Diamondback Energy has announced a strategic shift towards developing secondary zones in the Midland Basin, specifically targeting the Barnett and Woodford shales as an "emerging zone" for future growth. This move comes as acquisition opportunities in the Permian basin decline. The company plans to spend $125 million in 2026 on activity in these areas as they become a core part of its development plan.

Operational and Financial Performance

In its fourth-quarter earnings, Diamondback reported average oil production of 512,800 barrels per day, a 7.7% year-over-year increase. Total production averaged 969,100 barrels of oil equivalent per day, a 9.7% rise, exceeding analyst expectations. The company's adjusted profit was nearly $500 million, or $1.74 per share, and it repurchased 2.9 million shares for about $434 million during the quarter.

Development Strategy and Efficiency

The company has secured rights to nearly 200,000 acres in the Barnett and Woodford, representing roughly 900 gross and 600 net high-quality locations. To date, it has drilled and completed 24 wells in these plays with positive results. Diamondback also highlighted significant efficiency gains, stating it drilled 463 wells using only 15 rigs in 2025, seven fewer than would have been required two years prior. The company averaged lateral lengths over 12,100 feet, with its longest well exceeding 31,000 feet.

Enhanced Recovery and Future Outlook

Diamondback is testing surfactants and other enhanced oil recovery methods, including a $30 million surfactant pilot project at 60 wells in late 2025, which has yielded positive initial results. For the coming year, the company expects production between 926,000 and 962,000 boepd with a capital expenditure budget of $3.6 billion to $3.9 billion. Despite WTI prices trading above $65 per barrel, the company maintains its "yellow light" scenario for production, planning to keep output flat in 2026, though it notes a previously feared "red light" oversupply scenario now seems less apparent.