Diamondback Energy

“Seasonal Nature of Business Generally, demand for oil increases during the summer months and decreases during the winter months while natural gas decreases during the summer months and increases during the winter months. Certain natural gas buyers utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal demand fluctuations.”

Annual report 2025A · The company itself

“Restrictions on emissions of methane or carbon dioxide that may be imposed could adversely impact the demand for, price of, and value of our products and reserves.”

Annual report 2025A · The company itself

“From the beginning of 2023 through the end of 2025, WTI prices ranged from $55.27 to $93.68 per Bbl and the Henry Hub price of natural gas ranged from $1.58 to $5.29 per MMBtu.”

Annual report 2025A · The company itself

“Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us.”

Annual report 2025A · The company itself

“If the prices of oil and natural gas decline, we may be required to further write-down the value of our oil and natural gas properties in the future, which could negatively affect our results of operations.”

Annual report 2025A · The company itself

“Factors that may impact our credit ratings include debt levels, planned asset purchases or sales and near-term and long-term production growth opportunities, liquidity, asset quality, cost structure, product mix and commodity pricing levels. A ratings downgrade could adversely impact our ability to access financings or trade credit and increase our borrowing costs.”

Annual report 2025A · The company itself

“Commodity Price Risk Our major market risk exposure in our exploration and production business is in the pricing applicable to our oil and natural gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to our natural gas production.”

Annual report 2025A · The company itself

“The remainder of our Adjusted Free Cash Flow will be used primarily to reduce debt. •Leverage our experience operating in the Permian Basin. Our executive team, which has significant experience in the Permian Basin, intends to continue to seek ways to maximize hydrocarbon recovery by 2 Table of Contents optimizing and enhancing our drilling and completion techniques.”

Annual report 2025A · The company itself

“•Pursue strategic acquisitions with substantial resource potential. We have a proven history of acquiring leasehold positions in the Permian Basin that have substantial oil-weighted resource potential.”

Annual report 2025A · The company itself

“We use commodity price derivatives, which have historically included swaps, basis swaps, swaptions, roll hedges, costless collars, puts and basis puts, to reduce price volatility associated with certain of our oil, natural gas and natural gas liquids sales. Currently, we have hedged a portion of our estimated 2026 and 2027 production.”

Annual report 2025A · The company itself

“Table of Contents Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves. A significant portion of our net leasehold acreage is undeveloped, or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves. In addition, many of our oil and natural gas leases require us to drill wells that are commercially productive and to maintain the production in paying quantities, and if we are unsuccessful in drilling such wells and maintaining such production, we could lose our rights under such leases. Our future oil and natural gas reserves and production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage.”

Annual report 2025A · The company itself

“We make and expect to continue to make substantial capital expenditures in our business and operations for the exploration for and development, production and acquisition of oil and natural gas reserves. In 2025, our total cash capital expenditures were approximately $3.5 billion.”

Annual report 2025A · The company itself

“In addition, approximately 30% of our total estimated proved reserves as of December 31, 2025, were proved undeveloped reserves and may not be ultimately developed or produced. The reserve data included in the reserve reports of our independent petroleum engineers assume that substantial capital expenditures are required to develop such reserves.”

Annual report 2025A · The company itself

“As of December 31, 2025, we have approximately 8,854 gross (6,541 net) identified economic potential horizontal drilling locations in multiple horizons on our acreage at an assumed price of approximately $50.00 per Bbl WTI. As of December 31, 2025, only 1,351 of our gross identified economic potential horizontal drilling locations in which we have a working interest were attributed to proved reserves.”

Annual report 2025A · The company itself

“BUSINESS AND PROPERTIES Overview We are an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. This basin, which is one of the major producing basins in the United States, is characterized by an extensive production history, a favorable operating environment, mature infrastructure, long reserve life, multiple producing horizons, enhanced recovery potential and a large number of operators.”

Annual report 2025A · The company itself

“Our activities are primarily focused on horizontal development of the Spraberry and Wolfcamp formations of the Midland Basin and the Wolfcamp and Bone Spring formations of the Delaware Basin, both of which are part of the larger Permian Basin in West Texas and New Mexico. These formations are characterized by a high concentration of oil and liquids rich natural gas, multiple vertical and horizontal target horizons, extensive production history, long-lived reserves and high drilling success rates.”

Annual report 2025A · The company itself

“Sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at negotiated prices.”

Annual report 2025A · The company itself

“We are a party to long-term crude oil agreements under which, subject to certain terms and conditions, we are obligated to deliver specified quantities of oil to our counterparties. Our maximum delivery obligation under these agreements varies for different periods and depends in some cases upon certain conditions beyond our control. If production from our Permian Basin acreage decreases due to reduced developmental activities, as a result of the low commodity price environment, production related difficulties or otherwise, we may be unable to meet our obligations under our oil purchase agreements, which may result in deficiency payments to certain counterparties or a default under such agreements and may have an adverse effect on our company.”

Annual report 2025A · The company itself

“Seasonal Nature of Business Generally, demand for oil increases during the summer months and decreases during the winter months while natural gas decreases during the summer months and increases during the winter months. Certain natural gas buyers utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal demand fluctuations.”

Annual report 2025A · The company itself

“Restrictions on emissions of methane or carbon dioxide that may be imposed could adversely impact the demand for, price of, and value of our products and reserves.”

Annual report 2025A · The company itself

“From the beginning of 2023 through the end of 2025, WTI prices ranged from $55.27 to $93.68 per Bbl and the Henry Hub price of natural gas ranged from $1.58 to $5.29 per MMBtu.”

Annual report 2025A · The company itself

“Any of these developments may reduce the demand for products manufactured with (or powered by) hydrocarbons and the demand for, and in turn the prices of, the oil and natural gas that we produce and sell, which would likely have a material adverse impact on us.”

Annual report 2025A · The company itself

“If the prices of oil and natural gas decline, we may be required to further write-down the value of our oil and natural gas properties in the future, which could negatively affect our results of operations.”

Annual report 2025A · The company itself

“Factors that may impact our credit ratings include debt levels, planned asset purchases or sales and near-term and long-term production growth opportunities, liquidity, asset quality, cost structure, product mix and commodity pricing levels. A ratings downgrade could adversely impact our ability to access financings or trade credit and increase our borrowing costs.”

Annual report 2025A · The company itself

“Commodity Price Risk Our major market risk exposure in our exploration and production business is in the pricing applicable to our oil and natural gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to our natural gas production.”

Annual report 2025A · The company itself

“The remainder of our Adjusted Free Cash Flow will be used primarily to reduce debt. •Leverage our experience operating in the Permian Basin. Our executive team, which has significant experience in the Permian Basin, intends to continue to seek ways to maximize hydrocarbon recovery by 2 Table of Contents optimizing and enhancing our drilling and completion techniques.”

Annual report 2025A · The company itself

“•Pursue strategic acquisitions with substantial resource potential. We have a proven history of acquiring leasehold positions in the Permian Basin that have substantial oil-weighted resource potential.”

Annual report 2025A · The company itself

“Beginning with that legislation in 1978 and continuing with the Wellhead Decontrol Act of 1989, federal laws have been enacted which have resulted in the complete removal of all price and non-price controls for sales of domestic natural gas sold in “first sales,” which include all of our sales of our own production.”

Annual report 2025A · The company itself

“We use commodity price derivatives, which have historically included swaps, basis swaps, swaptions, roll hedges, costless collars, puts and basis puts, to reduce price volatility associated with certain of our oil, natural gas and natural gas liquids sales. Currently, we have hedged a portion of our estimated 2026 and 2027 production.”

Annual report 2025A · The company itself

“Table of Contents Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves. A significant portion of our net leasehold acreage is undeveloped, or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves. In addition, many of our oil and natural gas leases require us to drill wells that are commercially productive and to maintain the production in paying quantities, and if we are unsuccessful in drilling such wells and maintaining such production, we could lose our rights under such leases. Our future oil and natural gas reserves and production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage.”

Annual report 2025A · The company itself

“We make and expect to continue to make substantial capital expenditures in our business and operations for the exploration for and development, production and acquisition of oil and natural gas reserves. In 2025, our total cash capital expenditures were approximately $3.5 billion.”

Annual report 2025A · The company itself

“In addition, approximately 30% of our total estimated proved reserves as of December 31, 2025, were proved undeveloped reserves and may not be ultimately developed or produced. The reserve data included in the reserve reports of our independent petroleum engineers assume that substantial capital expenditures are required to develop such reserves.”

Annual report 2025A · The company itself

“BUSINESS AND PROPERTIES Overview We are an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. This basin, which is one of the major producing basins in the United States, is characterized by an extensive production history, a favorable operating environment, mature infrastructure, long reserve life, multiple producing horizons, enhanced recovery potential and a large number of operators.”

Annual report 2025A · The company itself

“Our activities are primarily focused on horizontal development of the Spraberry and Wolfcamp formations of the Midland Basin and the Wolfcamp and Bone Spring formations of the Delaware Basin, both of which are part of the larger Permian Basin in West Texas and New Mexico. These formations are characterized by a high concentration of oil and liquids rich natural gas, multiple vertical and horizontal target horizons, extensive production history, long-lived reserves and high drilling success rates.”

Annual report 2025A · The company itself

“If new laws or regulations that significantly restrict hydraulic fracturing are adopted, such laws could make it more difficult or costly for us to perform fracturing to stimulate production from tight formations as well as make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings based on allegations that specific chemicals used in the fracturing process could adversely affect groundwater. In addition, if hydraulic fracturing is further regulated at the federal, state or local level, our fracturing activities could become subject to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and recordkeeping obligations, plugging and abandonment requirements and also to permitting delays and potential increases in costs. Such changes could cause us to incur substantial compliance costs, and compliance or the consequences of any failure to comply by us could have a material adverse effect on our financial condition and results of operations.”

Annual report 2025A · The company itself

“As our operations also emit greenhouse gases directly, current and future laws or regulations limiting such emissions could increase our own costs.”

Annual report 2025A · The company itself

“The enactment of climate change-related regulations, policies and initiatives may also result in increases in our compliance costs and other operating costs and have other adverse effects, such as a greater potential for governmental investigations or litigation.”

Annual report 2025A · The company itself

“The rules impose requirements related to waste management practices and production methods, such as recycling produced water.”

Annual report 2025A · The company itself

“We expect to continue to exercise capital discipline, with a focus on capital efficiency over volume growth and plan to spend between $3.60 billion and $3.90 billion in cash capital expenditures in 2026. •Focus on low cost development and continuous operational improvement. Our acreage position is generally in contiguous blocks, which allows us to develop this acreage efficiently with a “manufacturing” strategy that takes advantage of economies of scale and uses centralized production and fluid handling facilities. We are the operator of approximately 97% of our acreage, which allows us to efficiently manage our operating costs, pace of development activities and the gathering and marketing of our production.”

Annual report 2025A · The company itself

“Part of our strategy involves drilling in existing or emerging shale plays using the latest available horizontal drilling and completion techniques; therefore, the results of our planned exploratory drilling in these plays are subject to risks associated with drilling and completion techniques and drilling results may not meet our expectations for reserves or production. Our operations involve developing and utilizing the latest drilling and completion techniques.”

Annual report 2025A · The company itself

“The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies, oilfield services or personnel may restrict our operations. The oil and natural gas industry is cyclical, which can result in shortages of drilling rigs, equipment, raw materials (particularly sand and other proppants), supplies and personnel.”

Annual report 2025A · The company itself

“In accordance with customary industry practice, we rely on independent third-party service providers to provide most of the services necessary to drill new wells. If we are unable to secure a sufficient number of drilling rigs at reasonable costs, our financial condition and results of operations could suffer, and we may not be able to drill all of our acreage before our leases expire.”

Annual report 2025A · The company itself

“We expect to continue to exercise capital discipline, with a focus on capital efficiency over volume growth and plan to spend between $3.60 billion and $3.90 billion in cash capital expenditures in 2026. •Focus on low cost development and continuous operational improvement. Our acreage position is generally in contiguous blocks, which allows us to develop this acreage efficiently with a “manufacturing” strategy that takes advantage of economies of scale and uses centralized production and fluid handling facilities. We are the operator of approximately 97% of our acreage, which allows us to efficiently manage our operating costs, pace of development activities and the gathering and marketing of our production.”

Annual report 2025A · The company itself

“•Deliver on our commitment to environmental, social and governance (“ESG”) performance. We are committed to the safe and responsible development of our resources in the Permian Basin. Our approach to ESG is evidenced through our commitment to people, safety, environmental responsibility, community and sound governance practices.”

Annual report 2025A · The company itself

“Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings and slow our growth. There is intense competition for acquisition opportunities in our industry.”

Annual report 2025A · The company itself

“We were operating 15 drilling rigs and four completion crews at December 31, 2025 and currently intend to operate between 15 and 18 rigs and approximately five completion crews on average in 2026. We will continue monitoring the ongoing commodity price environment and expect to retain the financial flexibility to adjust our drilling and completion plans in response to market conditions.”

Annual report 2025A · The company itself

“These restrictions on use of produced water, a moratorium on new produced water disposal wells, and additional monitoring and reporting requirements could result in increased operating costs, requiring us or our service providers to truck produced water, recycle it or pump it through the pipeline network or other means, all of which could be costly. We or our service providers may also need to limit disposal well volumes, disposal rates and pressures or locations, or require us or our service providers to shut down or curtail the injection of produced water into disposal wells. These factors may make drilling and completion activity in the affected parts of the Permian Basin less economical and adversely impact our business, results of operations and financial condition.”

Annual report 2025A · The company itself

“The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies, oilfield services or personnel may restrict our operations. The oil and natural gas industry is cyclical, which can result in shortages of drilling rigs, equipment, raw materials (particularly sand and other proppants), supplies and personnel.”

Annual report 2025A · The company itself

“Our operations and drilling activity are concentrated in the Permian Basin in West Texas, an area in which industry activity has increased rapidly. As a result, demand for qualified personnel in this area, and the cost to attract and retain such personnel, has increased over the past few years due to competition and may increase substantially in the future.”

Annual report 2025A · The company itself

“If any of these developments reduce the desirability of participating in the oilfield services, midstream or downstream portions of the oil and gas industry, then these developments may also reduce the availability to us of necessary third-party services and facilities that we rely on, which could increase our operational costs and adversely affect 24 Table of Contents our ability to explore for, produce, transport and process oil and natural gas and successfully carry out our business and financial strategy.”

Annual report 2025A · The company itself

“Further, as a result of any of these developments we could incur material write-downs of our oil and natural gas properties and the value of our undeveloped acreage could decline in the future. The marketability of our production is dependent upon transportation and other facilities, certain of which we do not control.”

Annual report 2025A · The company itself

“The availability, terms and cost of transportation of oil and natural gas significantly affect its marketability and sale. The interstate transportation and sale for resale of natural gas, and the interstate transportation of oil, is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by FERC.”

Annual report 2025A · The company itself

“The marketability of our oil and natural gas production depends in part upon the availability, proximity and capacity of transportation facilities owned by third parties. We do not control third-party transportation facilities and our access to them may be limited or denied.”

Annual report 2025A · The company itself

“Over the past several years, Texas has experienced extreme drought conditions. As a result of this severe drought, some local water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supply.”

Annual report 2025A · The company itself

“Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows. Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes.”

Annual report 2025A · The company itself

“We are heavily dependent on electrical power, internet and telecommunications infrastructure and our information systems and computer-based programs, including our well operations information, seismic data, electronic data processing and accounting data. If any of such infrastructure, systems or programs were to fail or become unavailable or compromised, or create erroneous information in our hardware or software network infrastructure, our ability to safely and effectively operate our business will be limited and any such consequence could have a material adverse effect on our business.”

Annual report 2025A · The company itself

“We have incurred a substantial amount of debt to finance our recent acquisitions and for other corporate purposes. Our ability to make scheduled payments of the principal, to pay interest on or to refinance our indebtedness, including our senior notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.”

Annual report 2025A · The company itself

“We are heavily dependent on electrical power, internet and telecommunications infrastructure and our information systems and computer-based programs, including our well operations information, seismic data, electronic data processing and accounting data. If any of such infrastructure, systems or programs were to fail or become unavailable or compromised, or create erroneous information in our hardware or software network infrastructure, our ability to safely and effectively operate our business will be limited and any such consequence could have a material adverse effect on our business.”

Annual report 2025A · The company itself

“Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy, and ultimately reduced demand for oil and natural gas. Such conditions could have a material adverse impact on our business, results of operations and cash flows.”

Annual report 2025A · The company itself

“These laws and regulations may limit the amount of oil and natural gas we can produce from our wells or limit the number of wells or the locations at which we can drill. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and natural gas liquids within its jurisdiction.”

Annual report 2025A · The company itself

“For example, on October 1, 2019, PHMSA published final rules to expand its integrity management requirements and impose new pressure testing requirements on regulated pipelines, including certain segments outside High Consequence Areas. Also, on November 15, 2021, PHMSA published a final rule extending reporting requirements to all onshore gas gathering operators and establishing a set of minimum safety requirements for certain gas gathering pipelines with large diameters and high operating pressures, and, on August 24, 2022, PHMSA published a final rule strengthening integrity management requirements for onshore gas 18 Table of Contents transmission lines, bolstering corrosion control standards and repair criteria, and imposing new requirements for inspections after extreme weather events.”

Annual report 2025A · The company itself

“If safety standards were to become more stringent in the future, it could cause us, like other similarly situated pipeline operators, to install new or modified safety controls, pursue additional capital projects or conduct maintenance programs on an accelerated or expanded basis, any or all of which tasks could result in our incurring increased operating costs that could have a material adverse effect on our results of operations or financial position.”

Annual report 2025A · The company itself

“For example, a significant hurricane or similar weather event could damage refining and other oil and natural gas-related facilities on the Gulf Coast of Texas and Louisiana, which (if significant enough) could limit the availability of gathering and transportation facilities across Texas and could then cause production in the Permian Basin (including potentially our 29 Table of Contents production) to be curtailed or shut in or (in the case of natural gas) flared. Climate change may also increase the frequency and severity of significant weather events over time.”

Annual report 2025A · The company itself

“Rapid growth in AI-related data centers and other high‑intensity computing is materially increasing regional electricity demand and straining grids, which—together with extreme weather conditions, intermittent renewable generation, and other market constraints—can reduce power availability, increase prices (including scarcity pricing), and cause outages. Reduced power reliability could disrupt our drilling, completion, and production activities; impair midstream operations; hinder remote monitoring and data integrity; and force suspensions or shutdowns or unplanned spending on backup power and communications, any of which could have a material adverse effect on our business and results of operations.”

Annual report 2025A · The company itself

“Rapid growth in AI-related data centers and other high‑intensity computing is materially increasing regional electricity demand and straining grids, which—together with extreme weather conditions, intermittent renewable generation, and other market constraints—can reduce power availability, increase prices (including scarcity pricing), and cause outages. Reduced power reliability could disrupt our drilling, completion, and production activities; impair midstream operations; hinder remote monitoring and data integrity; and force suspensions or shutdowns or unplanned spending on backup power and communications, any of which could have a material adverse effect on our business and results of operations.”

Annual report 2025A · The company itself

“Additionally, cities, counties, and other governmental entities in several states in the U.S. have filed lawsuits against energy companies seeking damages allegedly associated with climate change. Similar lawsuits may be filed in other jurisdictions.”

Annual report 2025A · The company itself

“Our producing properties are currently geographically concentrated in the Permian Basin of West Texas. As a result, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints, availability of equipment, facilities, personnel or services market limitations or interruption of the processing or transportation of crude oil, natural gas or natural gas liquids, and extreme weather conditions and their adverse impact on production volumes, availability of electrical power, road accessibility and transportation facilities.”

Annual report 2025A · The company itself

“In addition to the geographic concentration of our producing properties described above, as of December 31, 2025, most of our proved reserves are concentrated in the Wolfberry play in the Midland Basin.”

Annual report 2025A · The company itself

“Texas regulates the drilling for, and the production, gathering and sale of, oil and natural gas, including imposing severance taxes and requirements for obtaining drilling permits. States also regulate the method of developing new fields, the spacing and operation of wells and the prevention of waste of oil and natural gas resources.”

Annual report 2025A · The company itself