Diamondback Energy, Inc. (FANG): PESTLE Analysis [Nov-2025 Updated]

If you're tracking Diamondback Energy, Inc. (FANG), the 2025 story isn't about chasing production; it's about cash discipline and smart consolidation. They've cut full-year capital expenditure (CapEx) to a tight range of $3.45 to $3.55 billion, prioritizing free cash flow even with crude prices averaging around $64.80 per barrel. This focus on efficiency, plus a heavy commitment to returning at least 50% of that cash flow to you, the stockholder, is the core of their strategy against a backdrop of complex federal policy and a demanding ESG environment. Let's break down the macro forces shaping their next move.

Political

The political environment for Diamondback Energy is a study in contrasts. Being a purely US-based producer offers a defintely valuable hedge; it shields them from the direct supply shocks that hit international competitors when Middle East geopolitical tensions flare up. Still, federal policy scrutiny on hydraulic fracturing (fracking) and methane emissions remains a persistent risk, forcing them to spend more on compliance.

To be fair, the state-level regulatory environment in Texas is generally favorable for oil and gas development, which is a major tailwind. But remember, global crude oil price stability is still tied to those distant geopolitical events. Your investment is protected from local supply risk, but not from global price swings.

The US-centric model is a strong shield, but not a perfect one.

Economic

The economic picture is one of calculated constraint. Diamondback Energy has cut its full-year 2025 capital expenditure (CapEx) to a range of $3.45 to $3.55 billion. This isn't a sign of weakness; it's a clear move to prioritize free cash flow (FCF) over production growth, a mature industry strategy.

Here's the quick math: Even with the realized crude price expected to average around $64.80 per barrel for 2025, the company delivered a strong Q3 2025 Adjusted FCF of $1.8 billion. That cash generation is why they're committed to returning at least 50% of quarterly FCF to stockholders. Plus, consolidation through major acquisitions, like the Double Eagle deal, is enhancing scale and driving cost synergies, making each dollar of CapEx work harder.

Cash flow is king right now.

Sociological

Sociological factors center on talent and public perception. The Permian Basin is a tight labor market, so competitive wages and employee retention are persistent challenges that drive up operational costs. This is not a cheap place to hire or keep a great team.

Public pressure for robust environmental, social, and governance (ESG) reporting is also increasing, and Diamondback Energy is responding by putting its money where its mouth is. ESG metrics now account for a significant 25% weighting in management's 2025 bonus program. This directly links executive compensation to non-financial performance, which is a big shift. They're also focusing on community investment and local workforce development in West Texas to build social license.

You can't pay lip service to ESG anymore.

Technological

Technology is the engine of efficiency here. Diamondback Energy is a technical leader in the Permian, focusing on multi-zone development in areas like the Wolfcamp and Spraberry formations to maximize resource recovery from each pad. This is how they get more oil for less drilling.

They are also utilizing technology for capital efficiency by drawing down their inventory of drilled but uncompleted wells (DUCs), which brings production online faster without the upfront drilling cost. Plus, they are exploring behind-the-meter power generation to lower inflationary electricity costs, a smart way to manage operating expenses. Technical leadership drives superior well spacing and recovery rates, which is a competitive edge.

Better tech means cheaper barrels.

Legal

The legal landscape presents both risks and unexpected benefits. Compliance risk from new federal and state regulations on air and water quality, especially concerning methane, is a constant operational challenge that requires significant investment in monitoring and abatement. This isn't going away.

However, tax code changes, such as the 'One Big Beautiful Bill,' provided a significant cash tax tailwind in 2025, boosting immediate cash flow. Still, the ongoing regulatory process for large-scale acquisitions, like the Endeavor Energy Resources transaction, adds execution risk and time to their growth strategy. The risk of litigation related to hydraulic fracturing and land use also remains a factor you must price in.

The tax tailwind was a welcome surprise.

Environmental

The environmental focus is on measurable, near-term goals. Diamondback Energy has a clear goal to eliminate routine flaring (burning off excess natural gas) by the end of 2025, a key metric for reducing waste and emissions. They've also committed to net zero Scope 1 greenhouse gas (GHG) emissions since 2021, primarily through voluntary carbon offsets.

Water management is another high-priority area, with a target to source over 65% of operational water from recycled sources, reducing reliance on freshwater aquifers. Plus, their use of Continuous Emissions Monitoring Systems (CEMS) now covers 96% of operated oil production, which provides transparent, auditable data on emissions. This is crucial for investor confidence.

They are putting hard numbers on their green claims.

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Political factors

US producer status offers a hedge against Middle East geopolitical supply shocks.

Diamondback Energy's core operation in the Permian Basin positions it as a purely domestic US producer, which acts as a fundamental hedge against the volatility stemming from Middle East geopolitical supply shocks. This is defintely a strategic advantage. When tensions flare in the Strait of Hormuz or other chokepoints, the resulting oil price spike benefits US-centric companies with lower political risk exposure to those regions.

For the 2025 fiscal year, Diamondback Energy's updated guidance projects full-year oil production between 480 and 495 MBO/d (thousand barrels of oil per day), with total volumes ranging from 857 to 900 MBOE/d (thousand barrels of oil equivalent per day). This massive domestic output provides a buffer for the US market and reinforces the company's value proposition as a stable, non-OPEC+ supplier. This is a clean one-liner: Domestic production insulates revenue from foreign political turmoil.

Federal policy scrutiny on hydraulic fracturing and methane emissions remains an ongoing risk.

The federal government's stance on environmental regulation presents a dual-track political risk for Permian operators like Diamondback Energy. While the risk of an outright ban on hydraulic fracturing (fracking) has been politically mitigated, the regulatory pressure on methane emissions is concrete and costly.

On the fracking front, the Republican-led House passed the Protecting American Energy Production Act in February 2025, which aims to prohibit a federal moratorium on the practice without Congressional consent. This action provides a political firewall against a federal ban, which a 2021 Department of Energy analysis projected would cause a 244 percent increase in natural gas prices by 2025 if implemented.

However, the U.S. Environmental Protection Agency (EPA) is phasing in comprehensive regulations to reduce methane emissions throughout 2024 and 2025. These rules target both new and existing oil and gas facilities and are projected to reduce methane emissions from the sector by nearly 80 percent compared to a scenario without the rule. Here's the quick math: stricter monitoring and leak detection mandates translate directly into higher compliance capital expenditures and operating costs for all Permian operators, including Diamondback Energy.

State-level regulatory environment in Texas generally favors oil and gas development.

The state of Texas maintains a highly favorable regulatory environment for the oil and gas industry, largely due to the Texas Railroad Commission (RRC) and supportive state legislation. The RRC, which regulates the industry, has actively sought to streamline operations.

In July 2025, the RRC announced the formation of the Delivering Oil and Gas Efficiently Task Force (DOGE) specifically to cut regulatory delays and update agency systems, signaling a clear intent to support faster permitting and project timelines. Furthermore, the 2025 Texas Legislative Session passed critical bills that reduce industry liability and encourage efficiency:

• HB 49 (Effective September 1, 2025): Limits tort liability for producers involved in the beneficial reuse of treated oil and gas wastewater, provided they comply with RRC and Texas Commission on Environmental Quality (TCEQ) regulations.
• SB 1150: Mandates that oil and gas companies plug inactive wells after 15 years, a measure that reduces the long-term risk of methane leaks but requires a manageable increase in well-plugging capital.

This state-level support is a significant competitive advantage for Diamondback Energy, which is concentrated in the Permian Basin, allowing for more efficient capital deployment compared to operators in states with more restrictive policies.

Geopolitical tensions in regions like the Middle East directly impact global crude oil price stability.

Despite Diamondback Energy's domestic focus, its revenue is still tied to the global price of crude oil, which remains acutely sensitive to geopolitical risk in the Middle East. The political instability in the region creates a substantial 'geopolitical premium' in the price of oil.

For example, in mid-November 2025, crude oil prices surged dramatically due to converging flashpoints in the Middle East, which reignited supply disruption fears. This market reaction resulted in:

• WTI crude jumping 2.39% to settle at $60.09 per barrel.
• Brent crude rising 2.19% to $64.39 per barrel.

The ongoing threat to critical shipping lanes, such as the Strait of Hormuz, where Iranian tanker seizure activities have been noted in November 2025, keeps this price volatility high. For Diamondback Energy, this means that while they don't face the direct operational risk, their profitability is subject to sudden, politically-driven price swings that can radically alter free cash flow projections quarter-to-quarter.

Finance: Track the spread between WTI and Brent crude daily, as a widening gap often signals heightened geopolitical risk premium that directly impacts your realized prices.

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Economic factors

Diamondback Energy's economic position in 2025 is defined by disciplined capital allocation and a strategic pivot toward maximizing Free Cash Flow (FCF) per share, even amid volatile commodity prices. The key takeaway is that the company is translating operational efficiencies and major acquisitions into superior shareholder returns, prioritizing capital discipline over aggressive production growth.

This focus is a direct response to the market's demand for cash returns, and it's backed by strong financial performance. For example, year-to-date through September 2025, Diamondback generated approximately 15% more Adjusted Free Cash Flow per share compared to the same period in 2024, despite the average realized oil price declining by about 13%. That's the real measure of operational resilience.

Capital Discipline and Cash Flow Generation

In a macro environment the company describes as a yellow light, capital spending has been significantly tightened to protect cash flow. The full-year 2025 cash Capital Expenditure (CapEx) guidance was reduced to a range of $3.45 to $3.55 billion. This latest figure is a reduction of approximately $500 million, or about 13%, from the original 2025 budget of $4.0 billion, demonstrating a clear commitment to capital efficiency. The focus is on doing more with less, which is a smart move when oil price signals are uncertain.

The operational efficiency gains are clear in the Free Cash Flow figures. Diamondback Energy delivered a strong Q3 2025 Adjusted Free Cash Flow of $1.8 billion. This performance was achieved while maintaining a low reinvestment rate of only 31% in Q3, meaning a large portion of cash flow is available for other uses like debt reduction and shareholder returns.

Commodity Price Environment and Realized Value

The economic reality for Diamondback in 2025 is a lower price deck compared to the previous year, but the company's low-cost structure is mitigating the impact. The average realized oil price year-to-date through September 2025 was approximately $66 per barrel, a notable drop from around $76 per barrel in the same 2024 period. This is the price environment they are navigating. The company's unhedged realized cash margin remained robust at 73% in Q3, a testament to their low total operating cash expenses of $10.05 per barrel of oil equivalent (Boe).

Shareholder Returns and Strategic Consolidation

The core of Diamondback's capital allocation strategy is a firm commitment to return at least 50% of quarterly Free Cash Flow to stockholders. In Q3 2025, the company delivered on this promise, returning approximately $892 million to shareholders through base dividends and accelerated share repurchases. This included a record quarterly buyback of approximately 4.3 million shares for about $603 million.

Consolidation is a major economic driver. The acquisition of Double Eagle IV Midco, LLC, which closed in Q2 2025, is a prime example of enhancing scale and operational leverage. This deal is expected to generate annual cost savings of over $300 million through integrated operations and infrastructure synergies. Plus, the company is committed to divesting at least $1.5 billion in non-core assets to accelerate debt reduction, targeting a long-term net debt range of $6 billion to $8 billion.

• Return at least 50% of quarterly FCF to shareholders.
• Double Eagle acquisition expected to yield over $300 million in annual cost synergies.
• Targeting at least $1.5 billion from non-core asset sales for debt reduction.

What this estimate hides is the potential for further debt reduction, as the company has been opportunistically repurchasing senior notes at a discount, which lowers future interest expense and defintely strengthens the balance sheet.

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Social factors

You're operating in the Permian Basin, where the social landscape-specifically labor and public perception-creates both a significant cost risk and a clear mandate for corporate action. Diamondback Energy's strategy for 2025 is to directly link executive performance to social and environmental outcomes, a critical move to stabilize its workforce and manage increasing public scrutiny.

Competitive labor market and employee retention challenges persist in the Permian Basin.

The Permian Basin labor market remains intensely competitive in 2025, driven by high demand for specialized oil and gas skills and a severe cost-of-living crisis. This dynamic creates a constant retention challenge. To be fair, attracting and keeping technical talent is the single biggest operational headwind outside of commodity price volatility, especially for skilled positions like petroleum, electrical, and mechanical engineering.

The quick math on living costs shows the pressure: as of early 2025, the average rental cost in Midland, Texas, reached approximately $1,600, with Odessa close behind at about $1,500. This skyrocketing housing cost, which is significantly higher than in comparable West Texas cities, forces companies like Diamondback Energy to invest heavily in non-traditional compensation and retention programs to maintain a stable workforce.

Public pressure for environmental, social, and governance (ESG) reporting is increasing.

Public and investor pressure for transparent Environmental, Social, and Governance (ESG) reporting continues to escalate, pushing Diamondback Energy to formalize and quantify its social impact. The company is guided by established frameworks, including the Sustainability Accounting Standards Board (SASB), which helps translate operational data into investor-ready metrics.

This commitment is backed by tangible, near-term goals. For instance, the company has a long-term goal to eliminate routine flaring (the burning of natural gas) by the end of 2025. They also target a recycled water rate of more than 65% of water used in operations by the same 2025 deadline, directly addressing the social concern of water scarcity in West Texas.

ESG metrics account for a 25% weighting in management's 2025 bonus program.

Diamondback Energy has embedded its ESG commitment directly into its executive compensation structure, ensuring accountability from the top down. The company's short-term incentive (STI) compensation for management, which includes the annual cash bonus, assigns a 25% weighting to specific, measurable ESG performance metrics. This weighting was increased from 20% in prior years to underscore the importance of these non-financial factors.

This is a clear signal to the market that ESG performance is a material business driver. If onboarding takes 14+ days, churn risk rises. The performance metrics tied to this 25% weighting are precise and quantifiable, focusing heavily on environmental and safety outcomes:

• Flaring intensity (reducing gas waste)
• Greenhouse Gas (GHG) intensity (reducing emissions)
• Recycled water percentage (managing water use)
• Spill prevention (operational safety)
• Total Recordable Incident Rate (TRIR) (employee safety)

Focus on community investment and local workforce development in West Texas.

A core part of Diamondback Energy's social license to operate (SLO) in the Permian Basin is its commitment to community investment and local workforce development. Operating almost exclusively in West Texas, the company recognizes that its long-term success is tied to the prosperity and stability of the local communities.

The focus is on engagement and development, not just donations. A concrete example in 2025 was the partnership with the City of Midland and other regional leaders to host the 2025 Permian Basin Oil & Gas Legislative Summit in January. This event was designed to educate new state legislators on the industry's economic contribution-projected to range from $145 billion to $219 billion in gross product for the Texas economy by 2050-and the importance of responsible energy production.

This table outlines the dual pressure points of the social factor in 2025:

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Technological factors

Operational focus on multi-zone development (e.g., Wolfcamp and Spraberry formations) for maximum resource recovery.

Diamondback Energy, Inc. is a technical leader in the Permian Basin, using advanced drilling and completion technology to maximize resource recovery across multiple stacked pay zones (multiple layers of oil- and gas-bearing rock) simultaneously. You see this focus clearly in their 2025 operational mix, which is heavily weighted toward the Midland Basin's most prolific zones.

In the first half of 2025, the company completed 239 gross operated wells across the Permian Basin. The majority of this activity was concentrated in the Midland Basin, specifically targeting the Wolfcamp and Spraberry formations. This multi-zone strategy allows for higher-density drilling and better capital deployment across their massive 870,000 net acres of leasehold.

Here is a quick breakdown of the multi-zone completions in the Midland Basin for the first half of 2025, showing their technical focus on the most economic benches:

The average lateral length for the wells completed in the first six months of 2025 was a substantial 12,656 feet, which is a technical feat that directly drives higher recovery rates and better overall well economics. Longer laterals mean more reservoir contact for each well. It's just better math.

Utilizing technology for capital efficiency by drawing down drilled but uncompleted wells (DUCs).

The core of Diamondback Energy's 2025 capital plan is a disciplined focus on capital efficiency, which is being achieved, in part, by strategically completing their inventory of Drilled but Uncompleted wells (DUCs). This is a smart way to get production online without the immediate, full cost of new drilling. The DUC draw-down strategy, coupled with efficiency gains from recent acquisitions, has been a major driver of their improved financial metrics.

The company's full-year 2025 cash capital expenditures guidance was lowered to a range of $3.4 billion to $3.6 billion, a reduction of $500 million from the original guidance midpoint. Despite this significant capital cut, the full-year oil production guidance was raised to a range of 495 - 498 MBO/d.

This operational discipline translates to a huge win for investors: the implied full year 2025 oil production per million dollars of cash capital expenditures is 50.9 MBO per $MM of CAPEX. That's about 14% better than their initial 2025 guidance. They are getting more oil for less money. That's the definition of efficiency.

Exploring behind-the-meter power generation to lower inflationary electricity costs.

One of the most inflationary pieces of a shale operator's cash cost structure is electricity, which falls under Lease Operating Expenses (LOE). To combat this, Diamondback Energy is actively exploring 'behind-the-meter' power generation solutions. This means using their own produced natural gas to generate electricity directly on site, bypassing the volatile Texas power grid and high utility costs.

This initiative is critical because operating cash expenses were already at $10.05 per Boe in Q3 2025. Reducing the electricity component of this cost is a direct way to boost margins. The company is looking at a few interesting, long-term technological plays to secure a lower, more stable cost base:

• Partnering to develop natural gas-fired power plants in the Permian Basin.
• Securing a nonbinding letter of intent with Oklo Inc. to deploy small nuclear reactors for future electricity needs.

This is a 5- to 10-year outlook, not a near-term fix, but it defintely shows a proactive technical strategy to lock in lower costs and hedge against energy inflation.

Technical leadership in the basin drives superior well spacing and recovery rates.

Diamondback Energy's management has stated they are a technical leader in the Permian Basin, not just a cost leader. This technical edge is what allows them to achieve superior well spacing and resource recovery compared to peers. Their cost structure enables them to put 'another couple wells in every section'.

The technology driving this is the continuous improvement in drilling and completion (D&C) operations. For example, the company is utilizing advanced simulfrac operations, where they are completing 3,500 lateral feet a day. This high-speed, high-efficiency completion work is key to drawing down the DUC inventory quickly and maintaining production volumes.

The combination of long laterals-averaging over 12,000 feet year-to-date in 2025-and high-density, multi-zone development is the technical blueprint that ensures they are maximizing the recovery of oil and gas from their Tier-1 acreage. This is why they can cut capital spending by $500 million and still raise their production guidance.

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Legal factors

You're looking at Diamondback Energy, Inc.'s legal landscape in 2025, and the key takeaway is that regulatory compliance and tax policy are now inseparable from capital allocation decisions. The company has navigated a major M&A regulatory hurdle, but the near-term focus shifts to managing a complex, lower cash tax rate environment and mitigating escalating environmental litigation risks.

Compliance risk from new federal and state regulations on air and water quality, especially methane.

The regulatory environment for air and water quality, particularly concerning methane, remains a significant compliance and cost risk, even in the Permian Basin's favorable Texas jurisdiction. The Environmental Protection Agency (EPA) continues to tighten rules on methane emissions, forcing companies like Diamondback Energy, Inc. to make substantial infrastructure investments to avoid punitive fines and operational shutdowns. To be fair, the company is proactive here.

For 2025, environmental, social, and governance (ESG) performance is a tangible financial factor, carrying a 25% weighting in the management team's incentive compensation scorecard. This directly ties executive pay to meeting specific environmental targets, which include an updated goal to reduce methane intensity by at least 20% from 2024 levels by 2030. A more immediate, clear action is the commitment to eliminate routine flaring (burning off excess natural gas) by the end of 2025, as defined by the World Bank's Zero Routine Flaring initiative. This requires defintely heavy capital outlay for gas gathering and processing infrastructure, but it cuts future compliance risk.

• Methane Intensity Target: Reduce by at least 20% from 2024 levels by 2030.
• Routine Flaring: Eliminate by the end of 2025.
• Recycled Water Use: Target to source >65% of water from recycled sources (achieved 73% in 2023).

Tax code changes, like the 'One Big Beautiful Bill,' provided a cash tax tailwind in 2025.

The passage of the 'One Big Beautiful Bill Act' on July 4, 2025, created a material cash tax tailwind for Diamondback Energy, Inc. This legislation, which permanently extended several key business tax breaks from the 2017 Tax Cuts and Jobs Act (TCJA), directly benefits capital-intensive oil and gas operators. The most impactful provision is the restoration of 100% bonus depreciation for short-lived investments, allowing the company to immediately expense the full cost of new drilling equipment, pipelines, and other capital expenditures.

Here's the quick math: accelerated depreciation creates a large gap between the statutory corporate tax rate and the actual cash tax rate (the cash tax rate is what matters for free cash flow). The company's updated full-year 2025 guidance reflects this, projecting a cash tax rate of only 15% - 18% of pre-tax income, significantly lower than the 23% statutory corporate rate. This tax benefit was so pronounced that it led to a 'significant cash tax true-up' in the third quarter of 2025, boosting operating cash flow and Free Cash Flow.

Ongoing regulatory process for large-scale acquisitions, like the Endeavor Energy Resources transaction.

The regulatory process for the massive $26 billion acquisition of Endeavor Energy Resources is complete, having closed on September 11, 2024. The legal risk has shifted from anti-trust review to the complex compliance and integration of the combined entity's regulatory footprint across the Permian Basin. This merger created a premier independent operator with significant scale, which naturally invites greater scrutiny from federal and state regulators on environmental and operational compliance.

The combined company's sheer size means any future compliance lapse will have a magnified effect. For instance, the pro forma footprint is approximately 838,000 net acres, and the projected average daily production is 816,000 barrels of oil equivalent per day (BOE/d). Integrating the environmental compliance systems, permits, and reporting from Endeavor Energy Resources into Diamondback Energy, Inc.'s existing framework is a major near-term legal and operational task. One clean one-liner: The regulatory clearance is done, but the compliance work is just starting.

Risk of litigation related to hydraulic fracturing (fracking) and land use remains a factor.

Litigation risk from hydraulic fracturing (fracking) and land use disputes is a constant operational factor in the Permian Basin, where surface and mineral rights are often severed and complex. These lawsuits are typically state-level, focusing on subsurface trespass, implied lease covenants, and surface use agreements (SUAs). For example, a May 2025 case, Williams O & G Resources, LLC v. Diamondback Energy, Inc., centered on a dispute over the Texas Relinquishment Act and the breach of a Surface Use Agreement regarding frac-water purchases.

Specifically, the plaintiff alleged Diamondback Energy, Inc. violated the SUA by purchasing water from off-lease sources for fracking operations, even though surface water was available on the premises. While this specific case involved complex interpretation of Texas property law, it underscores the ongoing risk of litigation over fundamental operational inputs like water sourcing and disposal. This kind of legal action, even if successfully defended, consumes significant management time and legal spend, which ultimately impacts shareholder value.

Finance: Track the $270 million - $350 million Q4 2025 cash tax guidance against actuals to confirm the tax tailwind's magnitude by the end of the fiscal year.

Diamondback Energy, Inc. (FANG) - PESTLE Analysis: Environmental factors

Goal to eliminate routine flaring by the end of 2025

You're looking at an industry where natural gas flaring-the burning off of excess gas-is a major environmental and economic issue. Diamondback Energy, Inc. is defintely pushing to be a leader here, setting a clear, near-term target to eliminate routine flaring by the end of 2025, aligning with the World Bank's 'Zero Routine Flaring by 2030' initiative.

This isn't just a paper goal; it's tied directly to management's wallet. Flaring intensity is one of five key environmental and safety metrics that make up a 25% weighting in the 2025 management scorecard. The company's strategy involves investing in infrastructure, like gas gathering lines, and new technology, such as their $20 million equity investment in Verde Clean Fuels, which aims to capture wasted natural gas and convert it into gasoline.

Commitment to 'net zero' Scope 1 greenhouse gas (GHG) emissions since 2021 via voluntary carbon offsets

The company has maintained a 'Net Zero Now' commitment since January 1, 2021, ensuring every hydrocarbon molecule produced results in zero net Scope 1 greenhouse gas (GHG) emissions. This is achieved through a two-pronged approach: aggressive emissions reduction and the purchase of voluntary carbon offsets (carbon credits).

Here's the quick math on the offset side: Diamondback Energy retired carbon credits to offset approximately 1.8 million metric tons of CO2e emitted during 2023. That's a massive volume, and it's a crucial bridge strategy while they invest in income-generating projects designed to more directly offset their remaining Scope 1 emissions over time.

The company is also focused on broader intensity reduction, targeting a decrease in Scope 1 + 2 GHG intensity by at least 50% from 2020 levels by 2030, and maintaining peer-leading Scope 1 GHG intensity at 2024 levels.

High focus on water management, with a target to source over 65% of operational water from recycled sources

Operating in the Permian Basin, a water-scarce region, makes water management a critical factor. Diamondback Energy set a 2025 target to source over 65% of the water used for drilling and completion operations from recycled sources.

The good news is they hit this goal early. They achieved a water recycling rate of 73% in 2023, exceeding their 2025 target by 8 percentage points. This is a huge win, as it minimizes their draw on local freshwater resources, using a blend of recycled produced water and brackish water instead.

What this estimate hides is the complexity of the infrastructure needed, but the results show the investment is paying off:

• 2025 Target: Source >65% of operational water from recycled sources.
• 2023 Actual: Sourced 73% of operational water from recycled sources.

CEMS (Continuous Emissions Monitoring Systems) cover 96% of operated oil production, improving emissions tracking

Better data leads to better decisions, and that's where Continuous Emissions Monitoring Systems (CEMS) come in. CEMS are essential for accurately tracking methane and other volatile organic compound (VOC) emissions, which are key risks in the oil and gas sector.

The company's goal was to implement CEMS on facilities to cover more than 90% of operated oil production by the end of 2023. They achieved 96% in 2023, a strong indicator of their commitment to operational transparency and emissions control. This high coverage allows for quicker detection and repair of leaks, directly reducing their environmental footprint.

This focus on real-time data is a competitive advantage, allowing the company to demonstrate a lower emissions intensity to investors and customers.