Diamondback Energy (FANG) 10-K risk factor changes: FY2022 vs FY2021

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

[removed: In addition, if] [added: If] commodity prices decrease, our production, estimates of proved reserves and liquidity may be adversely affected.

Despite the [removed: recent] recovery [added: and overall strength] in demand [added: and pricing] for oil [removed: and natural gas and commodity prices, we have kept production on our acreage relatively flat during 2021,] [added: in 2022,] using excess cash flow for debt repayment and/or [removed: return] [added: returning capital] to our stockholders rather than expanding our drilling program.

We intend to continue exercising capital discipline [removed: by maintaining our] [added: and expect to maintain flat] oil production [removed: flat] in [removed: 2022] [added: 2023] at the fourth quarter [removed: 2021 level.][added: 2022 level, excluding production from recent acquisitions.]

Due to the improvement in commodity pricing environment and industry conditions, we did not record any impairments in [removed: 2021.][added: 2022.]

The [removed: 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 [removed: are] [added: continue to be] 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 [added: current] treatments [removed: or] [added: and] vaccines against the virus or its new strains; [removed: the extent of] [added: any] 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; [removed: an increasingly] competitive labor [removed: market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic; increased] [added: market;] logistics costs; [removed: additional costs due to] remote working arrangements, [removed: adherence to] social distancing guidelines and other COVID-19-related challenges.

Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, including the domestic and foreign supply of oil and natural gas; the level of prices and expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports; political and economic conditions in oil producing countries, including the Middle East, Africa, South [added: America and Russia; the potential impact of the war in Ukraine 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 taxes, including the Biden Administration’s energy and environmental policies; global or national health concerns, including the outbreak of pandemic or contagious disease, such as 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: 2021,] [added: 2022, 2021 and 2020,] NYMEX WTI prices ranged from [removed: $47.62] [added: $(37.63)] to [removed: $84.65] [added: $123.70] per Bbl and the NYMEX Henry Hub price of natural gas ranged from [removed: $2.45] [added: $1.48] to [removed: $6.31] [added: $9.68] per MMBtu.

In [removed: 2021,] [added: 2022,] our total capital expenditures, including expenditures for drilling, completion, infrastructure and additions to midstream assets, were approximately [removed: $1.5] [added: $1.9] billion.

Our [removed: 2022] [added: 2023] capital budget for drilling, completion and infrastructure, including investments in water disposal infrastructure and gathering line projects, is currently estimated to be approximately [removed: $1.75] [added: $2.50] billion to [removed: $1.90] [added: $2.70] billion, representing an increase of [removed: 23%] [added: 37%] from our [removed: 2021] [added: 2022] capital expenditures.

Since completing our initial public offering in October 2012, we have financed capital expenditures primarily with borrowings under our revolving credit facility, cash generated by operations and the net proceeds from public offerings of our common stock and [removed: the] [added: our] senior notes.

Further, our actual capital expenditures in [removed: 2022] [added: 2023] could exceed our capital expenditure budget.

Our review will not reveal all existing or potential [removed: problems] [added: problems, including title or environmental issues,] nor will it permit us to become sufficiently familiar with the properties to assess fully their deficiencies and capabilities.

[removed: If there are any title] defects or defects in the assignment of leasehold rights in properties in which we hold an interest, we will suffer a financial loss.

As of December 31, [removed: 2021,] [added: 2022,] we have approximately [removed: 9,314] [added: 8,276] gross [removed: (6,311] [added: (6,055] net) identified economic potential horizontal drilling locations in multiple horizons on our acreage at an assumed price of approximately $50.00 per Bbl WTI.

As of December 31, [removed: 2021,] [added: 2022,] only [removed: 602] [added: 703] of our gross identified economic potential horizontal drilling locations were attributed to proved reserves.

In addition, as of December 31, [removed: 2021,] [added: 2022,] we have identified approximately [removed: 2,531] [added: 2,148] 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.

Through December 31, [removed: 2021,] [added: 2022,] we are the operator of, have participated in, or have acquired working interest in a total of [removed: 2,842] [added: 3,254] horizontal producing wells completed on our acreage.

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

To the extent that the prices of [removed: oil] [added: oil, natural gas liquids] and natural gas remain at current levels or decline further, we may not be able to economically hedge [added: additional] future production at the same level as our current [removed: hedges,] [added: commodity price derivatives,] and our results of operations and financial condition may be negatively impacted.

For additional information regarding our outstanding derivative contracts as of December 31, [removed: 2021,] [added: 2022,] see Note [removed: 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202)] [added: 12—[Derivatives](#ia595866015b4400388c840bd76dbe1a1_193)] to our consolidated financial statements included elsewhere in this [removed: report.][added: report, [Item 7.]

If production from our Permian Basin acreage decreases due to [removed: decreased] [added: reduced] developmental activities, as a result of the low commodity price environment, production related difficulties or otherwise, we may be unable to meet our obligations under our oil purchase agreements, which may result in deficiency payments to certain counterparties or a default under such agreements and may have an adverse effect on our company.

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: $72] [added: $93] million at December 31, [removed: 2021)] [added: 2022)] and receivables from purchasers of our oil and natural gas production (approximately [removed: $598] [added: $618] million at December 31, [removed: 2021).][added: 2022).]

[removed: See “Business] [added: Business] and [removed: Properties—Oil] [added: Properties](#ia595866015b4400388c840bd76dbe1a1_22)—Oil] and Natural Gas Production Prices and Production Costs—Marketing and Customers” for additional information regarding these customers.

[removed: No] [added: An] impairment [removed: on] [added: of $6.0 billion was recorded for our] proved oil and natural gas properties [removed: was recorded] for the year ended December 31, [removed: 2021.][added: 2020.]

[removed: Impairments of] [added: No impairments were recorded on our] proved oil and natural gas properties [removed: of $6.0 billion and $0.8 billion were recorded] for the years ended December 31, [removed: 2020] [added: 2022] and [removed: 2019.][added: 2021.]

The standardized measure of our estimated proved reserves [removed: and our PV-10] are not necessarily the same as the current market value of our estimated proved oil reserves.

The present value of future net cash flow from our proved reserves, or standardized [removed: measure, and our related PV-10 calculation,] [added: measure] may not represent the current market value of our estimated proved oil reserves.

Approximately [removed: 33%] [added: 31%] of our total estimated proved reserves as of December 31, [removed: 2021,] [added: 2022,] were proved undeveloped reserves and may not be ultimately developed or produced.

Our producing properties are located in the Permian Basin of West Texas, making us vulnerable to risks [added: (including weather-related risks)] associated with operating in a single geographic area.

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 [removed: liquids] [added: liquids,] and extreme weather [removed: conditions, such as the severe winter storms in the Permian Basin in February 2021,] [added: conditions] and their adverse impact on production volumes, availability of electrical power, road accessibility and transportation facilities.

Due to the concentrated nature of our portfolio of properties, a number of our properties could experience any of the same conditions at the same time, resulting in a relatively greater impact on our results of operations than they might have on other companies that have a more diversified portfolio of [removed: properties.]

In addition to the geographic concentration of our producing properties described above, as of December 31, [removed: 2021,] [added: 2022,] most of our proved reserves are concentrated in the Wolfberry play in the Midland Basin.

[added: As a result of this severe drought, some local water] districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supply.

Recent regulatory restrictions on [removed: use] [added: the disposal] of produced water and [removed: a moratorium on] [added: additional monitoring and reporting requirements related to existing and additional monitoring] 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.

These restrictions on the disposal of produced water and [removed: a moratorium on] [added: additional monitoring and reporting requirements related to existing and] new [added: disposal of] produced water [added: and additional monitoring and reporting requirements related to existing and 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.

See [removed: Item 1.][added: “[Item 7.]

[removed: “Business—Regulation”] [added: Business and Properties](#ia595866015b4400388c840bd76dbe1a1_22)—Regulation”] for a detailed description of certain laws and regulations that affect us.

Seasonal restrictions may limit our ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may [added: lead to periodic shortages when drilling is allowed.]

The following is a summary of the principal risks that could adversely affect our business, operations and financial results:

- Market conditions and particularly volatility in prices for oil and natural gas may continue to adversely affect our revenue, cash flows, profitability, growth, production and the present value of our estimated reserves.

- Our commodity price derivatives could result in financial losses, may fail to protect us from declines in commodity prices, prevent us from fully benefiting from commodity price increases and may expose us to other risks, including counterparty credit risk.

- The IRA and other risks relating to climate change could accelerate the transition to a low carbon economy and could impose new costs on our operations that may have a material and adverse effect on us.

- Climate change-related regulations, policies and initiatives may have other adverse effects, such as a greater potential for governmental investigations or litigation.

[Table of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

- We may be unable to obtain needed capital or financing on satisfactory terms or at all to fund our acquisitions or development activities, which could lead to a loss of properties and a decline in our oil and natural gas reserves and future production.

- Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings, and title defects in the properties in which we invest may lead to losses.

- Our identified potential drilling locations are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling.

- If production from our Permian Basin acreage decreases, we may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contract, which may adversely affect our operations.

- The inability of one or more of our customers to meet their obligations, or loss of one or more of our significant purchasers, may adversely affect our financial results.

- Our method of accounting for investments in oil and natural gas properties may result in impairment of asset value.

- Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

- We are vulnerable to risks associated with our primary operations concentrated in a single geographic area.

- If transportation or other facilities, certain of which we do not control, or rigs, equipment, raw materials, oil services or personnel are unavailable, our operations could be interrupted and our revenues reduced.

- Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive and may impose restrictions on our operations.

- U.S. tax legislation, including recently adopted IRA, may negatively affect our business, results of operations, financial condition and cash flow.

- Drilling for and producing oil and natural gas are high-risk activities with many uncertainties that may result in a total loss of investment and adversely affect our business, financial condition or results of operations.

- A terrorist attack or armed conflict could harm our business and could adversely affect our business.

- A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.

- Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness, and we and our subsidiaries may be able to incur substantial additional indebtedness in the future.

- Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities.

- We depend on our subsidiaries for dividends, distributions and other payments.

- If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.

- The corporate opportunity provisions in our certificate of incorporation could enable affiliates of ours to benefit from corporate opportunities that might otherwise be available to us.

- If the price of our common stock fluctuates significantly, an investment in us could lose value.

- The declaration of dividends and any repurchases of our common stock are each within the discretion of our board of directors, and there is no guarantee that we will pay any dividends on or repurchases of our common stock in the future or at levels anticipated by our stockholders.

- A change of control could limit our use of net operating losses.

- If our operating results do not meet expectations of securities or industry analysts, our stock price could decline.

- We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

- Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of the company, which could adversely affect the price of our common stock.

[Table of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

Risks Related to the Oil and Natural Gas Industry and Our Business

We cannot predict the impact of the ongoing military war between Russia and Ukraine and the related humanitarian crisis on the global economy, energy markets, geopolitical stability and our business.

Our leasehold acreage is located primarily in the Permian Basin in West Texas.

However, the broader consequences of the war in Ukraine, which may include further sanctions, embargoes, supply chain disruptions, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.

We cannot predict the extent of the war’s effect on our business and results of operations as well as on the global economy and energy markets.

In prior periods, our business and operations were adversely impacted by the COVID-19 pandemic and volatility in the oil and natural gas markets, compounded by the global effects of the war in Ukraine, and we may experience such adverse effects in future periods.

The COVID-19 pandemic, combined with the global effects of the war in Ukraine, contributed to economic and pricing volatility that adversely impacted in prior periods, and may in the future adversely impact, our business and our industry.

[Table of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

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.

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 taxes, including the Biden Administration’s energy and environmental policies; global or national health concerns, including the outbreak of pandemic or contagious disease, such as 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.

In order to hold our current leases expiring in 2022, we will need to operate at least a one-rig program.

We have entered into commodity price derivatives for a portion of our production.

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

As a result of this severe drought, some local water

lead to periodic shortages when drilling is allowed.

Although some of the rules necessary to implement the Dodd-Frank Act remain to be adopted, the CFTC, the SEC and the Prudential Regulators have issued many rules to implement the Dodd-Frank Act, including a rule, which we refer to as the Mandatory Clearing Rule, requiring clearing of hedges, or swaps, that are subject to it (currently, only certain interest rate and credit default swaps), a rule, which we refer to as the End User Exception, establishing an “end user” exception to the Mandatory Clearing Rule, a rule, which we refer to as the Margin Rule, setting forth collateral requirements in connection with swaps that are not cleared and also an exception to the Margin Rule for end users that are not financial end users, which exception we refer to as the Non-Financial End User Exception, and a rule imposing position limits, which we refer to as the Position Limit Rule, and also an exception to the Position Limit Rule for swaps that constitute a “bona fide hedging transaction or position” within the definition of such term under the Position Limit Rule, subject to the party claiming the exemption complying with the applicable filing, recordkeeping and reporting requirements of the Position Limit Rule, which we refer to as the Bona Fide Hedging Exception.

We qualify for the End User Exception to the Mandatory Clearing Rule, we qualify for the Non-Financial End User Exception and will not be required to post margin in connection with uncleared swaps under the Margin Rule, and each of our existing and anticipated hedging positions constitutes a “bona fide hedging transaction or position” under the Position Limit Rule and we intend to undertake the filing, recordkeeping and reporting necessary to utilize the Bona Fide Hedging Exception under the Position Limit Rule, so we do not expect to be directly affected by any of such rules.

However, most if not all of our hedge counterparties will be subject to mandatory clearing in connection with their hedging activities with parties who do not qualify for the End User Exception and will be required to post margin in connection with their hedging activities with other swap dealers, major swap participants, financial end users and other persons that do not qualify for the Non-Financial End User Exception.

The Foreign Regulations could have similar effects.

with terms that vary from the above allocations of risk.

Changes in environmental laws could increase our operating costs and adversely impact our business, financial condition and cash flows.

President Biden has indicated that he is supportive of, and has issued executive orders promoting, various programs and initiatives designed to, among other things, curtail climate change, control the release of methane from new and existing oil and natural gas operations, and decarbonize electric generation and the transportation sector.

It remains unclear what additional actions President Biden will take and what support he will have for any potential legislative changes from Congress.

Further, it is uncertain to what extent any new environmental laws or regulations, or any repeal of existing environmental laws or regulations, may affect our business or operations.

However, such actions could significantly increase our operating costs or impair our ability to explore and develop other projects, which could adversely impact our business, financial condition and cash flows.

and accounting data.

The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain exploration, development, production, and processing activities.

For example, the oil and natural gas industry depends on digital technologies to interpret seismic data, manage drilling rigs, production equipment and gathering systems, conduct reservoir modeling and reserves estimation, and process and record financial and operating data.

At the same time, cyber incidents, including deliberate attacks or unintentional events, have increased.

The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.

Our technologies, systems, networks, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.

In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period.

Our systems for protecting against cyber security risks may not be sufficient.

As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.

We have relied in the past, and we may rely from time to time in the future, on borrowings under our revolving credit facility to fund a portion of our capital expenditures.

Unless we are able to repay borrowings under the revolving credit facility with cash flow from operations and proceeds from equity or debt offerings, implementing our capital programs may require an increase in our total leverage through additional debt issuances.

Rattler LLC’s weighted average interest rate on borrowings from its revolving credit facility was 1.41% during the year ended December 31, 2021.

On July 27, 2017, the U.K. Financial Conduct Authority (the authority that regulates LIBOR), which we refer to as the FCA, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

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.

This could materially and adversely affect our results of operations, cash flow and liquidity.

the affirmative vote of holders representing at least 66 2/3% of the voting power of all outstanding shares of capital stock be obtained to amend our certificate of incorporation; and the authorization given to our board of directors to issue and set the terms of preferred stock without the approval of our stockholders.

[removed: See Item] [added: See* *[Item] 1A.

“Risk [removed: Factors” and “Cautionary] [added: Factors”](#ia595866015b4400388c840bd76dbe1a1_25)* *and “[Cautionary] Statement Regarding Forward-Looking [removed: Statements.”*][added: Statements.](#ia595866015b4400388c840bd76dbe1a1_16)”*]

[removed: 2021] [added: 2022] Financial and Operating Highlights

- We recorded net income of [removed: $2.2] [added: $4.4] billion for the year ended December 31, [removed: 2021.][added: 2022.]

- Our average production was [removed: 137,002] [added: 386,005] MBOE/d during the year ended December 31, [removed: 2021.][added: 2022.]

- During the year ended December 31, [removed: 2021,] [added: 2022,] we drilled [removed: 175] [added: 240] gross horizontal wells [added: (including 197] in the Midland Basin and [removed: 41 gross horizontal wells] [added: 43] in the Delaware [removed: Basin.][added: Basin).]

- We turned [removed: 275] [added: 255] gross operated horizontal wells (including [removed: 207] [added: 213] in the Midland Basin and [removed: 64] [added: 42] in the Delaware Basin) to production and had capital expenditures, excluding acquisitions, of [removed: $1.5] [added: $1.9] billion during the year ended December 31, [removed: 2021.][added: 2022.]

- As of December 31, [removed: 2021,] [added: 2022,] we had approximately [removed: 445,848] [added: 508,767] net acres, which primarily consisted of [removed: approximately 265,562] [added: 325,540] net acres in the Midland Basin and [removed: approximately 148,588] [added: 150,719] net acres in the Delaware Basin.

As of December 31, [removed: 2021,] [added: 2022,] we had an estimated [removed: 9,314] [added: 8,276] gross horizontal locations that we believe to be economic at $50.00 per Bbl WTI.

In addition, our publicly traded subsidiary Viper owns mineral interests underlying approximately [removed: 930,871] [added: 775,180] gross acres and [removed: 27,027] [added: 26,315] net royalty acres in the Permian [removed: Basin and Eagle Ford Shale.][added: Basin.]

[removed: 2021] [added: 2022] Transactions and Recent Developments

[removed: [Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)][added: [Table](#ia595866015b4400388c840bd76dbe1a1_7) [of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)]

[removed: 2021] [added: 2022] Divestiture Activity

We used [removed: our] [added: the] net proceeds from [removed: these transactions toward] [added: this transaction towards] debt reduction.

[removed: We funded the redemption with] [added: Our working capital requirements are supported by our] cash [removed: on hand] and [added: cash equivalents and available] borrowings under our revolving credit facility.

[removed: During the year ended December 31, 2021, we repurchased approximately $431 million] [added: - Repurchased $1.1 billion] of [removed: Diamondback] [added: our] common stock, [removed: and as of December 31, 2021, $1.6] [added: leaving approximately $2.5] billion [removed: remained] available for future purchases under our common stock repurchase [removed: program.][added: program at December 31, 2022.]

During [added: 2022,] 2021 and [removed: 2020,] [added: 2020] the [removed: posted] [added: NYMEX WTI] price for [removed: West Texas intermediate light sweet] crude [removed: oil, or NYMEX WTI, has] [added: oil] ranged from $(37.63) to [removed: $84.65] [added: $123.70 per] Bbl, and the NYMEX Henry Hub price of natural gas [removed: has] ranged from $1.48 to [removed: $6.31] [added: $9.68] per [removed: MMBtu.][added: MMBtu, with seven-year highs reached in 2022.]

As of December 31, [removed: 2021,] [added: 2022,] we were operating [removed: 10] [added: 19] drilling rigs and four completion crews and currently intend to operate between [removed: 10] [added: 13] and [removed: 12] [added: 19] drilling rigs and between [removed: three and] four [added: and seven] completion crews in [removed: 2022] [added: 2023] on average across our current acreage position in the Midland and Delaware Basins.

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

We have also increased the weighting of ESG metrics [added: from 20% to 25%] in our annual short-term incentive compensation plan to motivate our executives [added: and our employees] to advance our environmental responsibility goals.

In September 2021, we announced our [removed: long-term] [added: near-term] goal to end routine flaring [added: (as defined] by [added: the World Bank) by] 2025 and a [removed: long-term] [added: near-term] target to source over 65% of our water used for drilling and completion operations from recycled sources by 2025.

For the full year ended [removed: 2021,] [added: 2022,] we flared [removed: 1.45%] [added: approximately 2.3%] of our gross natural gas [removed: production, down 26%] [added: production and sourced approximately 41% of our water used for drilling and completion operations] from [removed: 2020.][added: recycled sources.]

[removed: 2022] [added: 2023] Capital Budget

We have currently budgeted [removed: 2022] [added: 2023] total capital spend of [removed: $1.75] [added: $2.50] billion to [removed: $1.90] [added: $2.70] billion.

The following discussion focuses primarily on a comparison of the results of operations between the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

[removed: .For] [added: For] a discussion of the results of operations for the year ended December 31, [removed: 2020] [added: 2021] as compared to the year ended December 31, [removed: 2019,] [added: 2020,] please refer to [“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/1539838/000153983821000015/fang-20201231.htm#i4b770a66acfe418cb1b377f3d113fa9f_46)] [added: 10-K](http://www.sec.gov/ix?doc=/Archives/edgar/data/1539838/000153983822000008/fang-20211231.htm#ia0a8569c6321429087004ad63a8c5224_49)] for the year ended December 31, [removed: 2020] [added: 2021] (filed with the SEC on February [removed: 25, 2021),] [added: 24, 2022),] which is incorporated in this report by reference from such prior report on Form 10-K.

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

| Revenues (in millions): | | | | | | | | | | | | [removed: | | | | | |]

| Oil sales | | | $ | [removed: 5,396] [added: 7,660] | | | | | $ | [removed: 2,410 | | | | | |] [added: 5,396] | |

| Natural gas sales | | | [removed: 569 | | | | | | 107] [added: 858] | | | | | | [added: 569] | | |

| Natural gas liquid sales | | | [removed: 782 | | | | | | 239] [added: 1,048] | | | | | | [added: 782] | | |

| Total oil, natural gas and natural gas liquid revenues | | | $ | [removed: 6,747] [added: 9,566] | | | | | $ | [removed: 2,756 | | | | | |] [added: 6,747] | |

| Production Data: | | | | | | | | | | | | [removed: | | | | | |]

| Oil (MBbls) | | | [removed: 81,522 | | | | | | 66,182] [added: 81,616] | | | | | | [added: 81,522] | | |

| Natural gas (MMcf) | | | [removed: 169,406 | | | | | | 130,549] [added: 176,376] | | | | | | [added: 169,406] | | |

| Natural gas liquids (MBbls) | | | [removed: 27,246 | | | | | | 21,981] [added: 29,880] | | | | | | [added: 27,246] | | |

| Combined volumes (MBOE)(1) | | | [removed: 137,002 | | | | | | 109,921] [added: 140,892] | | | | | | [added: 137,002] | | |

| Daily oil volumes (BO/d) | | | [removed: 223,348 | | | | | | 180,825] [added: 223,605] | | | | | | [added: 223,348] | | |

| Daily combined volumes (BOE/d)(1) | | | [removed: 375,348 | | | | | | 300,331] [added: 386,005] | | | | | | [added: 375,349] | | |

As of December 31, 2022, we have one reportable segment, the upstream segment.

See Note 1—[Description of the Business and Basis of Presentation](#ia595866015b4400388c840bd76dbe1a1_151) and Note 17—[Segment Information](#ia595866015b4400388c840bd76dbe1a1_208) of the notes to the consolidated financial statements included elsewhere in this Annual Report for further discussion.

- Increased our annual base dividend by 50% to $3.00 per share and paid dividends to stockholders of $1.6 billion during 2022 and in February 2023 declared a combined base and variable cash dividend of $2.95 per share of common stock, payable in the first quarter of 2023.

Additionally on February 16, 2023, our board of directors approved an increase to the Company’s annual base dividend to $3.20 per share.

- During the year ended December 31, 2022, we issued $2.5 billion in principal amount of senior notes and retired an aggregate of $2.4 billion in principal amount of our then-outstanding senior notes.

We operate approximately 57% of these net royalty acres.

Pending Divestiture Transactions

In February 2023, we entered into definitive agreements with unrelated third-party buyers to divest non-core assets consisting of approximately 19,000 net acres in Glasscock County and approximately 4,900 net acres in Ward and Winkler counties for combined total consideration of $439 million, subject to certain closing adjustments.

The assets being sold in these pending transactions include approximately 2 MBO/d (7 MBOE/d) of 2023 production.

Both of these transactions are expected to close in the second quarter of 2023, subject to completion of diligence and satisfaction of customary closing conditions.

Lario Acquisition

On January 31, 2023, we closed on the Lario Acquisition, which included approximately 25,000 gross (15,000 net) acres in the Midland Basin and certain related oil and gas assets in exchange for 4.33 million shares of our common stock and $814 million, including certain customary closing adjustments.

Gray Oak Divestiture

On January 9, 2023, we divested our 10% non-operating equity investment in Gray Oak for $172 million in cash proceeds and recorded a gain on the sale of equity method investments of approximately $53 million in the first quarter of 2023.

2022 Acquisition Activity

On January 18, 2022, we acquired, from an unrelated third-party seller, approximately 6,200 net acres in the Delaware Basin for $232 million in cash, including customary closing adjustments.

On August 24, 2022, we completed the merger with Rattler pursuant to which we acquired all of the approximately 38.51 million publicly held outstanding common units of Rattler in exchange for approximately 4.35 million shares of our common stock.

On November 30, 2022, we acquired all leasehold interests and related assets of FireBird Energy LLC, which included approximately 75,000 gross (68,000 net) acres in the Midland Basin and certain related oil and gas assets, in exchange for 5.92 million shares of our common stock and $787 million of cash, including certain customary closing adjustments.

Additionally during the year ended December 31, 2022, we acquired, from unrelated third-party sellers, approximately 4,000 net acres in the Permian Basin for an aggregate purchase price of approximately $220 million in cash, including customary closing adjustments.

In October 2022, we completed the divestiture of non-core Delaware Basin acreage consisting of approximately 3,272 net acres, with net production of approximately 550 BO/d (800 BOE/d) for $155 million of net proceeds.

See Note 4—[Acquisitions and Divestiture](#ia595866015b4400388c840bd76dbe1a1_160)[s](#ia595866015b4400388c840bd76dbe1a1_160) and Note 16—[Subsequent Events](#ia595866015b4400388c840bd76dbe1a1_205) of the notes to the consolidated financial statements included elsewhere in this Annual Report for additional discussion of these transactions.

Commodity Prices and Certain Other Market Considerations

The war in Ukraine, the COVID-19 pandemic, rising interest rates, global supply chain disruptions, concerns about a potential economic downturn or recession and recent measures to combat persistent inflation contributed to economic and pricing volatility during 2022 and may continue to impact prices in 2023.

Although the impact of inflation on our business has been insignificant in prior periods, inflation in the U.S. has been rising at its fastest rate in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in the energy industry and other sectors, which is contributing to labor and materials shortages across the supply-chain.

Additionally, OPEC and its non-OPEC allies, known collectively as OPEC+, continues to meet regularly to evaluate the state of global oil supply, demand and inventory levels.

However, pricing may remain volatile during of 2023.

After giving effect for the recently completed the FireBird and Lario acquisitions, we expect to hold our pro forma oil production levels essentially flat in 2023.

During 2022, we had total capital expenditures of $1.9 billion, which was consistent with our guidance presented in November of 2022.

During the second quarter of 2022, we announced an increase to our quarterly return of capital commitment to at least 75% of our free cash flow beginning in the third quarter of 2022.

[Table](#ia595866015b4400388c840bd76dbe1a1_7) [of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

Accordingly, we are utilizing our free cash flow to meet our quarterly return of capital commitment and for debt repayment rather than expanding our drilling program.

During 2022, we continued to pay down debt and believe we have a strong balance sheet that can withstand another down cycle.

We are focused on maintaining high cash margins and a low-cost structure to drive an increasing return on capital and operational excellence, and to mitigate inflationary pressures through improvements and efficiencies in our drilling and completion programs.

Going forward, we intend to continue to remain flexible and use a combination of our growing and sustainable base dividend, variable dividend and opportunistic share repurchase program to generate the highest value proposition for our stockholders.

In the Delaware Basin, we continued to target the Wolfcamp and Bone Spring formations across our primary development areas located in Pecos, Reeves and Ward counties.

Collectively, the Delaware Basin accounted for approximately 15% of our total development in 2022, and we expect a similar portion of our total development to be focused in these areas in 2023.

Additionally, in the first quarter of 2023, we announced a target to sell at least $1.0 billion of non-core assets by year-end 2023, up from the previously announced target of $500 million.

In September 2022, we announced our medium-term goal to reduce Scope 1 and Scope 2 GHG intensity reduction by at least 50% from our 2020 level by 2030 and a short-term goal to implement continuous emission monitoring systems (“CEMS”) on our facilities to cover at least 90% of operated oil production by the end of 2023.

As of December 31, 2022, we had installed CEMS that cover approximately 85% of our operated oil production.

[Table](#ia595866015b4400388c840bd76dbe1a1_7) [of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

We operate in two operating segments: (i) the upstream segment, which is engaged in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas and (ii) through our subsidiary, Rattler, the midstream operations segment, which is focused on ownership, operation, development and acquisition of the midstream infrastructure assets in the Midland and Delaware Basins of the Permian Basin.

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.

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

Approximately 54% of these net royalty acres are operated by us.

- 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.

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”).

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.

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.

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.

For additional discussion of our 2021 debt transactions and the amendment to the second amended and restated credit facility, see Note 11—[Deb](#ia0a8569c6321429087004ad63a8c5224_187)[t](#ia0a8569c6321429087004ad63a8c5224_187).

Fourth Quarter 2021 Dividend Declaration and Increase

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

Stock and Unit Repurchase Programs

During the year ended December 31, 2021, Viper repurchased approximately $46 million of common units under its repurchase program.

As of December 31, 2021, $80 million remained available for use to repurchase common units under Viper’s common unit repurchase program.

During the year ended December 31, 2021, Rattler repurchased approximately $48 million of common units under its repurchase program.

As of December 31, 2021, $88 million remained available for use to repurchase common units under Rattler’s common unit repurchase program.

Although demand and market prices for oil and natural gas have recently [removed: increased substantially due to rising energy use, easing of] [added: increased, we cannot predict events, including] the [removed: COVID-19 pandemic restrictions, availability] [added: outcome] of [removed: treatments and vaccines in] the [removed: U.S. and globally and improvements] [added: war] in [removed: the U.S. and] [added: Ukraine, rising interest rates,] global [added: supply chain disruptions, a potential] economic [removed: activity, we cannot predict events] [added: downturn or recession, the COVID-19 pandemic,] that may lead to future [removed: commodity] price [removed: volatility.][added: volatility and the near term energy outlook remains subject to heightened levels of uncertainty.]

[removed: [Table of](#ia0a8569c6321429087004ad63a8c5224_7) [Contents](#ia0a8569c6321429087004ad63a8c5224_7)][added: [Table](#ia595866015b4400388c840bd76dbe1a1_7) [of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)]

At December 31, [removed: 2021,] [added: 2022,] we had a net [removed: liability] [added: asset commodity] derivative position of [removed: $168] [added: $153] million related to our commodity price derivatives.

Utilizing actual derivative contractual volumes under our commodity price derivatives as of December 31, [removed: 2021,] [added: 2022,] a 10% increase in forward curves associated with the underlying commodity would have increased the net [removed: liability] [added: asset] position by [removed: $149] [added: $11] million to [removed: $317] [added: $164] million, while a 10% decrease in forward curves associated with the underlying commodity would have reduced the net [removed: liability] [added: asset] derivative position by [removed: $117] [added: $8] million to [removed: $51] [added: $145] million.

For additional information on our open commodity derivative instruments at December 31, [removed: 2021,] [added: 2022,] see Note [removed: 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202).][added: 12—[Derivatives](#ia595866015b4400388c840bd76dbe1a1_193) of the notes to the consolidated financial statements included elsewhere in this Annual Report.]

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: $598] [added: $618] million at December 31, [removed: 2021),] [added: 2022),] and to a lesser extent, receivables resulting from joint interest receivables (approximately [removed: $72] [added: $93] million at December 31, [removed: 2021).][added: 2022).]

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

[removed: The] [added: At December 31, 2022, the] applicable margin ranges from [removed: 0.25%] [added: 0.125%] to [removed: 1.125%] [added: 1.000%] per annum in the case of the [removed: alternative] [added: alternate] base [removed: rate] [added: rate,] and from [removed: 1.25%] [added: 1.125%] to [removed: 2.125%] [added: 2.000%] per annum in the case of [removed: LIBOR,] [added: Adjusted Term SOFR,] in each case based on the pricing level.

For additional information on our variable interest rate debt at December 31, [removed: 2021,] [added: 2022,] see Note [removed: 11—[Debt](#ia0a8569c6321429087004ad63a8c5224_187).][added: 8—[Debt](#ia595866015b4400388c840bd76dbe1a1_181) of the notes to the consolidated financial statements included elsewhere in this Annual Report.]

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

At December 31, [removed: 2021,] [added: 2022,] we have interest rate swap agreements for a notional amount of $1.2 billion to manage the impact of [removed: market interest rates on] [added: changes to] the fair value of our [removed: fixed-rate debt.][added: fixed rate senior notes due to changes in market interest rates through December 2029.]

[removed: 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] [added: We] pay an average variable rate of interest [added: for these swaps] based on three month LIBOR plus [removed: 2.1865%.][added: 2.1865% and receive a fixed interest rate of 3.50% from our counterparties.]

For additional information on our interest rate swaps, see Note [removed: 15—[Derivatives](#ia0a8569c6321429087004ad63a8c5224_202).][added: 12—[Derivatives](#ia595866015b4400388c840bd76dbe1a1_193) of the notes to the consolidated financial statements included elsewhere in this Annual Report.]

Outstanding borrowings under the credit agreement bear interest at a per annum rate elected by Diamondback E&P.

At December 31, 2022, our receive-fixed, pay-variable interest rate swaps were in a net liability position of $193 million, and the weighted average variable rate was 5.97%.

In our midstream operations business, we have indirect exposure to commodity price risk in that persistent low commodity prices may cause us or Rattler’s other customers to delay drilling or shut in production, which would reduce the volumes available for gathering and processing by our infrastructure assets.

If we or Rattler’s other customers delay drilling or temporarily shut in production due to persistently low commodity prices or for any other reason, our revenue in the midstream operations segment could decrease, as Rattler’s commercial agreements do not contain minimum volume commitments.

The terms of our credit 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.

For additional information regarding [removed: contingencies,] [added: environmental matters,] see Note [removed: 18—[Commitments] [added: 15—[Commitments] and [removed: Contingencies](#ia0a8569c6321429087004ad63a8c5224_214)] [added: Contingencies](#ia595866015b4400388c840bd76dbe1a1_202)] included in notes to the consolidated financial statements included elsewhere in this Annual Report.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the [removed: effectiveness] [added: effectiveness] of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Aggregate market value of the voting and non-voting common equity held by non-affiliates of registrant as of June 30, [removed: 2021] [added: 2022] was approximately [removed: $16.9] [added: $21.2] billion.

As of February [removed: 18, 2022, 177,414,969] [added: 17, 2023, 183,590,330] shares of the registrant’s common stock were outstanding.

Portions of Diamondback Energy, Inc.’s Proxy Statement for the [removed: 2022] [added: 2023] 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: 2021][added: 2022]

| [Glossary of Oil and Natural Gas [removed: Terms](#ia0a8569c6321429087004ad63a8c5224_10)] [added: Terms](#ia595866015b4400388c840bd76dbe1a1_10)] | | | [removed: [ii](#ia0a8569c6321429087004ad63a8c5224_10)] [added: [ii](#ia595866015b4400388c840bd76dbe1a1_10)] | | |

| [Glossary of Certain Other [removed: Terms](#ia0a8569c6321429087004ad63a8c5224_13)] [added: Terms](#ia595866015b4400388c840bd76dbe1a1_13)] | | | [removed: [iv](#ia0a8569c6321429087004ad63a8c5224_13)] [added: [iv](#ia595866015b4400388c840bd76dbe1a1_13)] | | |

| [Cautionary Statement Regarding Forward-Looking [removed: Statements](#ia0a8569c6321429087004ad63a8c5224_16)] [added: Statements](#ia595866015b4400388c840bd76dbe1a1_16)] | | | [removed: [v](#ia0a8569c6321429087004ad63a8c5224_16)] [added: [v](#ia595866015b4400388c840bd76dbe1a1_16)] | | |

| [Items 1 and 2. Business and [removed: Properties](#ia0a8569c6321429087004ad63a8c5224_22)] [added: Properties](#ia595866015b4400388c840bd76dbe1a1_22)] | | | [removed: [1](#ia0a8569c6321429087004ad63a8c5224_22)] [added: [1](#ia595866015b4400388c840bd76dbe1a1_22)] | | |

| [Item 1A. Risk [removed: Factors](#ia0a8569c6321429087004ad63a8c5224_25)] [added: Factors](#ia595866015b4400388c840bd76dbe1a1_25)] | | | [removed: [27](#ia0a8569c6321429087004ad63a8c5224_25)] [added: [25](#ia595866015b4400388c840bd76dbe1a1_25)] | | |

| [Item 1B. Unresolved Staff [removed: Comments](#ia0a8569c6321429087004ad63a8c5224_28)] [added: Comments](#ia595866015b4400388c840bd76dbe1a1_28)] | | | [removed: [44](#ia0a8569c6321429087004ad63a8c5224_28)] [added: [47](#ia595866015b4400388c840bd76dbe1a1_28)] | | |

| [Item 3. Legal [removed: Proceedings](#ia0a8569c6321429087004ad63a8c5224_31)] [added: Proceedings](#ia595866015b4400388c840bd76dbe1a1_31)] | | | [removed: [44](#ia0a8569c6321429087004ad63a8c5224_31)] [added: [47](#ia595866015b4400388c840bd76dbe1a1_31)] | | |

| [Item 4. Mine Safety [removed: Disclosures](#ia0a8569c6321429087004ad63a8c5224_34)] [added: Disclosures](#ia595866015b4400388c840bd76dbe1a1_34)] | | | [removed: [44](#ia0a8569c6321429087004ad63a8c5224_34)] [added: [47](#ia595866015b4400388c840bd76dbe1a1_34)] | | |

| [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ia0a8569c6321429087004ad63a8c5224_40)] [added: Securities](#ia595866015b4400388c840bd76dbe1a1_40)] | | | [removed: [45](#ia0a8569c6321429087004ad63a8c5224_40)] [added: [47](#ia595866015b4400388c840bd76dbe1a1_40)] | | |

| [Item 7. Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ia0a8569c6321429087004ad63a8c5224_49)] [added: Operations](#ia595866015b4400388c840bd76dbe1a1_46)] | | | [removed: [46](#ia0a8569c6321429087004ad63a8c5224_49)] [added: [48](#ia595866015b4400388c840bd76dbe1a1_46)] | | |

| [Item 7A. Quantitative and Qualitative Disclosures about Market [removed: Risk](#ia0a8569c6321429087004ad63a8c5224_79)] [added: Risk](#ia595866015b4400388c840bd76dbe1a1_73)] | | | [removed: [63](#ia0a8569c6321429087004ad63a8c5224_79)] [added: [63](#ia595866015b4400388c840bd76dbe1a1_73)] | | |

| [Item 8. Financial Statements and Supplementary [removed: Data](#ia0a8569c6321429087004ad63a8c5224_85)] [added: Data](#ia595866015b4400388c840bd76dbe1a1_79)] | | | [removed: [64](#ia0a8569c6321429087004ad63a8c5224_85)] [added: [64](#ia595866015b4400388c840bd76dbe1a1_79)] | | |

| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ia0a8569c6321429087004ad63a8c5224_88)] [added: Disclosure](#ia595866015b4400388c840bd76dbe1a1_82)] | | | [removed: [64](#ia0a8569c6321429087004ad63a8c5224_88)] [added: [64](#ia595866015b4400388c840bd76dbe1a1_82)] | | |

| [Item 9A. Controls and [removed: Procedures](#ia0a8569c6321429087004ad63a8c5224_91)] [added: Procedures](#ia595866015b4400388c840bd76dbe1a1_85)] | | | [removed: [65](#ia0a8569c6321429087004ad63a8c5224_91)] [added: [65](#ia595866015b4400388c840bd76dbe1a1_85)] | | |

| [Item 9B. Other [removed: Information](#ia0a8569c6321429087004ad63a8c5224_100)] [added: Information](#ia595866015b4400388c840bd76dbe1a1_94)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_100)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_94)] | | |

| [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#ia0a8569c6321429087004ad63a8c5224_1099511629817)] [added: Inspections](#ia595866015b4400388c840bd76dbe1a1_97)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_1099511629817)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_97)] | | |

| [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#ia0a8569c6321429087004ad63a8c5224_106)] [added: Governance](#ia595866015b4400388c840bd76dbe1a1_103)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_106)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_103)] | | |

| [Item 11. Executive [removed: Compensation](#ia0a8569c6321429087004ad63a8c5224_109)] [added: Compensation](#ia595866015b4400388c840bd76dbe1a1_106)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_109)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_106)] | | |

| [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ia0a8569c6321429087004ad63a8c5224_112)] [added: Matters](#ia595866015b4400388c840bd76dbe1a1_109)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_112)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_109)] | | |

| [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#ia0a8569c6321429087004ad63a8c5224_115)] [added: Independence](#ia595866015b4400388c840bd76dbe1a1_112)] | | | [removed: [68](#ia0a8569c6321429087004ad63a8c5224_115)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_112)] | | |

| [Item 14. Principal Accountant Fees and [removed: Services](#ia0a8569c6321429087004ad63a8c5224_118)] [added: Services](#ia595866015b4400388c840bd76dbe1a1_115)] | | | [removed: [69](#ia0a8569c6321429087004ad63a8c5224_118)] [added: [68](#ia595866015b4400388c840bd76dbe1a1_115)] | | |

| [Item 15. Exhibits and Financial Statement [removed: Schedules](#ia0a8569c6321429087004ad63a8c5224_124)] [added: Schedules](#ia595866015b4400388c840bd76dbe1a1_121)] | | | [removed: [70](#ia0a8569c6321429087004ad63a8c5224_124)] [added: [69](#ia595866015b4400388c840bd76dbe1a1_121)] | | |

| [Item 16. Form 10-K [removed: Summary](#ia0a8569c6321429087004ad63a8c5224_127)] [added: Summary](#ia595866015b4400388c840bd76dbe1a1_124)] | | | [removed: [74](#ia0a8569c6321429087004ad63a8c5224_127)] [added: [73](#ia595866015b4400388c840bd76dbe1a1_124)] | | |

| [removed: Mcf/d] [added: MMcf/d] | | | [removed: One thousand] [added: Million] cubic feet of natural gas per day. | | |

| Equity Plan | | | The Company’s [added: 2021 Amended and Restated] Equity Incentive Plan. | | |

| Rattler’s [removed: General Partner] [added: GP] | | | Rattler Midstream GP LLC, a Delaware limited liability company; the general partner of Rattler Midstream LP and a wholly owned subsidiary of the Company. | | |

- changes in general economic, business or industry conditions, including changes in foreign currency exchange [removed: rates,] [added: rates] interest rates, and inflation [removed: rates;][added: rates and concerns over a potential economic downturn or recession;]

- significant declines in prices for oil, natural gas, or natural gas liquids, which could [added: (among other things)] require recognition of significant impairment charges;

At December 31, [removed: 2021,] [added: 2022,] our total acreage position in the Permian Basin was approximately [removed: 524,700] [added: 615,348] gross [removed: (445,848] [added: (508,767] net) acres, which consisted primarily of [removed: approximately 292,903] [added: 371,915] gross [removed: (265,562] [added: (325,540] net) acres in the Midland Basin and [removed: approximately 189,357] [added: 201,624] gross [removed: (148,588] [added: (150,719] net) acres in the Delaware Basin.

In addition, our publicly traded subsidiary Viper Energy Partners LP, which we refer to as Viper, owns mineral interests in the Permian [removed: Basin and Eagle Ford Shale.][added: Basin.]

We own [removed: Viper Energy Partners GP LLC, the general partner of Viper, which we refer to as] Viper’s [removed: general partner,] [added: General Partner,] and we own approximately [removed: 54%] [added: 56%] of the limited partner interests in Viper.

As of December 31, [removed: 2021,] [added: 2022,] our estimated proved oil and natural gas reserves were [removed: 1,788,991] [added: 2,032,971] MBOE (which includes estimated reserves of [removed: 127,888] [added: 148,900] MBOE attributable to the mineral interests owned by Viper).

Of these reserves, approximately [removed: 67%] [added: 69%] are classified as proved developed producing.

Proved undeveloped, or PUD, reserves included in this estimate are from [removed: 602] [added: 703] gross [removed: (533] [added: (650] net) horizontal well locations in which we have a working interest, and [removed: 17] [added: 15] horizontal wells in which we own only a mineral interest through [removed: our subsidiary,] Viper.

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐

| [PART I](#ia595866015b4400388c840bd76dbe1a1_19) | | | | | |

| [PART II](#ia595866015b4400388c840bd76dbe1a1_37) | | | | | |

| [Item 6.](#ia595866015b4400388c840bd76dbe1a1_43) [\[RESERVED\]](#ia595866015b4400388c840bd76dbe1a1_43) | | | [47](#ia595866015b4400388c840bd76dbe1a1_43) | | |

| [PART III](#ia595866015b4400388c840bd76dbe1a1_100) | | | | | |

| [PART IV](#ia595866015b4400388c840bd76dbe1a1_118) | | | | | |

| [Signatures](#ia595866015b4400388c840bd76dbe1a1_127) | | | S-[1](#ia595866015b4400388c840bd76dbe1a1_127) | | |

| Argus WTI Midland | | | Crude oil price index at the Permian Basin. | | |

| BO | | | One barrel of crude oil. | | |

| BO/d | | | One BO per day. | | |

| Henry Hub | | | Louisiana natural gas pricing index. | | |

| MBOE/d | | | One thousand BOE per day. | | |

| Waha Hub | | | West Texas natural gas index. | | |

| | | | | | |

| Guaranteed Senior Notes | | | The outstanding senior notes issued by Diamondback Energy, Inc. under indentures where Diamondback E&P is the sole guarantor, consisting of the 3.250% Senior Notes due 2026, 3.500% Senior Notes due 2029, 3.125% Senior Notes due 2031, 6.250% Senior Notes due 2033, 4.400% Senior Notes due 2051, 4.250% Senior Notes due 2052 and 6.250% Senior Notes due 2053. | | |

| | | | | | |

| SOFR | | | The secured overnight financing rate. | | |

| TSR | | | Total stockholder return of the Company’s common stock. | | |

| | | | | | |

| | | | | | |

| | | | | | |

- physical and transition risks relating to climate change;

- the other risk and factors discussed in this report.

We report operations in one reportable segment, the upstream segment.

Prior to the Rattler Merger (as defined below), both the upstream operations segment and the midstream operations segment were considered separate reportable segments.

Following the Rattler Merger, the Company determined only the upstream operations segment met the quantitative requirements of a reportable segment.

Pending Non-Core Asset Divestiture

In February 2023, we entered into definitive sales agreements with unrelated third-party buyers to divest non-core assets consisting of approximately 19,000 net acres in Glasscock County and approximately 4,900 net acres in Ward and Winkler counties for combined total consideration of $439 million, subject to certain closing adjustments.

Both of these transactions are expected to close in the second quarter of 2023, subject to completion of diligence and satisfaction of other customary closing conditions

Lario Acquisition

On January 31, 2023, we closed on our acquisition of all leasehold interests and related assets of Lario Permian, LLC, a wholly owned subsidiary of Lario Oil and Gas Company, and certain associated sellers (collectively “Lario”).

The acquisition included approximately 25,000 gross (15,000 net) acres in the Midland Basin and certain related oil and gas assets (the “Lario Acquisition”), in exchange for 4.33 million shares of our common stock and $814 million in cash, including certain customary closing adjustments.

The Lario Acquisition will be accounted for as a business combination in the first quarter of 2023, with the fair value of consideration allocated to the acquisition date fair value of assets and liabilities acquired.

[Table of](#ia595866015b4400388c840bd76dbe1a1_7) [Contents](#ia595866015b4400388c840bd76dbe1a1_7)

FireBird Acquisition

Rattler Merger

On August 24, 2022 (the “Effective Date”), we completed the merger with Rattler pursuant to which we acquired all of the approximately 38.51 million publicly held outstanding common units of Rattler in exchange for approximately 4.35 million shares of our common stock (the “Rattler Merger”).

Rattler continued as the surviving entity, and is now our wholly-owned subsidiary.

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

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

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

| [Item 6. Selected Financial Data](#ia0a8569c6321429087004ad63a8c5224_43) | | | [45](#ia0a8569c6321429087004ad63a8c5224_43) | | |

| [PART III](#ia0a8569c6321429087004ad63a8c5224_103) | | | | | |

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

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

| 2025 Indenture | | | The indenture relating to the 2025 Senior Notes, dated as of December 20, 2016, among the Company, the subsidiary guarantors party thereto and Wells Fargo, as the trustee, as supplemented. | | |

| 2025 Senior Notes | | | The Company’s 5.375% senior unsecured notes due 2025 issued under the 2025 indenture. | | |

| IG Indenture | | | The indenture dated as of December 5, 2019, among the Company, the subsidiary guarantors party thereto and Wells Fargo, as the trustee, as 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 2024, the Company’s 3.250% senior unsecured notes due 2026 and the Company’s 3.500% senior unsecured notes due 2029 issued under the IG indenture and the related first supplemental indenture. | | |

| May 2020 Notes | | | The Company’s 4.750% Senior Notes due 2025 issued under the IG Indenture and the related second supplemental indenture. | | |

| 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. | | |

| Rattler LTIP | | | Rattler Midstream LP Long-Term Incentive Plan. | | |

| Rattler Offering | | | Rattler’s initial public offering. | | |

| Senior Notes | | | The December 2019 Notes, the May 2020 Notes and the March 2021 Notes. | | |

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

We report operations in two operating segments: (i) the upstream segment and (ii) the midstream operations segment, which includes midstream services.

Further, our publicly traded subsidiary Rattler Midstream LP, which we refer to as Rattler, is focused on ownership, operation, development and acquisition of midstream infrastructure assets in the Midland and Delaware Basins of the Permian Basin.

We own Rattler Midstream GP LLC, the general partner of Rattler, which we refer to as Rattler’s general partner, and we own approximately 74% of the limited partner interests in Rattler.

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.

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.

During 2021, we completed

the QEP Merger, which increased our net acreage in the Midland Basin by approximately 49,000 net acres.

Also during 2021, we completed the Guidon Acquisition which included approximately 32,500 net acres in the Northern Midland Basin.

These acquisitions, combined with our developmental activities, contributed to an increase in our total proved reserves of approximately 36% in 2021.

As of December 31, 2021, Rattler LLC had $20 million of cash and cash equivalents, $195 million in outstanding borrowings and $405 million available for future borrowings under its operating company’s revolving credit facility.

Specifically, in February 2021, we announced significant enhancements to our ESG performance and disclosure, including Scope 1 and methane emission intensity reduction targets, as well as the implementation of our “Net Zero Now” initiative under which, effective January 1, 2021, we strive to produce every hydrocarbon with zero Scope 1 emissions.

In September 2021, we announced our long-term goal to end routine flaring by 2025 and a long-term target to source over 65% of our water used for drilling and completion operations from recycled sources by 2025.

- Access to midstream infrastructure and gathering and transportation pipelines.

There were [removed: 5,624] [added: 5,321] holders of record of our common stock on February [removed: 18, 2022.][added: 17, 2023.]

[removed: The] [added: Our] board of directors intends to continue the payment of dividends to the holders of the Company’s common stock in the [removed: future.][added: future; however, the Company can provide no assurance that dividends will be authorized or declared in the future or as to the amount or type of any future dividends.]

Our board of directors’ determination with respect to any such dividends, [added: whether base or variable,] including the record date, the payment date and the actual amount of the dividend, will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the board deems relevant at the time of such determination.

[removed: Repurchases] [added: Issuer Repurchases] of Equity Securities

Our common stock repurchase activity for the three months ended December 31, [removed: 2021] [added: 2022] was as follows:

| Period | | | | | | Total Number of Shares [removed: Purchased(1)] [added: Purchased] | | | | | | Average Price Paid Per [removed: Share(2)] [added: Share(1)] | | | | | | 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(3)] [added: Plan(2)] | | |

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

[removed: (3)In] [added: (2)In] September 2021, the Company’s board of directors authorized a [removed: $2] [added: $2.0] billion common stock repurchase program.

Future base and variable dividends are at the discretion of our board of directors, and the board of directors may change the dividend amount from time to time based on the Company's outlook for commodity prices, liquidity, debt levels, capital resources, free cash flow and other factors.

Recent Sales of Unregistered Securities

None.

| October 1, 2022 - October 31, 2022 | | | | | | 53 | | | | | | $ | 130.39 | | | | | 43 | | | | | | $ | 2,782 | |

| November 1, 2022 - November 30, 2022 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 2,782 | |

| December 1, 2022 - December 31, 2022 | | | | | | 2,302 | | | | | | $ | 134.58 | | | | | 2,302 | | | | | | $ | 2,472 | |

| Total | | | | | | 2,355 | | | | | | $ | 134.49 | | | | | 2,345 | | | | | | | | |

On July 28, 2022, our board of directors approved an increase in our common stock repurchase program from $2.0 billion to $4.0 billion.

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

The decision to pay any future dividends is solely within the discretion of, and subject to approval by, our board of directors.

| 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.

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

As of December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] 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: 2021.][added: 2022.]

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: 2021.][added: 2022.]

The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting at December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] based on criteria established in the 2013 *Internal 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: 2021,] [added: 2022,] based on criteria established in the 2013 *Internal 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: 2021,] [added: 2022,] and our report dated February [removed: 24, 2022] [added: 23, 2023] expressed an unqualified opinion on those financial statements.

February 23, 2023

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

None.

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.

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: 2021.][added: 2022.]

The Company also has made the Code of Business Conduct and Ethics available on our website under the [removed: “Corporate] [added: “Investors—Corporate] Governance” section at http://ir.diamondbackenergy.com.

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: 2021.][added: 2022.]

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: 2021.][added: 2022.]

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: 2021.][added: 2022.]

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: 2021.][added: 2022.]

| | | | [Report of Independent Registered Public Accounting Firm (PCAOB ID [removed: Number](#ia0a8569c6321429087004ad63a8c5224_133) 248[)](#ia0a8569c6321429087004ad63a8c5224_133)] [added: Number](#ia595866015b4400388c840bd76dbe1a1_130) 248[)](#ia595866015b4400388c840bd76dbe1a1_130)] | | | [removed: F-[1](#ia0a8569c6321429087004ad63a8c5224_133)] [added: F-[1](#ia595866015b4400388c840bd76dbe1a1_130)] | | |

| | | | [Consolidated Balance [removed: Sheets](#ia0a8569c6321429087004ad63a8c5224_139)] [added: Sheets](#ia595866015b4400388c840bd76dbe1a1_136)] | | | [removed: F-[4](#ia0a8569c6321429087004ad63a8c5224_139)] [added: F-[4](#ia595866015b4400388c840bd76dbe1a1_136)] | | |

| | | | [Consolidated Statement of Stockholders' [removed: Equity](#ia0a8569c6321429087004ad63a8c5224_148)] [added: Equity](#ia595866015b4400388c840bd76dbe1a1_142)] | | | [removed: F-[6](#ia0a8569c6321429087004ad63a8c5224_148)] [added: F-[6](#ia595866015b4400388c840bd76dbe1a1_142)] | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#ia0a8569c6321429087004ad63a8c5224_151)] [added: Flows](#ia595866015b4400388c840bd76dbe1a1_145)] | | | [removed: F-[7](#ia0a8569c6321429087004ad63a8c5224_151)] [added: F-[7](#ia595866015b4400388c840bd76dbe1a1_145)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#ia0a8569c6321429087004ad63a8c5224_154)] [added: Statements](#ia595866015b4400388c840bd76dbe1a1_148)] | | | [removed: F-[8](#ia0a8569c6321429087004ad63a8c5224_154)] [added: F-[8](#ia595866015b4400388c840bd76dbe1a1_148)] | | |

| 3.4 | | | | | | [removed: [Second] [added: [Third] 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 [removed: November 19, 2019).](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000122/diamondbackex31-11x19x.htm)] [added: October 3, 2023).](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000151/diamondbackex31-10x3x22.htm)] | | |

| 4.1 | | | | | | [Description of the Company’s Securities (incorporated by reference to Exhibit [removed: 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] [added: 4.6 to the Registration] Statement on [removed: 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)[,] [added: Form S-8,] File [removed: 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)[,] [added: No. 333-257561,] filed by the Company with the SEC [removed: on](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm) [June] [added: on June] 30, [removed: 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)] [added: 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000105/diamondbackex46-6x30x21.htm)] | | |

| 4.5 | | | | | | [Indenture, dated as of December 5, 2019, between Diamondback Energy, Inc. [removed: and Wells Fargo Bank,] [added: and](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex41-12x5x19.htm) [Computershare Trust Company,] National Association, as [added: successor] trustee [added: to Wells Fargo Bank, National Association] (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 5, [removed: 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex41-12x5x19.htm)] [added: 2019).](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex41-12x5x19.htm)] | | |

| 4.6 | | | | | | [First Supplemental Indenture, dated as of December 5, 2019, among Diamondback Energy, [removed: Inc.,] [added: Inc.,](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex42-12x5x19.htm) [Diamondback E&P LLC, as successor by merger to] Diamondback O&G [removed: LLC] [added: LLC,] and [removed: Wells Fargo Bank,] [added: Computershare Trust Company,] National Association, as [added: successor] trustee [added: to Wells Fargo Bank, National Association] (including the [removed: form] [added: forms] of [removed: 2024 Notes, 2026] [added: 3.250% Senior] Notes [added: due 2026] and [removed: 2029 Notes)] [added: 3.500% Senior Notes due 2029)] (incorporated by reference to Exhibit 4.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on December 5, [removed: 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex42-12x5x19.htm)] [added: 2019).](https://www.sec.gov/Archives/edgar/data/1539838/000153983819000127/diamondbackex42-12x5x19.htm)] | | |

| 4.7 | | | | | | [removed: [Second] [added: [Third] Supplemental Indenture, dated as of [removed: May 26, 2020,] [added: March 24, 2021,] among Diamondback Energy, Inc., Diamondback [added: E&P LLC, as successor by merger to Diamondback] O&G [removed: LLC] [added: LLC,] and [removed: Wells Fargo Bank,] [added: Computershare Trust Company,] National Association, as [added: successor] trustee [added: to Wells Fargo Bank, National Association] (including the [removed: form] [added: forms] of [removed: Notes)] [added: 3.125% Senior Notes due 2031 and 4.400% Senior Notes due 2051)] (incorporated by reference to Exhibit 4.2 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: March 24, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000110465921040981/tm218746d8_ex4-2.htm)] | | |

| [removed: 4.8] [added: 4.9] | | | | | | [removed: [Third] [added: [Fifth] Supplemental Indenture, dated as of March [removed: 24, 2021,] [added: 17, 2022,] among Diamondback Energy, Inc., Diamondback [removed: O&G] [added: E&P] LLC and [removed: Wells Fargo Bank,] [added: Computershare Trust Company,] National Association, as trustee (including the [removed: forms] [added: form] of [removed: 2023 Notes, 2031] [added: 4.250% Senior] Notes [removed: and 2051 Notes)] [added: due 2052)] (incorporated by reference to Exhibit 4.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on March [removed: 24, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000110465921040981/tm218746d8_ex4-2.htm)] [added: 17, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000110465922035018/tm229566d1_ex4-2.htm)] | | |

| [removed: 4.9] [added: 4.11] | | | | | | [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: 4.10] [added: 4.12] | | | | | | [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: 4.11] [added: 4.13] | | | | | | [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: 4.15] [added: 4.14] | | | | | | [Form of Indenture, dated September 1, 1996, between Energen Corporation and The Bank of New York as trustee (incorporated by reference to Exhibit 4(i) to 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: 10.8+] [added: 10.10+] | | | | | | [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 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: 10.11+] | | | | | | [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 [removed: C).](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex109.htm)] [added: C) (incorporated by reference to Exhibit 10.9 of the Annual Report on Form 10-K (File 001-35700) filed by the Company with the SEC on February 24, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex109.htm)] | | |

| [removed: 10.10+] [added: 10.12+] | | | | | | [Form of Participation Agreement (incorporated by reference from Schedule C-2 to Diamondback Energy, Inc. Senior Management Severance Plan filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K (File 001-35700) on February 27, 2020).](https://www.sec.gov/Archives/edgar/data/1539838/000153983820000021/diamondback201910-kxex105.htm) | | |

| [removed: 10.11+] [added: 10.13] | | | | | | [removed: [2014 Executive] [added: [Executive] Annual Incentive Compensation Plan [added: adopted in February 2021] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.11] to the Form [removed: 8-K,] [added: 10-K,] File No. 001-35700, filed by the Company with the SEC on [removed: April 2, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000153983814000043/ex10_1diamondback2014ex.htm)] [added: February 25, 2021).](http://www.sec.gov/Archives/edgar/data/1539838/000153983821000015/diamondback202010-kxex1011.htm)] | | |

| [removed: 10.13] [added: 10.14] | | | | | | [Second Amended and Restated Credit Agreement, dated as of November 1, 2013, among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.3 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on November 5, 2013).](http://www.sec.gov/Archives/edgar/data/1539838/000153983813000093/ex10_3diamondbacksecondame.htm) | | |

| [removed: 10.14] [added: 10.15] | | | | | | [First Amendment, dated June 9, 2014, to the Second Amended and Restated Credit Agreement, originally dated November 1, 2013, by and among the Company, as parent guarantor, Diamondback O&G LLC, as borrower, each of the guarantors party thereto, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.4 to the Form 10-Q, File No. 001-35700, filed by the Company with the SEC on August 7, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000153983814000081/ex10_4firstamendmenttoseco.htm) | | |

| [removed: 10.15] [added: 10.16] | | | | | | [Second Amendment to the Second Amended and Restated Credit Agreement, dated as of November 13, 2014, among Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, the guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on November 18, 2014).](http://www.sec.gov/Archives/edgar/data/1539838/000119312514416704/d822128dex102.htm) | | |

| [removed: 10.16] [added: 10.17] | | | | | | [Third Amendment, dated as of June 21, 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 10.1 to the Company’s Current Report on Form 8-K, File No. 001-35700, filed by the Company with the SEC on June 27, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000195/diamondbackexhibit101-6x27.htm) | | |

| [removed: 10.17] [added: 10.18] | | | | | | [Fourth Amendment, dated as of 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 10.2 to the Company’s Current Report on Form 8-K, File No. 001-35700, filed by the Company with the SEC on December 20, 2016).](http://www.sec.gov/Archives/edgar/data/1539838/000153983816000270/diamondbackex102-12x20x16.htm) | | |

| [removed: 10.18] [added: 10.19] | | | | | | [Fifth Amendment, dated as of 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 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 4, 2017).](http://www.sec.gov/Archives/edgar/data/1539838/000153983817000135/diamondbackex101-12x4x17.htm) | | |

| [removed: 10.19] [added: 10.20] | | | | | | [Eighth Amendment to the Second Amended and Restated Credit Agreement, dated as of October 26, 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 Form 8-K, File No. 001-35700, filed by the Company with the SEC on November 1, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000153983818000111/diamondbackex101-11x1x18.htm) | | |

| [removed: 10.20] [added: 10.21] | | | | | | [Ninth Amendment to Second Amended and Restated Credit Agreement and Fourth Amendment to Amended and Restated Guaranty and Collateral Agreement, dated as of November 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 Form 8-K, File No. 001-35700, filed by the Company with the SEC on December 6, 2018).](http://www.sec.gov/Archives/edgar/data/1539838/000119312518343869/d661873dex101.htm) | | |

| [removed: 10.21] [added: 10.22] | | | | | | [Tenth Amendment to Second Amended and Restated Credit Agreement, dated as of March 25, 2019, between Diamondback, 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 Form 8-K (File No. 00 1-35700), filed by the Company with the SEC on March 29, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000043/diamondbackex101-3x29x19.htm) | | |

| [removed: 10.22] [added: 10.23] | | | | | | [Eleventh Amendment to Second Amended and Restated Credit Agreement, dated as of June 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 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on July 3, 2019).](http://www.sec.gov/Archives/edgar/data/1539838/000153983819000082/diamondbackex10-1x7x3x19.htm) | | |

| [removed: 10.23] [added: 10.24] | | | | | | [Twelfth Amendment to Second Amended and Restated Credit Agreement and First Amendment to Second Amended and Restated Guaranty Agreement, dated as of June 2, 2021, between Diamondback Energy, Inc., as parent guarantor, Diamondback O&G LLC, as borrower, 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 June 8, 2021).](https://www.sec.gov/Archives/edgar/data/1539838/000153983821000095/diamondback-ex101x6x2x21.htm) | | |

| [removed: 10.24] [added: 10.26] | | | | | | [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) | | |

| [removed: 10.25] [added: 10.27] | | | | | | [Second Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of September 24, 2019, among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lender party thereto (incorporated by reference to Exhibit 10.1 of Viper Energy Partners LP’s Form 8-K (File 001-36505) filed on September 30, 2019).](http://www.sec.gov/Archives/edgar/data/1602065/000160206519000040/viperex101-9x30x19.htm) | | |

| [removed: 10.26] [added: 10.28] | | | | | | [Third Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of October 8, 2019, among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lender party thereto (incorporated by reference to Exhibit 10.1 of Viper Energy Partners LP’s Form 8-K (File 001-36505) filed on October 10, 2019).](http://www.sec.gov/Archives/edgar/data/1602065/000160206519000042/viperex101-10x10x19.htm) | | |

| [removed: 10.27] [added: 10.29] | | | | | | [Fourth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 29, 2019, among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Partnership’s Current Report on Form 8-K (File No. 001-36505) filed on December 5, 2019).](https://www.sec.gov/Archives/edgar/data/1602065/000160206519000051/viperex101-12519.htm) | | |

| [removed: 10.28] [added: 10.30] | | | | | | [Fifth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 11, 2020, among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on May 15, 2020).](https://www.sec.gov/Archives/edgar/data/1602065/000160206520000024/viperex101-51520.htm) | | |

| [removed: 10.29] [added: 10.31] | | | | | | [Sixth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 6, 2020, among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Partnership’s Current Report on Form 8-K (File 001-36505) filed on November 12, 2020).](https://www.sec.gov/Archives/edgar/data/1602065/000160206520000056/viperex101-11x12x20.htm) | | |

| [removed: 10.30] [added: 10.32] | | | | | | [Eighth Amendment to Amended and Restated Senior Secured Revolving Credit Agreement and Second Amendment to Guaranty and Collateral Agreement, dated as of November 15, 2021, by and among Viper Energy Partners LLC, as borrower, Viper Energy Partners LP, as parent guarantor, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of Viper Energy Partners LP’s Current Report on Form 8-K (File No. 001-36505) filed on November 18, 2021).](https://www.sec.gov/Archives/edgar/data/1602065/000160206521000061/viperex101-11x19x21.htm) | | |

| [removed: 10.31] [added: 10.25] | | | | | | [removed: [Credit] [added: [Thirteenth Amendment to Second Amended and Restated Credit] Agreement, dated [removed: May 28, 2019, by and among Rattler Midstream Operating] [added: as of June 2, 2022, between Diamondback Energy, Inc., as parent guarantor, Diamondback E&P] LLC, as borrower, [removed: Rattler Midstream LP, as parent,] Wells Fargo Bank, National Association, as [removed: the] administrative agent, and [removed: certain] [added: the] lenders [removed: from time to time] party thereto (incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to [removed: Rattler Midstream LP’s] [added: the] Form 8-K, File No. [removed: 001-38919,] [added: 001-35700,] filed by [removed: Rattler Midstream LP] [added: the Company] with the SEC on [removed: May 29, 2019).](http://www.sec.gov/Archives/edgar/data/1748773/000119312519159754/d751257dex102.htm)] [added: June 7, 2022).](http://www.sec.gov/Archives/edgar/data/1539838/000153983822000073/diamondback-ex101x6x2x22.htm)] | | |

| [removed: 10.32] [added: 10.33] | | | | | | [removed: [First Amendment] [added: [Ninth](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[Amendment] to [removed: the] [added: Amended and Restated Senior Secured Revolving] Credit [added: Agreement and Second Amendment to Guaranty and Collateral] Agreement, dated as of [removed: October 23, 2019,] [added: November 1](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[8](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[, 202](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[2](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[,] by and among [removed: Rattler Midstream Operating] [added: Viper Energy Partners] LLC, as borrower, [removed: Rattler Midstream] [added: Viper Energy Partners] LP, as [removed: parent,] [added: parent guarantor,] Wells Fargo Bank, National Association, as [removed: the] administrative agent, and [removed: certain] [added: the] lenders [removed: from time to time] party [removed: thereto (incorporated] [added: thereto](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[(incorporated] by reference to Exhibit [removed: 10.1 of Rattler Midstream LP’s Form 8-K (File 001-38919) filed] [added: 10.1](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[8](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [of the](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [Viper Energy](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [Partners](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [LP](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[’s](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [Annual](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [Report] on [removed: October 28, 2019).](http://www.sec.gov/Archives/edgar/data/1748773/000174877319000010/rattlerex101-10x28x19.htm)] [added: Form](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [10-K](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [(File 001-36505) filed on](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm) [February 23](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[, 202](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[3](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[)](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)[.](http://www.sec.gov/Archives/edgar/data/1602065/000160206523000007/viperex1018-2x23x23.htm)] | | |

| 21.1* | | | | | | [Subsidiaries of the [removed: Registrant.](https://www.sec.gov/Archives/edgar/data/1539838/000153983822000008/diamondback202110-kxex211.htm)] [added: Registrant.](https://www.sec.gov/Archives/edgar/data/1539838/000153983823000022/diamondback202210-kxex211.htm)] | | |

| | | | [Consolidated Statements of Operations and Comprehensive Income](#ia595866015b4400388c840bd76dbe1a1_139) | | | F-[5](#ia595866015b4400388c840bd76dbe1a1_139) | | |

| 2.2# | | | | | | [Agreement and Plan of Merger, dated as of May 15, 2022, by and among Diamondback Energy, Inc., Rattler Midstream GP LLC, Bacchus Merger Sub Company and Rattler Midstream LP (incorporated by reference to Exhibit 2.1 to the Form 8-K, File No. 001-35700, filed by Diamondback Energy, Inc. with the SEC on May 16, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000119312522151938/d338417dex21.htm) | | |

| 4.8 | | | | | | [Fourth Supplemental Indenture, dated as of June 30, 2021, among Diamondback Energy, Inc., Diamondback E&P LLC and Computershare Trust Company, National Association, as successor trustee to Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 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/diamondbackex103-8221.htm) | | |

| 4.10 | | | | | | [Sixth Supplemental Indenture, dated as of October 28, 2022, among Diamondback Energy, Inc., Diamondback E&P LLC and Computershare Trust Company, National Association (including the form of 6.250% Senior Notes due 2033) (incorporated by reference to Exhibit 4.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on October 28, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000110465922112432/tm2229096d1_ex4-2.htm) | | |

| 4.15 | | | | | | [Amended and Restated Officers’ Certificate, dated as of February 27, 1998, between Energen Corporation and The Bank of New York as trustee, relating to the Medium-Term Notes, Series B, due 2028 (incorporated by reference to Exhibit](https://www.sec.gov/Archives/edgar/data/3146/000095014401509873/g73137ex4-diii.txt) [4(](https://www.sec.gov/Archives/edgar/data/3146/000095014401509873/g73137ex4-diii.txt)[a](https://www.sec.gov/Archives/edgar/data/3146/000095014401509873/g73137ex4-diii.txt)[)(iii)](https://www.sec.gov/Archives/edgar/data/3146/000095014401509873/g73137ex4-diii.txt) [to the Form 10-K, File No. 001-7810, filed by Energen Corporation with the SEC on February 28, 2018).](https://www.sec.gov/Archives/edgar/data/3146/000095014401509873/g73137ex4-diii.txt) | | |

| 4.21 | | | | | | [Indenture, dated as of December 13, 2022, between Diamondback Energy, Inc. and Computershare Trust Company, National Association, as trustee (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 13, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000110465922126629/tm2232530d1_ex4-1.htm) | | |

| 4.22 | | | | | | [First Supplemental Indenture, dated as of December 13, 2022, among Diamondback Energy, Inc., Diamondback E&P LLC and Computershare Trust Company, National Association, as trustee (including the form of 6.250% Senior Notes due 2053) (incorporated by reference to Exhibit 4.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on December 13, 2022).](https://www.sec.gov/Archives/edgar/data/1539838/000110465922126629/tm2232530d1_ex4-2.htm) | | |

| 10.6+* | | | | | | [2022 Form of Time Vesting Restricted Stock Unit Award Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983823000022/diamondback202210-kxex106.htm) | | |

| 10.7+* | | | | | | [2022 Form of Performance-Vesting Restricted Stock Unit Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983823000022/diamondback202210-kxex107.htm) | | |

| 10.8+* | | | | | | [2023 Form of Time Vesting Restricted Stock Unit Award Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983823000022/diamondback202210-kxex108.htm) | | |

| 10.9+* | | | | | | [2023 Form of Performance-Vesting Restricted Stock Unit Agreement.](https://www.sec.gov/Archives/edgar/data/1539838/000153983823000022/diamondback202210-kxex109.htm) | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | [Consolidated Statements of Operations](#ia0a8569c6321429087004ad63a8c5224_145) | | | F-[5](#ia0a8569c6321429087004ad63a8c5224_145) | | |

| 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) | | |

| 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) | | |

| 10.6+ | | | | | | [Form of Time-Vesting Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on March 5, 2014).](https://www.sec.gov/Archives/edgar/data/1539838/000153983814000018/ex10_1db2014awardstimebase.htm) | | |

| 10.7+ | | | | | | [Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Form 8-K, File No. 001-35700, filed by the Company with the SEC on March 5, 2014).](https://www.sec.gov/Archives/edgar/data/1539838/000153983814000018/ex10_2db2014tsrperformance.htm) | | |

| 10.12+ | | | | | | [Executive Annual Incentive Compensation Plan adopted in February 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) | | |

| 10.33 | | | | | | [Second Amendment, dated as of November 2, 2020, to the Credit Agreement, dated May 28, 2019, as amended on October 23, 2019, by and among Rattler Midstream Operating LLC, as borrower, Rattler Midstream LP, as parent, Wells Fargo Bank, National Association, as the administrative agent, and certain lenders from time to time party thereto. (incorporated by reference to Exhibit 10.3 of Rattler Midstream LP's Quarterly Report on Form 10-Q (File 001-38919) filed on November 5, 2020).](https://www.sec.gov/Archives/edgar/data/1748773/000174877320000046/rattlerex103-11x5x20.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) | | |

| Date: | | | February [removed: 24, 2022] [added: 23, 2023] | | | | | | | | |

| /s/ Travis D. Stice | | | | | | Chairman of the Board, Chief Executive Officer and Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Vincent K. Brooks | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Michael P. Cross | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ David L. Houston | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Stephanie K. Mains | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Mark L. Plaumann | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Melanie M. Trent | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Steven E. West | | | | | | Director | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Kaes Van’t Hof | | | | | | President and Chief Financial Officer | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

| /s/ Teresa L. Dick | | | | | | Chief Accounting Officer, Executive Vice President and Assistant Secretary | | | | | | February [removed: 24, 2022] [added: 23, 2023] | | |

We have audited the accompanying consolidated balance sheets of Diamondback Energy, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of [removed: operations,] [added: operations and comprehensive income,] stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] based on criteria established in the 2013 *Internal Control—Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February [removed: 24, 2022] [added: 23, 2023] expressed an unqualified opinion.

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

As described [added: further] in Note 2 to the financial statements, the Company accounts for its oil and [added: natural] gas properties using the full cost method of [removed: accounting] [added: accounting,] which requires management to make estimates of proved reserve volumes and future revenues to record depletion [removed: expense and measure its oil and gas properties for potential impairment.][added: expense.]

Additionally, as described in Note 4 to the financial statements, the Company acquired significant oil and [added: natural] gas properties during the year through the [removed: Guidon Acquisition and QEP Merger.][added: FireBird Acquisition.]

To estimate the volume of proved reserves and future revenues, management makes significant estimates and assumptions, including forecasting the [added: timing and volumetric amounts of] production [added: and corresponding] decline rate of producing properties [removed: and forecasting the timing and volume of production] associated with the Company’s development [removed: plan for proved undeveloped properties.][added: plan.]

[removed: Management] [added: For acquired reserves, management] also utilizes an estimated fair value pricing model [removed: for] [added: in determining] the [removed: valuation] [added: corresponding value] of [removed: acquired] proved reserves.

In addition, the estimation of proved reserves is also impacted by management’s judgments and estimates regarding the financial performance of wells [removed: associated with proved reserves] to determine if wells are expected, with reasonable certainty, to be economical under the appropriate pricing [removed: assumptions required in the estimation of depletion expense and potential impairment measurements.][added: assumptions.]

We identified the estimation of proved reserves [removed: of] [added: attributable to] oil and [added: natural] gas properties, including acquired [removed: reserves,] [added: proved reserves in the FireBird Acquisition,] due to its impact on depletion [removed: expense, impairment evaluation,] [added: expense] 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 [removed: 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 [removed: or impairment expense,] and the fair value of acquired oil and [added: natural] gas properties.

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

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

- We evaluated the level of knowledge, skill, and ability of the Company’s reservoir engineering [removed: specialists and their relationship to the Company,] [added: specialists,] made inquiries of those reservoir engineers regarding the process followed and judgments made to estimate the Company’s proved reserve volumes, and read the reserve report prepared [added: and reviewed] by the Company’s specialists.

–Compared the estimated pricing [added: and pricing] differentials used in the reserve report to [added: actual] realized prices related to revenue transactions recorded in the current year and examined contractual support for the pricing differentials;

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

[removed: –Evaluated the Company’s] [added: –Obtained] evidence supporting the amount of [added: development of] proved undeveloped properties reflected in the reserve report [removed: by examining] [added: and compared future development plans to] historical conversion rates [removed: and support for] [added: to evaluate] the Company’s intent to develop the proved undeveloped properties;

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

–Applied analytical procedures [added: on inputs] to the reserve report by comparing to historical actual results and to the prior year reserve report.

–Utilized a valuation specialist to evaluate the appropriateness of fair value pricing used in the fair value reserve report [added: by comparing the pricing forecast] to published product pricing on the acquisition closing date;

–Evaluated the appropriateness of the future operating cost and capital expenditure assumptions used in the fair value reserve report [added: by comparing forecasted amounts] 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 [removed: land] [added: the purchase] and [removed: division order records;][added: sale agreement;]

–Evaluated, on a sample basis, the appropriateness of management’s estimated future production volumes and the production decline [removed: curves;] [added: curves by comparing to analogous operated wells;] and

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

| | | | [added: 2022 | | | | | |] 2021 | | | | | | 2020 | | |

| Cash and cash equivalents | | | $ | [removed: 654] [added: 157] | | | | | $ | [removed: 104] [added: 654] | |

| Restricted cash | | | [removed: 18] [added: 7] | | | | | | [removed: 4] [added: 18] | | |

| Joint interest and other, net | | | [removed: 72] [added: 104] | | | | | | [removed: 56] [added: 72] | | |

| Oil and natural gas sales, net | | | [removed: 598] [added: 618] | | | | | | [removed: 281] [added: 598] | | |

| /s/ Rebecca A. Klein | | | | | | Director | | | | | | February 23, 2023 | | |

| Rebecca A. Klein | | | | | | | | | | | | | | |

| /s/ Frank D. Tsuru | | | | | | Director | | | | | | February 23, 2023 | | |

| Frank D. Tsuru | | | | | | | | | | | | | | |

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

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

- Identified inputs and assumptions that were significant to the period end determination of proved reserve volumes and tested management’s process of determining the significant inputs and assumptions, as follows:

–Tested operating cost inputs by comparing the forecasted amount to historical actual costs and reconciling any material differences;

–Assessed the reasonableness of forecasted capital expenditures by comparing drilling forecasts applied in the reserve report to recent, actual drilling costs and evaluated any differences;

- Identified inputs and assumptions that were significant to the estimated fair value of the acquired oil and natural gas properties in the FireBird Acquisition and tested management’s process of determining the significant inputs and assumptions, as follows:

–Utilized a valuation specialist to evaluate whether the Company’s valuation methodology was reasonable and for certain inputs and assumptions, evaluated the process used to develop the estimate and developed an independent expectation of the estimate to evaluate its reasonableness;

February 23, 2023

| Other property, equipment and land | | | 1,481 | | | | | | 1,250 | | |

| Assets held for sale | | | 158 | | | | | | — | | |

| Income taxes payable | | | 34 | | | | | | 17 | | |

| Accumulated other comprehensive income (loss) | | | (7) | | | | | | — | | |

| Other operating expenses | | | 112 | | | | | | 95 | | | | | | 109 | | |

| Basic | | | $ | 24.61 | | | | | $ | 12.24 | | | | | $ | (28.61) | |

| Diluted | | | $ | 24.61 | | | | | $ | 12.24 | | | | | $ | (28.61) | |

| Diluted | | | 176,539 | | | | | | 176,643 | | | | | | 157,976 | | |

| Comprehensive income (loss): | | | | | | | | | | | | | | | | | |

| Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | | |

| Pension and postretirement benefit plans | | | (7) | | | | | | — | | | | | | — | | |

| Comprehensive income (loss) attributable to Diamondback Energy, Inc | | | $ | 4,379 | | | | | $ | 2,182 | | | | | $ | (4,517) | |

| Distribution equivalent rights payments | | | — | | | | | | — | | | | | | — | | | | | | (15) | | | | | | — | | | | | | (1) | | | | | | (16) | | |

| Repurchased units under buyback programs | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (153) | | | | | | (153) | | |

| Common stock issued for acquisition | | | 10,273 | | | | | | — | | | | | | 1,220 | | | | | | — | | | | | | — | | | | | | (344) | | | | | | 876 | | |

| Distributions to non-controlling interest | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (217) | | | | | | (217) | | |

| Other comprehensive income (loss), net of tax | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7) | | | | | | — | | | | | | (7) | | |

| Net income (loss) | | | — | | | | | | — | | | | | | — | | | | | | 4,386 | | | | | | — | | | | | | 176 | | | | | | 4,562 | | |

| Balance at December 31, 2022 | | | 179,841 | | | | | | $ | 2 | | | | | $ | 14,213 | | | | | $ | 801 | | | | | $ | (7) | | | | | $ | 681 | | | | | $ | 15,690 | |

| Depreciation, depletion, amortization and accretion | | | 1,344 | | | | | | 1,275 | | | | | | 1,311 | | |

| (Income) loss from equity investment | | | (77) | | | | | | (15) | | | | | | 10 | | |

| Income tax payable | | | 17 | | | | | | — | | | | | | — | | |

| Property acquisitions | | | (1,567) | | | | | | (827) | | | | | | (198) | | |

| Funds held in escrow | | | (108) | | | | | | 40 | | | | | | (51) | | |

Rattler Merger

On August 24, 2022 (the “Effective Date”), the Company completed the merger with Rattler pursuant to which the Company acquired all of the approximately 38.51 million publicly held outstanding common units of Rattler in exchange for approximately 4.35 million shares of the Company’s common stock (the “Rattler Merger”).

Rattler continued as the surviving entity.

Following the Rattler Merger, the Company owned all of Rattler’s outstanding common units and Class B units, and Rattler GP remained the general partner of Rattler.

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

- To the extent key, sensitive inputs and assumptions used to determine proved reserve volumes and other cash flow inputs and assumptions are derived from the Company’s accounting records, such as historical pricing differentials, operating costs, estimated capital costs and working and net revenue interests, we tested management’s process for determining the assumptions, including examining the underlying support, on a sample basis.

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

–Evaluated the models used to estimate the operating costs at year-end compared to historical operating costs;

–Compared the models used to determine the future capital expenditures and compared estimated future capital expenditures used in the reserve report to amounts expended for recently drilled and completed wells with similar locations;

- 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.

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

February 24, 2022

Diamondback Energy, Inc. and Subsidiaries

| Midstream assets | | | 1,076 | | | | | | 1,013 | | |

| Midstream services | | | 45 | | | | | | 50 | | | | | | 64 | | |

| Midstream services expense | | | 89 | | | | | | 105 | | | | | | 91 | | |

| Basic | | | $ | 12.35 | | | | | $ | (28.59) | | | | | $ | 1.47 | |

| Diluted | | | $ | 12.30 | | | | | $ | (28.59) | | | | | $ | 1.47 | |

| Diluted | | | 177,359 | | | | | | 157,976 | | | | | | 163,843 | | |

| Balance December 31, 2018 | | | 164,273 | | | | | | 2 | | | | | | 12,936 | | | | | | 762 | | | | | | | | | | | | 467 | | | | | | 14,167 | | |

| Net proceeds from issuance of common units - Rattler Midstream LP | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 720 | | | | | | 720 | | |

| Common units issued for acquisition | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 124 | | | | | | 124 | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 240 | | | | | | | | | | | | 75 | | | | | | 315 | | |

| Issuance of common units - Viper Energy Partners LP | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | 337 | | | | | | 337 | | |

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

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

| Public offering costs | | | — | | | | | | — | | | | | | (41) | | |

| Proceeds from public offerings | | | — | | | | | | — | | | | | | 1,106 | | |

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

As of December 31, 2021, the Company owned approximately 74% of Rattler’s total units outstanding.

The Company’s wholly owned subsidiary, Rattler Midstream GP LLC, is the general partner of Rattler.

Notes to Consolidated Financial Statements-(Continued)

The Company adopted Accounting Standards Update (“ASU”) 2016-13 and the subsequent applicable modifications

to the rule on January 1, 2020.

they are incurred.

Any income from services provided by subsidiaries to working interest owners of properties in which the Company also owns an interest, to the extent they exceed related costs incurred, are accounted for as reductions of capitalized costs of oil and natural gas properties proportionate to the Company’s investment in the subsidiary.

For additional information regarding the Company’s asset retirement obligations, see Note 9—[Asset Retirement Obligations](#ia0a8569c6321429087004ad63a8c5224_181).

Sales of oil, natural gas and natural gas liquids are recognized at the point control of the product is transferred to the customer.

Virtually all of the pricing provisions in the Company’s contracts are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, the quality of the oil or natural gas and the prevailing supply and demand conditions.

As a result, the price of the oil, natural gas and natural gas liquids fluctuates to remain competitive with other available oil, natural gas and natural gas liquids supplies.

*Midstream Revenue*

Substantially all revenues from gathering, compression, water handling, disposal and treatment operations are derived from intersegment transactions for services Rattler provides to exploration and production operations.

The portion of such fees shown in the Company’s consolidated financial statements represent amounts charged to interest owners in the Company’s operated wells, as well as fees charged to other third parties for water handling and treatment services provided by Rattler or usage of Rattler’s gathering and compression systems.