The **negative natural gas sales** in **Q3 2024** were primarily driven by a **decline in average natural gas prices**. Despite an increase in production volumes, the average price fell to **$(0.26) per Mcf**, creating a negative pricing environment that more than offset the additional production, resulting in a negative sales figure.  **[0001539838-24-000198_fang-20240930.htm:48]** **[0001539838-24-000198_fang-20240930.htm:53]** 

Why did Natural gas sales turn negative in Q3 2024?

The dramatic surge in Sales of purchased oil in Q2 2024 was driven by **Diamondback Energy's strategy of entering into purchase and separate sales transactions with third parties** to satisfy unused oil pipeline capacity commitments, a strategy that began in **Q3 2023**. Additionally, the **Purchased oil expense** closely mirrored the sales, indicating that these transactions are designed mainly to offset pipeline commitments rather than generate significant net revenue.  **[0001539838-24-000150_fang-20240630.htm:43]** **[0001539838-24-000150_fang-20240630.htm:9]** 

What drove the dramatic surge in Sales of purchased oil in Q2 2024?

The spike in **Merger and integration expenses** in Q3 2024 occurred primarily due to costs associated with the **Endeavor Acquisition**. These costs included approximately **$171 million** in severance and accelerated incentive compensation payments to former Endeavor employees, about **$78 million** in investment banking and legal fees incurred upon the acquisition's closing, along with additional smaller items like SEC filing fees and other professional fees.  **[0001539838-24-000198_fang-20240930.htm:50]** 

Why did Merger and integration expenses spike in Q3 2024?

The decline in Basic EPS in Q3 2024 was driven by **higher costs and expenses**, notably increases in **depreciation, depletion, amortization, and accretion expenses** (rising from **$442 million** to **$742 million**) and a sharp increase in **merger and integration expenses** (from **$1 million** to **$258 million**). Additionally, there was **dilution from an increased share count** (rising from **178,872 thousand** to **204,730 thousand** shares), and **net income** attributable to common stockholders fell from **$915 million** to **$659 million**. These combined factors led to the significant decline in Basic EPS.  **[0001539838-24-000195_diamondbackex991-11x4x24.htm:0]** **[0001539838-24-000198_fang-20240930.htm:9]** 

What contributed to the decline in Basic EPS in Q3 2024?

Operating income dropped significantly in Q3 2024 primarily because the company experienced **substantially higher costs and expenses**. In particular, increases in **depreciation, depletion, amortization, and accretion (DD&A)**, **merger and integration expenses**, **lease operating expenses**, and **gathering, processing, and transportation expenses** drove up overall operating costs significantly. Additionally, expenses related to the **Endeavor Acquisition** further intensified these cost pressures, offsetting revenue growth and resulting in a sharp decline in operating income.  **[0001539838-24-000195_diamondbackex991-11x4x24.htm:6]** **[0001539838-24-000198_fang-20240930.htm:43]** 

Why did operating income drop significantly in Q3 2024?

82b45c1dad286b5ae4a094beeecdea5334177df35c6a9a390a7c9e3fac5be293

The spike in **cash and cash equivalents** in Q2 2024 can be attributed to a significant increase in **cash from financing activities**, which saw an inflow of **$4,663 million** compared to a negative cash flow of **$1,207 million** in the comparable period of 2023. In addition, there was a positive contribution from **operating activities** with **$2,863 million** generated, along with a reduction in the cash outflows used in **investing activities** (from **$1,874 million** down to **$1,200 million**). Together, these factors led to a net increase of **$6,326 million** in cash for the period.  **[0001539838-24-000150_fang-20240630.htm:51]** 

Why did cash and cash equivalents spike in Q2 2024?

The sharp rise in total assets in Q3 2024 was primarily driven by several strategic transactions. **The acquisition of Endeavor Energy Resources, LP** brought in significant acreage and assets through a blend of **$7.3 billion in cash** and the issuance of **117.27 million common shares**, thereby boosting property and equipment assets.  **[0001539838-24-000198_fang-20240930.htm:43]** **[0001539838-24-000198_fang-20240930.htm:8]** **[0001539838-24-000198_fang-20240930.htm:18]**  Additionally, the **value of oil and natural gas properties** increased notably from **$42,430 million** to **$79,718 million**.  **[0001539838-24-000198_fang-20240930.htm:8]**  Further, the **Viper TWR Acquisition** and the **TRP Energy Asset Exchange** added to the asset base through mineral, royalty, and other asset enhancements, while an increase in **accounts receivable** from **$654 million** to **$1,197 million** reflected higher production volumes and revenue.  **[0001539838-24-000198_fang-20240930.htm:43]** **[0001539838-24-000198_fang-20240930.htm:8]** **[0001539838-24-000198_fang-20240930.htm:18]** 

What drove total assets to rise so sharply in Q3 2024?

The nearly doubling of long-term debt in Q2 2024—from **$6,641 million** at the end of 2023 to **$11,980 million**—was primarily driven by issuing new senior notes, including a **$5.5 billion** note in April 2024 along with several other senior notes issued during the first half of 2024, as well as raising debt to finance the pending acquisition of Endeavor Energy Resources, L.P.  **[0001539838-24-000150_fang-20240630.htm:53]** **[0001539838-24-000150_fang-20240630.htm:23]** 

Why did long-term debt nearly double in Q2 2024?

The documents do not provide any specific details explaining the surge in current maturities of debt in Q3 2024.   

What led to the surge in current maturities of debt in Q3 2024?

6b2b994d50377c8cb4abe4d9218bfc3e8d699cfbcff1c98a3700d73d2c7e6447

The low investing cash flow in **Q3 2024** was largely due to a combination of significantly higher **property acquisitions** and reduced **proceeds from the sale of assets**. Specifically, Diamondback Energy (FANG) spent **$7,791 million** on property acquisitions in Q3 2024 compared to only **$168 million** in Q3 2023. Additionally, while the company spent a similar amount on drilling, completions, and related activities, it received only **$207 million** from asset sales in Q3 2024 versus **$868 million** in the prior period. These factors together led to the much lower net cash provided by (used in) investing activities in Q3 2024.  **[0001539838-24-000195_diamondbackex991-11x4x24.htm:0]** **[0001539838-24-000195_diamondbackex991-11x4x24.htm:7]** 

Why was investing cash flow so low in Q3 2024?

The surge in property acquisitions in Q3 2024 was driven by the **Endeavor Acquisition** completed on **September 10, 2024**. This deal involved a total consideration of approximately **$27.7 billion**, which included **$7.6 billion in cash** and **117.27 million shares** of Diamondback's common stock. The acquisition significantly boosted property acquisitions for the quarter, contributing to the marked increase over Q3 2023.  **[0001539838-24-000198_fang-20240930.htm:12]** **[0001140361-24-041469_ef20035848_ex99-2.htm:10]** **[0001140361-24-041476_ny20035826x1_s3asr.htm:6]** 

What drove the surge in property acquisitions in Q3 2024?

The steep cash decline in Q3 2024 was primarily driven by a significant net cash outflow in investing activities. **Investing activities** used **$8,166 million**, mainly due to substantial **property acquisitions of $7,791 million**. This large outflow greatly outweighed the positive contributions from **operating activities** (which provided **$1,209 million** after non-cash adjustments) and **financing activities** (which contributed **$419 million**), culminating in a net decrease of **$6,538 million** in cash and cash equivalents.  **[0001539838-24-000198_fang-20240930.htm:12]** **[0001539838-24-000195_diamondbackex991-11x4x24.htm:7]** 

What factors contributed to the steep cash decline in Q3 2024?

The spike in Q2 2024 financing cash flows was primarily driven by the significant inflows from the **issuance of senior notes, which raised $5.5 billion**, and by additional proceeds from the **partial sale of an investment worth $451 million**. These inflows were partially offset by outflows including **dividends paid ($900 million to stockholders and $98 million to non-controlling interests)**, **$260 million in repayments under credit facilities**, and **$42 million in share repurchases**.  **[0001539838-24-000150_fang-20240630.htm:52]** **[0001539838-24-000147_diamondbackex991-8x5x24.htm:8]** 

What underpinned the spike in financing cash flows in Q2 2024?

The ending cash balance in Q3 2024 plummeted primarily due to **substantial cash outflows from investing activities** and increased expenses in operating activities. Specifically, the company experienced a **net cash outflow of $(8,166) million** from investing, driven largely by **property acquisitions totaling $(7,791) million** and additional capital expenditures, while operating activities provided **$1,209 million** that was lower than the previous period due to merger and integration costs, extra lease operating expenses, and changes in working capital. Although there was some cash provided from financing activities (**$419 million**), it was not enough to offset the large outflows, ultimately resulting in a **net decrease of $(6,538) million** in cash during the period.  **[0001539838-24-000198_fang-20240930.htm:58]** **[0001539838-24-000195_diamondbackex991-11x4x24.htm:7]** 

Why did the ending cash balance plummet in Q3 2024?

c42d0fbe80867919373c6daea90d45ba043e0fc62c3f9f5b307671029d5b6c88

Gain (loss) on derivative instruments, net (USD, millions)

cb7510c0736ef54d2eedcd45321b0ea043e90720de245f04b13e3a7513ec60c7

ad4323919ee72374117a721e01a23fc8689b934a9bd9853d829f94452cf41864

(Gain) loss on derivative instruments, net (USD, millions)

Cash received (paid) on settlement of derivative instruments (USD, millions)

Repurchased shares under buyback program (USD, millions)

7ab26618b7070a40cc865fd9f98c3e0c518ca74aa1d174483ac4116a6048bb2c

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

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cd8212c10c709790d74f495766f47d94a1c2ec9eb9f7af8c1d62b3a357a67153

Midland Basin

- Oil Sales

- Natural Gas Sales

- Natural Gas Liquid Sales

- Total Revenue

Delaware Basin

Other Regions

Oil, Natural Gas, and Natural Gas Liquid Sales

Sales of Purchased Oil

Other Operating Income

Total Revenue

fdf039a6c5f3fe158576d1c89824cedbc65c15fc911516388869779f1976075d

76d74ec4faa5760838ec067efdf7269c8df5d8d1b6fd3d7c934c832bb9850651

Diamondback Energy (FANG)

Financials