Chris Mathews, senior editor of shale and A&D, Hart Energy: Hi, my name is Chris Mathews, senior editor of shale and A&D at Hart Energy, and I'm joined by Danny Wesson, executive vice president and COO at Diamondback Energy for a discussion about the Permian Basin and Diamondback's footprint. [I'm] wondering if you can give us an update on what you can tell us post Q1 earnings, Diamondback's footprint production if you can. Just give us an update.

Danny Wesson, executive vice president and COO, Diamondback Energy: Yeah. Diamondback is currently running about 16 rigs. We got four simulfrac fleets running. We got our fourth fleet running just just after Q1 earnings and [we] replaced two of our conventional fleets that we had running from the tail end of our two acquisitions we did at the end of last year. You know, we're focused on the drilling and completing and turning line 325 or so wells this year. And should output a little bit of growth on ... 260,000 barrels a day of net production for the year and spend about $2.6 billion.

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CM: I think a lot at the SUPER DUG Conference here are interested in where service cost inflation is going and the cost of drilling and the cost of other products and services out in the shale patch in the Permian. What can you give us, what's the latest on service cost inflation?

DW: Yeah, I mean, we've seen certainly some help on the consumable side of things. We entered the year with record high casing prices, [we] started to see some help on the casing side of things and, and Q2 and, and have further optics into some help on Q3 and Q4. I've certainly seen some deflation and diesel and things that are tied to the commodity, you know, different types of poly pipe and that's such ... and so we're getting a little help on the consumable side. We've also seen some softening in the services sector, namely in the drilling space and other ancillary services. We've seen the headline drilling rig count print over the last two weeks kind of soften and, and you know, there's always a lot of volatility in those numbers, but generally we're seeing a little help on the drilling services side of things. Not so much on the completion side today, the spot market for completions has come down, but we are continuing to see help with the efficiency gains that we're getting from our simulfrac fleets. And so we're seeing costs come down from their peak in Q1 and should continue to see help throughout the year

CM: And maybe, yeah, back half of [20]23, into [20]24, kind of.

DW: That's correct. Yeah, I mean, it's hard to see what what [20]24 is gonna look like today, with the activity, but we certainly feel like we [might] be past the peak of service cost inflation and should get some help through the back half of [20]23. 

CM: Got it. I want to talk about A&D in my purview as senior editor of A&D and talk about the M&A landscape in the Permian, which you note is always competitive. And we've seen some deals this year. Are we gonna see more as publics look for inventory, as maybe privates look for scale? What do you think is gonna happen on the Permian M&A outlook?

DW: Yeah, I think you're gonna continue to see deals get done. I think it is certainly, you know, very competitive. It's -- and it's always been competitive in M&A cycles, particularly in the private for public deals. And, and I think you're gonna continue to see deals get brought to the table [because] it seems like we're in an M&A cycle today. We'll see who transacts and who doesn't, but we are seeing private investment flow back into the space as well, which means that we'll continue to have more inventory that comes forward as these private guys put together packages that aren't there today. But I do think M&A [has] been competitive in the Permian Basin, will continue to get more and more competitive for core inventory. And you'll hopefully see some more private deals come to the table throughout this year.

CM: Awesome. Thank you so much for joining us for this edition of Hart Energy Live with Danny Wesson, executive vice president and COO at Diamondback Energy.