Diamondback Energy raised its 2026 production guidance and boosted the dividend 7%, while unveiling plans for a Permian gas-fired power plant to serve data centers.
Alpha Score of 58 reflects moderate overall profile with strong momentum, weak value, weak quality, moderate sentiment.
Diamondback Energy raised its 2026 production guidance and increased its quarterly dividend 7% after second-quarter output topped the company's own forecast, the Midland-based producer said Tuesday.
Output averaged 472,000 barrels of oil equivalent a day in the three months through June, above the midpoint of the company's April guidance. Oil volumes came in at 282,000 barrels a day. Cash flow from operations before working capital changes reached $1.5 billion, while capital spending totaled $644 million. Free cash flow hit $676 million.
Diamondback now expects full-year 2026 production of 470,000 to 473,000 BOE/d, up from a prior range of 465,000 to 469,000. The company tightened its capital budget to $2.55 billion to $2.65 billion from $2.5 billion to $2.7 billion.
Shareholder returns totaled $535 million in the quarter, split between $317 million in dividends and $218 million in share buybacks. The board approved a new quarterly dividend of $1.04 a share, up from $0.97. Diamondback ended the quarter with $3.2 billion remaining on its buyback authorization.
Net debt stood at $8.4 billion, with a leverage ratio of 0.7 times trailing cash flow. The company had $1.2 billion drawn on its credit facility at quarter-end.
Diamondback carries an Alpha Score of 57 out of 100, a Moderate rating, according to AlphaScala data. The score reflects the company's balanced risk profile in the energy sector.
Power Project Targets Data Center Demand
CEO Kaes Van't Hof said Diamondback is evaluating construction of a natural-gas fired power plant in the Permian Basin to supply electricity to its own operations and potentially to data center developers. The company has signed a memorandum of understanding with an unnamed data center developer, he said on the earnings call.
"We see an opportunity to monetize our gas in a way that's differentiated from just selling it into the pipeline," Van't Hof said. The plant would draw on Diamondback's associated gas production and could begin operations within three to four years, he added.
On mergers and acquisitions, Van't Hof said Diamondback is not interested in large-scale deals but remains active in the bolt-on acquisition market in the Permian. "We have 10-plus years of drilling inventory," he said. "We don't need to do a big deal to keep the machine running."
Diamondback's second-quarter results included contributions from the Endeavor Energy Resources acquisition, which closed in September 2024. The company said integration is on track and cost synergies are running ahead of plan.
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