Diamondback Energy Aims for $1.5B Asset Sales, Maintains $900M CapEx Amid Debt Reduction Focus

Diamondback Energy plans to sell $1.5 billion in noncore assets and maintain a $900 million per quarter capital expenditure amid its focus on debt reduction. The company's CEO emphasized the focus on maximizing shareholder value through cost-cutting measures in the Permian Basin.

Diamondback Energy, Inc. (FANG) announced during its Q2 2025 earnings call that it aims to sell $1.5 billion in noncore assets while maintaining a quarterly capital expenditure (capex) of $900 million. This strategic move is part of the company's broader focus on maximizing shareholder value and reducing debt.

The company's CEO, Matthew Kaes Van’t Hof, highlighted Diamondback's cost-cutting measures in the Permian Basin, emphasizing that the company has been able to execute better than competitors on acquired assets. He also mentioned the successful integration of Endeavor, which nearly doubled the company’s size without operational disruption, positioning Diamondback as the "consolidator of choice" in the Permian.

Progress on the noncore asset sales has been notable, with $250 million to $260 million in sales already completed. Ongoing negotiations are underway for the EPIC pipeline stake and Endeavor Water assets, with binding documents expected to be finalized in the coming quarters. These sales are anticipated to bring significant cash inflows, which will help pay down a term loan due in 2027 and potentially fund increased share repurchases if market conditions weaken.

Operational improvements have been a key focus, with the company reporting a significant increase in NGL production, adding 33,000 barrels per day in Q2 over Q1. The company's operational costs, specifically the cost of liquids extraction (LOE), have benefited from realized field synergies, and further cost discipline is expected as asset sales and operational improvements materialize.

Diamondback's cautious macro stance was reiterated, with CEO Van’t Hof referencing the company’s "yellow light" analogy. Despite the uncertainty, the company plans to maintain oil production at 490,000 barrels per day and expects flexibility to adjust based on market conditions. The company's guidance for LOE is set at $5.60 to $5.80 per BOE on a normalized basis, with expectations of continued operational efficiencies and potential for higher LOE if a water sale closes.

Analysts were generally probing and occasionally skeptical, with questions focusing on asset sales, capital allocation, macro outlook, and operational efficiencies. Management maintained a confident yet measured tone, emphasizing operational success, cost discipline, and strategic patience.

Diamondback Energy's Q2 2025 call underscored a continued focus on disciplined capital allocation, operational efficiency, and strategic patience in the face of ongoing macroeconomic uncertainty. The company remains committed to its $1.5 billion noncore asset sale program, with significant progress already made and further updates expected in the coming quarters. The company is maintaining production and capex guidance, prioritizing debt reduction, and flexibly positioning itself to capitalize on improved market conditions while addressing inflationary risks and efficiency challenges head-on.

References:
[1] https://seekingalpha.com/news/4478928-diamondback-energy-targets-1_5b-noncore-asset-sales-and-maintains-900m-per-quarter-capex-amid
[2] https://www.marketbeat.com/instant-alerts/filing-argent-trust-co-acquires-3538-shares-of-diamondback-energy-inc-nasdaqfang-2025-08-04/