Diamondback Energy (FANG) 10-K risk factor changes: FY2021 vs FY2020

[removed: However, any increase in our indebtedness] [added: Any of these factors] could have [added: a material] adverse [removed: effects] [added: effect] on our financial condition and results of [removed: operations, including:][added: operations.]

Our business and operations have been and will likely continue to be adversely affected by the ongoing COVID-19 [removed: pandemic.][added: pandemic and volatility in the oil and natural gas markets.]

[removed: Based on the results of the quarterly ceiling test, we were required to record an] [added: No] impairment on [removed: our] proved oil and natural gas [removed: interests] [added: properties was recorded] for the year ended December 31, [removed: 2020.][added: 2021.]

[removed: If] [added: However, if] commodity prices fall below current levels, we may be required to record impairments in future periods and such impairments could be material.

Our results of operations may [removed: be] also [added: be] adversely impacted by any future government rule, regulation or order that may impose production limits, as well as pipeline capacity and storage constraints, in the Permian Basin where we operate.

[removed: We cannot predict] [added: It is difficult to assess] the ultimate impact of [removed: these factors] [added: the COVID-19 pandemic] on our business, financial condition and [removed: results of operation.][added: cash flows.]

Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, [removed: including;] [added: including] the domestic and foreign supply of oil and natural gas; the level of prices and expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports; political and economic conditions in oil producing countries, including the Middle East, Africa, South [removed: America and Russia; the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; speculative trading in crude oil and natural gas derivative contracts; the level of consumer]

[added: America and Russia; the potential impact of any Russian-Ukrainian conflict on the global energy markets; the continued threat of terrorism and the impact of military and other action, including U.S. military operations in the Middle East; the ability of members of the OPEC+ to agree to and maintain oil price and production controls; speculative trading in crude oil and natural gas derivative contracts; the level of consumer] product demand; extreme weather conditions and other natural disasters; risks associated with operating drilling rigs; technological advances affecting energy consumption; the price and availability of alternative fuels; domestic and foreign governmental regulations and [removed: taxes; the continued threat of terrorism and the impact of military and other action,] [added: taxes,] including [removed: U.S. military operations in] the [removed: Middle East;] [added: Biden Administration’s energy and environmental policies;] global or national health concerns, including the outbreak of pandemic or contagious disease, such as [removed: COVID-19;] [added: COVID-19 and its variants;] the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; and overall domestic and global economic conditions.

During [removed: 2020,] [added: 2021,] NYMEX WTI prices ranged from [removed: $(37.63)] [added: $47.62] to [removed: $63.27] [added: $84.65] per Bbl and the NYMEX Henry Hub price of natural gas ranged from [removed: $1.48] [added: $2.45] to [removed: $3.35] [added: $6.31] per MMBtu.

If the prices of oil and natural gas [removed: decline further,] [added: decline,] our operations, financial condition and level of expenditures for the development of our oil and natural gas reserves may be materially and adversely affected.

Reductions in our reserves could also negatively impact the borrowing base under our revolving credit facility, which could [removed: further] limit our liquidity and ability to conduct additional exploration and development activities.

In addition, many of our oil and natural gas leases require us to drill wells that are commercially [removed: productive,] [added: productive] and [added: to maintain the production in paying quantities, and] if we are unsuccessful in drilling such [removed: wells,] [added: wells and maintaining such production,] we could lose our rights under such leases.

In [removed: 2020,] [added: 2021,] our total capital expenditures, including expenditures for drilling, [added: completion,] infrastructure and additions to midstream assets, were approximately [removed: $1.9] [added: $1.5] billion.

Our [removed: 2021] [added: 2022] capital budget for drilling, completion and infrastructure, including investments in water disposal infrastructure and gathering line projects, is currently estimated to be approximately [removed: $1.4] [added: $1.75] billion to [removed: $1.6] [added: $1.90] billion, representing [removed: a decrease] [added: an increase] of [removed: 50%] [added: 23%] from our [removed: 2020] [added: 2021] capital [removed: budget.][added: expenditures.]

We intend to finance our future capital expenditures [removed: for our drilling operations] with cash flow from operations, while future acquisitions may also be funded from operations as well as proceeds from offerings of our debt and equity securities and borrowings under our revolving credit facility.

Our cash flow from operations and access to capital are subject to a number of variables, [removed: including;] [added: including] our proved reserves; the volume of oil and natural gas we are able to produce from existing wells; the prices at which our oil and natural gas are sold; our ability to acquire, locate and produce economically new reserves; and our ability to borrow under our credit facility.

Further, our actual capital expenditures in [removed: 2021] [added: 2022] could exceed our capital expenditure budget.

If we are unable to fund our capital [removed: requirements,] [added: requirements or our costs of capital increase,] we may be required to curtail our operations relating to the exploration and development of our prospects, which in turn could lead to a possible loss of properties and a decline in our oil and natural gas reserves, or we may be otherwise unable to implement our development plan, complete acquisitions or take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our production, revenues and results of operations.

The successful acquisition of producing properties requires an assessment of several factors, [removed: including;] [added: including] recoverable reserves, future oil and natural gas prices and their applicable differentials, operating costs, and potential environmental and other liabilities.

If these acquisitions include geographic regions in which we do not currently operate, [removed: as in the case of the pending merger with QEP,] we could be subject to unforeseen operating difficulties and difficulties in coordinating geographically dispersed operations, personnel and facilities.

Our financial position and results of operations may [added: also] fluctuate significantly from period to period, based on whether or not significant acquisitions are completed in particular periods.

[removed: At an assumed price] [added: As] of [removed: approximately $60.00 per Bbl WTI,] [added: December 31, 2021,] we [removed: currently] have approximately [removed: 10,413] [added: 9,314] gross [removed: (6,863] [added: (6,311] net) identified economic potential horizontal drilling locations in multiple horizons on our [removed: acreage.][added: acreage at an assumed price of approximately $50.00 per Bbl WTI.]

As of December 31, [removed: 2020,] [added: 2021,] only [removed: 628] [added: 602] of our gross identified [added: economic] potential horizontal drilling locations were attributed to proved reserves.

Our ability to drill and develop these locations depends on a number of uncertainties, including the availability of capital, construction of infrastructure, [added: unusual or unexpected geological formations, title problems, facility or equipment malfunctions, unexpected operational events,] inclement weather, [added: environmental and other] regulatory [removed: changes] [added: requirements] and approvals, oil and natural gas prices, costs, drilling results and the availability of water.

In addition, [added: as of December 31, 2021,] we have identified approximately [removed: 2,708] [added: 2,531] horizontal drilling locations in intervals in which we have drilled very few or no wells, which are necessarily more speculative and based on results from other operators whose acreage may not be consistent with ours.

[removed: Through December 31, 2020, we are the operator of, have participated in, or have acquired working interest in a total of 2,380 horizontal wells completed on our acreage, we] [added: We] cannot assure you that the analogies we draw from available data from these or other wells, more fully explored locations or producing fields will be applicable to our drilling locations.

In [removed: addition, in] order to hold our current leases expiring in [removed: 2021,] [added: 2022,] we will need to operate at least a one-rig program.

Any [removed: such losses] [added: non-renewal or other loss] of leases could materially and adversely affect the growth of our asset basis, cash flows and results of operations.

Although we have hedged a portion of our estimated [removed: 2021 and] 2022 [added: and 2023] production, we may still be adversely affected by [removed: continuing and prolonged] declines in the price of oil and may be exposed to other risks, including counterparty credit risk.

For additional information regarding our outstanding derivative contracts as of December 31, [removed: 2020,] [added: 2021,] see Note [removed: 15—[Derivatives](#i4b770a66acfe418cb1b377f3d113fa9f_208)] [added: 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202)] to our consolidated financial statements included elsewhere in this report.

If production from our Permian Basin acreage decreases due to decreased developmental activities, production related difficulties or otherwise, we may fail to meet our obligations to deliver specified quantities of oil under our oil purchase [removed: contract,] [added: contracts,] which will result in deficiency payments to the counterparty and may have an adverse effect on our operations.

We are a party to long-term crude oil agreements under which, subject to certain terms and conditions, we are obligated to deliver specified quantities of oil to [removed: such companies.][added: our counterparties.]

In addition to credit risk related to receivables from commodity derivative contracts, our principal exposure to credit risk is through receivables from joint interest owners on properties we operate (approximately [removed: $56] [added: $72] million at December 31, [removed: 2020)] [added: 2021)] and receivables from purchasers of our oil and natural gas production (approximately [removed: $281] [added: $598] million at December 31, [removed: 2020).][added: 2021).]

This concentration of customers may impact our overall credit risk in that these entities may be similarly affected by [added: any adverse] changes in economic and other conditions.

[removed: Depletion for] [added: Impairments of proved] oil and natural gas properties [added: of $6.0 billion and $0.8 billion were recorded] for the years ended December 31, [removed: 2020, 2019 and 2018 was $1.2 billion, $1.4 billion] [added: 2020] and [removed: $595 million, respectively.][added: 2019.]

Approximately [removed: 38%] [added: 33%] of our total estimated proved reserves as of December 31, [removed: 2020,] [added: 2021,] were proved undeveloped reserves and may not be ultimately developed or produced.

Recovery of proved undeveloped reserves requires significant capital expenditures and successful drilling [added: and completion] operations.

As a result of this concentration, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints, availability of equipment, facilities, personnel or services market limitations or interruption of the processing or transportation of crude oil, natural gas or natural gas liquids and extreme weather conditions, such as the [removed: recent] severe winter storms in the Permian [removed: Basin,] [added: Basin in February 2021,] and their adverse impact on production volumes, availability of electrical power, road accessibility and transportation facilities.

In addition to the geographic concentration of our producing properties described above, as of December 31, [removed: 2020,] [added: 2021,] most of our proved reserves are concentrated in the Wolfberry play in the Midland Basin.

In addition, we do not have long-term contracts securing the use of our existing rigs, and the [removed: operator] [added: operators] of those rigs may choose to cease providing services to us.

In addition, if commodity prices decrease, our production, estimates of proved reserves and liquidity may be adversely affected.

After turning negative in April 2020, NYMEX WTI prices have recovered, closing at $85.43 per Bbl as of January 18, 2022, as demand for oil and natural gas increased and many restrictions on conducting business implemented in response to the COVID-19 pandemic were lifted due to improved treatments and availability of vaccinations in the U.S. and globally.

The emergence of the Delta COVID-19 variant in the latter part of 2021 and the subsequent surge of the highly transmissible Omicron variant, however, contributed to economic and pricing volatility as industry and market participants evaluated industry conditions and production outlook.

Despite the recent recovery in demand for oil and natural gas and commodity prices, we have kept production on our acreage relatively flat during 2021, using excess cash flow for debt repayment and/or return to our stockholders rather than expanding our drilling program.

We intend to continue exercising capital discipline by maintaining our oil production flat in 2022 at the fourth quarter 2021 level.

We cannot reasonably predict whether production levels will remain at current levels or the full extent of the events above and any subsequent recovery may have on our industry and our business.

Due to the improvement in commodity pricing environment and industry conditions, we did not record any impairments in 2021.

The ongoing COVID-19 pandemic continues to present operational, health, labor, logistics and other challenges, and it is difficult to assess the ultimate impact of the COVID-19 pandemic on our business, financial condition and cash flows.

There are many variables and uncertainties regarding the COVID-19 pandemic, including the emergence, contagiousness and threat of new and different strains of the virus and their severity; the effectiveness of treatments or vaccines against the virus or its new strains; the extent of travel restrictions, business closures and other measures that are or may be imposed in affected areas or countries by governmental authorities; disruptions in the supply chain; an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic; increased logistics costs; additional costs due to remote working arrangements, adherence to social distancing guidelines and other COVID-19-related challenges.

Further, there remain increased risks of cyberattacks on information technology systems used in a remote working environment; increased privacy-related risks due to processing health-related personal information; absence of workforce due to illness; the impact of the pandemic on any of our contractual counterparties; and other factors that are currently unknown or considered immaterial.

Through December 31, 2021, we are the operator of, have participated in, or have acquired working interest in a total of 2,842 horizontal producing wells completed on our acreage.

See “Business and Properties—Oil and Natural Gas Production Prices and Production Costs—Marketing and Customers” for additional information regarding these customers.

Under certain circumstances, the revenue due to them can be offset by any unpaid receivables.

See “Business and Properties—Oil and Natural Gas Production Prices and Production Costs—Marketing and Customers” for additional information regarding these customers.

As a result of this severe drought, some local water

Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition.

In September 2021, the Texas Railroad Commission curtailed the amount of produced water companies were permitted to inject into some wells near Midland and Odessa in the Permian Basin, and has since indefinitely suspended some permits there and expanded the restrictions to other areas.

These actions were taken in an effort to control induced seismic activity and recent increases in earthquakes in the Permian Basin, which have been linked by the U.S. and local seismologists to wastewater disposal in oil fields.

These restrictions on the disposal of produced water and a moratorium on new produced water disposal wells could result in increased operating costs, requiring us or our service providers to truck produced water, recycle it or dispose of it by other means, all of which could be costly.

We or our service providers may also need to limit disposal well volumes, disposal rates and pressures or locations, or require us or our service providers to shut down or curtail the injection of produced water into disposal wells.

These factors may make drilling activity in the affected parts of the Permian Basin less economical and adversely impact our business, results of operations and financial condition.

Risks that we face while drilling include, but are not limited to, the following:

- spacing of wells to maximize economic return;

- landing our well bore in the desired drilling zone;

- staying in the desired drilling zone while drilling horizontally through the formation;

- running our casing the entire length of the well bore; and

- being able to run tools and other equipment consistently through the horizontal well bore.

Risks that we face while completing our wells include, but are not limited to, being able to:

- fracture stimulate the planned number of stages;

- run tools the entire length of the well bore during completion operations;

- successfully clean out the well bore after completion of the final fracture stimulation stage; and

- prevent unintentional communication with other wells.

anticipate.

lead to periodic shortages when drilling is allowed.

with terms that vary from the above allocations of risk.

and accounting data.

On March 5, 2021, the ICE Benchmark Administration, which administers LIBOR, and the FCA announced that all LIBOR settings will either cease to be provided by any administrator, or no longer be representative immediately after 2021, for all non-U.S. dollar LIBOR settings and one-week and two-month U.S. dollar LIBOR settings, and immediately after June 30, 2023 for the remaining U.S. dollar LIBOR settings.

In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phase-out could cause LIBOR to perform differently than in the past or cease to exist.

Our current credit agreement provides for any

changes away from LIBOR to a successor rate to be based on prevailing or equivalent standards, however, changes in the method of calculating LIBOR, or the discontinuation, reform, or replacement of LIBOR or any other benchmark rates may adversely affect interest rates and result in higher borrowing costs.

Risks Relating to the Pending Merger

The pending merger may not be completed and the merger agreement may be terminated in accordance with its terms.

Failure to complete the pending merger could negatively impact the price of shares of our common stock and our future businesses and financial results.

The pending merger is subject to a number of conditions that must be satisfied, including the approval by QEP stockholders of the merger agreement proposal, or, to the extent permitted by applicable law, waived, in each case prior to the completion of the pending merger.

The conditions to the completion of the pending merger, some of which are beyond our control, may not be satisfied or waived in a timely manner or at all, and, accordingly, the pending merger may be delayed or may not be completed.

In addition, if the pending merger is not completed by June 30, 2021, or, in certain instances, on or before September 30, 2021, either we or QEP may choose not to proceed with the pending merger by terminating the merger agreement, and the parties can mutually decide to terminate the merger agreement at any time, before or after stockholder approval.

Further, either we or QEP may elect to terminate the merger agreement in certain other circumstances specified in the merger agreement.

If the transactions contemplated by the merger agreement are not completed for any reason, our ongoing business, financial condition and financial results may be adversely affected.

Without realizing any of the benefits of having completed the transactions, we will be subject to a number of risks, including the following:

- we may be required to pay our costs relating to the transactions, which are substantial, such as legal, accounting, financial advisory and printing fees, whether or not the transactions are completed;

- time and resources committed by our management to matters relating to the transactions could otherwise have been devoted to pursuing other beneficial opportunities;

- we may experience negative reactions from financial markets, including negative impacts on the price of our common stock, including to the extent that the current market price reflects a market assumption that the transactions will be completed;

- we may experience negative reactions from employees, customers or vendors; and

- since the merger agreement restricts the conduct of our business prior to completion of the pending merger, we may not have been able to take certain actions during the pendency of the merger that would have benefitted us as an independent company and the opportunity to take such actions may no longer be available.

We will be subject to business uncertainties while the merger is pending, which could adversely affect our business.

Uncertainty about the effect of the pending merger on employees, industry contacts and business partners may have an adverse effect on us.

These uncertainties may impair our ability to attract, retain and motivate key personnel until the pending merger is completed and for a period of time thereafter and could cause industry contacts, business partners and others that deal with us to seek to change their existing business relationships with us.

In addition, the merger agreement restricts the parties to the merger agreement from entering into certain corporate transactions and taking other specified actions without the consent of the other party.

These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the pending merger.

We will incur significant transaction and merger-related costs in connection with the pending merger, which may be in excess of those anticipated by us.

We have incurred and expect to continue to incur a number of non-recurring costs associated with negotiating and completing the pending merger, combining the operations of the two companies and achieving desired synergies.

These fees and costs have been, and will continue to be, substantial.

The substantial majority of non-recurring expenses will consist of transaction costs related to the pending merger and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, severance and benefit costs and filing fees.

We will also incur transaction fees and costs related to the integration of the companies, which may be substantial.

Moreover, we may incur additional unanticipated expenses in connection with the pending merger and the integration, including costs associated with any stockholder litigation related to the pending merger.

Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of the combined company following the completion of the pending merger.

We and our subsidiaries will have substantial indebtedness after giving effect to the pending merger, which may limit our financial flexibility and adversely affect our financial results.

Under the merger agreement, QEP’s outstanding debt (other than its existing credit facility) will remain outstanding, which debt, as of December 31, 2020 was approximately $1.6 billion and consisted of amounts outstanding under QEP’s senior notes.

As of December 31, 2020, we had total long-term debt of approximately $5.6 billion, consisting primarily of the amounts outstanding under our revolving credit facility, our senior unsecured notes, the notes issued by our subsidiary Energen Corporation, the senior notes issued by our publicly traded subsidiaries, Viper and Rattler, and the amounts outstanding under Viper’s and Rattler’s revolving credit facilities.

Our pro forma indebtedness as of December 31, 2020, assuming consummation of the pending merger had occurred on such date and QEP’s senior notes remain outstanding, would have been approximately $7.4 billion, representing an increase in comparison to our indebtedness on a recent historical basis.

We believe that post-merger we will retain our investment grade credit ratings and retire the combined company’s pro forma debt at a faster rate than either company would have been able to do absent the pending merger.

- increasing difficulty to satisfy our obligations with respect to our debt obligations, including any repurchase obligations that may arise thereunder;

- diverting a significant portion of our cash flows to service our indebtedness, which could reduce the funds available to us for operations and other purposes;

- increasing our vulnerability to general adverse economic and industry conditions;

- placing us at a competitive disadvantage compared to our competitors that are less leveraged and, therefore, may be able to take advantage of opportunities that we would be unable to pursue due to our indebtedness;

- limiting our ability to access the capital markets to raise capital on favorable terms;

- impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes; and

- increasing our vulnerability to interest rate increases, as our borrowings under our revolving credit facility are at variable interest rates.

We believe that the combined company will have flexibility to repay, refinance, repurchase, redeem, exchange or otherwise terminate large portions of our outstanding debt obligations.

[added: -] As of December 31, [removed: 2020,] [added: 2021,] we had approximately [removed: 378,678] [added: 445,848] net acres, which primarily consisted of approximately [removed: 194,591] [added: 265,562] net acres in the Midland Basin and approximately [removed: 152,587] [added: 148,588] net acres in the Delaware Basin.

As of December 31, [removed: 2020,] [added: 2021,] we had an estimated [removed: 10,413] [added: 9,314] gross horizontal locations that we believe to be economic at [removed: $60.00] [added: $50.00] per Bbl WTI.

In addition, our publicly traded subsidiary Viper owns mineral interests underlying approximately [removed: 787,264] [added: 930,871] gross acres and [removed: 24,350] [added: 27,027] net royalty acres in the Permian Basin and Eagle Ford Shale.

Approximately [removed: 52%] [added: 54%] of these net royalty acres are operated by us.

[removed: 2020] [added: 2021] Transactions and Recent Developments

COVID-19 and [removed: Collapse in] [added: Effects on] Commodity Prices

During [added: 2021 and] 2020, the posted price for [removed: the WTI price for] [added: West Texas intermediate light sweet] crude [removed: oil] [added: oil, or NYMEX WTI, has] ranged from $(37.63) to [removed: $63.27 per barrel, or] [added: $84.65] Bbl, and the NYMEX Henry Hub price of natural gas [added: has] ranged from $1.48 to [removed: $3.35] [added: $6.31] per MMBtu.

On January [removed: 29, 2021,] [added: 18, 2022,] the [added: closing] NYMEX WTI price for crude oil was [removed: $52.20] [added: $85.43] per Bbl and the [added: closing] NYMEX Henry Hub price of natural gas was [removed: $2.56] [added: $4.28] per MMBtu.

[removed: This was] [added: In early March 2020, oil prices dropped sharply and continued to decline, briefly reaching negative levels, as] a result of multiple factors affecting the supply and demand in global oil and natural gas markets, including [added: (i)] actions taken by OPEC members and other exporting nations impacting commodity price and production levels and [added: (ii)] a significant decrease in demand due to the [removed: ongoing] COVID-19 pandemic.

[removed: In addition, as] [added: As] a result of the sharp decline in commodity prices [removed: in early March 2020, and the continued depressed oil pricing throughout the second and third quarters of] [added: during] 2020, we recorded [removed: $6.0 billion of aggregate] non-cash ceiling test impairments for the year ended December 31, [removed: 2020.][added: 2020 of $6.0 billion which is included in accumulated depletion, depreciation, amortization and impairment on our consolidated balance sheet.]

[removed: These impairment] [added: Impairment] charges [removed: adversely affected] [added: affect] our results of operations but [removed: did] [added: do] not reduce our cash [removed: flows.][added: flow.]

If the trailing 12-month commodity prices [removed: continue to] fall as compared to the commodity prices used in prior quarters, we [removed: will] [added: may] have material [removed: write downs] [added: write-downs] in subsequent quarters.

[removed: The cash portion of this transaction is expected to be] [added: We] funded [removed: through a combination of] [added: the redemption with] cash on hand and borrowings under our [added: revolving] credit facility.

Fourth Quarter [removed: 2020] [added: 2021] Dividend Declaration and Increase

On February 18, [removed: 2021,] [added: 2022,] our board of directors declared a cash dividend for the fourth quarter of [removed: 2020] [added: 2021] of [removed: $0.40] [added: $0.60] per share of common stock, payable on March 11, [removed: 2021] [added: 2022] to our stockholders of record at the close of business on March 4, [removed: 2021,] [added: 2022,] representing a [removed: 6.7%] [added: 20%] increase per share from the previously paid quarterly dividend.

During the year ended December 31, [removed: 2020,] [added: 2021,] Viper repurchased approximately [removed: $24] [added: $46] million of [removed: its] common units under its repurchase program.

As of December 31, [removed: 2020, $76] [added: 2021, $80] million remained available for use to repurchase common units under Viper’s common unit repurchase program.

During the year ended December 31, [removed: 2020,] [added: 2021,] Rattler repurchased approximately [removed: $15] [added: $48] million of [removed: its] common [removed: stock] [added: units] under its repurchase program.

As of December 31, [removed: 2020, $85] [added: 2021, $88] million remained available for use to repurchase common units under Rattler’s common unit repurchase program.

As of December 31, [removed: 2020,] [added: 2021,] we were operating [removed: eight] [added: 10] drilling rigs and [added: four completion crews and] currently intend to operate between [removed: eight] [added: 10] and 12 drilling rigs [added: and between three and four completion crews] in [removed: 2021] [added: 2022] on average across our current acreage position in the Midland and Delaware Basins.

In [removed: 2021,] [added: 2022,] we expect to focus development on these areas.

To further underscore our commitment to carbon neutrality, we [removed: are] [added: have] also [removed: implementing] [added: implemented] our “Net Zero Now” initiative under which, effective January 1, 2021, [added: we strive to produce] every hydrocarbon molecule [removed: we produce is anticipated to be produced] with zero Scope 1 emissions.

To the extent our greenhouse gas and methane intensity targets do not eliminate our carbon footprint, we [removed: intend to purchase] [added: have purchased] carbon credits to offset the remaining emissions.

We [added: have] also [removed: plan to increase] [added: increased] the weighting of ESG metrics in our annual short-term incentive compensation plan to motivate our executives to advance our environmental responsibility goals.

With respect to flaring, we flared [removed: 0.9%] [added: 1.55%] of our gross natural gas production in the fourth quarter of [removed: 2020.][added: 2021.]

For the full year ended [removed: 2020,] [added: 2021,] we flared [removed: 2.0%] [added: 1.45%] of our gross natural gas production, down [removed: 64%] [added: 26%] from [removed: 2019.][added: 2020.]

[removed: 2021] [added: 2022] Capital Budget

If commodity prices strengthen, we intend to [removed: grow] [added: maintain flat] oil [removed: production within our 2021 budget,] [added: production,] pay down indebtedness and return cash to our stockholders.

[removed: For] [added: .For] a discussion of the results of operations for the year ended December 31, [removed: 2019] [added: 2020] as compared to the year ended December 31, [removed: 2018,] [added: 2019,] please refer to [removed: [“](https://www.sec.gov/ix?doc=/Archives/edgar/data/1539838/000153983820000021/diamondback201910-k.htm)[Part] [added: [“Part] II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form [removed: 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/1539838/000153983820000021/diamondback201910-k.htm)] [added: 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/1539838/000153983821000015/fang-20201231.htm#i4b770a66acfe418cb1b377f3d113fa9f_46)] for the year ended December 31, [removed: 2019] [added: 2020] (filed with the SEC on February [removed: 27, 2020),] [added: 25, 2021),] which [removed: discussion] is incorporated in this report by reference from such prior report on Form 10-K.

| | | | Year Ended December 31, | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| Oil sales | | | $ | [removed: 2,410] [added: 5,396] | | | | | $ | [removed: 3,554] [added: 2,410] | | | | | | | |

| Natural gas sales | | | [removed: 107] [added: 569] | | | | | | [removed: 66] [added: 107] | | | | | | | | |

| Natural gas liquid sales | | | [removed: 239] [added: 782] | | | | | | [removed: 267] [added: 239] | | | | | | | | |

| Total oil, natural gas and natural gas liquid revenues | | | $ | [removed: 2,756] [added: 6,747] | | | | | $ | [removed: 3,887] [added: 2,756] | | | | | | | |

| Production [removed: Data (in thousands):] [added: Data:] | | | | | | | | | | | | | | | | | |

| Oil (MBbls) | | | [removed: 66,182] [added: 81,522] | | | | | | [removed: 68,518] [added: 66,182] | | | | | | | | |

| Natural gas (MMcf) | | | [removed: 130,549] [added: 169,406] | | | | | | [removed: 97,613] [added: 130,549] | | | | | | | | |

| Natural gas liquids (MBbls) | | | [removed: 21,981] [added: 27,246] | | | | | | [removed: 18,498] [added: 21,981] | | | | | | | | |

| Combined volumes [removed: (MBOE)] [added: (MBOE)(1)] | | | [removed: 109,921] [added: 137,002] | | | | | | [removed: 103,285] [added: 109,921] | | | | | | | | |

We are an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

We operate under a strategic approach that focuses predominantly on enhancing return through our low-cost development strategy of resource conversion, capital allocation and continued improvements in operational and cost efficiencies.

We are also committed to delivering results in a socially and environmentally responsible manner.

2021 Financial and Operating Highlights

- We recorded net income of $2.2 billion for the year ended December 31, 2021.

- Our average production was 137,002 MBOE/d during the year ended December 31, 2021.

- During the year ended December 31, 2021, we drilled 175 gross horizontal wells in the Midland Basin and 41 gross horizontal wells in the Delaware Basin.

- We turned 275 gross operated horizontal wells (including 207 in the Midland Basin and 64 in the Delaware Basin) to production and had capital expenditures, excluding acquisitions, of $1.5 billion during the year ended December 31, 2021.

- The average lateral length for the wells completed during the year ended December 31, 2021 was 10,602 feet.

- Our cash operating costs for the year ended December 31, 2021 were $9.46 per BOE, including lease operating expenses of $4.12 per BOE, cash general and administrative expenses of $0.69 per BOE and production and ad valorem taxes and gathering and transportation expenses of 4.65 per BOE.

2021 Acquisition Activity and Recent Transactions

On February 26, 2021, we completed the Guidon Acquisition, which included approximately 32,500 net acres in the Northern Midland Basin, in exchange for 10.68 million shares of the Company’s common stock and $375 million of cash.

On March 17, 2021, we completed the QEP Merger.

The addition of QEP’s assets increased our net acreage in the Midland Basin by approximately 49,000 net acres.

Under the terms of the merger agreement, we issued approximately 12.12 million shares of our common stock to the former QEP stockholders, with a total value of approximately $987 million on the closing date.

[Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)

On October 1, 2021, Viper completed the acquisition of certain mineral and royalty interests from Swallowtail Royalties LLC and Swallowtail Royalties II LLC (the “Swallowtail entities”) which included certain mineral and royalty interests for 15.25 million of Viper’s common units and approximately $225 million in cash (the “Swallowtail Acquisition”).

The cash portion of the purchase price was funded through a combination of cash on hand and approximately $190 million of borrowings under Viper LLC’s revolving credit facility.

On October 5, 2021, Rattler and a private affiliate of an investment fund formed a joint venture entity, Remuda Midstream Holdings LLC (the “WTG joint venture”).

Rattler contributed approximately $104 million in cash for a 25% membership interest in the WTG joint venture, which then completed the acquisition of a majority interest in WTG Midstream LLC (“WTG Midstream”).

2021 Divestiture Activity

On June 3, 2021 and June 7, 2021, respectively, we closed transactions to divest certain non-core Permian assets, including over 7,000 net acres of non-core Southern Midland Basin acreage in Upton county, Texas and approximately 1,300 net acres of non-core, non-operated Delaware Basin assets in Lea county, New Mexico, for combined net cash proceeds of $82 million, after customary closing adjustments.

We used our net proceeds from these transactions toward debt reduction.

On October 21, 2021, we completed the divestiture of our Williston Basin oil and natural gas assets, consisting of approximately 95,000 net acres acquired in the QEP Merger, for net cash proceeds of approximately $586 million after customary closing adjustments.

We used our net proceeds from this transaction toward debt reduction.

On November 1, 2021, we completed the sale of certain gas gathering assets to Brazos Delaware Gas, LLC, which we refer to as Brazos, for net cash proceeds of approximately $54 million, after customary closing adjustments.

On December 1, 2021, we completed the sale of certain water midstream assets with a carrying value of approximately $160 million to Rattler in exchange for cash proceeds of approximately $160 million.

On November 1, 2021, Rattler completed the sale of its gas gathering assets to Brazos for net cash proceeds of approximately $83 million at closing, after customary closing adjustments, and an aggregate of $10 million in contingent payments.

See Note 4—[Acquisitions and Divestiture](#ia0a8569c6321429087004ad63a8c5224_166)s for additional discussion of these transactions.

Debt Transactions

Issuances of Notes

On March 24, 2021, Diamondback Energy, Inc. issued $650 million aggregate principal amount of 0.900% Senior Notes due March 24, 2023 (the “2023 Notes”), $900 million aggregate principal amount of 3.125% Senior Notes due March 24, 2031 (the “2031 Notes”) and $650 million aggregate principal amount of 4.400% Senior Notes due March 24, 2051 (the “2051 Notes”) and received proceeds, net of $24 million in debt issuance costs and discounts, of $2.18 billion.

The net proceeds were primarily used to fund the redemption of other senior notes outstanding as discussed further below.

Redemption of Notes

The net proceeds from the March 2021 Notes discussed above were primarily used to fund the repurchase of $1.65 billion in fair value carrying amount of the QEP Notes that remained outstanding at the effective time of the QEP Merger for total cash consideration of $1.7 billion, and $368 million principal amount of 2025 Senior Notes, for total cash consideration of $381 million.

Giving effect to the repurchase of the 2023 Notes discussed below, these refinancing transactions are expected to result in an estimated annual interest cost savings of approximately $40 million in addition to an estimated $60 to $80 million of previously announced expected annual cost synergies from the QEP Merger.

In June 2021, we redeemed the remaining $191 million principal amount of outstanding legacy 4.625% senior notes due September 1, 2021 of Energen Corporation (“Energen”).

In August 2021 we redeemed the remaining $432 million principal amount of our outstanding 5.375% 2025 Senior Notes at a redemption price equal to 102.688% of the principal amount plus accrued interest.

[Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)

On November 1, 2021, we redeemed the aggregate $650 million principal amount of our outstanding 2023 Notes with the proceeds received from the divestiture of our Williston Basin assets and cash on hand.

Upstream Operations

In our upstream segment, our activities are primarily directed at the horizontal development of the Wolfcamp and Spraberry formations in the Midland Basin and the Wolfcamp and Bone Spring formations in the Delaware Basin.

We intend to continue to develop our reserves and increase production through development drilling and exploitation and exploration activities on our multi-year inventory of identified potential drilling locations and through acquisitions that meet our strategic and financial objectives, targeting oil-weighted reserves.

Midstream Operations

In our midstream operations segment, Rattler’s crude oil infrastructure assets consist of gathering pipelines and metering facilities, which collectively gather crude oil for its customers.

Rattler’s facilities gather crude oil from horizontal and vertical wells in our ReWard, Spanish Trail, Pecos and Fivestones areas within the Permian Basin.

Rattler’s natural gas gathering and compression system consists of gathering pipelines, compression and metering facilities, which collectively service the production from our Pecos area assets within the Permian Basin.

Rattler’s water sourcing and distribution assets consists of water wells, frac pits, pipelines and water treatment facilities, which collectively gather and distribute water from Permian Basin aquifers to the drilling and completion sites through buried pipelines and temporary surface pipelines.

Rattler’s gathering and disposal system spans approximately 517 miles and consists of gathering pipelines along with produced water disposal, or PWD, wells and facilities which collectively gather and dispose of produced water from operations throughout our Permian Basin acreage.

We have entered into multiple fee-based commercial agreements with Rattler, each with an initial term ending in 2034, utilizing Rattler’s infrastructure assets or its planned infrastructure assets to provide an array of essential services critical to our upstream operations in the Delaware and Midland Basins.

Our agreements with Rattler include substantial acreage dedications.

On March 11, 2020, the World Health Organization characterized the global outbreak of the novel strain of coronavirus, COVID-19, as a “pandemic.” To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and a reduction in demand for many products from direct or ultimate customers.

Although many stay-at-home orders have expired and certain restrictions on conducting business have been lifted, the COVID-19 pandemic resulted in a

widespread health crisis and a swift and unprecedented reduction in international and U.S. economic activity which, in turn, has adversely affected the demand for oil and natural gas and caused significant volatility and disruption of the financial markets.

In early March 2020, oil prices dropped sharply and continued to decline reaching negative levels.

In response to recent volatility in commodity prices, many producers have reduced their capital expenditure budgets.

While OPEC members and certain other nations agreed in April 2020 to cut production and subsequently extended such production cuts through December 2020, which helped to reduce a portion of the excess supply in the market and improve crude oil prices, they agreed to increase production by 500,000 barrels per day beginning in January 2021.

We cannot predict if or when commodity prices will stabilize and at what levels.

As a result of the reduction in crude oil demand caused by factors discussed above, in 2020, we lowered our 2020 capital budgets and production guidance, curtailed near term production and reduced rig count, all of which may be subject to further reductions or curtailment if the commodity markets and macroeconomic conditions worsen.

Although we have restored curtailed production, actions taken in response to the COVID-19 pandemic and depressed commodity pricing environment have had and are expected to continue to have an adverse effect on our business, financial results and cash flows.

Our production, proved reserves and cash flows will also be adversely impacted.

Our results of operations may be further adversely impacted by any government rule, regulation or order that may impose production limits, as well as pipeline capacity and storage constraints, in the Permian Basin where we operate.

Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic, the depressed commodity prices and the adverse macroeconomic conditions will persist, the full extent of the impact they will have on our industry and our business, financial condition, results of operations or cash flows, or the pace or extent of any subsequent recovery.

Pending Merger with QEP Resources, Inc.

On December 20, 2020, we, QEP and the Merger Sub, entered into the merger agreement under which the Merger Sub will be merged with and into QEP, with QEP surviving as our wholly owned subsidiary.

If the pending merger is completed, each QEP stockholder will receive, in exchange for each share of QEP common stock held by such stockholder immediately prior to the closing of the pending merger, 0.050 of a share of our common stock.

The completion of the pending merger is subject to satisfaction or waiver of certain customary mutual closing conditions, including the receipt of the required approvals from QEP’s stockholders.

The pending merger is expected to close shortly following the special meeting of the QEP stockholders, which is scheduled for March 16, 2021, subject to QEP stockholder approval and other customary closing conditions.

See “[Items 1 and 2.

Business and Properties—Overview—Pending Merger with QEP Resources, Inc.](#i4b770a66acfe418cb1b377f3d113fa9f_22)” for additional information regarding the pending merger.

We expect that the pending merger will:

- add material Tier-1 Midland Basin inventory;

- be accretive on all relevant 2021 per share metrics including cash flow per share, free cash flow per share and leverage, before accounting for synergies;

- lower 2021 reinvestment ratio and enhance ability to generate free cash flow, de-lever and return capital to our stockholders; and

- realize significant, tangible annual synergies of $60 to $80 million comprised of general and administrative expense savings, cost of capital and interest expense savings, improved capital efficiency from high-graded development of

combined acreage, physical adjacencies to increase lateral lengths and significant adjacent Permian Basin midstream assets.

In addition, we expect to maintain our investment grade credit ratings following the completion of the pending merger.

Pending Guidon Acquisition

On December 18, 2020, we entered into a definitive purchase and sale agreement with Guidon and certain of Guidon’s affiliates to acquire approximately 32,500 net acres in the Northern Midland Basin and certain related oil and natural gas assets, which we refer to as the Pending Guidon Acquisition.

Consideration for the Pending Guidon Acquisition consists of $375 million in cash and 10.6 million shares of our common stock, subject to adjustment.

Pricing for oil and natural gas production has been volatile and unpredictable for several [removed: years, and we expect this volatility to continue in the future.][added: years.]

[removed: The] [added: Further, the] prices we receive for production depend on many [added: other] factors outside of our control.

We use derivatives, including swaps, basis swaps, swaptions, roll [removed: hedges and] [added: hedges,] costless collars, [added: puts and basis puts,] to reduce price volatility associated with certain of our oil and natural gas sales.

At December 31, [removed: 2020,] [added: 2021,] we had a net liability derivative position of [removed: $255] [added: $168] million related to our commodity price [removed: risk] derivatives.

Utilizing actual derivative contractual volumes under our commodity price derivatives as of December 31, [removed: 2020,] [added: 2021,] a 10% increase in forward curves associated with the underlying commodity would have increased the net liability position [added: by $149 million] to [removed: $284 million, an increase of $29] [added: $317] million, while a 10% decrease in forward curves associated with the underlying commodity would have [removed: decreased] [added: reduced] the net liability derivative position [added: by $117 million] to [removed: $226 million, a decrease of $29] [added: $51] million.

For additional information on our open commodity derivative instruments at December 31, [removed: 2020,] [added: 2021,] see Note [removed: 15—[Derivatives](#i4b770a66acfe418cb1b377f3d113fa9f_208).][added: 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202).]

Our principal exposures to credit risk are due to the concentration of receivables from the sale of our oil and natural gas production (approximately [removed: $281] [added: $598] million at December 31, [removed: 2020),] [added: 2021),] and to a lesser extent, receivables resulting from joint interest receivables (approximately [removed: $56] [added: $72] million at December 31, [removed: 2020).][added: 2021).]

We do not require our customers to post collateral, and the [added: failure or] inability of our significant customers to meet their obligations to us due to their liquidity issues, bankruptcy, insolvency or liquidation may adversely affect our financial results.

We are subject to market risk exposure related to changes in interest rates on our indebtedness under our revolving credit [removed: facility.][added: facilities and changes in the fair value of our fixed-rate debt.]

The terms of our [removed: revolving] credit [removed: facility] [added: agreement] provide for interest on borrowings at a floating rate equal to an alternative base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.5% and 3-month LIBOR plus 1.0%) or LIBOR, in each case plus the applicable margin.

The applicable margin ranges from [removed: 0.125%] [added: 0.25%] to [removed: 1.0%] [added: 1.125%] per annum in the case of the alternative base rate and from [removed: 1.125%] [added: 1.25%] to [removed: 2.0%] [added: 2.125%] per annum in the case of LIBOR, in each case [removed: depending] [added: based] on the [removed: amount of the loan outstanding in relation to the borrowing base.][added: pricing level.]

Historically, we have [added: at times] used interest rate swaps and treasury locks to reduce our exposure to variable rate interest payments associated with our revolving credit [removed: facility.][added: facility and changes in the fair value of our fixed-rate debt.]

For additional information on our variable interest rate debt at December 31, [removed: 2020,] [added: 2021,] see Note [removed: 11—[Debt](#i4b770a66acfe418cb1b377f3d113fa9f_184).][added: 11—[Debt](#ia0a8569c6321429087004ad63a8c5224_187).]

Although demand and market prices for oil and natural gas have recently increased substantially due to rising energy use, easing of the COVID-19 pandemic restrictions, availability of treatments and vaccines in the U.S. and globally and improvements in the U.S. and global economic activity, we cannot predict events that may lead to future commodity price volatility.

[Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)

The pricing level depends on certain rating agencies’ ratings of our long-term senior unsecure debt.

We believe significant interest rate changes would not have a material near-term impact on our future earnings or cash flows.

At December 31, 2021, we have interest rate swap agreements for a notional amount of $1.2 billion to manage the impact of market interest rates on the fair value of our fixed-rate debt.

These interest rate swaps have been designated as fair value hedges of the Company’s $1.2 billion 3.50% fixed rate senior notes due 2029 whereby we will receive the fixed rate of interest and will pay an average variable rate of interest based on three month LIBOR plus 2.1865%.

For additional information on our interest rate swaps, see Note 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202).

For the year ended December 31, 2020, four purchasers each accounted for more than 10% of our revenue.

For each of the years ended December 31, 2019 and 2018, three purchasers each accounted for more than 10% of our revenue.

No other customer accounted for more than 10% of our revenue during these periods.

Our allowances for credit losses were insignificant at December 31, 2020.

The ongoing COVID-19 pandemic, depressed commodity pricing environment and adverse macroeconomic conditions may enhance our customer credit risk.

The following table summarizes the Company’s interest rate swaps as of December 31, 2020:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Type | | | Effective Date | | | Contractual Termination Date | | | Notional Amount (in millions) | | | Interest Rate | | |

| Interest Rate Swap | | | December 31, 2024 | | | December 31, 2054 | | | $ | 250 | | 1.692 | | % |

| Interest Rate Swap | | | December 31, 2024 | | | December 31, 2054 | | | $ | 250 | | 1.8361 | | % |

| Interest Rate Swap | | | December 31, 2024 | | | December 31, 2054 | | | $ | 250 | | 1.852 | | % |

| Interest Rate Swap | | | December 31, 2024 | | | December 31, 2054 | | | $ | 250 | | 1.722 | | % |

See Note 18—[Subsequent Events](#i4b770a66acfe418cb1b377f3d113fa9f_229) for discussion of derivative transactions which occurred subsequent to December 31, 2020.

We are a party to various [added: routine] legal proceedings, disputes and claims arising in the [added: ordinary] course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.

While the ultimate outcome of the pending proceedings, disputes or claims, and any resulting impact on us, cannot be predicted with certainty, we believe that none of these matters, if ultimately decided adversely, will have a material adverse effect on our financial condition, [removed: cash flows or] results of [removed: operations.][added: operations or cash flows.]

For additional information regarding contingencies, see Note [removed: 17—Commitments] [added: 18—[Commitments] and [removed: Contingencies] [added: Contingencies](#ia0a8569c6321429087004ad63a8c5224_214)] included in notes to the consolidated financial statements included elsewhere in this Annual Report.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

| | | | | | | Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | [removed: | | |]

| | | | Title of Each Class | | | | | | Trading Symbol(s) | | | | | | Name of Each Exchange on Which Registered | | | [removed: | | |]

| | | | Common Stock, par value $0.01 per share | | | | | | FANG | | | | | | The Nasdaq Stock Market LLC | | | [removed: | | |]

| | | | | | | | | | | | | | | | (NASDAQ Global Select Market) | | | [removed: | | |]

| | | | | | | Securities registered pursuant to Section 12(g) of the Act: None | | | | | | | | | | | | [removed: | | |]

Aggregate market value of the voting and non-voting common equity held by non-affiliates of registrant as of June 30, [removed: 2020] [added: 2021] was approximately [removed: $6.6] [added: $16.9] billion.

As of February [removed: 19, 2021, 158,015,647] [added: 18, 2022, 177,414,969] shares of the registrant’s common stock were outstanding.

Portions of Diamondback Energy, Inc.’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2020][added: 2021]

| [Glossary of Oil and Natural Gas [removed: Terms](#i4b770a66acfe418cb1b377f3d113fa9f_10)] [added: Terms](#ia0a8569c6321429087004ad63a8c5224_10)] | | | [removed: [ii](#i4b770a66acfe418cb1b377f3d113fa9f_10)] [added: [ii](#ia0a8569c6321429087004ad63a8c5224_10)] | | |

| [Glossary of Certain Other [removed: Terms](#i4b770a66acfe418cb1b377f3d113fa9f_13)] [added: Terms](#ia0a8569c6321429087004ad63a8c5224_13)] | | | [removed: [iv](#i4b770a66acfe418cb1b377f3d113fa9f_13)] [added: [iv](#ia0a8569c6321429087004ad63a8c5224_13)] | | |

| [Cautionary Statement Regarding Forward-Looking [removed: Statements](#i4b770a66acfe418cb1b377f3d113fa9f_16)] [added: Statements](#ia0a8569c6321429087004ad63a8c5224_16)] | | | [removed: [v](#i4b770a66acfe418cb1b377f3d113fa9f_16)] [added: [v](#ia0a8569c6321429087004ad63a8c5224_16)] | | |

| [Items 1 and 2. Business and [removed: Properties](#i4b770a66acfe418cb1b377f3d113fa9f_22)] [added: Properties](#ia0a8569c6321429087004ad63a8c5224_22)] | | | [removed: [1](#i4b770a66acfe418cb1b377f3d113fa9f_22)] [added: [1](#ia0a8569c6321429087004ad63a8c5224_22)] | | |

| [Item 1A. Risk [removed: Factors](#i4b770a66acfe418cb1b377f3d113fa9f_25)] [added: Factors](#ia0a8569c6321429087004ad63a8c5224_25)] | | | [removed: [28](#i4b770a66acfe418cb1b377f3d113fa9f_25)] [added: [27](#ia0a8569c6321429087004ad63a8c5224_25)] | | |

| [Item 1B. Unresolved Staff [removed: Comments](#i4b770a66acfe418cb1b377f3d113fa9f_28)] [added: Comments](#ia0a8569c6321429087004ad63a8c5224_28)] | | | [removed: [52](#i4b770a66acfe418cb1b377f3d113fa9f_28)] [added: [44](#ia0a8569c6321429087004ad63a8c5224_28)] | | |

| [Item 3. Legal [removed: Proceedings](#i4b770a66acfe418cb1b377f3d113fa9f_31)] [added: Proceedings](#ia0a8569c6321429087004ad63a8c5224_31)] | | | [removed: [52](#i4b770a66acfe418cb1b377f3d113fa9f_31)] [added: [44](#ia0a8569c6321429087004ad63a8c5224_31)] | | |

| [Item 4. Mine Safety [removed: Disclosures](#i4b770a66acfe418cb1b377f3d113fa9f_34)] [added: Disclosures](#ia0a8569c6321429087004ad63a8c5224_34)] | | | [removed: [52](#i4b770a66acfe418cb1b377f3d113fa9f_34)] [added: [44](#ia0a8569c6321429087004ad63a8c5224_34)] | | |

| [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i4b770a66acfe418cb1b377f3d113fa9f_40)] [added: Securities](#ia0a8569c6321429087004ad63a8c5224_40)] | | | [removed: [52](#i4b770a66acfe418cb1b377f3d113fa9f_40)] [added: [45](#ia0a8569c6321429087004ad63a8c5224_40)] | | |

| [Item 6. Selected Financial [removed: Data](#i4b770a66acfe418cb1b377f3d113fa9f_2420)] [added: Data](#ia0a8569c6321429087004ad63a8c5224_43)] | | | [removed: [53](#i4b770a66acfe418cb1b377f3d113fa9f_2420)] [added: [45](#ia0a8569c6321429087004ad63a8c5224_43)] | | |

| [Item 7. Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i4b770a66acfe418cb1b377f3d113fa9f_46)] [added: Operations](#ia0a8569c6321429087004ad63a8c5224_49)] | | | [removed: [54](#i4b770a66acfe418cb1b377f3d113fa9f_46)] [added: [46](#ia0a8569c6321429087004ad63a8c5224_49)] | | |

| [Item 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk](#i4b770a66acfe418cb1b377f3d113fa9f_61)] [added: Risk](#ia0a8569c6321429087004ad63a8c5224_79)] | | | [removed: [71](#i4b770a66acfe418cb1b377f3d113fa9f_61)] [added: [63](#ia0a8569c6321429087004ad63a8c5224_79)] | | |

| [Item 8. Financial Statements and Supplementary [removed: Data](#i4b770a66acfe418cb1b377f3d113fa9f_67)] [added: Data](#ia0a8569c6321429087004ad63a8c5224_85)] | | | [removed: [72](#i4b770a66acfe418cb1b377f3d113fa9f_67)] [added: [64](#ia0a8569c6321429087004ad63a8c5224_85)] | | |

| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i4b770a66acfe418cb1b377f3d113fa9f_70)] [added: Disclosure](#ia0a8569c6321429087004ad63a8c5224_88)] | | | [removed: [72](#i4b770a66acfe418cb1b377f3d113fa9f_70)] [added: [64](#ia0a8569c6321429087004ad63a8c5224_88)] | | |

| [Item 9A. Controls and [removed: Procedures](#i4b770a66acfe418cb1b377f3d113fa9f_73)] [added: Procedures](#ia0a8569c6321429087004ad63a8c5224_91)] | | | [removed: [72](#i4b770a66acfe418cb1b377f3d113fa9f_73)] [added: [65](#ia0a8569c6321429087004ad63a8c5224_91)] | | |

| [Item 9B. Other [removed: Information](#i4b770a66acfe418cb1b377f3d113fa9f_85)] [added: Information](#ia0a8569c6321429087004ad63a8c5224_100)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_85)] [added: [68](#ia0a8569c6321429087004ad63a8c5224_100)] | | |

| [PART [removed: III](#i4b770a66acfe418cb1b377f3d113fa9f_88)] [added: III](#ia0a8569c6321429087004ad63a8c5224_103)] | | | | | |

| [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#i4b770a66acfe418cb1b377f3d113fa9f_91)] [added: Governance](#ia0a8569c6321429087004ad63a8c5224_106)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_91)] [added: [68](#ia0a8569c6321429087004ad63a8c5224_106)] | | |

| [Item 11. Executive [removed: Compensation](#i4b770a66acfe418cb1b377f3d113fa9f_94)] [added: Compensation](#ia0a8569c6321429087004ad63a8c5224_109)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_94)] [added: [68](#ia0a8569c6321429087004ad63a8c5224_109)] | | |

| [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i4b770a66acfe418cb1b377f3d113fa9f_97)] [added: Matters](#ia0a8569c6321429087004ad63a8c5224_112)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_97)] [added: [68](#ia0a8569c6321429087004ad63a8c5224_112)] | | |

| [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#i4b770a66acfe418cb1b377f3d113fa9f_100)] [added: Independence](#ia0a8569c6321429087004ad63a8c5224_115)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_100)] [added: [68](#ia0a8569c6321429087004ad63a8c5224_115)] | | |

| [Item 14. Principal Accountant Fees and [removed: Services](#i4b770a66acfe418cb1b377f3d113fa9f_103)] [added: Services](#ia0a8569c6321429087004ad63a8c5224_118)] | | | [removed: [75](#i4b770a66acfe418cb1b377f3d113fa9f_103)] [added: [69](#ia0a8569c6321429087004ad63a8c5224_118)] | | |

| [Item 15. Exhibits and Financial Statement [removed: Schedules](#i4b770a66acfe418cb1b377f3d113fa9f_109)] [added: Schedules](#ia0a8569c6321429087004ad63a8c5224_124)] | | | [removed: [76](#i4b770a66acfe418cb1b377f3d113fa9f_109)] [added: [70](#ia0a8569c6321429087004ad63a8c5224_124)] | | |

| [Item 16. Form 10-K [removed: Summary](#i4b770a66acfe418cb1b377f3d113fa9f_112)] [added: Summary](#ia0a8569c6321429087004ad63a8c5224_127)] | | | [removed: [80](#i4b770a66acfe418cb1b377f3d113fa9f_112)] [added: [74](#ia0a8569c6321429087004ad63a8c5224_127)] | | |

| PUD | | | Proved [removed: undeveloped.] [added: undeveloped reserves.] | | |

| Productive well | | | A well that is found to be [added: mechanically] capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes. | | |

The following is a glossary of certain other terms that are used in this Annual [removed: Report.][added: Report:]

| 2025 Senior Notes | | | The Company’s 5.375% senior unsecured notes due 2025 [removed: in] [added: issued under] the [removed: aggregate principal amount of $800 million.] [added: 2025 indenture.] | | |

| [removed: December 2019 Notes] [added: IG] Indenture | | | The indenture [removed: relating to the December 2019 Notes] dated as of December 5, 2019, among the Company, the subsidiary guarantors party thereto and Wells Fargo, as the trustee, as [removed: supplemented.] [added: supplemented by the supplemental indentures relating to the December 2019 Notes, the May 2020 Notes and the March 2021 Notes.] | | |

| December 2019 Notes | | | The Company’s 2.875% senior unsecured notes due [removed: 2024 in the aggregate principal amount of $1.0 billion,] [added: 2024,] the Company’s 3.250% senior unsecured notes due 2026 [removed: in the aggregate principal amount of $800 million] and the Company’s 3.500% senior unsecured notes due 2029 [removed: in] [added: issued under] the [removed: aggregate principal amount of $1.2 billion.] [added: IG indenture and the related first supplemental indenture.] | | |

| [PART I](#ia0a8569c6321429087004ad63a8c5224_19) | | | | | |

| [PART II](#ia0a8569c6321429087004ad63a8c5224_37) | | | | | |

| [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ia0a8569c6321429087004ad63a8c5224_1099511629817) | | | [68](#ia0a8569c6321429087004ad63a8c5224_1099511629817) | | |

| [PART IV](#ia0a8569c6321429087004ad63a8c5224_121) | | | | | |

| [Signatures](#ia0a8569c6321429087004ad63a8c5224_130) | | | S-[1](#ia0a8569c6321429087004ad63a8c5224_130) | | |

| March 2021 Notes | | | The Company’s 0.900% Senior Notes due 2023, the Company’s 3.125% Senior Notes due 2031 and the Company’s 4.400% Senior Notes due 2051 issued under the IG Indenture and the related third supplemental indenture. | | |

This Annual Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions.

Accordingly, forward-looking statements are not guarantees of future performance and our actual outcomes could differ materially from what we have expressed in our forward-looking statements.

Factors that could cause our outcomes to differ materially include (but are not limited to) the following:

- Changes in supply and demand levels for oil, natural gas, and natural gas liquids, and the resulting impact on the price for those commodities;

- the impact of public health crises, including epidemic or pandemic diseases such as the COVID-19 pandemic, and any related company or government policies or actions;

- actions taken by the members of OPEC and Russia affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments;

- restrictions on the use of water, including limits on the use of produced water and a moratorium on new produced water well permits recently imposed by the Texas Railroad Commission in an effort to control induced seismicity in the Permian Basin;

- significant declines in prices for oil, natural gas, or natural gas liquids, which could require recognition of significant impairment charges;

- challenges with employee retention and an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic;

- changes in safety, health, environmental, tax, and other regulations or requirements (including those addressing air emissions, water management, or the impact of global climate change);

- security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, or from breaches of information technology systems of third parties with whom we transact business;

- lack of, or disruption in, access to adequate and reliable transportation, processing, storage, and other facilities for our oil, natural gas, and natural gas liquids;

- failures or delays in achieving expected reserve or production levels from existing and future oil and natural gas developments, including due to operating hazards, drilling risks, or the inherent uncertainties in predicting reserve and reservoir performance;

- difficulty in obtaining necessary approvals and permits;

- severe weather conditions;

- acts of war or terrorist acts and the governmental or military response thereto;

- changes in the financial strength of counterparties to our credit agreement and hedging contracts;

- changes in our credit rating; and

- the risk factors discussed in Item 1A of Part I of this Annual Report on Form 10-K.

In light of these factors, the events anticipated by our forward-looking statements may not occur at the time anticipated or at all.

Significant 2021 Acquisitions and Divestitures

On February 26, 2021, we acquired all leasehold interests and related assets of Guidon Operating LLC (the “Guidon Acquisition”), which included approximately 32,500 net acres in the Northern Midland Basin, in exchange for 10.68 million shares of the Company’s common stock and $375 million of cash.

On March 17, 2021, we acquired QEP Resources, Inc. (”QEP”) in a transaction structured as a merger (the “QEP Merger”).

The addition of QEP’s assets increased our net acreage in the Midland Basin by approximately 49,000 net acres.

Under the terms of the merger agreement with QEP, we issued approximately 12.12 million shares of our common stock to the former QEP stockholders, constituting a total value at the closing date of approximately $987 million.

On October 21, 2021, we completed the divestiture of our Williston Basin oil and natural gas assets, consisting of approximately 95,000 net acres acquired in the QEP Merger, for net cash proceeds of approximately $586 million after customary closing adjustments.

See Note 4—[Acquisitions and Divestitures](#ia0a8569c6321429087004ad63a8c5224_166) included in notes to the consolidated financial statements included elsewhere in this Annual Report for additional discussion of our acquisitions and divestitures during 2021.

COVID-19 and Effects on Commodity Prices

After briefly reaching negative levels in April 2020, oil prices recovered during 2021, closing at $85.43 per Bbl as of January 18, 2022 per Bbl WTI, spurred by the global economic recovery from the COVID-19 pandemic and producer restraint.

Demand for oil and natural gas increased during 2021, as many restrictions on conducting business implemented in response to the COVID-19 pandemic were lifted due to improved treatments and availability of vaccinations in the U.S. and globally.

The emergence of the Delta COVID-19 variant in the latter part of 2021 and the subsequent surge of the highly transmissible Omicron variant, however, contributed to economic and pricing volatility as industry and market participants evaluated industry conditions and production outlook.

Further, on January 4, 2022, OPEC and its non-OPEC allies, known collectively as OPEC+, agreed to continue their program (commenced in August of 2021) of gradual monthly output increases in February 2022, raising its output target by 400,000 Bbls per day, which move is expected to further boost oil supply in response to rising demand.

In its report issued on February 10, 2022, OPEC noted its expectation that world oil demand will rise by 4.15 million Bbls per day in 2022 as the global economy continues to post a strong recovery from the COVID-19 pandemic.

Although this demand outlook is expected to underpin oil prices, already seen at a seven-year high in February 2022, we cannot predict any future volatility in commodity prices or demand for crude oil.

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| [PART I](#i4b770a66acfe418cb1b377f3d113fa9f_19) | | | | | |

| [PART II](#i4b770a66acfe418cb1b377f3d113fa9f_37) | | | | | |

| [PART IV](#i4b770a66acfe418cb1b377f3d113fa9f_106) | | | | | |

| [Signatures](#i4b770a66acfe418cb1b377f3d113fa9f_115) | | | S-[1](#i4b770a66acfe418cb1b377f3d113fa9f_115) | | |

Various statements contained in this Annual Report are “forward-looking statements” as defined by the SEC.

Forward-looking statements may include statements about:

- the volatility of realized oil and natural gas prices and the extent and duration of price reductions and increased production by the Organization of the Petroleum Exporting Counties, or OPEC, members and other oil exporting nations;

- the threat, occurrence, potential duration or other implications of epidemic or pandemic diseases, including the ongoing COVID-19 pandemic, any government responses thereto and logistical challenges and the supply chain disruptions during the ongoing COVID-10 pandemic;

- any impact of the ongoing COVID-19 pandemic on the health and safety of our employees;

- logistical challenges and the supply chain disruptions;

- U.S. and global economic conditions and political and economic developments, including the effects of the recent U.S. presidential and congressional elections on energy and environmental policies;

- our ability to execute our business and financial strategies;

- exploration and development drilling prospects, inventories, projects and programs;

- levels of production;

- the impact of reduced drilling activity on our exploration and development drilling prospects, inventories, projects and programs;

- our ability to replace our oil and natural gas reserves;

- our ability to identify, complete and effectively integrate acquisitions of properties or businesses, including our pending merger with QEP Resources, Inc., or QEP, and the Pending Guidon Acquisition (defined below);

- competition in the oil and natural gas industry;

- title defects in our oil and natural gas properties;

- uncertainties with respect to identified drilling locations and estimates of reserves;

- the impact of severe weather conditions, including the recent winter storms in the Permian Basin, on our production;

- restrictions on the use of water;

- the availability of transportation, pipeline and storage facilities;

- our ability to comply with applicable government laws and regulations and to obtain permits and governmental approvals;

- our environmental initiatives and targets;

- future operating results;

- future dividends to our stockholders;

- impact of any impairment charges;

- lease operating expenses, general and administrative costs and finding and development costs;

- operating hazards;

- civil unrest, terrorist attacks and cyber threats;

- the effects of litigation relating to our pending merger with QEP and any future litigation;

- our ability to keep up with technological advancements;

- capital expenditure plans;

- other plans, objectives, expectations and intentions; and

- certain other factors discussed elsewhere in this report.

There were [removed: 2,564] [added: 5,624] holders of record of our common stock on February [removed: 19, 2021.][added: 18, 2022.]

Our common stock repurchase activity for the three months ended December 31, [removed: 2020] [added: 2021] was as follows:

| Period | | | | | | Total Number of Shares [removed: Purchased] [added: Purchased(1)] | | | | | | Average Price Paid Per [removed: Share(1)] [added: Share(2)] | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plan | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the [removed: Plan(2)] [added: Plan(3)] | | |

[removed: (1)The] [added: (2)The] average price paid per share [removed: is net of] [added: includes] any commissions paid to repurchase stock.

The Company’s board of directors has authority to declare dividends to the holders of the Company’s common stock.

The board of directors intends to continue the payment of dividends to the holders of the Company’s common stock in the future.

| October 1, 2021 - October 31, 2021 | | | | | | 2 | | | | | | $ | 94.67 | | | | | — | | | | | | $ | 1,978 | |

| November 1, 2021 - November 30, 2021 | | | | | | 1,326 | | | | | | $ | 106.25 | | | | | 1,326 | | | | | | $ | 1,837 | |

| December 1, 2021 - December 31, 2021 | | | | | | 2,533 | | | | | | $ | 105.80 | | | | | 2,533 | | | | | | $ | 1,569 | |

| Total | | | | | | 3,861 | | | | | | $ | 105.95 | | | | | 3,859 | | | | | | | | |

(1)Includes 2,308 shares of common stock repurchased from employees in order to satisfy tax withholding requirements.

Such shares are cancelled and retired immediately upon repurchase.

(3)In September 2021, the Company’s board of directors authorized a $2 billion common stock repurchase program.

The stock repurchase program has no time limit and may be suspended, modified, or discontinued by the board of directors at any time.

On February 13, 2018, we announced the initiation of an annual cash dividend in the amount of $0.50 per share of our common stock payable quarterly which began with the first quarter of 2018.

Beginning with the first quarter of 2019, the annual cash dividend was set at $0.75 per share of our common stock.

Then, beginning with the fourth quarter of 2019, the annual cash dividend was increased to $1.50 per share for our common stock and, beginning with the fourth quarter of 2020, the annual cash dividend was further increased to $1.60 per share of our common stock.

Unregistered Sales of Equity Securities

As previously disclosed in our Current Report on Form 8-K filed with the SEC on December 21, 2020, we entered into a definitive purchase and sale agreement, dated as of December 18, 2020, with Guidon and certain of Guidon’s affiliates to acquire approximately 32,500 net acres in the Northern Midland Basin and certain related oil and gas assets.

Consideration for the Pending Guidon Acquisition consists of $375 million in cash and 10.6 million shares of our common stock, subject to adjustment.

The shares to be issued in the Pending Guidon Acquisition will be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act as sales by an issuer not involving any public offering.

We have agreed to file with the SEC, and use our reasonable best efforts to cause to be declared effective, a shelf registration statement registering for resale these shares within 60 days following the closing of the Pending Guidon Acquisition, which is expected to occur on February 26, 2021.

| October 1, 2020 - October 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1,304 | |

| November 1, 2020 - November 30, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1,304 | |

| December 1, 2020 - December 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| Total | | | | | | — | | | | | | $ | — | | | | | — | | | | | | | | |

(2)In May 2019, our board of directors approved a stock repurchase program to acquire up to $2 billion of our outstanding common stock through December 31, 2020.

This repurchase program was suspended beginning in the first quarter of 2020 and expired on December 31, 2020.

[Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)

\[Reserved.\]

As of December 31, [removed: 2020,] [added: 2021,] an evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act.

Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, [removed: 2020,] [added: 2021,] our disclosure controls and procedures are effective.

There have not been any changes in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Based on its evaluation under the framework in the 2013 Internal Control-Integrated Framework, management did not identify any material weaknesses in the Company’s internal control over financial reporting and determined that the Company maintained effective internal control over financial reporting as of December 31, [removed: 2020.][added: 2021.]

Grant Thornton LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued their report on the effectiveness of the Company’s internal control over financial reporting at December 31, [removed: 2020.][added: 2021.]

The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting at December 31, [removed: 2020,] [added: 2021,] is included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”

We have audited the internal control over financial reporting of Diamondback Energy, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in the 2013 *Internal [removed: Control-Integrated] [added: Control—Integrated] Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in the 2013 *Internal [removed: Control-Integrated] [added: Control—Integrated] Framework* issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, [removed: 2020,] [added: 2021,] and our report dated February [removed: 25, 2021] [added: 24, 2022] expressed an unqualified opinion on those financial statements.

In July 2021, we implemented an enterprise resource planning system covering various financial and accounting processes.

As a result of this implementation, certain internal controls over financial reporting have been automated, modified or implemented to address the new environment associated with the implementation of this system.

We believe we have maintained appropriate internal control over financial reporting during the implementation and believe this new system will strengthen our internal control system.

However, there are inherent risks in implementing any new system, and we will continue to evaluate these control changes as part of our assessment of internal control over financial reporting.

February 24, 2022

February 25, 2021

Effective February 21, 2022, our board of directors promoted Kaes Van’t Hof, then our Chief Financial Officer and Executive Vice President—Business Development to the role of our President.

In addition to his role as our President, Mr. Van’t Hof will continue to serve as our Chief Financial Officer.

Also, effective February 21, 2022, our board of directors promoted Daniel N.

Wesson, then our Executive Vice President—Operations, to the role of our Chief Operating Officer.

In addition to his role as our Chief Operating Officer, Mr. Wesson will continue to serve as our Executive Vice President.

Mr. Van’t Hof’s and Mr. Wesson’s full biographies and, to the extent applicable, the information required by Item 404(a) of Regulation S-K, are included in our definitive proxy statement on Schedule 14A, filed by us with the SEC on April 23, 2021, which we refer to as our 2021 proxy statement.

Each of Mr. Van’t Hof and Mr. Wesson was named as our named executive officer in our 2021 proxy statement.

In connection with these promotions, the compensation committee of our board of directors approved increases in Mr. Van’t Hof’s and Mr. Wesson’s annual base salaries to $625,000 and $560,000, respectively.

In addition, the compensation committee also approved annual long-term equity incentive compensation awards with an intended grant date value of $3,750,000 for Mr. Van’t Hof and $2,250,000 for Mr. Wesson to be granted under our equity incentive plan and represented by a combination of performance-based and time-based restricted stock units, vesting over applicable performance or service periods.

These executives will continue to participate in our annual executive cash incentive plan, which provides an opportunity to receive an annual bonus payable in a single lump sum, based on a target percentage of these executives’ respective annual base salaries and such performance goals and criteria as determined in the discretion of the compensation committee of our board of directors, as well as in other employee benefit plans generally available to similarly situated employees, as in effect from time to time, a description of which is included in our 2021 proxy statement.

None.

PART III

None.

PART III

Information as to Item 10 will be set forth in our definitive proxy statement, which is to be filed pursuant to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, [removed: 2020.][added: 2021.]

Information as to Item 11 will be set forth in our definitive proxy statement, which is to be filed pursuant to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, [removed: 2020.][added: 2021.]

Information as to Item 12 will be set forth in our definitive proxy statement, which is to be filed pursuant to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, [removed: 2020.][added: 2021.]

Information as to Item 13 will be set forth in our definitive proxy statement, which is to be filed pursuant to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, [removed: 2020.][added: 2021.]

Information as to Item 14 will be set forth in our definitive proxy statement, which is to be filed pursuant to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, [removed: 2020.][added: 2021.]

| | | | [Report of Independent Registered Public Accounting [removed: Firm](#i4b770a66acfe418cb1b377f3d113fa9f_118)] [added: Firm (PCAOB ID Number](#ia0a8569c6321429087004ad63a8c5224_133) 248[)](#ia0a8569c6321429087004ad63a8c5224_133)] | | | [removed: F-[1](#i4b770a66acfe418cb1b377f3d113fa9f_118)] [added: F-[1](#ia0a8569c6321429087004ad63a8c5224_133)] | | |

| | | | [Consolidated Balance [removed: Sheets](#i4b770a66acfe418cb1b377f3d113fa9f_124)] [added: Sheets](#ia0a8569c6321429087004ad63a8c5224_139)] | | | [removed: F-[3](#i4b770a66acfe418cb1b377f3d113fa9f_124)] [added: F-[4](#ia0a8569c6321429087004ad63a8c5224_139)] | | |

| | | | [Consolidated Statements of [removed: Operations](#i4b770a66acfe418cb1b377f3d113fa9f_130)] [added: Operations](#ia0a8569c6321429087004ad63a8c5224_145)] | | | [removed: F-[4](#i4b770a66acfe418cb1b377f3d113fa9f_130)] [added: F-[5](#ia0a8569c6321429087004ad63a8c5224_145)] | | |

| | | | [Consolidated Statement of Stockholders' [removed: Equity](#i4b770a66acfe418cb1b377f3d113fa9f_133)] [added: Equity](#ia0a8569c6321429087004ad63a8c5224_148)] | | | [removed: F-[5](#i4b770a66acfe418cb1b377f3d113fa9f_133)] [added: F-[6](#ia0a8569c6321429087004ad63a8c5224_148)] | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#i4b770a66acfe418cb1b377f3d113fa9f_136)] [added: Flows](#ia0a8569c6321429087004ad63a8c5224_151)] | | | [removed: F-[6](#i4b770a66acfe418cb1b377f3d113fa9f_136)] [added: F-[7](#ia0a8569c6321429087004ad63a8c5224_151)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i4b770a66acfe418cb1b377f3d113fa9f_139)] [added: Statements](#ia0a8569c6321429087004ad63a8c5224_154)] | | | [removed: F-[8](#i4b770a66acfe418cb1b377f3d113fa9f_139)] [added: F-[8](#ia0a8569c6321429087004ad63a8c5224_154)] | | |

| [removed: 3.3] [added: 3.4] | | | | | | [Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on November 19, 2019).](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000122/diamondbackex31-11x19x.htm) | | |

| 4.1 | | | | | | [Description of the Company’s Securities (incorporated by reference to Exhibit [removed: 4.1 to the Form 10-K,] [added: 4.](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[6](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [to the](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [Registration Statement on Form](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [S-8](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[,] File [removed: No. 000-35700,] [added: No.](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [333](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[\-](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[25756](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[1](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[,] filed by the Company with the SEC [removed: on February 27, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex41.htm)] [added: on](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [June 30, 2021](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)[).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)] | | |

| [removed: 4.3] [added: 4.5] | | | | | | [Indenture, dated as of December [removed: 20, 2016, among] [added: 5, 2019, between] Diamondback Energy, [removed: Inc., the guarantors party thereto] [added: Inc.] and Wells Fargo Bank, National Association, as trustee [removed: (including the form of Diamondback Energy, Inc.’s 5.375% Senior Notes due 2025)] (incorporated by reference to Exhibit 4.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on December [removed: 21, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000272/diamondbackex41-12x21x16.htm)] [added: 5, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex41-12x5x19.htm)] | | |

| [removed: 4.4] [added: 4.6] | | | | | | [First Supplemental [removed: Indenture for the 5.375% Senior Notes due 2025,] [added: Indenture,] dated as of [removed: January 29, 2018,] [added: December 5, 2019,] among Diamondback Energy, Inc., [removed: the guarantors party thereto] [added: Diamondback O&G LLC] and Wells Fargo Bank, National Association, as trustee [added: (including the form of 2024 Notes, 2026 Notes and 2029 Notes)] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.2] to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on [removed: January 30, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000153983818000006/diamondbackex43-1x30x18.htm)] [added: December 5, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex42-12x5x19.htm)] | | |

| [removed: 4.5] [added: 4.7] | | | | | | [Second Supplemental [removed: Indenture for the 5.375% Senior Notes due 2025,] [added: Indenture,] dated as of [removed: October 12, 2018,] [added: May 26, 2020,] among [removed: Sidewinder Merger Sub] [added: Diamondback Energy,] Inc., [removed: a subsidiary of the Company, the Company, the other guarantors] [added: Diamondback O&G LLC] and Wells Fargo Bank, National Association, as trustee [added: (including the form of Notes)] (incorporated by reference to Exhibit [removed: 4.8] [added: 4.2] to the Form [removed: 10-K,] [added: 8-K,] File [removed: No.] [added: No] 001-35700, filed by the Company with the SEC on [removed: February 25, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000008/diamondback201810-kxex48.htm)] [added: May 26, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000061/diamondbackex42-5x26x20.htm)] | | |

| [removed: 4.6] [added: 4.20] | | | | | | [removed: [Third] [added: [First] Supplemental [removed: Indenture for the 5.375% Senior Notes due 2025,] [added: Indenture,] dated as of [removed: January 28, 2019,] [added: March 23, 2021,] among [removed: Energen Corporation, Energen Resources Corporation, and EGN Services, Inc., each a direct or indirect subsidiary of the Company, the Company, the other guarantors under the indenture] [added: QEP Resources, Inc.] and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit [removed: 4.9] [added: 4.3] to the Form [removed: 10-K,] [added: 8-K,] File No. 001-35700, filed by the Company with the SEC on [removed: February 25, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000008/diamondback201810-kxex49.htm)] [added: March 24, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000110465921040981/tm218746d8_ex4-3.htm)] | | |

| [removed: 4.7] [added: 4.8] | | | | | | [removed: [Indenture,] [added: [Third Supplemental Indenture,] dated as of [removed: December 5, 2019, between] [added: March 24, 2021, among] Diamondback Energy, [removed: Inc.] [added: Inc., Diamondback O&G LLC] and Wells Fargo Bank, National Association, as trustee [added: (including the forms of 2023 Notes, 2031 Notes and 2051 Notes)] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.2] to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on [removed: December 5, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex41-12x5x19.htm)] [added: March 24, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000110465921040981/tm218746d8_ex4-2.htm)] | | |

| [removed: 4.8] [added: 10.13] | | | | | | [removed: [First Supplemental Indenture,] [added: [Second Amended and Restated Credit Agreement,] dated as of [removed: December 5, 2019,] [added: November 1, 2013,] among Diamondback Energy, Inc., [added: as parent guarantor,] Diamondback O&G [removed: LLC and] [added: LLC, as borrower,] Wells Fargo Bank, National Association, as [removed: trustee (including the form of 2024 Notes, 2026 Notes] [added: administrative agent,] and [removed: 2029 Notes)] [added: the lenders party thereto] (incorporated by reference to Exhibit [removed: 4.2] [added: 10.3] to the Form [removed: 8-K,] [added: 10-Q,] File No. 001-35700, filed by the Company with the SEC on [removed: December] [added: November] 5, [removed: 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex42-12x5x19.htm)] [added: 2013).](http://www.sec.gov/Archives/edgar/data/1539838/000153983813000093/ex10_3diamondbacksecondame.htm)] | | |

| [removed: 4.9] [added: 10.15] | | | | | | [Second [removed: Supplemental Indenture,] [added: Amendment to the Second Amended and Restated Credit Agreement,] dated as of [removed: May 26, 2020,] [added: November 13, 2014,] among Diamondback Energy, Inc., [added: as parent guarantor,] Diamondback O&G [removed: LLC and] [added: LLC, as borrower, the guarantors,] Wells Fargo Bank, National Association, as [removed: trustee (including] [added: administrative agent, and] the [removed: form of Notes)] [added: lenders party thereto] (incorporated by reference to Exhibit [removed: 4.2] [added: 10.2] to the Form 8-K, File [removed: No] [added: No.] 001-35700, filed by the Company with the SEC on [removed: May 26, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000061/diamondbackex42-5x26x20.htm)] [added: November 18, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000119312514416704/d822128dex102.htm)] | | |

| [removed: 4.10] [added: 4.9] | | | | | | [Indenture, dated as of October 16, 2019, among Viper Energy Partners LP, as issuer, Viper Energy Partners LLC, as guarantor, and Wells Fargo Bank, National Association, as trustee (including the form of Viper Energy Partners LP’s 5.375% Senior Notes due 2027) (incorporated by reference to Exhibit 4.1 of Viper Energy Partners LP’s Current Report on Form 8-K (File 001-36505) filed on October 17, 2019).](http://www.sec.gov/Archives/edgar/data/1602065/000110465919054635/tm19193893_ex4-1.htm) | | |

| [removed: 4.11] [added: 4.10] | | | | | | [Consent Letter, dated August 28, 2019, between Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, Inc. as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File 001-35700) filed on September 4, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000103/diamondbackex101-9x4x19.htm) | | |

| [removed: 4.12] [added: 4.11] | | | | | | [Subordinated Promissory Note, dated as of October 16, 2019, by Viper Energy Partners LLC in favor of Viper Energy Partners LP (incorporated by reference to Exhibit 10.2 of Viper Energy Partners LP’s Current Report on Form 8-K (File 001-36505) filed on October 17, 2019).](http://www.sec.gov/Archives/edgar/data/1602065/000110465919054635/tm19193893_ex10-2.htm) | | |

| [removed: 4.13] [added: 4.12] | | | | | | [Indenture, dated as of July 14, 2020, among Rattler Midstream LP, as issuer, Rattler Midstream Operating LLC, Tall City Towers LLC, Rattler Ajax Processing LLC, and Rattler OMOG LLC, as guarantors, and Wells Fargo Bank, National Association, as trustee (including the form of Rattler Midstream LP’s 5.625% Senior Notes due 2025) (incorporated by reference to Exhibit 4.1 to the Form 8-K, File No. 001-38919, filed by Rattler Midstream LP with the SEC on July 14, 2020).](https://www.sec.gov/Archives/edgar/data/1748773/000119312520192623/d939793dex41.htm) | | |

| [removed: 4.14] [added: 4.15] | | | | | | [Form of Indenture, dated September 1, 1996, between Energen [added: Corporation] and The Bank of New York as trustee (incorporated by reference to Exhibit 4(i) to [removed: Energen’s] [added: Energen Corporation’s] Registration Statement on Form S-3 (Registration No. 333-11239), filed with the SEC on August 30, 1996).](http://www.sec.gov/Archives/edgar/data/277595/0000950109-96-005681.txt) | | |

| [removed: 10.1] [added: 10.3+] | | | | | | [removed: [Diamondback Energy, Inc. 2019] [added: [2021] Amended and Restated [added: Diamondback Energy, Inc.] Equity Incentive Plan (incorporated by reference to Appendix [removed: A] [added: B] to Schedule [removed: DEFA] [added: DEF] 14A filed by the Company with the SEC on April [removed: 26, 2020).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000181/a2016additionalproxymateri.htm)] [added: 23, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000130817921000252/lfang2021_def14a.htm)] | | |

| [removed: 10.2+] [added: 10.1+] | | | | | | [2020 Form of Time Vesting Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K (File 001-35700) filed on February 27, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex102.htm) | | |

| [removed: 10.3+] [added: 10.2+] | | | | | | [2020 Form of Performance Vesting Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K (File 001-35700) filed on February 27, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex103.htm) | | |

| [removed: 10.4+*] [added: 10.4+] | | | | | | [2021 Form of Time Vesting Restricted Stock Unit Award [removed: Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex104.htm)] [added: Agreement (incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-K (File 001-35700) filed by the Company with the SEC on February 25, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex104.htm)] | | |

| [removed: 10.5+*] [added: 10.5+] | | | | | | [2021 Form of Performance Vesting Restricted Stock Unit [removed: Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex105.htm)] [added: Agreement (incorporated by reference to Exhibit 10.5 of the Annual Report on Form 10-K (File 001-35700) filed by the Company with the SEC on February 25, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex105.htm)] | | |

| 10.8+ | | | | | | [Form of Director and Officer Indemnification Agreement (incorporated by reference [removed: to](http://www.sec.gov/Archives/edgar/data/1539838/000119312512360997/d295327dex1015.htm)[ ](http://www.sec.gov/Archives/edgar/data/1539838/000119312512360997/d295327dex1015.htm)[Exhibit] [added: to](http://www.sec.gov/Archives/edgar/data/1539838/000119312512360997/d295327dex1015.htm) [](http://www.sec.gov/Archives/edgar/data/1539838/000119312512360997/d295327dex1015.htm)[Exhibit] 10.15 to Amendment No. 4 to the Registration Statement on Form S-1, File No. 333-179502, filed by the Company with the SEC on August 20, 2012).](http://www.sec.gov/Archives/edgar/data/1539838/000119312512360997/d295327dex1015.htm) | | |

| [removed: 10.9+] [added: 10.10+] | | | | | | [removed: [Diamondback] [added: [Form of Participation Agreement (incorporated by reference from Schedule C-2 to Diamondback] Energy, Inc. Senior Management Severance Plan [removed: (including forms of participation agreements attached thereto] [added: filed] as [removed: Schedules C-1 and C-2) (incorporated by reference to] Exhibit 10.5 [removed: of] [added: to] the Company’s Annual Report on Form 10-K (File 001-35700) [removed: filed] on February 27, [removed: 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex103.htm)] [added: 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex105.htm)] | | |

| [removed: 10.10+] [added: 10.11+] | | | | | | [2014 Executive Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on April 2, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000153983814000043/ex10_1diamondback2014ex.htm) | | |

| [removed: 10.11+*] [added: 10.12+] | | | | | | [Executive Annual Incentive Compensation Plan adopted in February [removed: 2021.](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex1011.htm)] [added: 2021 (incorporated by reference to Exhibit 10.11 to the Form 10-K, File No. 001-35700, filed by the Company with the SEC on February 25, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex1011.htm)] | | |

| [removed: 10.12] [added: 10.14] | | | | | | [removed: [Second] [added: [First Amendment, dated June 9, 2014, to the Second] Amended and Restated Credit Agreement, [added: originally] dated [removed: as of] November 1, 2013, [added: by and] among [removed: Diamondback Energy, Inc.,] [added: the Company,] as parent guarantor, Diamondback O&G LLC, as borrower, [added: each of the guarantors party thereto, each of the lenders party thereto and] Wells Fargo Bank, National Association, as administrative [removed: agent, and the lenders party thereto] [added: agent] (incorporated by reference to Exhibit [removed: 10.3] [added: 10.4] to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on [removed: November 5, 2013).](http://www.sec.gov/Archives/edgar/data/1539838/000153983813000093/ex10_3diamondbacksecondame.htm)] [added: August 7, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000153983814000081/ex10_4firstamendmenttoseco.htm)] | | |

| [removed: 10.13] [added: 10.16] | | | | | | [removed: [First] [added: [Third] Amendment, dated [added: as of] June [removed: 9, 2014,] [added: 21, 2016,] to the Second Amended and Restated Credit Agreement, [removed: originally] dated [added: as of] November 1, 2013, by and among [removed: the Company,] [added: Diamondback Energy, Inc.,] as parent guarantor, Diamondback O&G LLC, as borrower, [removed: each of the guarantors party thereto, each] [added: certain other subsidiaries] of [removed: the lenders party thereto and] [added: Diamondback Energy, Inc., as guarantors,] Wells Fargo Bank, National Association, as administrative [removed: agent] [added: agent, and the lenders party thereto] (incorporated by reference to Exhibit [removed: 10.4] [added: 10.1] to the [added: Company’s Current Report on] Form [removed: 10-Q,] [added: 8-K,] File No. 001-35700, filed by the Company with the SEC on [removed: August 7, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000153983814000081/ex10_4firstamendmenttoseco.htm)] [added: June 27, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000195/diamondbackexhibit101-6x27.htm)] | | |

| [removed: 10.14] [added: 10.19] | | | | | | [removed: [Second] [added: [Eighth] Amendment to the Second Amended and Restated Credit Agreement, dated as of [removed: November 13, 2014,] [added: October 26, 2018, by and] among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, [removed: the] [added: certain other subsidiaries of Diamondback Energy, Inc., as] guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on November [removed: 18, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000119312514416704/d822128dex102.htm)] [added: 1, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000153983818000111/diamondbackex101-11x1x18.htm)] | | |

| [removed: 10.15] [added: 10.17] | | | | | | [removed: [Third] [added: [Fourth] Amendment, dated as of [removed: June 21,] [added: December 15,] 2016, to the Second Amended and Restated Credit Agreement, dated as of November 1, 2013, by and among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, Inc., as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company’s Current Report on Form 8-K, File No. 001-35700, filed by the Company with the SEC on [removed: June 27, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000195/diamondbackexhibit101-6x27.htm)] [added: December 20, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000270/diamondbackex102-12x20x16.htm)] | | |

| [removed: 10.16] [added: 10.18] | | | | | | [removed: [Fourth] [added: [Fifth] Amendment, dated as of [removed: December 15, 2016,] [added: November 28, 2017,] to the Second Amended and Restated Credit Agreement, dated as of November 1, 2013, by and among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, Inc., as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to the Company’s Current Report on Form 8-K, File No. 001-35700, filed by the Company with the SEC on December [removed: 20, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000270/diamondbackex102-12x20x16.htm)] [added: 4, 2017).](http://www.sec.gov/Archives/edgar/data/1539838/000153983817000135/diamondbackex101-12x4x17.htm)] | | |

| [removed: 10.17] [added: 10.20] | | | | | | [removed: [Fifth Amendment, dated as of November 28, 2017,] [added: [Ninth Amendment] to [removed: the] Second Amended and Restated Credit [added: Agreement and Fourth Amendment to Amended and Restated Guaranty and Collateral] Agreement, dated as of November [removed: 1, 2013,] [added: 29, 2018,] by and among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, Inc., as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the [removed: Company’s Current Report on] Form 8-K, File No. 001-35700, filed by the Company with the SEC on December [removed: 4, 2017).](http://www.sec.gov/Archives/edgar/data/1539838/000153983817000135/diamondbackex101-12x4x17.htm)] [added: 6, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000119312518343869/d661873dex101.htm)] | | |

| [removed: 10.18] [added: 10.21] | | | | | | [removed: [Eighth] [added: [Tenth] Amendment to [removed: the] Second Amended and Restated Credit Agreement, dated as of [removed: October 26, 2018, by and among Diamondback Energy, Inc.,] [added: March 25, 2019, between Diamondback,] as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, [removed: Inc.,] [added: Inc.] as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Form [removed: 8-K, File] [added: 8-K (File] No. [removed: 001-35700,] [added: 00 1-35700),] filed by the Company with the SEC on [removed: November 1, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000153983818000111/diamondbackex101-11x1x18.htm)] [added: March 29, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000043/diamondbackex101-3x29x19.htm)] | | |

| [removed: 10.19] [added: 10.22] | | | | | | [removed: [Ninth] [added: [Eleventh] Amendment to Second Amended and Restated Credit [removed: Agreement and Fourth Amendment to Amended and Restated Guaranty and Collateral] Agreement, dated as of [removed: November 29, 2018, by and among] [added: June 28, 2019, between] Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, certain other subsidiaries of Diamondback Energy, [removed: Inc.,] [added: Inc.] as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on [removed: December 6, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000119312518343869/d661873dex101.htm)] [added: July 3, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000082/diamondbackex10-1x7x3x19.htm)] | | |

| [removed: 10.20] [added: 10.23] | | | | | | [removed: [Tenth] [added: [Twelfth] Amendment to Second Amended and Restated Credit [added: Agreement and First Amendment to Second Amended and Restated Guaranty] Agreement, dated as of [removed: March 25, 2019,] [added: June 2, 2021,] between [removed: Diamondback,] [added: Diamondback Energy, Inc.,] as parent guarantor, Diamondback O&G LLC, as borrower, [removed: certain other subsidiaries of Diamondback Energy, Inc. as guarantors,] Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Form [removed: 8-K (File] [added: 8-K, File] No. [removed: 00 1-35700),] [added: 001-35700,] filed by the Company with the SEC on [removed: March 29, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000043/diamondbackex101-3x29x19.htm)] [added: June 8, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000095/diamondback-ex101x6x2x21.htm)] | | |

| [removed: 10.21] [added: 10.25] | | | | | | [removed: [Eleventh] [added: [Second] Amendment to [removed: Second] Amended and Restated [added: Senior Secured Revolving] Credit Agreement, dated as of [removed: June 28,] [added: September 24,] 2019, [removed: between Diamondback Energy, Inc., as parent guarantor, Diamondback O&G] [added: among Viper Energy Partners] LLC, as borrower, [removed: certain other subsidiaries of Diamondback Energy, Inc.] [added: Viper Energy Partners LP,] as [removed: guarantors,] [added: parent guarantor,] Wells Fargo Bank, National Association, as administrative agent, and the [removed: lenders] [added: lender] party thereto (incorporated by reference to Exhibit 10.1 [removed: to the] [added: of Viper Energy Partners LP’s] Form [removed: 8-K, File No. 001-35700,] [added: 8-K (File 001-36505)] filed [removed: by the Company with the SEC] on [removed: July 3, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000082/diamondbackex10-1x7x3x19.htm)] [added: September 30, 2019).](http://www.sec.gov/Archives/edgar/data/1602065/000160206519000040/viperex101-9x30x19.htm)] | | |

| [removed: 10.22] [added: 10.24] | | | | | | [Amended and Restated Credit Agreement, dated as of July 20, 2018, by and among, Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File 001-36505) filed by Viper Energy Partners LP on July 26, 2018).](http://www.sec.gov/Archives/edgar/data/1602065/000160206518000027/viperex101-7x26x18.htm) | | |

| 3.3 | | | | | | [Certificate of Amendment No. 2 to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on June 8, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000095/diamondbackex31-6x2x21.htm) | | |

| 4.3 | | | | | | [Registration Rights Agreement, dated as of February 26, 2021, by and among the Company, Guidon Operating LLC and Guidon Energy Holdings LP (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3, File No. 333-255731, filed by the Company with the SEC on May 3, 2021.](https://www.sec.gov/Archives/edgar/data/1539838/000119312521148164/d301323dex43.htm) | | |

| 4.4 | | | | | | [Letter Agreement, dated as of April 27, 2021, by and among the Company, Guidon Operating LLC and Guidon Energy Holdings LP relating to the Registration Rights Agreement referenced as Exhibit 4.2 hereto (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-3, File No. 333-255731, filed by the Company with the SEC on May 3, 2021.](https://www.sec.gov/Archives/edgar/data/1539838/000119312521148164/d301323dex44.htm) | | |

| 4.13* | | | | | | [Supplemental Indenture, dated as of December 8, 2021, among Rattler WTG LLC, as guaranteeing subsidiary, Rattler Midstream LP, as issuer, Rattler Midstream Operating LLC, Tall City Towers LLC, Rattler OMOG LLC and Rattler Ajax Processing LLC, as the other guarantors, and Wells Fargo Bank, National Association, as trustee.](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex413.htm) | | |

| 4.14* | | | | | | [Supplemental Indenture, dated as of December 22, 2021, among Rattler Holdings LLC, as guaranteeing subsidiary, Rattler Midstream LP, as issuer, Rattler Midstream Operating LLC, Tall City Towers LLC, Rattler OMOG LLC and Rattler Ajax Processing LLC, as the other guarantors, and Wells Fargo Bank, National Association, as trustee.](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex414.htm) | | |

| 4.16 | | | | | | [Indenture, dated as of March 1, 2012, between QEP Resources, Inc. and Wells Fargo Bank, National Association as trustee (incorporated by reference to Exhibit 4.1 to QEP Resources Inc.’s Current Report on Form 8-K, filed with the SEC on March 1, 2012).](http://www.sec.gov/Archives/edgar/data/1108827/000119312512091528/d310241dex41.htm) | | |

| 4.17 | | | | | | [Officer’s Certificate, dated as of March 1, 2012 (including the form of the 5.375% Notes due 2022) (incorporated by reference to Exhibit 4.2 to QEP Resources, Inc.’s. Current Report on Form 8-K, filed with the SEC on March 1, 2012).](https://www.sec.gov/Archives/edgar/data/1108827/000119312512091528/d310241dex42.htm) | | |

| 4.18 | | | | | | [Officer’s Certificate, dated as of September 12, 2012 (incorporated by reference to Exhibit 4.1 to QEP Resources, Inc.’s Current Report on Form 8-K, filed with the SEC on September 14, 2012).](https://www.sec.gov/Archives/edgar/data/1108827/000114036112040365/ex4_1.htm) | | |

| 4.19 | | | | | | [Officer’s Certificate, dated as of November 21, 2017 (including the form of the 5.625% Senior Notes due 2026) (incorporated by reference to Exhibit 4.2 to QEP Resources, Inc.’s Current Report on Form 8-K, filed with the SEC on November 21, 2017).](https://www.sec.gov/Archives/edgar/data/1108827/000119312517349375/d485967dex42.htm) | | |

| 10.9+* | | | | | | [Diamondback Energy, Inc. Amended and Restated Senior Management Severance Plan, adopted effective as of February 21, 2022 (including a form of participation agreement attached thereto as Schedule C).](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex109.htm) | | |

| | | | | | | | | |

| | | | | | | | | |

| 10.34 | | | | | | [Third Amendment to Credit Agreement, dated as of December 21, 2021, among Rattler Midstream Operating LLC, as borrower, Rattler Midstream LP, as parent, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 of](https://www.sec.gov/Archives/edgar/data/1748773/000119312521367004/d242121dex101.htm) [](https://www.sec.gov/Archives/edgar/data/1748773/000119312521367004/d242121dex101.htm)[Rattler Midstream LP’s the Partnership’s Quarterly Report on Form 10-Q (File 001-38919) filed on December 27, 2021)](https://www.sec.gov/Archives/edgar/data/1748773/000119312521367004/d242121dex101.htm)[.](https://www.sec.gov/Archives/edgar/data/1748773/000119312521367004/d242121dex101.htm) | | |

| 10.35+ | | | | | | [Transition and Consulting Agreement, entered into on November 30, 2021, between Diamondback Energy, Inc. and Russell Pantermuehl (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 30, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000119312521343714/d246321dex101.htm) | | |

| | | | | | | | | |

| 22.1 | | | | | | [List of Issuers and Guarantors Subsidiaries (incorporated by reference to Exhibit 22.1 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on August 5, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000117/diamondback-ex211x821.htm) | | |

| | | | | | | | | |

| 10.31+ | | | | | | [Energen Corporation Stock Incentive Plan (as amended effective November 7, 2017) (incorporated by reference to Exhibit 10(b) to Energen’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017).](http://www.sec.gov/Archives/edgar/data/277595/000027759517000067/egn93017exhibit10b.htm) | | |

| 10.32+ | | | | | | [Amendment to the Energen Corporation Stock Incentive Plan, dated November 27, 2018 (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-8, File No. 333-228637, filed by the Company with the SEC on November 30, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000119312518339924/d667200dex47.htm) | | |

| 10.33+ | | | | | | [Form of Stock Option Agreement under the Energen Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10(r) to Energen’s Annual Report on Form 10-K for the year ended December 31, 2012).](http://www.sec.gov/Archives/edgar/data/3146/000027759513000012/exhibit10r.htm) | | |

| 10.34+ | | | | | | [Form of Restricted Stock Agreement under the Energen Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10(s) to Energen’s Annual Report on Form 10-K for the year ended December 31, 2012).](http://www.sec.gov/Archives/edgar/data/3146/000027759513000012/exhibit10s.htm) | | |

| 10.35+ | | | | | | [Form of Restricted Stock Unit Agreement under the Energen Corporation Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Energen’s Current Report on Form 8-K filed December 12, 2013).](http://www.sec.gov/Archives/edgar/data/3146/000119312513471062/d642324dex102.htm) | | |

| Date: | | | February [removed: 25, 2021] [added: 24, 2022] | | | | | | | | |

| /s/ Steven E. West | | | | | | [removed: Chairman of the Board and] Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Travis D. Stice | | | | | | [added: Chairman of the Board,] Chief Executive Officer and Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Vincent K. Brooks | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Michael P. Cross | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ David L. Houston | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Stephanie K. Mains | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Mark L. Plaumann | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Melanie M. Trent | | | | | | Director | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Kaes Van’t Hof | | | | | | [added: President and] Chief Financial Officer [removed: and Executive Vice President—Business Development] | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

| /s/ Teresa L. Dick | | | | | | Chief Accounting Officer, Executive Vice President and Assistant Secretary | | | | | | February [removed: 25, 2021] [added: 24, 2022] | | |

We have audited the accompanying consolidated balance sheets of Diamondback Energy, Inc. (a Delaware corporation) and subsidiaries [removed: (collectively the] [added: (the] “Company”) as of December 31, [removed: 2020 and 2019,] [added: 2021] and [added: 2020,] the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in the 2013 *Internal [removed: Control-Integrated] [added: Control—Integrated] Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February [removed: 25, 2021] [added: 24, 2022] expressed an unqualified opinion.

The communication of critical audit matters does not alter in any way our opinion on the financial [removed: statements] [added: statements,] taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Estimation of proved reserves as it relates to the calculation and recognition of depletion [removed: expense and] [added: expense,] the evaluation of [removed: impairment*][added: impairment, and the valuation of oil and gas properties in the Guidon Acquisition and QEP Merger*]

We identified the estimation of proved reserves of oil and gas properties, [added: including acquired reserves,] due to its impact on depletion [removed: expense and] [added: expense,] impairment evaluation, [added: and acquisition accounting,] as a critical audit matter.

The principal consideration for our determination that the estimation of proved reserves is a critical audit matter is that relatively minor changes in certain inputs and assumptions, which require a high degree of subjectivity, necessary to estimate the volume and future revenues of the Company’s proved reserves could have a significant impact on the measurement of depletion expense or impairment [removed: expense.][added: expense, and the fair value of acquired oil and gas properties.]

- We tested the design and operating effectiveness of key controls relating to the preparation of the ceiling test [removed: calculation and] [added: calculation,] management’s estimation of proved reserves for the purpose of estimating depletion expense and assessing the Company’s oil and gas properties for potential [removed: impairment.][added: impairment, and management’s estimation of the fair value of the acquired oil and gas properties.]

Specifically, these controls related to the use of historical information in the estimation of proved reserves derived from the Company’s accounting [removed: records and] [added: records,] the management review controls on information provided to the reservoir engineering [removed: specialists and] [added: specialists,] the management review controls on the final proved reserve report [added: and on the final fair value reserve reports of the acquired oil and gas properties] prepared by the Company’s specialists.

[removed: –Evaluated] [added: –Compared, on a sample basis,] the working and net revenue interests used in the reserve report [removed: by inspecting a sample of] [added: to] land and division order records;

–Evaluated the Company’s evidence supporting the amount of proved undeveloped properties reflected in the reserve report by examining historical conversion rates and support for the Company’s [removed: or the operator’s] intent to develop the proved undeveloped properties;

–Evaluated the estimated ultimate recovery of proved undeveloped properties to the estimated ultimate recovery of comparable proved developed producing [removed: properties;] [added: properties, on a sample basis;] and

| | | | [added: 2021 | | | | | |] 2020 | | | | | | 2019 | | |

| Cash and cash equivalents | | | $ | [removed: 104] [added: 654] | | | | | $ | [removed: 123] [added: 104] | |

| Restricted cash | | | [removed: 4] [added: 18] | | | | | | [removed: 5] [added: 4] | | |

| Joint interest and other, net | | | [removed: 56] [added: 72] | | | | | | [removed: 186] [added: 56] | | |

| Oil and natural gas sales, net | | | [removed: 281] [added: 598] | | | | | | [removed: 429] [added: 281] | | |

| Inventories | | | [removed: 33] [added: 62] | | | | | | [removed: 37] [added: 33] | | |

| Derivative instruments | | | [removed: 1] [added: 13] | | | | | | [removed: 46] [added: 1] | | |

| Income tax receivable | | | [removed: 100] [added: 1] | | | | | | [removed: 19] [added: 100] | | |

| Prepaid expenses and other current assets | | | [removed: 23] [added: 28] | | | | | | [removed: 24] [added: 23] | | |

| Total current assets | | | [removed: 602] [added: 1,446] | | | | | | [removed: 869] [added: 602] | | |

| Oil and natural gas properties, full cost method of accounting [removed: ($7,493] [added: ($8,496] million and [removed: $9,207] [added: $7,493] million excluded from amortization at December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] respectively) | | | [removed: 27,377] [added: 32,914] | | | | | | [removed: 25,782] [added: 27,377] | | |

| Midstream assets | | | [removed: 1,013] [added: 1,076] | | | | | | [removed: 931] [added: 1,013] | | |

| Other property, equipment and land | | | [removed: 138] [added: 174] | | | | | | [removed: 125] [added: 138] | | |

| Accumulated depletion, depreciation, amortization and impairment | | | [removed: (12,314)] [added: (13,545)] | | | | | | [removed: (5,003)] [added: (12,314)] | | |

| Property and equipment, net | | | [removed: 16,214] [added: 20,619] | | | | | | [removed: 21,835] [added: 16,214] | | |

| Funds held in escrow | | | [removed: 51] [added: 12] | | | | | | [removed: —] [added: 51] | | |

| Equity method investments | | | [removed: 533] [added: 613] | | | | | | [removed: 479] [added: 533] | | |

Additionally, as described in Note 4 to the financial statements, the Company acquired significant oil and gas properties during the year through the Guidon Acquisition and QEP Merger.

Management also utilizes an estimated fair value pricing model for the valuation of acquired proved reserves.

- To the extent key, sensitive inputs and assumptions used to determine the fair value of the acquired proved reserve volumes and other cash flow inputs were analyzed by testing management’s process for determining the assumptions, including examining the underlying support.

Specifically, our audit procedures involved testing management’s assumptions as follows:

–Utilized a valuation specialist to evaluate the appropriateness of fair value pricing used in the fair value reserve report to published product pricing on the acquisition closing date;

–Utilized a valuation specialist to evaluate whether the Company’s valuation methodology was reasonable and performed a sensitivity analysis;

–Evaluated the appropriateness of the future operating cost and capital expenditure assumptions used in the fair value reserve report to historical operating costs and capital expenditures of similarly located properties;

–Compared, on a sample basis, the working and net revenue interests used in the fair value reserve report to land and division order records;

–Evaluated, on a sample basis, the appropriateness of management’s estimated future production volumes and the production decline curves; and

–Compared the acreage value allocated, on a per acre basis, to other recent acquisitions in the same or similar locations.

February 24, 2022

| Depreciation, depletion, amortization and accretion | | | 1,275 | | | | | | 1,311 | | | | | | 1,454 | | |

| Gain (loss) on sale of equity method investments | | | 23 | | | | | | — | | | | | | — | | |

| Cash paid for tax withholding on vested equity awards | | | — | | | | | | — | | | | | | (13) | | | | | | — | | | | | | | | | | | | — | | | | | | (13) | | |

| Cash paid for tax withholding on vested equity awards | | | — | | | | | | — | | | | | | (5) | | | | | | — | | | | | | | | | | | | (2) | | | | | | (7) | | |

| Distribution equivalent rights payments | | | — | | | | | | — | | | | | | — | | | | | | (4) | | | | | | | | | | | | (2) | | | | | | (6) | | |

| Cash paid for tax withholding on vested equity awards | | | — | | | | | | — | | | | | | (6) | | | | | | — | | | | | | | | | | | | (2) | | | | | | (8) | | |

| Repurchased shares under buyback program | | | (4,128) | | | | | | — | | | | | | (431) | | | | | | — | | | | | | | | | | | | — | | | | | | (431) | | |

| Repurchased units under buyback programs | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | (94) | | | | | | (94) | | |

| Net income (loss) | | | — | | | | | | — | | | | | | — | | | | | | 2,182 | | | | | | | | | | | | 94 | | | | | | 2,276 | | |

| Balance at December 31, 2021 | | | 177,551 | | | | | | $ | 2 | | | | | $ | 14,084 | | | | | $ | (1,998) | | | | | | | | | | | $ | 1,157 | | | | | $ | 13,245 | |

| Impairment of oil and natural gas properties | | | — | | | | | | 6,021 | | | | | | 790 | | |

| Depreciation, depletion, amortization and accretion | | | 1,275 | | | | | | 1,311 | | | | | | 1,454 | | |

| (Gain) loss on sale of equity method investments | | | (23) | | | | | | — | | | | | | — | | |

| Property acquisitions | | | (812) | | | | | | (185) | | | | | | (776) | | |

| Distributions from equity method investments | | | 9 | | | | | | 40 | | | | | | — | | |

| Financing portion of net cash received (paid) for derivative instruments | | | 22 | | | | | | — | | | | | | — | | |

1) See [Note 2—Summary of Significant](#ia0a8569c6321429087004ad63a8c5224_160) [Accounting](#ia0a8569c6321429087004ad63a8c5224_160) [Policies](#ia0a8569c6321429087004ad63a8c5224_160)

Diamondback O&G LLC (“O&G”), Energen Corporation (“Energen”), Energen Resources Corporation and EGN Services, Inc., former wholly owned subsidiaries of Diamondback, were merged with and into Diamondback E&P LLC effective June 30, 2021 as part of the internal restructuring of the Company’s subsidiaries (the “E&P Merger”).

The Company accounts for its interest rate swaps which have been designated as fair value hedges under the “shortcut” method of accounting.

As such, gains and losses due to changes in the fair value of the interest rate swaps completely offset changes in the fair value of the hedged portion of the underlying debt.

they are incurred.

See Note 11—[Debt](#ia0a8569c6321429087004ad63a8c5224_187) for further details.

| | | | 2021 | | | | | | 2020 | | |

| Accrued compensation | | | 48 | | | | | | 27 | | |

purchaser and the price that will be received for the sale of the product.

The Company accounts for its corporate joint ventures under the equity method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 323 “Investments — Equity Method and Joint Ventures.” The Company also applies the equity method of accounting to investments of less than 50% in an investee over which the Company exercises significant influence but does not have control and investments of greater than 50% in an investee over which the Company does not exercise significant influence or have control.

As of December 31, 2021, the Company’s proportionate share of the income or loss from equity method investments is recognized on a one-month lag for all equity method investments.

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This update requires the acquirer in a business combination to record contract asset and liabilities following Topic 606 – “Revenue from Contracts with Customers” at acquisition as if it had originated the contract, rather than at fair value.

Revenue from Contracts with Customers

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

February 25, 2021

See accompanying notes to consolidated financial statements.

| Gain (loss) on revaluation of investment | | | (9) | | | | | | 5 | | | | | | (1) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at December 31, 2017 | | | 98,167 | | | | | | $ | 1 | | | | | $ | 5,291 | | | | | $ | (38) | | | | | | | | | | | $ | 327 | | | | | $ | 5,581 | |

| Impact of adoption of ASU 2016-01, net of tax | | | — | | | | | | — | | | | | | — | | | | | | (9) | | | | | | | | | | | | (7) | | | | | | (16) | | |

| Common shares issued for business combination | | | 63,126 | | | | | | 1 | | | | | | 7,069 | | | | | | — | | | | | | | | | | | | — | | | | | | 7,070 | | |

| Stock options assumed in business combination | | | — | | | | | | — | | | | | | 14 | | | | | | — | | | | | | | | | | | | — | | | | | | 14 | | |

| Restricted stock units assumed in business combination | | | — | | | | | | — | | | | | | 52 | | | | | | — | | | | | | | | | | | | — | | | | | | 52 | | |

| Repurchased shares for tax withholding | | | (140) | | | | | | — | | | | | | (14) | | | | | | — | | | | | | | | | | | | — | | | | | | (14) | | |

| Common shares issued for Ajax | | | 2,584 | | | | | | — | | | | | | 340 | | | | | | — | | | | | | | | | | | | — | | | | | | 340 | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 846 | | | | | | | | | | | | 99 | | | | | | 945 | | |

| Repurchased shares for tax withholding | | | (125) | | | | | | — | | | | | | (13) | | | | | | — | | | | | | | | | | | | — | | | | | | (13) | | |

| Repurchased shares for tax withholding | | | (75) | | | | | | — | | | | | | (5) | | | | | | — | | | | | | | | | | | | (2) | | | | | | (7) | | |

| Acquisitions of leasehold interests | | | (119) | | | | | | (443) | | | | | | (1,371) | | |

| Acquisitions of mineral interests | | | (66) | | | | | | (333) | | | | | | (440) | | |

| Funds held in escrow | | | (51) | | | | | | — | | | | | | 11 | | |

| Investment in real estate | | | — | | | | | | (1) | | | | | | (111) | | |

| Repayment on Energen's credit facility | | | — | | | | | | — | | | | | | (559) | | |

(1)Includes $7 billion of common stock issued for business combination, $14 million for stock options assumed and $52 million for restricted stock units assumed.

The consolidated subsidiaries include these wholly owned subsidiaries as well as Viper Energy Partners LP, a Delaware limited partnership (“Viper”), Viper’s subsidiary Viper Energy Partners LLC, a Delaware limited liability company (“Viper LLC”), Rattler Midstream LP (formerly known as Rattler Midstream Partners LP), a Delaware limited partnership (“Rattler”), Rattler Midstream Operating LLC (formerly known as Rattler Midstream LLC), a Delaware limited liability company (“Rattler LLC”), Rattler LLC’s wholly owned subsidiaries Tall City Towers LLC, a Delaware limited liability company (“Tall City”), Rattler Ajax Processing LLC, a Delaware limited liability company, Rattler OMOG LLC, a Delaware limited liability company, Energen’s wholly owned subsidiaries Energen Resources Corporation, an Alabama corporation (“Energen Resources”), EGN Services, Inc., an Alabama corporation and Bohemia Merger Sub Inc., a Delaware corporation.

Companies in the oil and natural gas industry have changed near term business plans in response to changing market conditions.

Internal costs capitalized to the

The Company records the differences between its

An investment of less than 50% in an investee over which the Company exercises significant influence but does not have control is accounted for using the equity method.

Additionally, an investment of greater than 50% in an investee over which the Company does not exercise significant influence or have control is also accounted for using the equity method.

The Company has determined it has the ability to exercise significant influence over its investments which constitute less than a 20% ownership interest, and does not have the ability to exercise significant influence over its investments which constitute greater than a 50% ownership interest, and therefore accounts for all of its investments under the equity method.

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, “Financial Instruments - Credit Losses”.

This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income.

The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

*Disaggregation of Revenue*

| Oil sales | | | $ | 1,350 | | | | | $ | 508 | | | | | $ | 21 | | | | | $ | 1,879 | |

| Total | | | $ | 1,528 | | | | | $ | 577 | | | | | $ | 25 | | | | | $ | 2,130 | |

Pending Acquisitions

See Note 18—[Subsequent Events](#i4b770a66acfe418cb1b377f3d113fa9f_229) for acquisition agreements entered into in 2020 that are expected to close in 2021.

The mineral and royalty interests divested in the Drop-Down represent approximately

2018 Activity