Diamondback Posts $2.15 Billion Q3 Adjusted Free Cash Flow, Updates 2026 Outlook

Diamondback Energy (NASDAQ: FANG) generated $2.15 billion of adjusted free cash flow in the third quarter of 2026 and increased its quarterly base dividend, while updating its full-year production and capital spending forecasts. The Permian Basin producer now expects approximately 1.015 million barrels of oil equivalent per day in 2026, up from its previous outlook of more than 1 million Boe/d, as total capital expenditures are projected to reach $3.95 billion to $4.00 billion.

The company reported third-quarter net income attributable to Diamondback of $1.60 billion. Consolidated adjusted EBITDA, a non-GAAP measure, was $3.75 billion, including $3.39 billion attributable to Diamondback.

Operating cash flow before working-capital changes totaled $3.17 billion. After $1.03 billion of cash capital expenditures, free cash flow was $2.15 billion, while adjusted free cash flow was also about $2.15 billion after excluding $2 million of merger and transaction expenses. For the first nine months of 2026, adjusted free cash flow reached $6.22 billion.

Diamondback produced 525,000 barrels of oil per day and 1.034 million Boe/d during the quarter. The company now forecasts full-year oil production of approximately 524,000 barrels per day, compared with its prior outlook of more than 522,000 barrels per day.

Higher dividend and continued debt reduction

Diamondback declared a quarterly base cash dividend of $1.18 per share, 7% above the preceding quarter and 18% higher year over year. The new rate equates to $4.72 per share annually. The company said the capital needed to maintain its projected 2026 oil production and fund the annual base dividend could be covered at a WTI oil price of $36 per barrel, assuming Henry Hub gas at $3 per Mcf and natural gas liquids at $20 per barrel, and excluding current hedges.

Diamondback has repurchased 44.2 million shares for $6.35 billion under its stock-buyback programs, with approximately $9.65 billion remaining under its current $16 billion authorization as of Oct. 30.

The company also continued to prioritize debt reduction. Diamondback said it had reduced standalone debt by approximately $2.4 billion during 2026 through the presentation date, including the October redemption of $698 million of 2026 senior notes and fourth-quarter open-market repurchases of $195 million in principal. Consolidated net debt stood at $12.82 billion on Sept. 30, representing 0.9 times annualized third-quarter adjusted EBITDA. Standalone liquidity was about $3.55 billion.

Production outlook comes with higher capital spending

Diamondback increased its full-year capital expenditure forecast to between $3.95 billion and $4.00 billion from approximately $3.90 billion. Operated drilling and completion spending is now expected to be $3.35 billion to $3.40 billion, compared with about $3.31 billion previously. Forecast net lateral footage completed rose to a range of 6.2 million to 6.6 million feet.

For the fourth quarter, management expects oil production of 518,000 to 528,000 barrels per day and total production of 1.025 million to 1.045 million Boe/d. Capital expenditures are projected at $1.00 billion to $1.05 billion, with cash taxes of $500 million to $560 million.

The company narrowed expected lease operating expenses to $5.95 to $6.20 per Boe from $5.90 to $6.40. Gathering, processing and transportation costs are now forecast at $1.30 to $1.50 per Boe, down from the prior range of $1.40 to $1.60, while production and ad valorem taxes are expected to equal approximately 6.5% of revenue rather than about 7%.

At commodity strip prices as of Oct. 30, Diamondback expects to generate approximately $9.2 billion of free cash flow in 2026. That forward-looking non-GAAP estimate assumes the company’s current operating plan and is not accompanied by a reconciliation to a comparable GAAP measure because several inputs, including working-capital movements and future commodity prices, cannot be reliably predicted.

Midland Basin costs and inventory

Diamondback expects Midland Basin drilling, completion and equipment costs of approximately $550 per lateral foot in 2026, 2% below 2025 and 12% below 2023. Its development model centers on multi-zone co-development, which the company said supports resource recovery while limiting degradation from later wells.

The company reported about 901,000 net acres across the Midland and Delaware basins and identified 8,854 gross locations that it estimates can generate at least a 10% return at oil prices of $50 per barrel, based on specified natural gas and NGL assumptions and 2026 budgeted well costs.

Diamondback also highlighted its emerging Midland Basin Barnett position, comprising approximately 224,000 net acres and an inventory of 878 gross, or 561 net, locations. The company said its Barnett wells with first production in 2025 had generated roughly 50% more cumulative oil over 12 months than its Midland Basin core average. Management expects full-field development to reduce Barnett well costs by about 20%, although those projections remain dependent on future execution.

Viper Energy, Diamondback’s publicly traded mineral and royalty subsidiary, produced an average of 69,100 barrels of oil per day in the quarter and generated $520 million of free cash flow. Of Diamondback’s 135 third-quarter completions, 101 were on Viper acreage, where Viper held an average net revenue interest of 8.9%.

Diamondback’s outlook remains exposed to commodity-price volatility, drilling schedules, cost inflation and the availability of rigs, equipment and oilfield services. The company also identified regulatory constraints, including restrictions on produced-water disposal, as well as infrastructure interruptions, reservoir-performance uncertainty, acquisition integration and its substantial indebtedness as factors that could cause actual production, spending and cash flow to differ from its forecasts.