Diamondback Energyhas reported financial and operating results for the second quarter ended June 30, 2021.

SECOND QUARTER 2021 HIGHLIGHTS

• Q2 2021 average production of 242.5 MBO/d (401.5 MBOE/d)
• Generated Q2 2021 cash flow from operating activities of $954 million; Operating Cash Flow Before Working Capital Changes (as defined and reconciled below) of $944 million, or $5.19 per diluted share
• Q2 2021 cash capital expenditures of $366 million; Q2 2021 activity-based capital expenditures incurred of approximately $418 million
• Generated Q2 2021 Free Cash Flow (as defined and reconciled below) of $578 million, or $3.18 per diluted share
• Increasing annual dividend by 12.5% to $1.80 per share; declared Q2 2021 cash dividend of $0.45 per share payable on August 19, 2021; implies a 2.3% annualized yield based on the July 30, 2021 share closing price of $77.13
• Closed previously announced divestitures of non-core Permian assets for net proceeds of $82 million
• Previously announced divestiture of Williston Basin assets expected to close in late Q3 2021
• As previously announced, Diamondback fully redeemed the $191 million aggregate principal amount of remaining 4.625% 2021 Energen bonds in June
• Announced full redemption of $432 million remaining aggregate principal amount of 5.375% bonds due 2025
• Flared 1.0% (2.0% including QEP) of gross natural gas production in the second quarter of 2021; 0.9% (1.7% including QEP) in the first half of 2021

2021 GUIDANCE UPDATE

• Increasing full year 2021 oil production guidance to 219 - 222 MBO/d (363 - 370 MBOE/d), up from 212 - 216 MBO/d (350 - 360 MBOE/d) previously
• Lowering full year 2021 cash CAPEX guidance to $1.525 - $1.625 billion, down 6% at the midpoint from $1.60 - $1.75 billion previously
• Initiating Q3 2021 oil production guidance of 233 - 239 MBO/d (388 - 398 MBOE/d); includes 15 - 17 MBO/d (25 - 29 MBOE/d) attributable to a full quarter of estimated net Q3 2021 Williston Basin production
• Initiating Q3 2021 Permian Basin oil production guidance of 218 - 222 MBO/d (363 - 370 MBOE/d)
• Q3 2021 cash CAPEX guidance of $430 - $480 million
• Diamondback believes it can maintain Q4 2021 Permian Basin oil production through full year 2022 with 10% - 15% more capital than the midpoint of its revised 2021 capital budget

“Diamondback built on its track record of execution in the second quarter, generating $578 million of Free Cash Flow. Operationally, capital efficiency continues to improve. As a result, we are cutting our 2021 capital budget by $100 million due to cost control and volume outperformance. Put simply, we are doing more with less: producing more barrels with less capital, fewer completed wells and fewer drilling rigs,” stated Travis Stice, Chief Executive Officer of Diamondback.

Mr. Stice continued, “From a macro perspective, the world oil market is still artificially undersupplied and there is not a call on shale production growth today. Therefore, Diamondback will maintain capital discipline by holding oil production flat for the foreseeable future. If this maintenance plan continues into 2022, we expect to be able to hold fourth quarter 2021 Permian oil production flat with 10 - 15% more capital than our current 2021 plan, demonstrating our improved capital efficiency that incorporates a full year of spend on the assets we acquired in the first quarter. We still believe the best path to long term value creation for stockholders today is achieved through flat oil production, lower costs and return of Free Cash Flow.”

“As we have stated in the past, an increased return will not hinder our efforts to continue to pay down gross debt, and we have proven that again today with our second dividend increase this year, bringing our year-to-date dividend growth to 20%. Additionally, beginning in 2022, we plan to return 50% of our Free Cash Flow to our stockholders. The form of this additional capital return will be decided by the Board at the appropriate time, but we intend to be flexible based on which opportunities we believe present the best return to our stockholders at that time.”

During the second quarter of 2021, Diamondback drilled 47 gross horizontal wells in the Midland Basin and nine gross horizontal wells in the Delaware Basin. The Company turned 47 operated horizontal wells to production in the Midland Basin, 14 operated horizontal wells to production in the Delaware Basin and four operated horizontal wells in the Williston Basin. The average lateral length for the wells completed during the second quarter was 11,137 feet. Operated completions during the second quarter consisted of 19 Lower Spraberry wells, ten Wolfcamp A wells, nine Middle Spraberry wells, eight Jo Mill wells, six Wolfcamp B wells, five Third Bone Spring wells, two Second Bone Spring wells, two Dean wells, two Bakken wells and two Three Forks wells.

In the first half of 2021, Diamondback drilled 88 gross horizontal wells in the Midland Basin and 17 gross horizontal wells in the Delaware Basin. The Company turned 89 operated horizontal wells to production in the Midland Basin, 39 operated horizontal wells in the Delaware Basin and four operated horizontal wells in the Williston Basin. The average lateral length for wells completed during the first six months of 2021 was 10,729 feet, and consisted of 38 Wolfcamp A wells, 29 Lower Spraberry wells, 15 Middle Spraberry wells, 13 Jo Mill wells, 13 Wolfcamp B wells, eight Second Bone Spring wells, eight Third Bone Spring wells, three Dean wells, two Bakken wells, two Three Forks wells and one Barnett well.

FINANCIAL UPDATE

Diamondback's second quarter 2021 net income was $311 million, or $1.71 per diluted share. Adjusted net income (a non-GAAP financial measure as defined and reconciled below) was $437 million, or $2.40 per diluted share.

Second quarter 2021 Consolidated Adjusted EBITDA (as defined and reconciled below) was $1,001 million. Adjusted EBITDA net of non-controlling interest was $971 million.

Second quarter 2021 average unhedged realized prices were $63.22 per barrel of oil, $2.40 per Mcf of natural gas and $23.41 per barrel of natural gas liquids ("NGLs"), resulting in a total equivalent unhedged price of $45.63 per BOE.

Diamondback's cash operating costs for the second quarter of 2021 were $9.33 per BOE, including lease operating expenses ("LOE") of $4.30 per BOE, cash general and administrative ("G&A") expenses of $0.63 per BOE, production and ad valorem taxes of $2.87 per BOE and gathering and transportation expenses of $1.53 per BOE. LOE increased quarter over quarter due to the integration of QEP's Williston Basin assets which carry a higher expense structure than Diamondback's Permian Basin assets. LOE is expected to decrease when the previously announced sale of the Williston Basin assets closes.

As of June 30, 2021, Diamondback had $284 million in standalone cash and no borrowings outstanding under its revolving credit facility, with approximately $1.6 billion available for future borrowing under the facility and $1.9 billion of total liquidity.

During the second quarter of 2021, Diamondback spent $330 million on drilling and completion, $10 million on midstream, $14 million on infrastructure and $12 million on non-operated properties, for total cash capital expenditures of $366 million. During the first half of 2021, Diamondback has spent $603 million on drilling and completions, $17 million on midstream, $22 million on infrastructure and $20 million on non-operated properties, for total cash capital expenditures of $662 million.

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