Diamondback Oil Prices Fall After a Record Second Quarter
Unhedged realized oil averaged $87.30 a barrel in the third quarter, down from $96.82 in the second, as the Permian producer booked a $182 million net loss on commodity contracts.
Diamondback Energy (FANG) reported third-quarter 2026 average unhedged realized oil prices of $87.30 a barrel, down from $96.82 a barrel in the second quarter, as the Permian producer’s commodity mix cooled after a record production run.
The oil and natural gas company said hedged realized oil averaged $85.89 a barrel. Natural gas realized prices turned positive: unhedged gas averaged $1.12 an Mcf after a negative $2.15 an Mcf in the second quarter, and hedged gas averaged $0.90 an Mcf. Natural gas liquids averaged $20.02 a barrel, up from $18.56.
For the three months ended September 30, 2026, Diamondback anticipated a $97 million net cash loss and an $85 million net non-cash loss on derivative instruments, with a $182 million net loss on commodity contracts. Basic and diluted weighted average shares outstanding were 279,959 thousand.
The price step-down followed a second quarter in which the company had already lifted annual production targets. In that release, Diamondback raised 2026 oil guidance to 522+ MBO/d from 520+ and total BOE to 1,000+ MBOE/d from 972+, leaving full-year cash capital expenditures unchanged at about $3.9 billion. It had guided third-quarter oil production of 517–527 MBO/d (995–1,015 MBOE/d) and cash capex of $950–$1,050 million.
Second-quarter operations had already crossed a symbolic line. Average oil production was 525 MBO/d and total production 1,018 MBOE/d, surpassing 1.0 million barrels of oil equivalent per day, versus 521.0 MBO/d and 979.4 MBOE/d in the first quarter. Net cash provided by operating activities was $3.6 billion, and operating cash flow before working capital changes was $3.3 billion, compared with $1.8 billion and $2.6 billion in the first quarter. Cash capital expenditures were $996 million. Free cash flow and adjusted free cash flow were $2.3 billion.
Capital return in the second quarter was lighter than in the first. Diamondback repurchased 756,385 shares for about $141 million, after buying 3.3 million shares for about $548 million in the first quarter. It declared a base cash dividend of $1.10 a share. Total debt was reduced by about $1.3 billion quarter over quarter to $12.8 billion, and net debt by about $1.6 billion to $12.3 billion.
In July the board doubled the share-repurchase authorization to $16.0 billion from $8.0 billion. After 547,716 shares repurchased in the third quarter to date for about $100 million, the company said about $9.9 billion remained available.
Drilling activity in the second quarter slowed on a gross-well basis from the first. Gross wells drilled were 97 (net 89), versus 118 (net 111) in the first quarter. Gross wells completed were 168 (net 157), versus 147 (net 137). Average completed lateral length was 11,983 feet. Combined realized price was $51.68 a BOE, and hedged combined price was $52.90 a BOE.
Earlier in the year the company had completed a cash-funded tender that retired about $777 million of 2051 and 2052 senior notes for about $632 million including interest, and repaid the remaining $550 million of a $1.5 billion term loan due 2027, leaving pro forma gross debt of $12.7 billion at the end of April 2026. The first-quarter base dividend of $1.10 a share marked a 10% year-over-year increase; total capital return that quarter was $859 million, about 50% of adjusted free cash flow.
The third-quarter print is a prices-and-derivatives update rather than a full operating release. Management’s Item 2.02 disclosed realized and hedged prices, the anticipated $182 million net loss on commodity contracts, and the 279,959 thousand share count. The company’s forward-looking framework still points to the 2026 plan it restated in August: oil at 522+ MBO/d, total BOE at 1,000+ MBOE/d, and cash capital expenditures of about $3.9 billion for the year.
The mix that supported second-quarter cash generation—oil near $97 a barrel unhedged, gas still negative, NGLs at $18.56—had shifted by September. Oil’s $9.52-per-barrel drop in the unhedged average is the quarter’s defining move. Hedged oil at $85.89 a barrel and the $182 million net commodity-contract loss sit against that lower tape. Gas’s return to positive realized prices, unhedged at $1.12 an Mcf and hedged at $0.90 an Mcf, and NGLs at $20.02 a barrel complete the third-quarter price set the company disclosed.