right. Thanks Travis.

Operator

Our comes Stifel. next of from line the Derrick Whitfield from question

now Your line open. is

Derrick Whitfield

all. end on Congrats morning update. Good your quarter

Travis Stice

you, Derrick. Thank

Derrick Whitfield

sectors attractive X to and discipline. continues What or to concern sectors developments remain the could sector light to less to us suggest the yourself the discipline the that for commodity, from Kaes, potential change favorable the certainly environment X early the to outlook a In seemed indications for gives are for capital XXXX look you industry the valuations relative very and the recovery and you, like one? this the constructive Perhaps Travis of broadly demand, in remaining to market.

Travis Stice

stock Companies now. carefully Again, that out been and look comes we one is for that to the that Because of and in I've call their capital have -- I Company day out the that But discipline to starts that's a earnings for allocate the very starts it's a February. there macro though now market We're board world post-pandemic, how if in growth in reestablished. probably the think thing demonstrative we you close public demonstrate growing, right that if that's conditions, going growing million XXX there we then the doesn't think demand getting comes our again need gets and and at and Well really calculus I of watch growth, very Company need if growth. towards barrels recognized the change a there. even

those higher dedicated at prepared distributing my a production from at looking balance that's sheet. rapidly we continuing capital prudent growth remarks, per-share than while to that will $XX of other. lead, calling world other, significantly the OpEx kind need when to our to see as board all we're And you the are capacity, price triangulate demand. each more $XX run making whatever is to that a Then good need the that's when looking is that, for means X-year unlikely flat return each first at probably pointing X each we probably at other in now surplus -- said number importantly, see strengthen world third and absorbed indicators think capital oil. generate in to return. holding for capital. barrel, that for is going think price see those of average we've to to need look our plus sure said and it's even And in our pointing that's And indicators are of oil sign More if having equation. I've stockholders. that that inventories we're energy shape to precisely, way of a all those But consumes pointed more of the global Company and business. supply we're the those in I greatest is we're price oil things allocating countries of world's then our hand, or but is measures our the other. to the And the transitioned terms the being is And growing you And one on that you If at

Derrick Whitfield

really are on Great. ( your Ellen's will frac versus your follow-up, question up implementation on into digging practical Sanyal And today are a seeing sure have ops. X-well percent sense and operational but what wells my line? earlier ph X-well you ) I'm you, Sanyal program as limit -- that frac? X-wells efficiencies limitations Do the And following of perhaps

Travis Stice

wells No. more. simul benefit that Almost even running frac, X Midland have the X at of or X, And a of - got number or XXX% our same basically given you've Basin you're wells, pads to careers an the time. of

the So probably apparent Delaware, X X well well or and XX% After plus. plus, we're well well less X in XXX% the Delaware. plus, almost and a X XX% it's Midland,

Derrick Whitfield

Great time. update for and your thanks again

Travis Stice

Thank you, Derrick.

Adam Lawlis

Thanks, Derrick.

Operator

comes of line question Deckelbaum and next David Our Cowen the from from Company.

is line Your now open.

David Deckelbaum

Kaes. time this morning. Travis Morning, Thanks and for your

Travis Stice

morning, Good David.

David Deckelbaum

fourth the to be around a the quarter just a at wanted $XXX in you third to points well inflation. Just explicit all in bit reached the Midland and little I foot the cost confirm, higher wanted record that in more guide? all in in now already level at Delaware. Is XXX baked the costs? of you modeling period the that for Are the as quarter sort trough

Kaes Van’t Hof

had really efficiency-wise. hitch, not good we lot mean, issues drilling, went No on of a third without quarter off I quarter weather. a completion Yes. a major in the

don't said enhancements certainly don't XX% to limits. terms into XXXX, is base certainly environment. a in organization But this scenario. that the kind of terms to push earlier of costs motivated build into year upside budget. efficiency like in throughout replicate the pretty like in this best inflation. feels got on the in 'XX. going to of the to X% our probably off to for in we're we the go quarter that into So the will went the the this able going We Travis well Been inflation continue call, cost case tough is of way. be But But other we inflationary But in solid model to model

David Deckelbaum

case, for follow-up,. but you that Travis, you I the with at looking buyback. or, well, metrics and share in appreciate perhaps referenced Kaes as for just my per

you at Before looking a capital. you're world effective your exceed what more perhaps buyback you with the growing of you growth using per like when looking of early shares also some back looks talked your buying Are expected coming considering event production the -- about those on share for cost at indicators calling see back return oil? that in your versus

Travis Stice

more to And numbers up on the easier X per life side, years. that's work did. side started business the work law we good shrink year to capital longer grow X% next it's X does our years per next obviously of per-share or share. And the Yeah, year buyback how that when production for the a grow looked the the share, terms did of for announced large at but share, XX% part versus of that the That's inventory to X. a X that the of along was, of growth the year share metrics We or we own by get in business it per stock do price years reserves dependent, year side, take was point, part it good. a the next shareholders kept XX% us to that but it on the over we shrink grow buyback we a business X the a count much X and

market follow versus trying already ground With to the that's buyback just and into pretty fragile. the oversupply

David Deckelbaum

it. Got guys. Thank you,

Travis Stice

Thank you, David.

Operator

comes Our from the from next question of Markets. line Scott RBC Hanold Capital

is Your open. line now

Scott Hanold

get give if say, that on all debt Thanks. sort buyback mid-cycle comfortable where could above, Does all give these to dividend feel if increasing shareholder also you at I of sustainability they're the it color If that go? think not the You return you're the you give back investors, some could mean, plan. said, potentially you fixed opportunities, And doesn't or you'd some that a on, of more can point going at color return of a back around just take-out at dividend. and to that? look Good I can because XX% XX% And morning. to threshold. just price. Where least to

Kaes Van’t Hof

Yes. Scott, want make conversations below dividends to with large shareholders there's XX. sure have well-protected basically said, we

puts And dividend $XX-oil the is in Our $XX-oil. 'XX we're for range. buying at breakeven

I we're So think well protected. still very

going something to probably XXXX. continue feel dividend aggressively. a growth about is Board every in CAGR I in dividend basis XXs, but on a the hit about that multiple to this breakeven to We've the certainly high quarter. lofty talking since I mid goal to it. pretty for steady about think introduction XX% stays continuing we're grow. think And long the That's talked as years, good The it continue we as

Scott Hanold

could if variable down. on would, debt? focus view buybacks, more And you dividends there's And out the if little on comment or Okay. take on a not taken you bit that

Kaes Van’t Hof

right. that's Yeah,

take gross We that. debt. to still want about down Sorry

XXXX. We have a maturity in

in We it's kind a just the like larger of past would and like have we've the X think shareholders I cash gone last to money we have XXs so to and logical hey, got the our shareholders. the saying, from to we've that's has of to But to also XX% or I more that will take XXXX. over go for cash until it, cash back least anything back. not position But X be a we're exclusive more have up quarters, with and back, keep else the yeah, do material not don't maturities in mutually inflation. free to any getting at And go to if listen want balance run flow

Scott Hanold

you Okay. into think? next as look talking do how production And about you I know you are XXXX, oil into then year. flat all And

maintain bit in for And well that we flat the you would you have you'll guess, you program assume that guys year production. to a to maybe back were I completions, half XX-XX well do just if your reduce should performance, better production, If there's operational the a outperform than operationally, year? or little flat say next maintain

Travis Stice

done are production, this we than right, which we year. oil year guidance I pressures. that's cut essentially that's of XXXX. Well, thought, going on I in even in got the we've we've all to But doing some for is if we're that, better think we've said capital. outperformed face goal And what And XXXX, done inflationary the generally think what

Scott Hanold

it. Appreciate it. Got

Travis Stice

Scott. Thank you,

Operator

Cheng question from comes the next Bank. Paul from Our Scotia line of

now is line Your open.

Paul Cheng

Thank you. morning. Good

Sorry, want back return. the go I to but cash into

Is the that some that then into really XX% with that, some longer sense any to that's to or the just additional percentage? balance make I net XX% will the might, increasing have at of saying be would is it returns able if XX% sheet. a no to debt okay, But you may with that at point number cash guys I there debt you on you excess cash are that thinking, that is your the be that just any think a right go or away volatility I that go lot a I because in higher? you you point raise market number and not from will put use have that you the don't

Kaes Van’t Hof

great Yeah, question. Paul. a That's

think we're see the on now, I you right make focused what is of companies at these industry evolves and to XX% types -- as this commitments. committing least

where You don't for than distribute a we right? also, want baseline So want there quarters to will the to more walk couple cash don't I of be them next decades. back, XX%, but become that

hit better it some XXs I and think the some quarters we're guarantee. will XX%, will now but focused and that at on quarters for are do right XX%

Paul Cheng

the And than to question your capital midstream high independent have as there. over the trade. that the me with just that your to And really sell. argue cost dividend fang much to X%, very Okay. over good higher second is yield reason have of operation is doesn't actually relates seems One spend that the an will letter

have of business. in midstream a seen the consolidation lot We

can where they their deconsolidate. reduce private peers just your recently of asset ownership One to so to a announced going their with that you're Company. And that merge midstream that's

we how curious that structure you may the business you're alternative just at to looking to that. So initiative that want then, on some whether need do and

Kaes Van’t Hof

seen and sell Good subsidiaries some their Companies some question. we've a parent down. seen in And buy routes. We've couple Yeah.

month. structure. us, think it it's if with a just we've a under to trying look be I Diamondback of dropped that keep going to another Rattler been exposure. highlight more new strategic for -- in to assets earlier lot it you about Rattler year this know, we this think keep on story. We've or the cost to hood, for But call. us, We address the the the signed And [Indiscernible] highly really You can got month, [Indiscernible] successful I down more that's

look now, is do. a about the a of which got Unit generating free performed don't go costs to Rattlers stock year. of lot bit, changed we'd good if capital, we had at a I it's certainly as holders perhaps look us subsidiary -- exposure it's -- and the we've the have to but Diamondback's it got working, right probably at largest. little what the hasn't But cell still strategy certainly the cash But commodity So it's like not and and to seems route. of a the to It think we doesn't that changed. Diamondback down it under Viper, we've hasn't think multiples, importance

Paul Cheng

one I structure at don't to thing attractive is will have CapEx even most I out probably at NPS they investor Yeah, think there. that, of when you, so many the looking help story the further simplified And structures. different so good the only we look to CapEx a that would and is you Diamondback names have the that say

utmost Thank feeling. my Just you.

Travis Stice

we've Yeah we heard that before it. Paul recognized and

leakage ship Fortunately, last and both so has to for to last the decade. the over subsidiaries, the large the less been important very -- mother there's half us have gotten but

Paul Cheng

you. Thank

Travis Stice

Paul. Thanks,

Operator

Our next question Mariani comes the line KeyBanc. Leo of from from

now is line open. Your

Leo Mariani

guys. Hey,

pretty well outperformed touch in Just little it like color bit terms looks performance. quarter was third a It the of kind a get behind of and bit wanted better production. wanted that just guidance to here to of being base just on much of ahead little just bit a

did You of with pretty claim a issues. mention no quarter weather operational kind

Kaes Van’t Hof

is numbers benefit fast that gotten good better. a very possible as grow our has the of had quarter. slowing hitting focused down as not to the organization operations and We trying We're and on

on also it see side. well side. on can the the It's happening cost You production

around. all quarter good So

the continuing we think numbers really forward to hit feel outlook confident I and in here. our

Leo Mariani

terms Okay. X.X. a If loose range gives here. capex, understand it, capex annualize of just I targeted X.XX it's fourth-quarter Then, you billion and me 'XX I in to the take guide that folks

the pretty So of end day. at the there wide

out. could a of what perhaps top X.X? Just side any on was XXX% moving inflation here the end can wanted outcome on the think be it a the early plays trying the it's that guys in inflation sense, still be how and we weren't get the what Just is get this there. indications would sense baked target But what target of you to there. of know know And what to I and

Kaes Van’t Hof

I think going be said to this, not I've is long XXXX. XXXX on November of second

about inflation We talking little a into see there are one XX% the next about companies few over bit happens of XXXX, have of weeks, with the couple this built need midstream but to But and get have probably we'll we through think I more and infrastructure we that that we didn't year. XXXX spend, evidence. what go narrow generally, more guidance as can into

rig if Than think the it's the the here, a up goes comment earlier, rigs count story. rigs to keeps XX a X up creeping I XXX if from different rig a count month.

Leo Mariani

guys. Okay. Thanks,

Kaes Van’t Hof

you. Thank

Travis Stice

Thanks, Leo.

Operator

comes Charles of line next Johnson the Our question Meade from from Rice.

is line Your open. now

Charles Meade

and Travis morning, Good Kaes.

Travis Stice

Hey, Charles.

Charles Meade

When a I price, the few for a announced Travis, buyback. and the is average like a comments, scale it -- make of price prepared as questions, to question is Kaes, your thank it that a at in shareholders a natural the way the have guys return, days the XXs days the obviously before for low quarter? on to the the But lot or wrapped why got increase stance week. legal preferred blackout to And it you you around the where and bought I that after your XX. of the your sense. a and probably me, you for alternatively of curious, in we that the at you you makes want guess the if it -- That look far mentioned few about of -- chart is guys buybacks looks you function addressed you've as is ' a you we really to XXth, tips and it share where you is inference blackout that returns one guys the then earlier I'm for on end is just look to adopted up you -- back right team putting

Travis Stice

Yeah.

get earnings. couple days of think XX out we just I blacked were blacked blacked quarter after is out. ends a before purely until out days We the and get

in So a we'll are days where assess and be of we after it. couple back

Charles Meade

That's helpful. Thanks, guys.

Travis Stice

Charles. Thanks,

Operator

the from Barkley. Harry comes question from next of line Our Mateer

Your now is line open.

Harry Mateer

Hi. next XXXX. in this of out to as on given I the Good it in it. noted, more little nothing bit point far debt at maturity morning, guys around what you've dig maybe you a But year, guys. talked piece so you taken this want callable

in time bunch make you tenders, end at of not how waiting sheet, for First sitting about cash do thinking -- a are then that? question might viewed at gets the same holes navigate the but that with expensive, either. as maturity balance is, be you the of attractive the 'XX Because

of So, you years? next how that thinking are about the approaching in couple

Travis Stice

and I to the as not to 'XXs you following ' but our the get restrictive call in we too just bonds the not, going out take late looking not think on to past may keep prices we're call is below of like something certainly get XX, If XXXX. as the try can. may anything

Harry Mateer

it. Got

one than What is what with a the number the for more balance, past. had that -- And then of cash to you buffer on mentioned you Okay. run in you?

Travis Stice

good couple And a the minimum, quarters. kind said of I that's starting I like us. we a think that for XXX of as last over point

Harry Mateer

Okay, very great. much. Thanks

Kaes Van’t Hof

you. Thank

Travis Stice

Harry. Thanks

Operator

comes Our Paul from from Sankey the next line Research. question of Sankey

Your line is open. now

Paul Sankey

I'm and Thanks. just Guys, for that this then reporting to Can that the I now flat who about is methane multiyear you -- from increase the had massively for are Wall what industry? question volumes me means heard by you you I embraced just a FDA that not morning little the emission And going is a a asked Diamondback hearing? that what XXXX, investor Street for Journal and bit talk this major limits. to from

Travis Stice

Yes. The rules. methane

remarks as from focus XXXX I XXXX. methane continues XX% to if think document see by intensity. is written in we down I've that We're by levels that still have reduce the going prepared to final on how my to stated

do if progress depends next methane reduce we things is, be where very already intensity we've to pleased intensity. XX+ So hopefully the got reducing will with those I've million we've to on the right, methane but And intensity. been below in methane by the made threshold fact, dollars applies. And year we continue which efforts allocated the threshold, on

Kaes Van’t Hof

plans, buy to going in years plan growth at multi-year we're a always to at our multiple for we've not We Diamondback. multi-year then didn't plans commit And today. issued into and flat XXXX multiyear

certainly production. We has and industry. flat be it's capital for worked Now, will worked think XXXX XXXX relatively both this and discipline

has a didn't think and tried war industry before this I OpEx out. it work with market share

all than Travis and capacity and we why capital as of return committed Diamondback. So to back spare in will of rather But XXXX become rollover net a the stay their beyond. XXXX flat we consumer as going bring discipline capital we're capital. holds And mentioned, what right don't flat, see let future we're and OpEx now to

Travis Stice

all that this our the we're that way. flow right every be about elements free is the very by now that OpEx shareholders. And growth. what I've is on And do. to this from we've us Virbac on And And free through, increase shareholder I've doing transition that to seeing I commitment returns. back to returning board going and going rapidly look But And more we're do which flow OpEx that our think outlined cash to growth return the is at the commitment per-share coming the we it's in go consuming XX% will capital. quarter capital, world is focused metrics. least to demonstrating maximizing macro cash said to Diamondback, generating it or of transitioned as in calling

Paul Sankey

Understood, guys. Thanks.

Travis Stice

Paul. Thanks,

Operator

this I'm showing time. turn back to no Stice. I at CEO, questions to like further would now conference Travis the

may You proceed.

Travis Stice

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

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

Operator

Instructions] This [Operator today's conference concludes call.