Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
	March 31,		December 31,
	2025		2024
	(In millions, except par values and share data)
Assets
Current assets:
Cash and cash equivalents ($560 million and $27 million related to Viper)	$	1,816	$	161
Restricted cash	225		3
Accounts receivable:
Joint interest and other, net	257		198
Oil and natural gas sales, net ($146 million and $149 million related to Viper)	1,334		1,387

Inventories	117		116
Derivative instruments	267		168
Prepaid expenses and other current assets	67		77
Total current assets	4,083		2,110
Property and equipment:
Oil and natural gas properties, full cost method of accounting ($22,019 million and $22,666 million excluded from amortization at March 31, 2025 and December 31, 2024, respectively) ($6,097 million and $5,713 million related to Viper and $2,279 million and $2,180 million excluded from amortization related to Viper)	83,727		82,240
Other property, equipment and land	1,452		1,440
Accumulated depletion, depreciation, amortization and impairment ($1,148 million and $1,081 million related to Viper)	(20,283)		(19,208)
Property and equipment, net	64,896		64,472
Funds held in escrow	208		1
Equity method investments	383		375

Derivative instruments	61		2
Deferred income taxes, net ($249 million and $185 million related to Viper)	235		173

Other assets	200		159
Total assets	$	70,066	$	67,292
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade	$	124	$	253
Accrued capital expenditures	754		690
Current maturities of debt	914		900
Other accrued liabilities	761		1,020
Revenues and royalties payable	1,575		1,491
Derivative instruments	75		43
Income taxes payable	550		414
Total current liabilities	4,753		4,811
Long-term debt ($822 million and $1,083 million related to Viper)	12,996		12,075
Derivative instruments	93		106
Asset retirement obligations	586		573
Deferred income taxes	9,887		9,826
Other long-term liabilities	8		39
Total liabilities	28,323		27,430
Commitments and contingencies (Note 16)
Stockholders’ equity:
Common stock, $0.01 par value; 800,000,000 shares authorized; 287,287,926 and 290,984,373 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	3		3
Additional paid-in capital	33,125		33,501
Retained earnings (accumulated deficit)	5,352		4,238
Accumulated other comprehensive income (loss)	(7)		(6)
Total Diamondback Energy, Inc. stockholders’ equity	38,473		37,736
Non-controlling interest	3,270		2,126
Total equity	41,743		39,862
Total liabilities and stockholders' equity	$	70,066	$	67,292

See accompanying notes to condensed consolidated financial statements.

Diamondback Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,
		2025		2024
		(In millions, except per share amounts, shares in thousands)
Revenues:
Oil sales		$	3,039	$	1,867
Natural gas sales		212		50
Natural gas liquid sales		406		184

Sales of purchased oil		374		116
Other operating income		17		10
Total revenues		4,048		2,227
Costs and expenses:
Lease operating expenses		408		255
Production and ad valorem taxes		228		119
Gathering, processing and transportation		111		77
Purchased oil expense		382		117
Depreciation, depletion, amortization and accretion		1,097		469


General and administrative expenses		73		46

Merger and integration expenses		37		12
Other operating expenses		39		14
Total costs and expenses		2,375		1,109
Income (loss) from operations		1,673		1,118
Other income (expense):
Interest expense, net		(40)		(39)
Other income (expense), net		27		(3)

Gain (loss) on derivative instruments, net		226		(48)



Gain (loss) on extinguishment of debt		—		2
Income (loss) from equity investments, net		8		2
Total other income (expense), net		221		(86)
Income (loss) before income taxes		1,894		1,032
Provision for (benefit from) income taxes		403		223
Net income (loss)		1,491		809
Net income (loss) attributable to non-controlling interest		86		41
Net income (loss) attributable to Diamondback Energy, Inc.		$	1,405	$	768

Earnings (loss) per common share:
Basic		$	4.83	$	4.28
Diluted		$	4.83	$	4.28
Weighted average common shares outstanding:
Basic		289,612		178,477
Diluted		289,612		178,477

See accompanying notes to condensed consolidated financial statements.

Diamondback Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total
	Shares	Amount
	($ in millions, shares in thousands)
Balance December 31, 2024	290,984	$	3	$	33,501	$	4,238	$	(6)	$	2,126	$	39,862
Viper equity-based compensation	—	—		—		—		—		1		1
Distribution equivalent rights payments	—	—		—		(1)		—		—		(1)
Stock-based compensation	—	—		22		—		—		—		22
Cash paid for tax withholding on vested equity awards	(155)	—		(25)		—		—		—		(25)
Repurchased shares under buyback program	(3,656)	—		(580)		—		—		—		(580)


Viper LLC's units issued for acquisition	—	—		—		—		—		119		119

Net proceeds from Viper's issuance of common stock	—	—		—		—		—		1,232		1,232
Dividends to non-controlling interest	—	—		—		—		—		(95)		(95)
Dividends paid	—	—		—		(290)		—		—		(290)
Issuance of shares upon vesting of equity awards	115	—		—		—		—		—		—
Change in ownership of consolidated subsidiaries, net	—	—		206		—		—		(199)		7
Other comprehensive income (loss)	—	—		1		—		(1)		—		—
Net income (loss)	—	—		—		1,405		—		86		1,491
Balance March 31, 2025	287,288	$	3	$	33,125	$	5,352	$	(7)	$	3,270	$	41,743


	Common Stock			Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total
	Shares	Amount
	($ in millions, shares in thousands)
Balance December 31, 2023	178,724	$	2	$	14,142	$	2,489	$	(8)	$	805	$	17,430

Distribution equivalent rights payments	—	—		—		(4)		—		—		(4)
Stock-based compensation	—	—		21		—		—		—		21
Cash paid for tax withholding on vested equity awards	(187)	—		(34)		—		—		—		(34)
Repurchased shares under buyback program	(279)	—		(42)		—		—		—		(42)


Proceeds from partial sale of investment in Viper Energy, Inc.	—	—		219		—		—		197		416
Dividends to non-controlling interest	—	—		—		—		—		(44)		(44)
Dividends paid	—	—		—		(548)		—		—		(548)
Issuance of shares upon vesting of equity awards	82	—		—		—		—		—		—
Change in ownership of consolidated subsidiaries, net	—	—		(55)		—		—		70		15

Net income (loss)	—	—		—		768		—		41		809
Balance March 31, 2024	178,340	$	2	$	14,251	$	2,705	$	(8)	$	1,069	$	18,019

See accompanying notes to condensed consolidated financial statements.

Diamondback Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2025		2024
	(In millions)
Cash flows from operating activities:
Net income (loss)	$	1,491	$	809
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for (benefit from) deferred income taxes	6		52




Depreciation, depletion, amortization and accretion	1,097		469

(Gain) loss on extinguishment of debt	—		(2)

(Gain) loss on derivative instruments, net	(226)		48
Cash received (paid) on settlement of derivative instruments	85		(4)
(Income) loss from equity investment, net	(8)		(2)

Equity-based compensation expense	18		14



Other	24		16
Changes in operating assets and liabilities:
Accounts receivable	(6)		(95)

Income tax receivable	3		12

Prepaid expenses and other current assets	6		89
Accounts payable and accrued liabilities	(374)		(110)


Income taxes payable	135		70
Revenues and royalties payable	84		(35)

Other	20		3
Net cash provided by (used in) operating activities	2,355		1,334
Cash flows from investing activities:
Additions to oil and natural gas properties	(942)		(609)




Property acquisitions	(750)		(153)


Proceeds from sale of assets	41		12







Other	(2)		(1)
Net cash provided by (used in) investing activities	(1,653)		(751)
Cash flows from financing activities:

Proceeds from borrowings under credit facilities	2,277		90
Repayments under credit facilities	(2,538)		(80)
Proceeds from senior notes	1,200		—
Repayment of senior notes	—		(25)












Repurchased shares under buyback program	(575)		(42)

Proceeds from partial sale of investment in Viper Energy, Inc.	—		451

Net proceeds from Viper's issuance of common stock	1,232		—
Dividends paid to stockholders	(290)		(548)

Dividends/distributions to non-controlling interest	(95)		(44)



Other	(36)		(71)
Net cash provided by (used in) financing activities	1,175		(269)
Net increase (decrease) in cash and cash equivalents	1,877		314
Cash, cash equivalents and restricted cash at beginning of period	164		585
Cash, cash equivalents and restricted cash at end of period	$	2,041	$	899

See accompanying notes to condensed consolidated financial statements.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Organization and Description of the Business

Diamondback Energy, Inc., together with its subsidiaries (collectively referred to as “Diamondback” or the “Company” unless the context otherwise requires), is an independent oil and natural gas company currently focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas.

As of March 31, 2025, the wholly owned subsidiaries of Diamondback include Diamondback E&P LLC (“Diamondback E&P”), a Delaware limited liability company, Rattler Midstream GP LLC, a Delaware limited liability company, Rattler Midstream LP, a Delaware limited partnership, QEP Resources, Inc., a Delaware corporation and Eclipse Merger Sub II, LLC, a Delaware limited liability company.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries after all significant intercompany balances and transactions have been eliminated upon consolidation. The Company has one reportable segment, the upstream segment.

On March 5, 2024, the Company exercised certain of its demand rights, pursuant to a registration rights agreement initially entered into on June 23, 2014, as amended and restated on May 9, 2018 and November 10, 2023, and on March 8, 2024, completed a public offering of approximately 13.23 million of Viper’s Class A common stock at a price of $35.00 per share for proceeds, net of underwriters’ discount, of approximately $451 million. After this offering, the Company owned less than 50% of Viper’s combined outstanding Class A common stock and Class B common stock, resulting in Viper no longer being a controlled company under the Nasdaq rules. Following the completion of the Viper 2024 Equity Offering (as defined and discussed in Note 10—Stockholders' Equity and Earnings (Loss) Per Share) the Company’s ownership of Viper’s voting securities was further reduced to approximately 45%. However, the Company determined, in each case, that it still controls the activities of Viper in accordance with the guidance for variable interest entities in Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and therefore continues to consolidate Viper in the Company’s financial statements at March 31, 2025. See further discussion of the Company’s determination that Viper is a variable interest entity (“VIE”) in Note 2—Summary of Significant Accounting Policies. The results of operations attributable to the non-controlling interest in Viper are presented within equity and net income and are shown separately from the equity and net income attributable to the Company.

As of March 31, 2025, the Company owned approximately 39% of Viper’s combined outstanding Class A common stock and Class B common stock. The results of operations attributable to the non-controlling interest in Viper are presented within equity and net income and are shown separately from the equity and net income attributable to the Company.

These condensed consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to SEC rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10–Q should be read in conjunction with the Company’s most recent Annual Report on Form 10–K for the fiscal year ended December 31, 2024, which contains a summary of the Company’s significant accounting policies and other disclosures.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period financial statement presentation. These reclassifications had an immaterial effect on the previously reported total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Certain amounts included in or affecting the Company’s condensed consolidated financial statements and related disclosures must be estimated by management, requiring certain assumptions to be made with respect to values or conditions that cannot be known with certainty at the time the condensed consolidated financial statements are prepared. These estimates and assumptions affect the amounts the Company reports for assets and liabilities and the Company’s disclosure of contingent liabilities as of the date of the condensed consolidated financial statements. Actual results could differ from those estimates.

Making accurate estimates and assumptions is particularly difficult in the oil and natural gas industry given the challenges resulting from volatility in oil and natural gas prices. For instance, the war in Ukraine, the Israel-Hamas war and other conflicts in the Middle East, effects of tariffs, actions taken by OPEC and its non-OPEC allies, known collectively as OPEC+, global supply chain disruptions, measures to combat persistent inflation and instability in the financial sector have contributed to recent economic and pricing volatility. The financial results of companies in the oil and natural gas industry have been impacted materially as a result of these events and changing market conditions. Such circumstances generally increase uncertainty in the Company’s accounting estimates, particularly those involving financial forecasts.

The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, fair value estimates of derivative instruments, the fair value determination of assets acquired and liabilities assumed and estimates of income taxes, including deferred tax valuation allowances.

Variable Interest Entity

Viper is a publicly traded corporation formed by the Company in 2014 to provide an attractive return to its stockholders (the largest of which is Diamondback) by focusing on business results, maximizing dividends through organic growth and pursuing accretive growth opportunities through acquisitions of mineral, royalty, overriding royalty, net profits and similar interests from the Company and from third parties. Viper has no employees and the Company provides management, operating and administrative services to Viper under a services and secondment agreement, including the services of the executive officers and other employees.

In connection with the reduction of the Company’s ownership percentage in Viper to below 50% in March 2024, the Company re-evaluated whether Viper should continue to be consolidated in the Company’s financial statements. Viper meets the definition of a VIE under ASC Topic 810 and the Company continues to be the primary beneficiary of the VIE through its ability, via existing contractual agreements, to direct the activities that most significantly affect the economic performance of Viper. The Company also has the obligation to absorb losses and the right to receive benefits that could be significant to Viper. As such, the Company will continue to consolidate the activity of Viper. Neither the Viper 2024 Equity Offering or the Viper 2025 Equity Offering (as defined and discussed in Note 10—Stockholders' Equity and Earnings (Loss) Per Share) were determined to be events that would cause the Company to change its conclusion regarding Viper’s status as a VIE. See Note 17— Subsequent Events for further discussion of changes in the Company’s ownership of Viper.

Viper maintains its own capital structure that is separate from the Company. The Company is not under any obligation to provide additional financial support or investment to Viper. Viper’s assets cannot be used by the Company for general corporate purposes, and the creditors of Viper’s liabilities do not have recourse to the Company’s assets. The assets and liabilities of Viper are included in the Company’s condensed consolidated balance sheets and disclosed parenthetically, if material.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Recent Accounting Pronouncements

Recently Adopted Pronouncements

There are no recently adopted pronouncements of significance.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which requires that certain information in a reporting entity’s tax rate reconciliation be disaggregated and provides additional requirements regarding income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses,” which requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the income statement. The amendments are effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. Adoption of the update will not impact the Company’s financial position, results of operations or liquidity.

The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, previously disclosed, or not material upon adoption.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue from Contracts with Customers

The following tables present the Company’s revenue from contracts with customers:


	Three Months Ended March 31,
		2025		2024
		(In millions)
Oil sales		$	3,039	$	1,867
Natural gas sales		212		50
Natural gas liquid sales		406		184
Total oil, natural gas and natural gas liquid revenues		3,657		2,101
Sales of purchased oil		374		116
Other service revenues		11		8
Total revenue from contracts with customers		$	4,042	$	2,225

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

The following tables present the Company’s revenue from oil, natural gas, and natural gas liquids disaggregated by basin:










	Three Months Ended March 31, 2025								Three Months Ended March 31, 2024
	Midland Basin		Delaware Basin		Other		Total		Midland Basin		Delaware Basin		Other		Total
	(In millions)
Oil sales	$	2,801	$	236	$	2	$	3,039	$	1,503	$	360	$	4	$	1,867
Natural gas sales	191		20		1		212		34		15		1		50
Natural gas liquid sales	374		31		1		406		137		47		—		184
Total	$	3,366	$	287	$	4	$	3,657	$	1,674	$	422	$	5	$	2,101

4. ACQUISITIONS AND DIVESTITURES

2025 Activity

See Note 17—Subsequent Events for details on acquisition and divestiture activity subsequent to March 31, 2025.

2024 Activity

Diamondback Acquisitions and Divestitures

Endeavor Acquisition

For details on the Endeavor Acquisition, which closed on September 10, 2024, see Note 5—Endeavor Energy Resources, LP Acquisition.

TRP Energy, LLC Asset Exchange

On December 20, 2024, the Company completed a transaction with TRP Energy, LLC (“TRP”), in which the Company exchanged certain assets including approximately 47,034 gross (35,673 net) acres located in the Delaware Basin and $325 million in cash, subject to customary post-closing adjustments, for certain of TRP’s assets consisting of approximately 21,582 gross (15,421 net) acres located in the Midland Basin with 55 operated locations (the “TRP Exchange”). The TRP Exchange is expected to expand our operating footprint and enhance our inventory of near-term drilling locations, and was valued at approximately $1.4 billion. The Company funded the cash portion of the exchange with cash on hand and borrowings under its revolving credit facility.

The following table presents the acquisition consideration transferred in the TRP Exchange (in millions):


Consideration:
Oil and natural gas properties	$	989
Midstream assets	53
Suspense liabilities relieved	(9)
Cash consideration	325
Total consideration	$	1,358

Acquisition Date Fair Value of Consideration Transferred

The acquisition date fair value of oil and natural gas properties transferred was determined using an income approach utilizing the discounted cash flow method, which takes into account production forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. These inputs are not observable in the market and are considered level 3 inputs within the fair value hierarchy. The oil and natural gas properties transferred did not significantly impact the Company’s capitalized costs or proved reserves as of December 31, 2024.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

The acquisition date fair value of midstream assets transferred was determined based on the cost approach, which utilized asset listings and cost records with consideration for the age, condition, utilization and economic support of the assets.

Allocation of Consideration Transferred

The TRP Exchange has been accounted for under the acquisition method of accounting for business combinations in accordance with ASC Topic 805, “Business Combinations.” The following table represents the allocation of the total consideration transferred in the TRP Exchange to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date. Although the allocation of consideration transferred is substantially complete as of the date of this filing, title to properties exchanged remain subject to change as the details of the transaction are finalized subsequent to closing. As such, there may be further adjustments to the fair value of certain assets acquired and liabilities assumed. The allocation of consideration transferred will be finalized within twelve months of the closing date of the transaction.

The following table sets forth the Company’s preliminary purchase price allocation (in millions):


Total consideration	$	1,358

Fair value of liabilities assumed:
Suspense liabilities	(3)

Fair value of assets acquired:
Oil and natural gas properties	1,361
Net assets acquired and liabilities assumed	$	1,358

Oil and natural gas properties acquired were valued using an income approach utilizing the discounted cash flow method, which takes into account production forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. These inputs are not observable in the market and are considered level 3 inputs within the fair value hierarchy.

With the completion of the TRP Exchange, the Company acquired proved properties of $860 million and unproved properties of $501 million.

The results of operations attributable to the TRP Exchange since the acquisition date have been included in the condensed consolidated statements of operations and include $127 million of total revenue and $111 million of net income for the three months ended March 31, 2025.

WTG Midstream Transaction

The Company owns a 25% non-operating equity investment in Remuda Midstream Holdings LLC, referred to as the “WTG joint venture.” On July 15, 2024, the WTG joint venture sold its WTG Midstream LLC subsidiary (the “WTG Midstream Transaction”), for which the Company received as its portion of the consideration 10.1 million common units issued by Energy Transfer LP (NYSE: ET) and $190 million in cash, subject to customary post-closing adjustments. The common unit consideration is also subject to preferred distributions to incentive members of the WTG joint venture which reduce the proceeds attributable to the Company. At the closing of the WTG Midstream Transaction, the value attributable to the Company of the 10.1 million common units was approximately $135 million, of which approximately $81 million was received by the Company and $54 million was initially held in escrow pursuant to an escrow agreement entered into by the WTG joint venture in connection with the initial transaction. In the first quarter of 2025, the Company received approximately $15 million related to the settlement of working capital and $27 million of the initial escrow amount was released. The total value of distributions received by the Company through March 31, 2025 of $313 million, including certain customary post-closing adjustments, (excluding the remaining $27 million held in escrow) exceeded the carrying value of the Company’s investment balance in the WTG joint venture, resulting in an aggregate gain of approximately $116 million, of which approximately $42 million was recognized during the three months ended March 31, 2025. The gain is included in the caption “Other income (expense), net” in the condensed consolidated statement of operations.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Viper Acquisitions

Viper Tumbleweed Acquisitions

In September and October of 2024, Viper completed a series of related acquisitions including the Viper TWR Acquisition, the Viper Q Acquisition and the Viper M Acquisition, collectively the (“Viper Tumbleweed Acquisitions”), each as defined and discussed below.

On October 1, 2024, Viper acquired all of the issued and outstanding equity interests in TWR IV, LLC and TWR IV SellCo, LLC from Tumbleweed Royalty IV, LLC (“TWR IV”) and TWR IV SellCo Parent, LLC (the “Viper TWR Acquisition”), pursuant to a definitive purchase and sale agreement for consideration consisting of approximately (i) $464 million in cash, including transaction costs and certain customary post-closing adjustments, (ii) 10.09 million Viper LLC units to TWR IV, (iii) an option for TWR IV to acquire up to 10.09 million shares of Viper’s Class B Common Stock (the “TWR Class B Option”), and (iv) contingent cash consideration of up to $41 million, payable in January of 2026, based on the average price of WTI sweet crude oil prompt month futures contracts for the calendar year 2025 (the “WTI 2025 Average”).

TWR IV can exchange some or all of the Viper LLC units received for an equal number of shares of Viper’s Class A common stock. The mineral and royalty interests acquired in the Viper TWR Acquisition represent approximately 3,067 net royalty acres located primarily in the Permian Basin. Viper funded the cash consideration through a combination of cash on hand, borrowings under the Viper LLC credit agreement and proceeds from the Viper 2024 Equity Offering (as defined and discussed in Note 10—Stockholders' Equity and Earnings (Loss) Per Share).

On September 3, 2024, Viper acquired all of the issued and outstanding equity interests in Tumbleweed-Q Royalties, LLC (the “Viper Q Acquisition”), pursuant to a definitive purchase and sale agreement for consideration consisting of (i) approximately $114 million in cash, including transaction costs and certain customary post-closing adjustments, and (ii) contingent cash consideration of up to $5 million, payable in January of 2026, based on the WTI 2025 Average.

Additionally, on September 3, 2024, Viper acquired all of the issued and outstanding equity interests in MC TWR Royalties, LP and MC TWR Intermediate, LLC (the “Viper M Acquisition” and together with the Viper Q Acquisition, the “Viper Q & M Acquisitions”), pursuant to a definitive purchase and sale agreement for consideration consisting of (i) approximately $76 million in cash, including transaction costs and certain customary post-closing adjustments, and (ii) contingent cash consideration of up to $4 million, payable in January of 2026, based on the WTI 2025 Average. The mineral and royalty interests acquired in the Viper Q & M Acquisitions, represent approximately 406 and 267 net royalty acres located primarily in the Permian Basin, respectively. Viper funded the cash consideration for the Viper Q & M Acquisitions through a combination of cash on hand and borrowings under the Viper LLC credit agreement.

See Note 14—Fair Value Measurements for further discussion of the fair value of the contingent consideration liabilities for each of the Viper Tumbleweed Acquisitions discussed above (collectively, the “2026 WTI Contingent Liability”).

5. ENDEAVOR ENERGY RESOURCES, LP ACQUISITION

On September 10, 2024, the Company completed its acquisition of Endeavor Parent, LLC (“Endeavor”) (the “Endeavor Acquisition”) for consideration consisting of (i) $7.1 billion in cash paid to the Endeavor equityholders, (ii) $238 million for the repayment of Endeavor’s net debt, which included the $219 million net debt position and the associated $19 million make-whole premium paid upon redemption of the senior notes and costs incurred to terminate Endeavor’s revolving credit facility, and (iii) approximately 117.27 million shares of the Company’s common stock. The Endeavor Acquisition included approximately 500,849 gross (361,927 net) acres, which are primarily located in the Permian Basin. Following the Endeavor Acquisition, the Company believes its inventory has industry-leading depth and quality that will be converted into cash flow with the industry’s lowest cost structure, creating a differentiated value proposition for Diamondback stockholders.

The cash consideration for the Endeavor Acquisition was funded through a combination of cash on hand, the net proceeds from the Company’s April 2024 Notes offering and borrowings under the Tranche A Loans (as defined and discussed in Note 9—Debt). Immediately following the close of the Endeavor Acquisition, Endeavor equityholders held approximately 39.8% of Diamondback’s common stock. As of March 31, 2025, Endeavor’s equityholders held approximately 36.2% of the Company’s common stock.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Following the closing of the Endeavor Acquisition, the Company filed with the SEC a shelf registration statement, which became immediately effective upon filing, registering for resale the shares of common stock issued in the Endeavor Acquisition, as required by the terms of the related registration rights agreement.

The following table presents the acquisition consideration paid to Endeavor equityholders in the Endeavor Acquisition (in millions, except per share data, shares in thousands):


Consideration:
Shares of Diamondback common stock issued at closing	117,267
Closing price per share of Diamondback common stock on the closing date	$	171.49
Fair value of Diamondback common stock issued	$	20,110

Base cash amount	$	8,000
Preliminary closing adjustments	(928)
Cash consideration to Endeavor equityholders	7,072
Cash payment of net debt position and make-whole amount	238
Total cash consideration	7,310

Total consideration (including fair value of Diamondback common stock issued)	$	27,420

Purchase Price Allocation

The Endeavor Acquisition has been accounted for under the acquisition method of accounting for business combinations in accordance with ASC Topic 805, “Business Combinations.” The following table represents the preliminary allocation of the total purchase price for the acquisition of Endeavor to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date. Although the purchase price allocation is substantially complete as of the date of this filing, certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, final tax returns that provide the underlying tax basis of Endeavor’s assets and liabilities. As such, there may be further adjustments to the fair value of certain assets acquired and liabilities assumed, including Endeavor’s deferred tax liability, oil and natural gas properties, which include mineral and royalty interests acquired, and other property and equipment. The Company expects to complete the purchase price allocation during the 12-month period following the acquisition date.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

The following table sets forth the Company’s preliminary purchase price allocation (in millions):


Total consideration	$	27,420

Fair value of liabilities assumed:
Accounts payable - trade	$	18
Accrued capital expenditures	173
Other accrued liabilities	613
Revenues and royalties payable	567
Derivative instruments	5
Income taxes payable	261
Other current liabilities	21
Asset retirement obligations	260
Deferred income taxes	7,211
Other long-term liabilities	5
Amount attributable to liabilities acquired	$	9,134

Fair value of assets acquired:

Accounts receivable - joint interest and other, net	$	69
Accounts receivable - oil and natural gas sales, net	659
Inventories	77
Derivative instruments	25
Prepaid expenses and other current assets	20
Oil and natural gas properties	34,824
Other property, equipment and land	849
Other assets	31
Amount attributable to assets acquired	$	36,554

Net assets acquired and liabilities assumed	$	27,420

The purchase price allocation above is based on the fair values of the assets and liabilities of Endeavor as of the closing date of the Endeavor Acquisition. The majority of the value of assets acquired and liabilities assumed was measured based on inputs that are not observable in the market and are therefore considered Level 3 inputs. The fair value of acquired property and equipment is based on the cost approach, which utilized asset listings and cost records with consideration for the reported age, condition, utilization and economic support of the assets. Oil and natural gas properties were valued using an income approach utilizing the discounted cash flow method, which takes into account production and mineral interest forecasts, projected commodity prices and pricing differentials, and estimates of future capital and operating costs which were then discounted utilizing an estimated weighted-average cost of capital for industry market participants. The value of derivative instruments was based on observable inputs including forward commodity-price curves which are considered Level 2 inputs. Deferred income taxes represent the tax effects of differences in the tax basis and acquisition-date fair values of assets acquired and liabilities assumed. The fair values of asset retirement obligations and inventories were calculated in accordance with the Company’s internal policies as described in Note 2 —Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The fair values of various current assets and liabilities including accounts receivable and accounts payable approximate their carrying values on the closing date of the Endeavor Acquisition because of the short-term nature of the instruments.

With the completion of the Endeavor Acquisition, the Company acquired proved properties of $20.6 billion and unproved properties of $14.2 billion, primarily in the Midland Basin.

The results of operations attributable to the Endeavor Acquisition since the acquisition date have been included in the condensed consolidated statements of operations and include $1.4 billion of total revenue and $477 million of net income for the three months ended March 31, 2025.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

6. PROPERTY AND EQUIPMENT

Property and equipment includes the following as of the dates indicated:


	March 31,		December 31,
	2025		2024
	(In millions)
Oil and natural gas properties:
Subject to depletion	$	61,708	$	59,574
Not subject to depletion	22,019		22,666
Gross oil and natural gas properties	83,727		82,240
Accumulated depletion	(12,143)		(11,083)
Accumulated impairment	(7,954)		(7,954)
Oil and natural gas properties, net	63,630		63,203
Other property, equipment and land	1,452		1,440
Accumulated depreciation, amortization, accretion and impairment	(186)		(171)
Total property and equipment, net	$	64,896	$	64,472

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter which determines a limit, or ceiling, on the book value of proved oil and natural gas properties. No impairment expense was recorded for the three months ended March 31, 2025 or 2024 based on the results of the respective quarterly ceiling tests.

In addition to commodity prices, the Company’s production rates, levels of proved reserves, future development costs, transfers of unevaluated properties and other factors will determine its actual ceiling test calculation and impairment analysis in future periods. If the future trailing 12-month commodity prices decline as compared to the commodity prices used in prior quarters, the Company may have material write downs in subsequent quarters. It is possible that circumstances requiring additional impairment testing will occur in future interim periods, which could result in potentially material impairment charges being recorded.

7. ASSET RETIREMENT OBLIGATIONS

The following table describes the changes to the Company’s asset retirement obligations liability for the following periods:


	Three Months Ended March 31,
	2025		2024
	(In millions)
Asset retirement obligations, beginning of period	$	592	$	245
Additional liabilities incurred	16		1
Liabilities acquired	1		1
Liabilities settled and divested	(12)		(7)
Accretion expense	9		3
Revisions in estimated liabilities	1		31
Asset retirement obligations, end of period	607		274
Less current portion(1)	21		8
Asset retirement obligations - long-term	$	586	$	266

(1) The current portion of the asset retirement obligation is included in the caption “Other accrued liabilities” in the Company’s condensed consolidated balance sheets.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

8. RELATED PARTY TRANSACTIONS

Viper

During the first quarter of 2025, Viper deposited approximately $223 million of cash into escrow pursuant to an equity purchase agreement for the 2025 Drop Down (as defined and discussed in Note 17—Subsequent Events). Viper’s escrow deposit is reflected in the caption “Restricted cash” on the Company’s condensed consolidated balance sheet at March 31, 2025.

Deep Blue

On September 1, 2023, the Company closed on a joint venture agreement with Five Point Energy LLC to form Deep Blue Midland Basin LLC (“Deep Blue”), in which the Company owns 30% equity ownership interest. In addition to the Deep Blue transaction, the Company has other significant related party transactions with Deep Blue which include (i) certain accounts receivable from Deep Blue, (ii) accrued capital expenditures and other accrued payables related to a commitment to fund certain capital expenditures on projects that were in process at the time of the Deep Blue transaction, and (iii) lease operating expenses and capitalized expenses related to fees paid to Deep Blue under a 15-year dedication for its produced water and supply water within a 12-county area of mutual interest in the Midland Basin.

The following table presents the significant related party balances included in the condensed consolidated balance sheets at March 31, 2025 and December 31, 2024:


	March 31,		December 31,
	2025		2024
	(In millions)
Current assets - Accounts receivable	$	5	$	5
Long-term assets - Equity method investments	$	145	$	137
Current liabilities - Accrued capital expenditures	$	(30)	$	(31)
Current liabilities - Other accrued liabilities	$	(36)	$	(22)

During the three months ended March 31, 2025 and 2024, the Company recorded approximately $47 million and $31 million, respectively, for water services provided by Deep Blue during the completion phase of wells. These costs were capitalized and are included in the caption “Oil and natural gas properties” on the condensed consolidated balance sheets.

The following table presents the significant related party transactions included in the condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
		2025		2024
		(In millions)
Lease operating expenses		$	37	$	26

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

9. DEBT

Long-term debt consisted of the following as of the dates indicated:


	March 31,		December 31,
	2025		2024
	(In millions)
3.250% Senior Notes due 2026	$	750	$	750
5.625% Senior Notes due 2026	14		14
5.200% Senior Notes due 2027	850		850
7.125% Medium-term Notes, Series B, due 2028	73		73
3.500% Senior Notes due 2029	915		915
5.150% Senior Notes due 2030	850		850
3.125% Senior Notes due 2031	767		767
6.250% Senior Notes due 2033	1,100		1,100
5.400% Senior Notes due 2034	1,300		1,300
5.550% Senior Notes due 2035	1,200		—
4.400% Senior Notes due 2051	650		650
4.250% Senior Notes due 2052	750		750
6.250% Senior Notes due 2053	650		650
5.750% Senior Notes due 2054	1,500		1,500
5.900% Senior Notes due 2064	1,000		1,000
Tranche A Loans	900		900

Unamortized debt issuance costs	(98)		(91)
Unamortized discount costs	(25)		(25)
Unamortized premium costs	2		3
Unamortized basis adjustment of dedesignated interest rate swap agreements(1)	(68)		(72)

Viper revolving credit facility	—		261
Viper 5.375% Senior Notes due 2027	430		430
Viper 7.375% Senior Notes due 2031	400		400
Total debt, net	13,910		12,975
Less: current maturities of debt	914		900
Total long-term debt	$	12,996	$	12,075

(1) Represents the unamortized basis adjustment related to two receive-fixed, pay variable interest rate swap agreements which were previously designated as fair value hedges of the Company’s $1.2 billion 3.500% fixed rate senior notes due 2029. This basis adjustment is being amortized to interest expense over the remaining term of the 2029 Notes utilizing the effective interest method.

References in this section to the Company shall mean Diamondback Energy, Inc. and Diamondback E&P, collectively, unless otherwise specified.

Credit Agreement

On March 21, 2025, Diamondback E&P, as borrower, and Diamondback Energy, Inc., as parent guarantor, entered into a fifteenth amendment to the existing credit agreement, which made certain amendments to the representations and warranties that must be made to fund the loans under the 2025 Term Loan Agreement (defined below). The credit agreement provides for a maximum credit amount of $2.5 billion. As of March 31, 2025, the Company had no outstanding borrowings under the credit agreement and approximately $2.5 billion available for future borrowings. During the three months ended March 31, 2025, the weighted average interest rate on borrowings under the credit agreement was 5.92%. The credit agreement matures on June 2, 2029.

As of March 31, 2025, the Company was in compliance with all financial maintenance covenants under the credit agreement.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Term Loan Agreements

2025 Term Loan Agreement

In connection with the Double Eagle Acquisition (as defined and discussed in Note 17—Subsequent Events), Diamondback Energy, Inc., as guarantor, entered into a Term Loan Credit Agreement with Diamondback E&P LLC, as borrower, and Bank of America, N.A., as administrative agent (the “2025 Term Loan Agreement”) on March 21, 2025.

The 2025 Term Loan Agreement provides the Company with the ability to borrow up to $1.5 billion on an unsecured basis to fund a portion of the cash consideration for the Double Eagle Acquisition (as defined and discussed in Note 17—Subsequent Events) and costs and expenses related to the acquisition. As of March 31, 2025, the Company had no outstanding borrowings under the 2025 Term Loan Agreement.

On the date of closing of the Double Eagle Acquisition, the entire amount available under the 2025 Term Loan Agreement was drawn in a single borrowing. Any remaining outstanding amounts will mature and be payable in full on the second anniversary of the initial funding date.

Outstanding borrowings under the Term Loan Agreement bear interest at a per annum rate elected by the Company that is equal to (i) term SOFR plus 0.10% (“Adjusted Term SOFR”) or (ii) an alternate base rate (which is equal to the greatest of (a) the federal funds effective rate plus 0.50%, (b) the prime rate (c) Adjusted Term SOFR plus 1.0%, and (d) 1.0%), in each case plus the applicable margin. The applicable margin ranges from 0.125% to 1.000% per annum in the case of the alternate base rate, and from 1.125% to 2.000% per annum in the case of Adjusted Term SOFR, in each case based on the pricing level, and (ii) the commitment fee is equal to 0.125% per annum on the aggregate principal amount of the commitments. The pricing level depends on the Company’s long-term senior unsecured debt ratings.

2024 Term Loan Agreement

On February 29, 2024, Diamondback Energy, Inc., as guarantor, entered into a Term Loan Credit Agreement with Diamondback E&P LLC, as borrower, and Citibank, N.A., as administrative agent (the “2024 Term Loan Agreement”), which at March 31, 2025, is comprised of $1.0 billion of Tranche A Loans (the “Tranche A Loans”). The Tranche A Loans were drawn to fund a portion of the cash consideration for the Endeavor Acquisition. The initial Tranche A Loans were made in a single borrowing on the date of closing of the Endeavor Acquisition (the “Closing Date”) and any remaining outstanding amounts will mature and be payable in full on the first anniversary of the Closing Date.

As of March 31, 2025, the Company had $900 million in outstanding borrowings under the Tranche A Loans. During the three months ended March 31, 2025, the weighted average interest rate on borrowings under the Term Loan Agreement was 5.68%.

Issuance of Notes

On March 20,2025, the Company issued $1.2 billion aggregate principal amount of 5.550% Senior Notes due April 1, 2035 (the “2035 Notes”). The Company received net proceeds of $1.2 billion, after underwriters’ discounts and transaction costs. Interest on the 2035 Notes is payable semi-annually on April 1 and October 1 of each year. The Company used the net proceeds to fund a portion of the cash consideration for the Double Eagle Acquisition (as defined and discussed in Note 17—Subsequent Events) in the second quarter of 2025.

The 2035 Notes are included in the Guaranteed Senior Notes for the Company, which are senior unsecured obligations and are fully and unconditionally guaranteed by Diamondback E&P, are senior in right of payment to any of the Company’s future subordinated indebtedness and rank equal in right of payment with all of the Company’s existing and future senior indebtedness.

Viper’s Credit Agreement

Viper LLC’s credit agreement, as amended to date, provides for a revolving credit facility in the maximum credit amount of $2.0 billion with a borrowing base of $1.3 billion. As of March 31, 2025, the elected commitment amount was $1.3 billion, with no outstanding borrowings and $1.3 billion available for future borrowings. During the three months ended

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

March 31, 2025 and 2024, the weighted average interest rates on borrowings under the Viper credit agreement were 6.57% and 7.65%, respectively. The revolving credit facility will mature on September 22, 2028. As of March 31, 2025, Viper LLC was in compliance with all financial maintenance covenants under the Viper LLC credit agreement.

10. STOCKHOLDERS’ EQUITY AND EARNINGS (LOSS) PER SHARE

Stock Repurchase Program

The Company’s board of directors approved a common stock repurchase program to acquire up to $6.0 billion of the Company’s outstanding common stock, excluding excise tax. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions, and are subject to market conditions, applicable regulatory and legal requirements, contractual obligations and other factors. The repurchase program does not require the Company to acquire any specific number of shares. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. During the three months ended March 31, 2025 and 2024, the Company repurchased approximately $575 million, and $42 million of common stock under this repurchase program, respectively, in each case excluding excise tax. As of March 31, 2025, approximately $2.1 billion remained available for future repurchases under the Company’s common stock repurchase program, excluding excise tax.

Viper 2025 Equity Offering

On February 3, 2025, Viper completed an underwritten public offering of approximately 28.34 million shares of Viper’s Class A common stock, which included 3.70 million shares issued pursuant to an option to purchase additional shares of Viper’s Class A common stock granted to the underwriters, at a price to the public of $44.50 per share for total net proceeds of approximately $1.2 billion, after the underwriters’ discount and transaction costs (the “Viper 2025 Equity Offering”). The net proceeds were used to fund (i) a portion of the cash consideration for the 2025 Drop Down (as defined and discussed in Note 17—Subsequent Event s), (ii) cash consideration for other acquisitions, and (iii) for general corporate purposes.

Viper 2024 Equity Offering

On September 13, 2024, Viper completed an underwritten public offering of approximately 11.5 million shares of its Class A common stock, which included 1.5 million shares issued pursuant to an option to purchase additional shares of Class A common stock granted to the underwriters, at a price to the public of $42.50 per share for total net proceeds to Viper of approximately $476 million, after underwriters’ discounts and transaction costs (the “Viper 2024 Equity Offering”). The net proceeds were used to fund a portion of the cash consideration for the Viper TWR Acquisition.

Change in Ownership of Consolidated Subsidiaries

Non-controlling interests in the accompanying condensed consolidated financial statements represent minority interest ownership in Viper and are presented as a component of equity. When the Company’s relative ownership interests in Viper change, adjustments to non-controlling interest and additional paid-in-capital, tax effected, will occur.

The following table summarizes changes in the ownership interest in consolidated subsidiaries during the periods presented:


	Three Months Ended March 31,
		2025		2024
		(In millions)
Net income (loss) attributable to the Company		$	1,405	$	768
Change in ownership of consolidated subsidiaries		206		(55)
Change from net income (loss) attributable to the Company's stockholders and transfers with non-controlling interest		$	1,611	$	713

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Dividends

The following table presents dividends and distribution equivalent rights paid on the Company’s common stock during the respective periods:


	Base		Variable		Total Per Share		Total
	(In millions, except per share amounts)
2025
First quarter	$	1.00	$	—	$	1.00	$	291




2024
First quarter	$	0.90	$	2.18	$	3.08	$	552

Earnings (Loss) Per Share

The Company’s earnings (loss) per share amounts have been computed using the two-class method. The two-class method is an earnings allocation proportional to the respective ownership among holders of common stock and participating securities. Basic earnings (loss) per share amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share include the effect of potentially dilutive non-participating securities outstanding for the period. Additionally, the per share earnings of Viper are included in the consolidated earnings per share computation based on the consolidated group’s holdings of the subsidiaries.

A reconciliation of the components of basic and diluted earnings per common share is presented below:


	Three Months Ended March 31,
		2025		2024
		(In millions, except per share amounts, shares in thousands)
Net income (loss) attributable to common shares		$	1,405	$	768
Less: distributed and undistributed earnings allocated to participating securities(1)		6		5
Net income (loss) attributable to common stockholders		$	1,399	$	763
Weighted average common shares outstanding:
Basic weighted average common shares outstanding		289,612		178,477
Effect of dilutive securities:
Weighted-average potential common shares issuable		—		—
Diluted weighted average common shares outstanding		289,612		178,477
Basic net income (loss) attributable to common shares		$	4.83	$	4.28
Diluted net income (loss) attributable to common shares		$	4.83	$	4.28

(1) Unvested restricted stock awards and performance stock awards that contain non-forfeitable distribution equivalent rights are considered participating securities and therefore are included in the earnings per share calculation pursuant to the two-class method.

See Note 17—Subsequent Events for further discussion of common stock issued for acquisitions subsequent to March 31, 2025.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

11. EQUITY-BASED COMPENSATION

Under the Equity Plan approved by the board of directors, the Company is authorized to issue up to 11.8 million shares of incentive and non-statutory stock options, restricted stock awards and restricted stock units, performance awards and stock appreciation rights to eligible employees. The Company currently has outstanding restricted stock units and performance-based restricted stock units under the Equity Plan. At March 31, 2025, approximately 3.8 million shares of common stock remain available for future grants under the Equity Plan. The Company classifies its restricted stock units and performance-based restricted stock units as equity-based awards and estimates the fair values of restricted stock awards and units as the closing price of the Company’s common stock on the grant date of the award, which is expensed over the applicable vesting period.

In addition to the Equity Plan, Viper maintains its own long-term incentive plan, which is not significant to the Company.

The following table presents the financial statement impacts of equity compensation plans and related costs on the Company’s financial statements:


	Three Months Ended March 31,
		2025		2024
		(In millions)
General and administrative expenses		$	18	$	14
Equity-based compensation capitalized pursuant to full cost method of accounting for oil and natural gas properties		$	5	$	7

Restricted Stock Units

The following table presents the Company’s restricted stock unit activity during the three months ended March 31, 2025 under the Equity Plan:


	Restricted Stock Units	Weighted Average Grant-Date Fair Value
Unvested at December 31, 2024	645,408	$	159.84
Granted	636,843	$	149.98
Vested	(107,814)	$	158.26
Forfeited	(18,782)	$	155.78
Unvested at March 31, 2025	1,155,655	$	154.62

The aggregate grant date fair value of restricted stock units that vested during the three months ended March 31, 2025 was $17 million. As of March 31, 2025, the Company’s unrecognized compensation cost related to unvested restricted stock units was $155 million, which is expected to be recognized over a weighted-average period of 2.5 years.

Performance Based Restricted Stock Units

The following table presents the Company’s performance restricted stock units activity under the Equity Plan for the three months ended March 31, 2025:


	Performance Restricted Stock Units	Weighted Average Grant-Date Fair Value
Unvested at December 31, 2024	278,902	$	278.72
Granted	171,638	$	222.34
Vested	(6,590)	$	158.96

Unvested at March 31, 2025(1)	443,950	$	258.70

(1)A maximum of 1,070,323 units could be awarded based upon the Company’s final TSR ranking.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

As of March 31, 2025, the Company’s unrecognized compensation cost related to unvested performance based restricted stock awards and units was $72 million, which is expected to be recognized over a weighted-average period of 2.0 years.

In March 2025, eligible employees received performance restricted stock unit awards totaling 171,638 units from which a minimum of 0% and a maximum of 200% of the units could be awarded based upon the measurement of total stockholder return of the Company’s common stock as compared to a designated peer group during the three-year performance period of January 1, 2025 to December 31, 2027 and cliff vest at December 31, 2027 subject to continued employment. The initial payout of the March 2025 awards will be further adjusted by a TSR modifier that may reduce the payout or increase the payout up to a maximum of 250%.

The fair value of each performance restricted stock unit issuance is estimated at the date of grant using a Monte Carlo simulation, which results in an expected percentage of units to be earned during the performance period.

The following table presents a summary of the grant-date fair values of performance restricted stock units granted and the related assumptions for the awards granted during the periods presented:


	March 2025
Grant-date fair value	$	222.34
Risk-free rate	3.99		%
Company volatility	34.60		%

12. INCOME TAXES

The following table provides the Company’s provision for (benefit from) income taxes and the effective income tax rate for the periods indicated:


	Three Months Ended March 31,
		2025			2024
		(In millions, except for tax rate)
Provision for (benefit from) income taxes		$	403		$	223
Effective income tax rate		21.3		%	21.6		%

Total income tax expense from continuing operations for the three months ended March 31, 2025 differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to (i) state income taxes, net of federal benefit, (ii) the effect of research and development tax credits, (iii) limitations on the deduction of certain permanent items, and (iv) other permanent differences between book and taxable income. For the three months ended March 31, 2024, total income tax expense from continuing operations differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to (i) state income taxes, net of federal benefit, and (ii) the impact of permanent differences between book and taxable income.

In connection with the closing of the Endeavor Acquisition, the Company recognized a $7.2 billion deferred tax liability.

In connection with the Company’s public offering of Viper’s Class A common stock and resulting decrease in its ownership of Viper in March 2024, the Company recorded a $36 million increase in tax payable and a $3 million increase in deferred tax liability through paid in capital and an $18 million increase in the deferred tax asset, net of valuation allowance, through non-controlling interest on the Company’s condensed consolidated balance sheet.

Based on application of the Inflation Reduction Act of 2022 guidance, the Company’s income tax expense for the three months ended March 31, 2025 was not impacted by the corporate alternative minimum tax.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

13. DERIVATIVES

At March 31, 2025, the Company has commodity derivative contracts and interest rate swaps outstanding. All derivative financial instruments are recorded at fair value.

Commodity Contracts

The Company has entered into multiple crude oil and natural gas derivatives, indexed to the respective indices as noted in the table below, to reduce price volatility associated with certain of its oil and natural gas sales. The Company has not designated its commodity derivative instruments as hedges for accounting purposes and, as a result, marks its commodity derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the condensed consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”

By using derivative instruments to economically hedge exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company has entered into commodity derivative instruments only with counterparties that are also lenders under its credit facility and have been deemed an acceptable credit risk. As such, collateral is not required from either the counterparties or the Company on its outstanding commodity derivative contracts.

As of March 31, 2025, the Company had the following outstanding commodity derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed.


					Swaps	Collars
Settlement Month	Settlement Year	Type of Contract	Bbls/MMBtu Per Day	Index	Weighted Average Differential		Weighted Average Floor Price	Weighted Average Ceiling Price
OIL
Apr. - Dec.	2025	Roll Swap	25,000	WTI Cushing	$0.93		$—	$—
Apr. - Dec.	2025	Basis Swap(1)	71,000	Argus WTI Midland	$1.05		$—	$—
NATURAL GAS
Apr. - Dec.	2025	Costless Collar	690,000	Henry Hub	$—		$2.49	$5.28
Jan. - Dec.	2026	Costless Collar	560,000	Henry Hub	$—		$2.70	$6.35
Jan. - Dec.	2027	Costless Collar	40,000	Henry Hub	$—		$3.00	$6.65
Apr. - Dec.	2025	Basis Swap(1)	610,000	Waha Hub	$(0.88)		$—	$—
May - Dec.	2025	Basis Swap(1)	20,000	HSC Hub	$(0.49)		$—	$—
Jan. - Dec.	2026	Basis Swap(1)	250,000	Waha Hub	$(1.44)		$—	$—
Jan. - Dec.	2027	Basis Swap(1)	220,000	Waha Hub	$(1.46)		$—	$—

(1) The Company has fixed price basis swaps for the spread between the Cushing crude oil price and the Midland WTI crude oil price as well as the spread between the Henry Hub natural gas price, the Waha Hub and the HSC Hub natural gas price. The weighted average differential represents the amount of reduction to the Cushing, Oklahoma oil price and the Waha Hub and HSC Hub natural gas price for the notional volumes covered by the basis swap contracts.

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Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)


Settlement Month	Settlement Year	Type of Contract	Bbls Per Day	Index	Strike Price	Deferred Premium
OIL
Apr. - Jun.	2025	Put	50,000	Brent	$58.30	$1.50
Apr. - Jun.	2025	Put	96,000	Argus WTI Houston	$55.10	$1.59
Apr. - Jun.	2025	Put	152,000	WTI Cushing	$55.53	$1.59
Jul. - Sep.	2025	Put	36,000	Brent	$56.39	$1.50
Jul. - Sep.	2025	Put	87,000	Argus WTI Houston	$55.00	$1.61
Jul. - Sep.	2025	Put	136,000	WTI Cushing	$54.91	$1.54
Oct. - Dec.	2025	Put	21,000	Brent	$55.00	$1.47
Oct. - Dec.	2025	Put	50,000	Argus WTI Houston	$55.00	$1.63
Oct. - Dec.	2025	Put	76,000	WTI Cushing	$54.84	$1.52
Jan. - Mar.	2026	Put	4,000	Brent	$55.00	$1.45
Jan. - Mar.	2026	Put	5,000	Argus WTI Houston	$55.00	$1.75
Jan. - Mar.	2026	Put	25,000	WTI Cushing	$55.00	$1.32

Interest Rate Swaps and Treasury Locks

Interest Rate Swaps

As of March 31, 2025, the Company has two receive-fixed, pay variable interest rate swap agreements for notional amounts of $300 million and $600 million, respectively, which are considered economic hedges of the Company’s $1.2 billion 3.50% fixed rate senior notes due 2029 (the “2029 Notes”). The Company receives a fixed 3.50% rate of interest on these swaps and pays the variable rate of SOFR plus 2.1865%. The interest rate swaps are not treated as hedges for accounting purposes and, as a result, changes in fair value are recorded in earnings under the caption “Gain (loss) on derivative instruments, net” in the condensed consolidated statements of operations.

The interest rate swaps were designated as fair value hedges at inception, but the Company subsequently elected to discontinue hedge accounting. The cumulative fair value basis adjustment recorded at the time of dedesignation is being amortized to interest expense over the remaining term of the 2029 Notes utilizing the effective interest method. See Note 9—Debt for further details.

Treasury Locks

During the first quarter of 2025, the Company entered into certain treasury lock contracts to reduce the forecasted interest rate risk associated with the issuance of the 2035 Notes. The treasury locks were terminated and settled upon issuance of the 2035 Notes with a loss of $1 million recognized under the caption “Gain (loss) on derivative instruments, net” on the condensed consolidated statements of operations for the three months ended March 31, 2025.

Balance Sheet Offsetting of Derivative Assets and Liabilities

The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 14—Fair Value Measurements for further details.

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Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Gains and Losses on Derivative Instruments

The following table summarizes the gains and losses on derivative instruments included in the condensed consolidated statements of operations:


	Three Months Ended March 31,
		2025		2024
		(In millions)
Gain (loss) on derivative instruments, net:
Commodity contracts		$	214	$	(16)
Interest rate swaps		11		(32)
2026 WTI Contingent Liability		2		—
Treasury locks		(1)		—
Total		$	226	$	(48)

Net cash received (paid) on settlements:
Commodity contracts		$	86	$	(4)

Treasury locks		(1)		—
Total		$	85	$	(4)

14. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As discussed in Note 14—Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, certain financial instruments of the Company are reported at fair value on the Company’s condensed consolidated balance sheets. The net amounts of derivative instruments are classified as current or noncurrent based on their anticipated settlement dates. The Company has an immaterial investment that is reported at fair value using observable, quoted stock prices and is included in “Other assets” on the Company’s condensed consolidated balance sheets at March 31, 2025 and December 31, 2024.

Viper LLC’s 2026 WTI Contingent Liability is reported at fair value using observable market data inputs and a Monte Carlo pricing model, which are considered Level 2 inputs within the fair value hierarchy. The 2026 WTI Contingent Liability was recorded in “Other accrued liabilities” on the Company’s condensed consolidated balance sheet at March 31, 2025 and in “Other long-term liabilities” on the Company’s consolidated balance sheet at December 31, 2024. The change in fair value of the 2026 WTI Contingent Liability is recognized in “Gain (loss) on derivative instruments, net” on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2025.

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Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

The following table provides the fair value of financial instruments that are recorded at fair value in the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024:


	As of March 31, 2025
	Level 1		Level 2		Level 3		Total Gross Fair Value		Gross Amounts Offset in Balance Sheet		Net Fair Value Presented in Balance Sheet
	(In millions)
Assets:
Current assets- Derivative instruments:

Commodity derivative instruments	$	—	$	420	$	—	$	420	$	(153)	$	267

Non-current assets- Derivative instruments:
Commodity derivative instruments	$	—	$	118	$	—	$	118	$	(57)	$	61
Non-current assets- Other assets:
Investment	$	49	$	—	$	—	$	49	$	—	$	49

Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments	$	—	$	199	$	—	$	199	$	(153)	$	46
Interest rate swaps	$	—	$	29	$	—	$	29	$	—	$	29
Current liabilities- Other accrued liabilities:
2026 WTI Contingent Liability	$	—	$	28	$	—	$	28	$	—	$	28
Non-current liabilities- Derivative instruments:
Commodity derivative instruments	$	—	$	66	$	—	$	66	$	(57)	$	9
Interest rate swaps	$	—	$	84	$	—	$	84	$	—	$	84


	As of December 31, 2024
	Level 1		Level 2		Level 3		Total Gross Fair Value		Gross Amounts Offset in Balance Sheet		Net Fair Value Presented in Balance Sheet
	(In millions)
Assets:
Current assets- Derivative instruments:

Commodity derivative instruments	$	—	$	274	$	—	$	274	$	(106)	$	168

Non-current assets- Derivative instruments:
Commodity derivative instruments	$	—	$	19	$	—	$	19	$	(17)	$	2
Non-current assets- Other assets:
Investment	$	8	$	—	$	—	$	8	$	—	$	8

Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments	$	—	$	121	$	—	$	121	$	(106)	$	15
Interest rate swaps	$	—	$	28	$	—	$	28	$	—	$	28
Non-current liabilities- Derivative instruments:
Commodity derivative instruments	$	—	$	27	$	—	$	27	$	(17)	$	10
Interest rate swaps	$	—	$	96	$	—	$	96	$	—	$	96
Non-current liabilities- Other long-term liabilities:
2026 WTI Contingent Liability	$	—	$	30	$	—	$	30	$	—	$	30

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Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Assets and Liabilities Not Recorded at Fair Value

The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets:


	March 31, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In millions)
Debt	$	13,910	$	13,606	$	12,975	$	12,564

The fair values of the Company’s credit agreement and Tranche A Loans and Viper LLC’s credit agreement approximate their carrying values based on borrowing rates available to the Company for bank loans with similar terms and maturities and are classified as Level 2 in the fair value hierarchy. The fair values of the outstanding notes were determined using the quoted market price at each period end, a Level 1 classification in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include those acquired in a business combination, inventory, proved and unproved oil and natural gas properties, equity method investments, asset retirement obligations and other long-lived assets that are written down to fair value when impaired or held for sale. Refer to Note 4—Acquisitions and Divestitures, Note 5—Endeavor Energy Resources, LP Acquisition and Note 6—Property and Equipment for additional discussion of nonrecurring fair value adjustments.

Fair Value of Financial Assets

The carrying amount of cash and cash equivalents, receivables, prepaid expenses and other current assets, payables, other accrued liabilities and funds held in escrow approximate their fair value because of the short-term nature of the instruments.

15. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
		2025		2024
		(In millions)
Supplemental disclosure of cash flow information:

Cash (paid) received for income taxes, net		$	(252)	$	(2)
Supplemental disclosure of non-cash transactions:
Accrued capital expenditures included in accounts payable and accrued expenses		$	746	$	674


Viper LLC's units issued for acquisition		$	119	$	—

16. COMMITMENTS AND CONTINGENCIES

The Company is a party to various routine legal proceedings, disputes and claims arising in the ordinary course of its business, including those that arise from interpretation of federal and state laws and regulations affecting the crude oil and natural gas industry, personal injury claims, title disputes, royalty disputes, contract claims, employment claims, claims alleging violations of antitrust laws, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of the Company’s current operations. While the ultimate outcome of the pending proceedings, disputes or claims and any resulting impact on the Company, cannot be predicted with certainty, the Company’s management believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s assessment is based on information known about the pending matters and its experience in contesting, litigating and settling similar matters. Actual outcomes could differ materially from the Company’s assessment. The Company records accrued liabilities for contingencies related to outstanding legal proceedings, disputes or claims when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated.

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

Environmental Matters

The United States Department of the Interior, Bureau of Safety and Environmental Enforcement, ordered several oil and gas operators, including a corporate predecessor of Energen Corporation, to perform decommissioning and reclamation activities related to a Louisiana offshore oil and gas production platform and related facilities. In response to the insolvency of the operator of record, the government ordered the former operators and/or alleged former lease record title owners to decommission the platform and related facilities. The Company has agreed to an arrangement with other operators to contribute to a trust to fund the decommissioning costs, however, the Company’s portion of such costs are not expected to be material.

Several coastal Louisiana parishes and the State of Louisiana have filed numerous lawsuits under Louisiana’s State and Local Coastal Resources Management Act (“SLCRMA”) against numerous oil and gas producers seeking damages for coastal erosion in or near oil fields located within Louisiana’s coastal zone. The Company is a defendant in five of these cases. The Company has exercised contractual indemnification rights where applicable. Plaintiffs’ SLCRMA theories are unprecedented, and there remains significant uncertainty about the claims (both as to scope and damages). Although the Company cannot predict the ultimate outcome of these matters, the Company believes the claims lack merit and intends to continue vigorously defending these lawsuits.

17. SUBSEQUENT EVENTS

First Quarter 2025 Dividend Declaration

On May 1, 2025, the board of directors of the Company declared a cash dividend for the first quarter of 2025 of $1.00 per share of common stock, payable on May 22, 2025 to its stockholders of record at the close of business on May 15, 2025. Future base and variable dividends are at the discretion of the Company’s board of directors.

2025 Drop Down Transaction

On May 1, 2025, the Company’s wholly owned subsidiary Endeavor Energy Resources, LP (“EER LP”) divested all of the issued and outstanding equity interests in 1979 Royalties, LP and 1979 Royalties GP, LLC (collectively, the “Endeavor Subsidiaries”), each of which is a subsidiary of the Company, pursuant to a definitive equity purchase agreement with Viper and Viper LLC in exchange for consideration consisting of (i) $1.0 billion in cash, and (ii) the issuance of 69.63 million Viper LLC units and an equivalent number of shares of Viper’s Class B common stock, subject to transaction costs and certain customary post-closing adjustments (the “2025 Drop Down”). Viper funded the cash consideration for the 2025 Drop Down with a portion of the proceeds from the Viper 2025 Equity Offering and borrowings under Viper LLC’s credit agreement. The 2025 Drop Down was accounted for as a transaction between entities under common control. On May 5, 2025, the Company used the cash proceeds received from the 2025 Drop Down to repay in full and terminate the $900 million Tranche A Loans.

EER LP can exchange some or all of the Viper LLC units received together with an equal number of shares of Viper’s Class B common stock for an equal number of shares of Viper’s Class A common stock. The mineral and royalty interests held and divested by the Endeavor Subsidiaries at closing of the 2025 Drop Down represent approximately 22,847 net royalty acres in the Permian Basin, 69% of which are operated by the Company, have an average net royalty interest of approximately 2.8% and current oil production of approximately 17,097 BO/d (the “Endeavor Mineral and Royalty Interests”). The Endeavor Mineral and Royalty Interests include interests in horizontal wells comprised of 6,055 gross proved developed production wells (of which approximately 29% are operated by the Company), 116 gross completed wells and 394 gross drilled but uncompleted wells, all of which are principally concentrated in the Midland Basin, with the balance located primarily in the Delaware and Williston Basins.

Immediately after the completion of the 2025 Drop Down, the Company beneficially owned approximately 53.7% of Viper’s outstanding common stock (or approximately 52% of Viper’s outstanding common stock, on a fully diluted basis after giving effect to the outstanding TWR Class B Option).

Double Eagle Acquisition

On April 1, 2025, the Company completed its acquisition of all of the issued and outstanding interests of DE Permian, LLC, DE IV Combo, LLC, and DE IV Operating, LLC, each of which are wholly owned subsidiaries of Double Eagle IV Midco, LCC (“Double Eagle”) (the “Double Eagle Acquisition”) for consideration of $3.0 billion in cash and approximately 6.84 million shares of the Company’s common stock, subject to transaction costs and certain customary post-closing

Diamondback Energy, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements - (Continued)

(Unaudited)

adjustments. The Double Eagle Acquisition consists of approximately 67,700 gross (40,000 net) acres, which are primarily located in the Midland Basin, and approximately 407 gross (342 net) horizontal locations in primary development targets. The Company funded the cash portion of the Double Eagle Acquisition through a combination of proceeds from the 2035 Notes, proceeds from the 2025 Term Loan Agreement, and borrowings on the Company’s credit facility.

Retirement of Notes

In the second quarter of 2025, the Company opportunistically repurchased principal amounts of $111 million of our 4.400% Senior Notes due 2051, $89 million of our 4.250% Senior Notes due 2052 and $20 million of our 5.750% Senior Notes due 2054 in open market transactions for total cash consideration, including accrued interest paid, of $167 million, at an average of 75.3% of par value.

18. SEGMENT INFORMATION

The Company is managed on a consolidated basis as one operating segment and one reportable segment, 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. This singular operating and reportable segment is comprised of (i) the Company and its wholly owned subsidiaries, and (ii) Viper and its consolidated subsidiaries, which have been aggregated due to the similarity in their economic characteristics, products and services, processes, type of customers, method of distribution for their products and the regulatory environment in which they operate. The upstream segment derives its revenue from customers through the sale of oil and natural gas products as well as other immaterial service contracts. See Note 3—Revenue from Contracts with Customers for further discussion of the Company’s sources of revenue.

The Chief Operating Decision Maker (“CODM”) uses the Company’s condensed consolidated financial results to make key operating decisions, assess performance and to allocate resources. The measures of segment profit or loss and total assets utilized by the CODM are net income and total assets as reported on the condensed consolidated statements of operations and the condensed consolidated balance sheets, respectively. The significant expense categories, their amounts and other segment items that are regularly provided to the CODM are those that are reported in the Company’s condensed consolidated statements of operations.

The CODM uses consolidated net income as a measure of profitability to evaluate segment performance and to make capital allocation decisions such as reinvestment in the business or return of capital through the payment of base and variable dividends or repurchases under the share repurchase program.

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