Diamondback Energy (NASDAQ:FANG) focused much of its fourth-quarter 2025 earnings call on a growing position in the Barnett and Woodford interval in the Midland Basin, outlining early well results, plans to ramp development, and efforts to improve drilling and completion costs. Management also discussed operational efficiencies in its core Midland program, early-stage surfactant testing, and an emerging data center-related gas marketing opportunity.
Barnett/Woodford position: productivity strong, cost reduction is the key
CEO Kaes Van’t Hof said Diamondback has built a Barnett position that was “essentially almost zero acres a couple of years ago,” growing it without “cap raises,” “press releases,” or acquiring a “private equity-backed entity.” He described the acreage as “in our backyard” and emphasized that the company is not paying “$3 million, $4 million, $5 million, $6 million a stick” to assemble it.
Management repeatedly stressed that the play’s next step is driving costs down as development shifts from delineation to full-field execution. Van’t Hof said Barnett wells are currently around “$1,000 a foot,” and he framed a target of roughly “$800 a foot” as the threshold for returns to become competitive, particularly when paired with higher oil productivity.
Product mix and well performance: oil uplift alongside higher gas
Analysts pressed management on Barnett product mix given higher gas-oil ratios (GORs). Barkmann said initial GORs were higher, around “3,000,” but described a “flatter GOR profile” through the first year compared with core zones. He said core zones start around “80% oil” for the first six months before declining to about “75% oil,” while the Barnett plan discussed on the call was “67%” and “basically flat for the 1st 12 months.”
On estimated recoveries, Barkmann told analysts the uplift seen at 12 months “roughly equates” to what the company sees on an EUR basis. He pegged core zones at about “50 BO a foot” and said the Barnett is “pretty close to about 75 BO a foot” for ultimate recovery.
Van’t Hof also tied the Barnett’s gas exposure to broader basin fundamentals, noting the Permian is expected to see “a lot of gas takeaway coming on in the 2027–2030 time frame.” He said improved gas and liquids pricing could benefit returns in the “2027+ time frame,” while also noting Barnett leasing differs from typical Permian HBP dynamics.
Development plans: drilling and completion changes, ramp expected in 2027
COO Danny Wesson outlined how Diamondback expects to reduce Barnett well costs by applying techniques used in its core Midland development, including multi-pad development, multi-well pads, and simul-frac operations. He said the company has been conservative during delineation, prioritizing “successful wellbores,” but expects changes in drilling plans and a move toward longer laterals to improve economics. Diamondback is targeting “15,000 foot laterals” in the Barnett where possible.
Later in the call, management provided a clearer activity cadence. Wesson said the company expects to drill about “30 wells” in 2026 and “pop” (bring online) “closer to 10,” with activity “ramp[ing] up significantly in 2027.” He described a program closer to “100 wells” in 2027 on a growth basis.
On operational differences versus the Midland core, Wesson said Barnett wells use oil-based mud and require “an extra string of pipe in the vertical portion of the hole.” He also noted larger completion jobs aimed at four wells per section and that the company has been doing more single-well or zipper-frac work to date, with plans to shift toward larger multi-well pad development and simul-frac as the program matures.
Operational execution: continuous pumping and ongoing cost focus in the core
In the Midland Basin core, Wesson said Diamondback’s completion teams have been implementing continuous pumping across simul-frac electric fleets, which reduces downtime between well swaps. He said the company has been averaging about “4,500-ish feet a day” on those fleets and has seen results “above 5,500 feet per day.” Management said improved cycle times could eventually allow the company to reduce frac crews and still meet production targets, though Wesson cautioned that continuous pumping may not translate into major direct savings from service providers due to added equipment requirements.
When asked about further cost opportunities in the core, management cited continued drilling improvements—moving average spud-to-TD times closer to the fastest wells—as well as completion efficiency and supply-chain efforts around consumables such as fuel and supporting services.
Surfactants, data centers, and other topics
Management also discussed early surfactant testing aimed at boosting production from existing wells. Van’t Hof said the company ran a “60-well test” in the second half of 2025, focusing initially on production-side applications. He described the treatments as “fairly cheap jobs, about a half a million dollars,” often performed when the company had to pull an ESP anyway. He said some wells showed “multi-hundreds of barrels a day uplift,” and that the average uplift has been “about 100 barrels a day.” Barkmann called the results early but said a “handful” of DSUs have shown “really exciting results,” and the team is refining chemical design and test variables.
On a separate initiative, CFO Jere Thompson said Diamondback continues to pursue data center opportunities on its surface footprint and believes it can structure a power purchase agreement that provides “material uplift to nat gas pricing.” Van’t Hof said the company would not announce anything until agreements are “completely binding.”
Other items discussed included:
- Operating costs: Management said 2026 LOE headwinds include higher basin power prices and increased workover and plugging activity, while GP&T impacts include CPI escalators and more molecules taken in kind.
- Tariffs and tubulars: Management said casing procurement is repriced quarterly and that inflation has been more pronounced on casing than tubing, with uncertainty around tariff impacts depending on regulatory outcomes.
- Reserves and accounting: Van’t Hof said most reserve revisions were price-driven, and that performance-related changes were not meaningful. He also pointed to fair value accounting effects from acquisitions booked at higher commodity assumptions, specifically citing the Endeavor transaction being recorded at “$80 oil and $4 Henry Hub.”
- Strategy: Van’t Hof said consolidation has reduced M&A opportunities, leading the company to allocate more effort to organic resource expansion and enhancement efforts such as the Barnett program and surfactants, while still monitoring basin deal flow.
Throughout the call, management emphasized a cautious macro posture using its “stoplight” framework, saying the company is starting 2026 in a “quasi yellow light” approach—keeping oil production as the key input and adjusting capital spending based on conditions and execution, with potential for capital reductions later in the year if cost and operational targets are met.
About Diamondback Energy (NASDAQ:FANG)
Diamondback Energy, Inc (NASDAQ: FANG) is an independent oil and natural gas company focused on the development, exploration and production of unconventional resources in the Permian Basin. Headquartered in Midland, Texas, the company concentrates its operations in the core Midland and Delaware sub‑basins of West Texas and southeastern New Mexico, where it pursues contiguous acreage positions to support repeatable drilling programs.
Diamondback’s activities span the upstream value chain, including leasehold acquisition, well planning, drilling, completion and production optimization.
