The paragraph provides an introduction to Diamondback Energy's fourth-quarter 2024 earnings call. It details the participants in the call, including Travis Stice, Chairman and CEO, and others from the company's leadership team. The call includes forward-looking statements about the company's financial condition and future prospects, with a caution that actual results may differ due to various factors. Non-GAAP financial measures are also being discussed, with reconciliations available in the company's recent earnings release. Travis Stice welcomes participants and highlights a letter to shareholders and an updated investor presentation available on the company's website. The paragraph ends with instructions from the operator on how participants can ask questions during the Q&A session, with Neal Dingmann from Truist Securities being the first to ask a question.

In the conversation, Neal Dingmann congratulates Travis and Jerry on a successful career and asks about the company's free cash flow performance as shown on a slide. Dingmann is curious about how they managed to achieve similar free cash flow with a lower oil price ($67 per barrel compared to $76 the previous year) and whether this is due to larger scales or completion strategies. Travis Stice explains that the lower price threshold for the same free cash flow indicates improved capital efficiency or successful deals, such as the Endeavor deal. He acknowledges the challenge of continuously lowering this threshold but aims to do so through a reduced share count, lower costs, and quality inventory. Neal appreciates the positive progression and asks about the company's drilling and completion plans.

The paragraph discusses the company's strategy for well completion and drilling, highlighting a decrease in the number of newly drilled wells and an increase in completed wells due to a previous abundance of drilling and acquisitions of drilled but uncompleted wells (DUCs). The company plans a significant reduction in DUCs as part of its capital expenditure (CapEx) strategy. If ahead of schedule with a favorable budget, they may drill more wells, taking advantage of current low costs. Efficiency has improved, allowing the company to drill more wells with the same number of rigs compared to the previous year, and frac fleets are achieving higher completion rates due to learned efficiencies from acquisitions. The company is also exploring strategies to further increase completion rates.

In the paragraph, Neil Mehta from Goldman Sachs addresses Travis Stice regarding the company's potential pause in mergers and acquisitions following the Double Eagle acquisition in the Permian. Travis Stice agrees, noting that they have likely consolidated the last significant assets in the core area. He mentions that moving forward, the strategy will focus more on share repurchases as a means of capital allocation, given the quality of their current inventory. Stice emphasizes that at current valuation levels and oil prices, share repurchases are considered a strong use of capital, providing significant free cash flow and yield.

In the paragraph, the discussion centers on strategies for managing stock value and shareholder interests. Travis Stice explains that the company's goal is to make their stock appear undervalued by enhancing per-share metrics, as outlined in their 2025 plan. He emphasizes that their largest shareholder, the Stephens family, is patient and supportive, having a long-term perspective on the investment following the merger with Diamondback. They do not require immediate returns like a private equity investment might. The Stephens family and other shareholders encourage the company to engage in stock buybacks, viewing it as the best use of capital given current stock evaluations. Stice also mentions the company's ability to creatively manage ownership reductions beyond well-publicized deals, thanks to their strong balance sheet and cash flow, while simultaneously continuing to buy back shares in the market.

The paragraph discusses the company's midstream infrastructure budget of approximately $415 million, highlighting $60 million allocated to midstream CapEx related to the Endeavor water business. If this business is monetized, it could reduce their CapEx burden. Additionally, there's mention of $60-$70 million in one-time accelerated environmental CapEx. The company aims to reduce its infrastructure budget to 5-7% of total capital in the future. They have already begun implementing cost-saving measures in facility design, expecting significant savings over time. There's also a brief mention of DUCs (drilled but uncompleted wells) related to the Double Eagle transaction, although specifics are not provided.

The paragraph discusses a financial update and strategic approach by a company managing assets and debts. The company currently manages over two hundred ducks and expects to add more through a transaction with Double Eagle. They have a $1.5 billion commitment for asset sales and aim to reduce net debt to around ten billion by year's end. David Deckelbaum from TD asks about the potential for exceeding a fifty percent capital return, given current share valuations. Travis Stice responds that the fifty percent commitment will remain, but surpassing it depends on market conditions, as demonstrated by their actions in the fourth quarter.

The paragraph discusses the company's performance in terms of free cash flow, which exceeded expectations despite market volatility. They are hesitant to increase cash returns significantly due to current conditions and aim to complete non-core asset sales. The conversation shifts to infrastructure spending and power needs, with a focus on the potential sale to Deep Blue and internal power financing. They have consistently spent $70-100 million annually on power and plan to spend $70-75 million this year. There are discussions about power solutions in the basin, but the company separates this from their joint venture power initiatives.

The paragraph discusses plans by Diamondback Energy to work with a large Independent Power Producer (IPP) on developing a behind-the-meter gas power plant using Diamondback's gas. The intent is for Diamondback to receive some power back while a hyperscale or data center operator takes most of it. The discussion is ongoing with hyperscalers and highlights Diamondback's flexibility and ability to quickly execute projects, driven by the need to find a better market for their gas. It also mentions an asset sale divestiture program related to the Double Eagle transaction, focusing on selling non-core assets without divesting operated acreage. The main value is expected from their equity method investments listed in their financial documents.

The paragraph discusses a company's strategy involving its midstream business acquired from Endeavor and the potential for synergies with the Deep Blue joint venture. The focus is on monetizing assets, particularly a significant position in the Delaware Basin, to reach a financial target of $1.5 billion. Arun Jayaram expresses positive sentiment about the company's capital efficiency and queries about capital expenditure and well productivity for the coming year. Travis Stice responds, expressing optimism about maintaining high well productivity and explaining the variability in reported well numbers due to timing. He notes the company's previous annual development rate was about 500 wells, not including an additional 30 wells from Double Eagle.

In the paragraph, Travis Stice addresses Derrick Whitfield's question regarding the impact of a transaction with Double Eagle on capital and production. Stice explains that there will be no capital impact from the agreement, as it involves no financial expenditure on their part. The rationale for this part of the deal is to avoid moving rigs south to maintain certain leaseholds with lower working interest. Double Eagle, having available rigs, will accelerate development in the non-core Southern Midland Basin, which affects their production without imposing additional capital requirements.

The paragraph discusses a financial outlook and ongoing integration efforts within a company. It mentions an expectation of around $100 million in free cash flow by 2026, with 50% attributed to Viper. Additionally, there are unmodeled benefits from an acreage-related drop-down in Reagan County, which supports Viper's outperformance and benefits Time Back. In terms of synergies, Travis Stice highlights potential in both drilling completions and longer-term improvements in production as field teams integrate and share best practices. The integration process is ongoing, focusing on operational enhancements that could positively impact future operational expenses (LOE and OpEx).

In the paragraph, Travis Stice discusses the breakdown of the 2025 capital expenditure (CapEx) plan for legacy assets compared to the Double Eagle acquisition. He mentions a CapEx allocation of $100 million for Double Eagle from Q2 to Q4, with a production expectation of 27,000 barrels per day. The new guidance for the full year CapEx is adjusted to $3.6 to $4 billion, aligning with previous plans for Q1 2025, which involve $900 million to $1 billion for oil production levels similar to Q4 2024. Due to market volatility, the company decided to cut capital and focus on more efficient growth strategies prior to the Double Eagle acquisition. Kevin McCurdy inquires about CapEx related to assets that might be sold, with Stice indicating a $60 million midstream CapEx and some minor CapEx in the Delaware, which is not substantial overall.

The paragraph is an excerpt from a Q&A session involving an operator, Paul Cheng from Scotiabank, and Travis Stice. Paul congratulates Travis, Case, and Jerry and asks about savings in CapEx due to a stock drawdown. Travis responds by explaining that drilling costs approximately $220 per foot on a gross basis and $200 on a net basis, resulting in about $2.2 to $2.4 million per well, with an estimated $200 million in savings for the year. Paul then inquires about the cadence of the drilling program and whether well completions are consistent each quarter, noting expectations for higher production. Travis notes that 20 wells were brought into the current year from the previous year but does not provide specifics about future timing adjustments.

The paragraph features a discussion during a Q&A session about a deal involving Double Eagle. Travis Stice, the speaker, addresses Leo Mariani's question regarding potential cost savings and efficiencies from the deal. Stice mentions that Double Eagle, known for their land management, also operates competently, with well costs in the range of $625 to $650 per foot. However, Stice notes that their company, FANG, plans to apply their cost-efficient model, which keeps costs below $600 per foot, to the wells from Double Eagle, aiming for further savings and efficiencies moving forward.

The paragraph discusses a strategic decision in the oil and gas industry concerning infrastructure and asset management. The company has decided to move rigs to a different part of their asset to optimize inventory and extend its duration, avoiding the usual high decline curves associated with newly acquired deals. Leo Mariani brings up the topic of increasing capitalized interest, noting it has been rising, likely due to the Endeavor deal. Travis Stice explains that capitalized interest reflects undeveloped acreage bought with debt and is not included in the company's CapEx budget, which is focused on operational expenditures.

In the paragraph, Carlos, speaking for Doug Leggate, asks about the projected inventory and its returns based on current market conditions. Travis Stice responds by highlighting their focus on maintaining a low breakeven point, emphasizing a $50 breakeven price that ensures a 10% return rate. While higher commodity prices expand their inventory, they prefer maintaining financial strength to buy back shares rather than drilling new wells under less favorable conditions. The strategy is to be well-positioned to manage lower-returning inventory with a low-cost structure and delay such drilling until necessary.

In the paragraph, Travis Stice discusses the company's operational strategy concerning capital and drilling activities. The capital recovery process is described as "level loaded," with good visibility into drilling and completion activities. The company plans to reduce its rig count to around fifteen soon, maintaining that pace for most of the year. However, if things go well, they might drill thirty to fifty more wells while keeping a high drilled but uncompleted (DUC) well balance for operational flexibility. The company is also exploring opportunities in the Permian Basin, possibly securing a data center deal. Kalei Akamine from Bank of America inquires about the financial benefits of such deals, including potential land sale revenues and fixed prices for gas.

In the discussion, Travis Stice talks about considerations for land payments and potential benefits of participating in a power plant project, including equity involvement and providing gas for the plant. He mentions the possibility of structuring deals in various ways, such as fixed price or indexed agreements, with flexibility being key. The goal is to maintain a competitive operating cost structure as power becomes scarcer in the Permian Basin. Stice also touches on the potential excitement for Diamondback shareholders. Kalei Akamine then shifts the conversation to discuss the Endeavor share overhang and potential opportunities related to it, although Stice refrains from commenting directly on that aspect.

The paragraph discusses Diamondback's strategic decision to structure a deal with Inbound that involves a significant equity stake valued at seven and a half to eight billion dollars. The company opted for this approach to avoid increasing debt for its subsidiary, Viper, as they consider net debt on a consolidated level. This move is seen as a highly beneficial trade for Diamondback, allowing them to regain over 50% ownership of Viper and maintain Viper's capacity to further consolidate its market in the minerals sector, which is expected to grow significantly in the coming years. The paragraph concludes with brief closing remarks from CEO Travis Stice, thanking participants in the call.

This summary was generated with AI and may contain some inaccuracies.