Diamondback Profit Jumps 57% as Higher Oil Prices Outrun Its Hedges

Diamondback Energy reported third-quarter revenue of $5.43 billion on Monday, up 38.4 percent from a year earlier, an article calculation.

Diamondback Energy is an independent oil and natural gas producer based in Midland, Texas. It works the Permian Basin in West Texas. It reported results for the quarter ended September 30, 2026, after the market close on Monday, November 2.

A clear beat on the single consensus frame

Analysts polled by FactSet expected adjusted earnings of $5.72 per share, the Wall Street Journal reported. Diamondback reported adjusted earnings of $5.86 per share. Adjusted figures are the company's own non-GAAP measures, labeled as such wherever they appear.

Revenue cleared the same bar by more. FactSet expectations put revenue at $4.6 billion, on the same frame. Diamondback reported $5.43 billion for the quarter.

On the standard GAAP basis, net income attributable to Diamondback was $1.60 billion, or $5.69 per diluted share. A year earlier it was $1.02 billion, or $3.51 per share. Profit rose about 57 percent, an article calculation.

Adjusted net income was $1.65 billion, a company-defined measure. Adjusted EBITDA, also company-defined, was $3.39 billion for the quarter.

Higher oil prices did the heavy lifting

The quarter's story is price, not volume. Average oil production was 525 MBO/d, or thousand barrels of oil per day. Total production was 1,034 MBOE/d, or thousand barrels of oil equivalent per day, counting gas and liquids.

Oil output was essentially flat against the second quarter. The gain came from what each barrel fetched. A year earlier, the same production earned far less per barrel.

The unhedged realized oil price averaged $87.30 per barrel, up from $64.60 a year earlier. After hedges, the realized price was $85.89 per barrel. The hedges trimmed $1.41 per barrel, an article calculation.

Natural gas realized $1.12 per thousand cubic feet in the quarter. Natural gas liquids realized $20.02 per barrel, the release's price table shows.

Derivatives produced a net loss of $182 million in the quarter. Cash settlements accounted for $97 million of that loss. The remaining $85 million was a non-cash loss, the release's reconciliations show.

Diamondback also acquired a 7.5 percent equity interest in the Solitude Pipeline System. The system is a natural gas pipeline running from the Permian Basin to Katy, Texas. The release does not disclose the price paid.

Cash flow covered the dividend, buybacks and spending

Net cash provided by operating activities was $2.6 billion. Operating cash flow before working capital changes was $3.2 billion, a company-defined measure. Cash capital expenditures were $1.0 billion in the quarter.

Free Cash Flow was $2.1 billion, and Adjusted Free Cash Flow was $2.2 billion. Both are company-defined measures, as the release labels them. The exact table figures are $2.15 billion and $2.15 billion.

Cash generation also funded debt moves. The company repurchased $106 million of long-dated senior notes during the quarter. On October 1, it redeemed all $698 million of its 2026 senior notes at par.

The dividend rises, and buybacks continue

The board raised the quarterly base dividend to $1.18 per share. That is an annual rate of $4.72 per share, up 7.3 percent. The annual rate is up 18 percent from a year earlier, the release says.

The dividend is payable on November 19, 2026, to holders of record on November 12. It works out to an annualized yield of about 2.2 percent. That yield uses the October 30 closing price of $212.08, the release says.

Share repurchases added $251 million in the quarter, covering about 1.3 million shares. Total return of capital, dividends plus buybacks, was $582 million, the release's table shows.

Production guidance rises for a third time this year

Diamondback raised full-year oil production guidance to about 524 MBO/d, from 522 or more. Total production guidance rose to about 1,015 MBOE/d, from 1,000 or more.

Full-year cash capital spending guidance rose with it. The new range is $3.95 billion to $4.00 billion, from about $3.9 billion. Guidance is the company's expectation for work not yet done, not a result.

The increase is the company's third production-guidance raise this year. The company had already lifted the targets twice, the Wall Street Journal reported.

For the fourth quarter, oil production is guided to 518 to 528 MBO/d. Total production is guided to 1,025 to 1,045 MBOE/d. Cash capital spending is guided to $1.00 billion to $1.05 billion.

What remains unknown

What remains unknown starts with oil prices. The release does not say what price the full-year guidance assumes. Fourth-quarter results will turn mostly on prices Diamondback does not control.

The price paid for the Solitude stake is not disclosed. Neither is the return the company expects from it. How quickly derivative losses fade if prices fall is also unstated.

What to watch next

What to watch next starts with the earnings call on Tuesday, November 3, at 8:00 a.m. Central Time. Management's comments on prices, hedging and the Solitude stake are the dated test. The call has not happened yet at publication.

Then watch fourth-quarter delivery against the new guide. Oil output inside the 518 to 528 MBO/d range would confirm the raise. The November 19 dividend payment is the other dated item to track.