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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-35700
 
Diamondback Energy, Inc.
(Exact Name of Registrant As Specified in Its Charter)
DE
45-4502447
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
500 West Texas
Suite 1200
Midland,TX
79701
(Address of principal executive offices)
(Zip code)
(432) 221-7400
(Registrant’s telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockFANGThe Nasdaq Stock Market LLC
(NASDAQ Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No   

As of October 29, 2021, the registrant had 181,174,549 shares of common stock outstanding.


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DIAMONDBACK ENERGY, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
Page


i

Table of Contents
GLOSSARY OF OIL AND NATURAL GAS TERMS
The following is a glossary of certain oil and natural gas industry terms that are used in this Quarterly Report on Form 10-Q (this “report”):
BasinA large depression on the earth’s surface in which sediments accumulate.
Bbl or barrelOne stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other liquid hydrocarbons.
BOOne barrel of crude oil.
BOEOne barrel of oil equivalent, with six thousand cubic feet of natural gas being equivalent to one barrel of oil.
BOE/dBOE per day.
British Thermal Unit or BtuThe quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
CompletionThe process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
Finding and development costsCapital costs incurred in the acquisition, exploitation and exploration of proved oil and natural gas reserves divided by proved reserve additions and revisions to proved reserves.
Gross acres or gross wellsThe total acres or wells, as the case may be, in which a working interest is owned.
Horizontal wellsWells drilled directionally horizontal to allow for development of structures not reachable through traditional vertical drilling mechanisms.
MBblOne thousand barrels of crude oil and other liquid hydrocarbons.
MBO/dOne thousand BO per day.
MBOE/dOne thousand BOE per day.
McfOne thousand cubic feet of natural gas.
Mineral interestsThe interests in ownership of the resource and mineral rights, giving an owner the right to profit from the extracted resources.
MMBtuOne million British Thermal Units.
Net acres or net wellsThe sum of the fractional working interest owned in gross acres.
Net revenue interestAn owner’s interest in the revenues of a well after deducting proceeds allocated to royalty and overriding interests.
Oil and natural gas propertiesTracts of land consisting of properties to be developed for oil and natural gas resource extraction.
Plugging and abandonmentRefers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface. Regulations of all states require plugging of abandoned wells.
ProspectA specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.
Proved reservesThe estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.
ReservesThe estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to the market and all permits and financing required to implement the project. Reserves are not assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
ReservoirA porous and permeable underground formation containing a natural accumulation of producible natural gas and/or crude oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.
ii

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Royalty interestAn interest that gives an owner the right to receive a portion of the resources or revenues without having to carry any costs of development, which may be subject to expiration.
Working interestAn operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production and requires the owner to pay a share of the costs of drilling and production operations.
iii

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GLOSSARY OF CERTAIN OTHER TERMS
The following is a glossary of certain other terms that are used in this report:
2019 IndentureThe indenture, dated as of December 5, 2019, among the Company and Wells Fargo, as the trustee, as supplemented by the first supplemental indenture dated as of December 5, 2019, the second supplemental indenture dated as of May 26, 2020, the third supplemental indenture dated as of March 24, 2021, and the fourth supplemental indenture dated as of June 30, 2021, relating to the December 2019 Notes (defined above), the May 2020 Notes (defined below) and the March 2021 Notes (defined below).
2025 IndentureThe indenture relating to the 2025 Senior Notes (defined below), dated as of December 20, 2016, among the Company, the subsidiary guarantor party thereto and Wells Fargo, as the trustee, as supplemented.
2025 Senior NotesThe Company’s 5.375% senior unsecured notes due 2025 issued under the 2025 Indenture.
ASCAccounting Standards Codification.
ASUAccounting Standards Update.
December 2019 NotesThe Company’s 2.875% senior unsecured notes due 2024, the Company’s 3.250% senior unsecured notes due 2026 and the Company’s 3.500% senior unsecured notes due 2029 issued under the 2019 Indenture.
Equity PlanThe Company’s Equity Incentive Plan.
Exchange ActThe Securities Exchange Act of 1934, as amended.
FASBFinancial Accounting Standards Board.
GAAPAccounting principles generally accepted in the United States.
LIBORThe London interbank offered rate.
May 2020 NotesThe Company’s 4.750% Senior Notes due 2025 issued under the 2019 Indenture.
March 2021 NotesThe Company’s 0.900% Senior Notes due 2023, the Company’s 3.125% Senior Notes due 2031 and the Company’s 4.400% Senior Notes due 2051 issued under the 2019 Indenture.
NYMEXNew York Mercantile Exchange.
OPECOrganization of the Petroleum Exporting Countries.
RattlerRattler Midstream LP, a Delaware limited partnership.
Rattler’s General PartnerRattler Midstream GP LLC, a Delaware limited liability company; the general partner of Rattler Midstream LP and a wholly owned subsidiary of the Company.
Rattler LLCRattler Midstream Operating LLC, a Delaware limited liability company and a subsidiary of Rattler.
SECUnited States Securities and Exchange Commission.
Senior NotesThe 2025 Senior Notes, the December 2019 Notes, the May 2020 Notes and the March 2021 Notes.
ViperViper Energy Partners LP, a Delaware limited partnership.
Viper LLCViper Energy Partners LLC, a Delaware limited liability company and a subsidiary of Viper.
Wells FargoWells Fargo Bank, National Association.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this report are “forward-looking statements” as defined by the SEC. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, many of which are beyond our control. All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular, the factors discussed in this report and detailed under Part II, Item 1A. Risk Factors in this report and our Annual Report on Form 10–K for the year ended December 31, 2020 could affect our actual results and cause our actual results to differ materially from expectations, estimates or assumptions expressed, forecasted or implied in such forward-looking statements. Unless the context requires otherwise, references to “we,” “us,” “our” or the “Company” are intended to mean the business and operations of the Company and its consolidated subsidiaries.

Forward-looking statements may include statements about:
the volatility of realized oil and natural gas prices;
the implications and logistical challenges of epidemic or pandemic diseases, including the COVID-19 pandemic and its impact on the oil and natural gas industry, pricing and demand for oil and natural gas and supply chain logistics;
logistical challenges and the supply chain disruptions;
changes in general economic, business or industry conditions, including conditions of the U.S. oil and natural gas industry and the effect of U.S. energy, environmental, monetary and trade policies;
conditions in the capital, financial and credit markets and our ability to obtain capital needed for development and exploration operations on favorable terms or at all;
conditions of the U.S. oil and natural gas industry and the effect of U.S. energy, monetary and trade policies on our industry and business;
our ability to execute our business and financial strategies;
exploration and development drilling prospects, inventories, projects and programs;
levels of production;
the impact of reduced drilling activity on our exploration and development drilling prospects, inventories, projects and programs;
regional supply and demand factors, any delays, curtailment delays or interruptions of production, and any governmental order, rule or regulation that may impose production limits;
our ability to replace our oil and natural gas reserves;
acquisitions and sales of assets and our anticipated synergies and cost savings from these transactions;
competition in the oil and natural gas industry;
uncertainties with respect to identified drilling locations and estimates of reserves;
the impact of severe weather conditions on our production;
our ability to comply with applicable governmental laws and regulations and to obtain permits and governmental approvals;
our environmental initiatives and targets;
future operating results;
future dividends to our stockholders;
impact of any impairment charges;
lease operating expenses, general and administrative costs and finding and development costs;
capital expenditure plans;
use of proceeds from divestiture of assets;
the conditions impacting the timing and amount of common stock repurchases under our common stock repurchase program;
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other plans, objectives, expectations and intentions; and
certain other factors discussed elsewhere in this report.

All forward-looking statements speak only as of the date of this report or, if earlier, as of the date they were made. We do not intend to, and disclaim any obligation to, update or revise any forward-looking statements unless required by securities laws. You should not place undue reliance on these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
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PART I. FINANCIAL INFORMATION


ITEM 1.     CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,December 31,
20212020
(In millions, except par values and share data)
Assets
Current assets:
Cash and cash equivalents$457 $104 
Restricted cash18 4 
Accounts receivable:
Joint interest and other, net99 56 
Oil and natural gas sales, net712 281 
Inventories53 33 
Derivative instruments14 1 
Income tax receivable 100 
Assets held for sale83  
Prepaid expenses and other current assets28 23 
Total current assets1,464 602 
Property and equipment:
Oil and natural gas properties, full cost method of accounting ($8,214 million and $7,493 million excluded from amortization at September 30, 2021 and December 31, 2020, respectively)
32,554 27,377 
Midstream assets922 1,013 
Other property, equipment and land164 138 
Accumulated depletion, depreciation, amortization and impairment(13,234)(12,314)
Property and equipment, net20,406 16,214 
Funds held in escrow66 51 
Equity method investments509 533 
Derivative instruments4  
Deferred income taxes, net25 73 
Investment in real estate, net89 101 
Other assets76 45 
Total assets$22,639 $17,619 













See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets - (Continued)
(Unaudited)
September 30,December 31,
20212020
Liabilities and Stockholders’ Equity(In millions, except par values and share data)
Current liabilities:
Accounts payable - trade$21 $71 
Accrued capital expenditures308 186 
Current maturities of long-term debt20 191 
Other accrued liabilities476 302 
Revenues and royalties payable561 237 
Derivative instruments610 249 
Total current liabilities1,996 1,236 
Long-term debt6,925 5,624 
Derivative instruments36 57 
Asset retirement obligations178 108 
Deferred income taxes1,068 783 
Other long-term liabilities14 7 
Total liabilities10,217 7,815 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.01 par value; 400,000,000 shares authorized; 180,791,028 and 158,088,182 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
2 2 
Additional paid-in capital14,389 12,656 
Retained earnings (accumulated deficit)(2,908)(3,864)
Total Diamondback Energy, Inc. stockholders’ equity11,483 8,794 
Non-controlling interest939 1,010 
Total equity12,422 9,804 
Total liabilities and equity$22,639 $17,619 























See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(In millions, except per share amounts, shares in thousands)
Revenues:
Oil sales$1,506 $606 $3,845 $1,785 
Natural gas sales152 36 363 61 
Natural gas liquid sales239 65 528 156 
Midstream services12 12 35 37 
Other operating income1 1 4 5 
Total revenues1,910 720 4,775 2,044 
Costs and expenses:
Lease operating expenses156 102 415 332 
Production and ad valorem taxes124 55 304 148 
Gathering and transportation67 33 154 105 
Midstream services expense19 26 70 81 
Depreciation, depletion, amortization and accretion341 288 955 1,041 
Impairment of oil and natural gas properties 1,451  4,999 
General and administrative expenses38 20 99 64 
Merger and integration expense  77  
Other operating expense1 1 11 4 
Total costs and expenses746 1,976 2,085 6,774 
Income (loss) from operations1,164 (1,256)2,690 (4,730)
Other income (expense):
Interest expense, net(57)(53)(170)(147)
Other income (expense), net2 (2)(4)(8)
Gain (loss) on derivative instruments, net(234)(99)(895)82 
Gain (loss) on sale of equity method investments  23  
Gain (loss) on extinguishment of debt(12)(2)(73)(5)
Income (loss) from equity investments4 3 6 (10)
Total other income (expense), net(297)(153)(1,113)(88)
Income (loss) before income taxes867 (1,409)1,577 (4,818)
Provision for (benefit from) income taxes193 (304)352 (902)
Net income (loss) 674 (1,105)1,225 (3,916)
Net income (loss) attributable to non-controlling interest25 8 45 (138)
Net income (loss) attributable to Diamondback Energy, Inc.$649 $(1,113)$1,180 $(3,778)
Earnings (loss) per common share:
Basic$3.59 $(7.05)$6.73 $(23.91)
Diluted$3.56 $(7.05)$6.68 $(23.91)
Weighted average common shares outstanding:
Basic181,027 157,833 175,464 157,984 
Diluted182,149 157,833 176,553 157,984 
Dividends declared per share$0.50 $0.375 $1.35 $1.125 



See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Non-Controlling InterestTotal
SharesAmount
($ in millions, shares in thousands)
Balance December 31, 2020158,088 $2 $12,656 $(3,864)$1,010 $9,804 
Unit-based compensation— — — — 3 3 
Distribution equivalent rights payments— — — (1)— (1)
Common units issued for acquisitions22,795 — 1,727 — — 1,727 
Stock-based compensation— — 11 — — 11 
Cash paid for tax withholding on vested equity awards— — (6)— — (6)
Repurchased units under buyback programs— — — — (24)(24)
Distributions to non-controlling interest— — — — (17)(17)
Dividend paid— — — (68)— (68)
Exercise of stock options and issuance of restricted stock units and awards101 — — — — — 
Change in ownership of consolidated subsidiaries, net— — (4)— 4 — 
Net income (loss)— — — 220 3 223 
Balance March 31, 2021180,984 2 14,384 (3,713)979 11,652 
Unit-based compensation— — — — 3 3 
Distribution equivalent rights payments— — — (1)(1)(2)
Stock-based compensation— — 15 — — 15 
Cash paid for tax withholding on vested equity awards— — — — (2)(2)
Repurchased units under buyback programs— — — — (12)(12)
Distributions to non-controlling interest— — — — (24)(24)
Dividend paid— — — (72)— (72)
Exercise of stock options and vesting of restricted stock units and awards65 — 3 — — 3 
Change in ownership of consolidated subsidiaries, net— — (3)— 4 1 
Net income (loss)— — — 311 17 328 
Balance June 30, 2021181,049 2 14,399 (3,475)964 11,890 
Unit-based compensation— — — — 3 3 
Distribution equivalent rights payments— — —  (1)(1)
Stock-based compensation— — 17 — — 17 
Repurchased shares under buyback program(268)— (22)— — (22)
Repurchased units under buyback programs— — — — (27)(27)
Distributions to non-controlling interest— — — — (31)(31)
Dividend paid— — — (82)— (82)
Exercise of stock options and vesting of restricted stock units and awards10 — 1 — — 1 
Change in ownership of consolidated subsidiaries, net— — (6)— 6 — 
Net income (loss)— — — 649 25 674 
Balance September 30, 2021180,791 $2 $14,389 $(2,908)$939 $12,422 
See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity - (Continued)
(Unaudited)

Common StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Non-Controlling InterestTotal
SharesAmount
($ in millions, shares in thousands)
Balance December 31, 2019159,002 $2 $12,357 $890 $1,657 $14,906 
Unit-based compensation— — — — 5 5 
Distribution equivalent rights payments— — — — (1)(1)
Stock-based compensation— — 10 — — 10 
Cash paid for tax withholding on vested equity awards— — (5)— — (5)
Repurchased shares for share buyback program(1,280)— (98)— — (98)
Distribution to non-controlling interest— — — — (43)(43)
Dividend paid— — — (59)— (59)
Exercise of stock options and vesting of restricted stock units93 — 1 — — 1 
Net income (loss)— — — (272)(128)(400)
Balance March 31, 2020157,815 2 12,265 559 1,490 14,316 
Distribution equivalent rights payments— — — — (1)(1)
Stock-based compensation— — 11 — — 11 
Repurchased shares for share buyback program— — — — (2)(2)
Distribution to non-controlling interest— — — — (19)(19)
Dividend paid— — — (59)— (59)
Exercise of stock options and vesting of restricted stock units9 — — — — — 
Change in ownership of consolidated subsidiaries, net— — 329 — (329)— 
Net income (loss)— — — (2,393)(18)(2,411)
Balance June 30, 2020157,824 2 12,605 (1,893)1,121 11,835 
Unit-based compensation— — — — 3 3 
Stock-based compensation— — 10 — — 10 
Cash paid for tax withholding on vested equity awards— — — — — — 
Distribution to non-controlling interest— — — — (15)(15)
Dividend paid— — — (59)— (59)
Exercise of stock options and vesting of restricted stock units26 — — — — — 
Net income (loss)— — — (1,113)8 (1,105)
Balance September 30, 2020157,850 $2 $12,615 $(3,065)$1,117 $10,669 












See accompanying notes to condensed consolidated financial statements.
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Diamondback Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
20212020
(In millions)
Cash flows from operating activities:
Net income (loss) $1,225 $(3,916)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for (benefit from) deferred income taxes348 (840)
Impairment of oil and natural gas properties 4,999 
Depreciation, depletion, amortization and accretion955 1,041 
(Gain) loss on extinguishment of debt73 5 
(Gain) loss on derivative instruments, net895 (82)
Cash received (paid) on settlement of derivative instruments(847)288 
Equity-based compensation expense37 27 
(Gain) loss on sale of equity method investments(23) 
Other39 31 
Changes in operating assets and liabilities:
Accounts receivable(307)265 
Income tax receivable152 (62)
Prepaid expenses and other23 (1)
Accounts payable and accrued liabilities(39)(18)
Revenues and royalties payable257 (59)
Other(11)37 
Net cash provided by (used in) operating activities2,777 1,715 
Cash flows from investing activities:
Drilling, completions and infrastructure additions to oil and natural gas properties(1,030)(1,500)
Additions to midstream assets(23)(133)
Property acquisitions(438)(154)
Proceeds from sale of assets112 2 
Contributions to equity method investments(7)(90)
Distributions from equity method investments9 27 
Other54 (7)
Net cash provided by (used in) investing activities(1,323)(1,855)
Cash flows from financing activities:
Proceeds from borrowings under credit facilities759 917 
Repayments under credit facilities(853)(1,238)
Proceeds from senior notes2,200 997 
Repayment of senior notes(2,540)(239)
Premium on extinguishment of debt(178)(2)
Proceeds from (repayments to) joint venture(14)47 
Repurchased shares under buyback program(22)(98)
Repurchased units under buyback program(63) 
Dividends to stockholders(221)(177)
Distributions to non-controlling interest(72)(77)
Financing portion of net cash received (paid) for derivative instruments25  
Other(42)(19)
Net cash provided by (used in) financing activities(1,021)111 
Net increase (decrease) in cash and cash equivalents433 (29)
Cash, cash equivalents and restricted cash at beginning of period108