The expected $3 billion in synergies that Diamondback Energy expects to realize through its acquisition of Endeavor Energy Resources, announced Feb. 12, are largely underpinned by applying Diamondback’s existing cost structure to Endeavor assets. 

The cost assumptions Diamondback baked into the Endeavor acquisition are the same cost assumptions Diamondback uses, Travis Stice, chairman of the Diamondback board and CEO, said during a Feb. 21 conference call discussing the company’s fourth-quarter 2023 earnings.

During the call, Diamondback President and CFO Kaes Van't Hof said completion cost reductions will come from using simul frac and e-frac fleets.

“I don’t even think we’ve modeled the benefits of a much larger supply chain to these numbers. This is just us getting their costs down to our costs on the capital side, so there’s probably some upside there at some point,” Van’t Hof said. “On the drilling side, we’ve been a big proponent of clear fluids and not using oil-based mud to drill these wells. It saves time and money. That was something we put in place and learned from the QEP team three or four years ago.”

As the companies work through integration to become a Permian “super independent,” he said, Diamondback will work with Endeavor’s team to discover what Diamondback can do better.

“I think there’s some upside there, but really all we’re doing is looking to put in place what we’re doing today on a larger asset base,” he said.

Stice said Diamondback has historically done a “really good job of checking our egos at the door” when integrating acquired companies “and finding out what’s really working. And it’s a culture of seeking first to understand as opposed to being understood.”

The company’s strategy has been to pay attention to what is going on in the industry, he said.

“It’s culturally ingrained not only to rigorously examine our own internal results, but also spend intellectual capital on looking across the barbed wire fence at what others are doing,” Stice said. “As we move into a much larger position post-close, I promise you that culture will stay intact. We will continue to look and find what others are doing potentially better than we are and adopt accordingly.”

Stice said capital efficiency shines in Diamondback’s 2024 budget.
“We are essentially maintaining the volumes profile that we had in the fourth quarter, but we're doing so with 10% less capex,” he said. The company’s development strategy yields the same well performance. 

“I think as we look across the industry universe, capital efficiency for this year is going to be very, very important, and I like the way that our budget execution is shaping up in terms of that capital efficiency,” Stice said.

Durable inventory

Van’t Hof observed that recent deals have included “a lot of aggressive” inventory counts. The Diamondback-Endeavor combination provides about 6,000 locations, or 12 years of sub-$40/bbl breakeven inventory, he said. 

“Not all locations are created equal, and within that combined 6,000 location count, there’s some that break even below $30,” he said.

Stice said two things are important for companies in the oil and gas industry: durable inventory and conversion efficiency of the inventory.

“With the announcement of this Endeavor merger, we’re in control of both numerator and denominator of that ratio,” he said. “So our durable inventory greatly extends, and then our conversion efficiency that we’ve been known for” will apply to a larger asset base.

During the fourth quarter of 2023, Diamondback drilled 80 gross wells in the Midland Basin and four gross wells in the Delaware Basin. The company started production at 50 operated wells in the Midland Basin and nine gross wells in the Delaware with an average lateral length of 11,457 ft. Operated completions during the fourth quarter consisted of 14 Lower Spraberry wells, 14 Wolfcamp A wells, 13 Wolfcamp B wells, nine Jo Mill wells, four Third Bone Spring wells, three Middle Spraberry wells and two Wolfcamp D wells.

Looking at 2024, the company expects to drill 265 gross wells to 285 gross wells and complete 300 gross wells to 320 gross wells, averaging a lateral length of 11,500 ft.

Debt and sell-offs

One of the focuses this year will be reducing debt, and Van’t Hof said it’s possible the company will decrease debt from about $12 billion of net debt at the close of the Endeavor acquisition to about $10 billion by mid-2025.

That is based on oil at about $75/bbl and the combined company generating about $5 billion of free cash flow (FCF), he said. Between $2 billion and $2.5 billion of that FCF would likely be used to reduce the cash force of the purchase price, he said. 

“With the business continuing generating more free cash in 2025 with the numbers we laid out, you could see that $10 billion number by the middle of ‘25,” he said. “Now that excludes any asset sales or acceleration, and I think we try to be an ‘under promise, over deliver’ company, and there’s a lot of things that we can do to accelerate that outside of commodity price.”

Diamondback is looking at what it can sell down in “the next couple months,” Van’t Hof said. 

For now, “we’re highly focused on deal certainty and getting the deal closed, and we’re not going to do anything that derails that process,” he said.

The mix Diamondback presented when it announced the deal is structured in a way to prevent the company from being forced to sell any of its assets, he said. After the Endeavor deal closes, the company will be “very thoughtful” when looking at monetization strategies for minority interests, particularly as it relates to debt reduction, he said.

“When we structured the cash stock mix of the deal, we didn’t want to be a forced seller of assets to pay down debt,” Van’t Hof said.

In the interim, Van’t Hof said the company is focusing on closing the Endeavor deal as soon as possible. At that point, he said, the combined company can assess the landscape for additional potential purchases.

“I am confident that the landscape will look different whenever that time does come,” he said.


Diamondback reported a fourth quarter 2023 net income of $960 million on revenues of $2.2 billion, compared to fourth quarter 2022 net income of $1 billion on revenues of $2 billion. The company reported a full year 2023 net income of $3.1 billion on revenues of $8.4 billion, compared to full year 2022 net income of $4.4 billion on revenues of $9.6 billion.

The company had FCF of $910 million in the fourth quarter of 2023.

It repurchased 872,667 shares of common stock in fourth quarter 2023 for $129 million, and so far in the first quarter of 2024 has repurchased 279, 266 shares of common stock for $42 million. It also increased the annual base dividend by 7% to $3.60 per share, declared a fourth quarter 2023 base cash dividend of $0.90 per share and a variable cash dividend of $2.18 per share, payable on March 12. In all of 2023, the company repurchased 6.24 million shares of common stock for $838 million.