Diamondback Energy (FANG) Risk Factor Changes

The existence of some provisions in our certificate of incorporation and bylaws could delay or prevent a change in control of our company, even if that change would be beneficial to our stockholders.

As of December 31, 2025, we had an NOL carryforward of approximately $436 million, capital loss carryforwards of approximately $26 million and tax credits of $4 million for U.S.

tax-exempt rate, periodically promulgated by the IRS.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that experiences an “ownership change” (as defined in the Code) may be subject to limitations on its ability to o…

A change of control could limit our use of net operating losses and certain other tax attributes.

Despite our return of capital commitment to return at least 50% of Adjusted Free Cash Flow to stockholders, the amount of cash available to return to our stockholders, if any, can vary significantly from quarter to qu…

A downgrade in our debt ratings could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.

Lastly, our earnings are exposed to interest rate risk associated with borrowings under our and Viper’s revolving credit facilities and under our Term Loan Agreement.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future under our current debt agreement.

We have incurred a substantial amount of debt to finance our recent acquisitions and for other corporate purposes.

As of December 31, 2025, Endeavor’s equityholders held approximately 35.8% of our common stock.

A variety of U.S.

A significant cybersecurity attack or incident that compromises our Confidential Information or disrupts our normal operations, including our exploration, completion, production and corporate functions, could material…

Our IT Systems and Confidential Information, and that of our vendors, service providers and other third-party providers and business partners, are vulnerable to evolving cybersecurity threats, including, without limit…

We rely extensively on information technology systems and infrastructure, including but not limited to, data hosting platforms, real-time data acquisition systems, internally developed and third-party software, cloud…

The U.S.

In 2022, the IRA enacted a 15% corporate alternative minimum tax (“CAMT”) on the “adjusted financial statement income” of certain large corporations (generally, corporations reporting more than $1 billion average adju…

From time to time, legislation has been proposed that, if enacted into law, would make significant changes to U.S.

U.S.

Oil and natural gas operations in our operating areas can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife.

From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and natural gas wells below actual production capacity to conserve supplies of oi…

Our operations are subject to various governmental laws and regulations which require compliance that can be burdensome and expensive.

In September 2021, the Texas Railroad Commission curtailed the amount of produced water companies were permitted to inject into some wells near Midland and Odessa in the Permian Basin and has since indefinitely suspen…

Extreme regional weather events may occur that can affect our suppliers or customers, which could adversely affect us.

An impairment on proved oil and natural gas properties of approximately $3.7 billion was recorded for the year ended December 31, 2025.

The net capitalized costs of proved oil and natural gas properties are subject to a full cost ceiling limitation in which the costs are not allowed to exceed their related estimated future net revenues discounted at 10%.

We are also subject to credit risk due to the concentration of our oil and natural gas receivables with several significant customers.

The loss of one or more of our customers or their inability to meet their obligations may adversely affect our financial results.

We may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contracts, which will result in deficiency payments to the counterparty and may have an adverse effect on our operations.

formations, title problems, facility or equipment malfunctions, unexpected operational events, inclement weather, environmental and other regulatory requirements and approvals, oil and natural gas prices, costs, drill…

Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings and slow our growth.

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.

If we are unable to fund our capital requirements or our costs of capital increase, we may be required to curtail our operations relating to the exploration and development of our prospects, which in turn could lead t…

We cannot assure you that our operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures.

Additionally, our proved reserves will generally decline as reserves are depleted, except to the extent that we conduct successful exploration or development activities or acquire properties containing proved reserves…

We use 2-D and 3-D seismic data to identify the presence of oil and natural gas.

Further, in response to the evolving regulatory environment and investor expectations, or due to our acquisitions of other companies or assets, we may, periodically, make adjustments to our environmental targets or go…

In addition to potentially reducing demand for our oil and natural gas and potentially reducing the availability of oilfield services and midstream and downstream customers, further regulatory or other climate change…

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…

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…

Governmental and regulatory bodies, investors, consumers, industry and other stakeholders have evolving and varied views on climate change matters in recent years.

Risks relating to the transition to a low carbon economy could impose new costs on our operations that may have a material and adverse effect on us.

For additional information regarding our outstanding derivative contracts as of December 31, 2025, see Note 12—Derivatives in Item 8.

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, na…

These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty.

Our revenues, operating results, profitability, future rate of growth and the carrying value of our oil and natural gas properties depend significantly upon the prevailing prices for oil and natural gas.

•A downgrade in our debt ratings could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.

•U.S.

•Restrictions on our ability to obtain water and dispose of produced water, and additional monitoring and reporting requirements related to existing and new produced water disposal wells in the Permian Basin could adv…

•If transportation or other facilities, certain of which we do not control, or rigs, equipment, raw materials, supplies, oilfield services or personnel become unavailable or too costly, our operations could be interru…

•We may fail to meet our obligations to deliver specified quantities of oil under our oil purchase contracts.

•Our failure to successfully identify, complete and integrate pending and future acquisitions of properties or businesses could reduce our earnings.

•We may be unable to obtain needed capital or financing on satisfactory terms or at all to fund our acquisitions, exploration or development activities.

•Our success depends on developing our existing leasehold acreage and finding, developing or acquiring additional reserves.

•Changing political and social perspectives on climate change and other environmental, social and governance factors

•Risks relating to the transition to a low carbon economy could impose new costs on our operations that may have a material and adverse effect on us.

The nature of our business activities subjects us to certain hazards and risks.

At closing, we entered into the Stockholders Agreement with the Endeavor equityholders that, among other things, provided the Endeavor equityholders with certain shelf, demand and piggyback registration rights.

The market value of our common stock could decline if large amounts of our common stock are sold following the Endeavor Acquisition and the pending Double Eagle Acquisition.

revolving credit facility was 7.34% during the year ended December 31, 2024.

Borrowings under our and Viper LLC’s revolving credit facilities expose us to interest rate risk.

As a holding company, we depend on our subsidiaries for dividends and other payments.

We depend on our subsidiaries for dividends and other payments.

If a default occurs under our revolving credit facility, the lenders thereunder may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable, which…

We and our subsidiaries may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants and financial covenants contained in our and ou…

Certain of our debt instruments contain, and the terms of any future indebtedness may contain, restrictive covenants that limit our ability to, among other things: incur or guarantee additional indebtedness; make cert…

Restrictive covenants in certain of our existing and future debt instruments may limit our ability to respond to changes in market conditions or pursue business opportunities.

created availability under the revolving credit facility by repaying outstanding borrowings with the proceeds from debt or equity offerings.

We have historically relied on availability under our revolving credit facility to fund a portion of our capital expenditures.

Implementing our capital programs may require, under some circumstances, an increase in our total leverage through additional debt issuances, and any significant reduction in availability under our revolving credit fa…

We and our subsidiaries may be able to incur substantial additional indebtedness in the future.

We and our subsidiaries may still be able to incur substantial additional indebtedness in the future, which could further exacerbate the risks that we and our subsidiaries face.

The significant additional indebtedness incurred in connection with the Endeavor Acquisition, as well as additional indebtedness that may be incurred in connection with future acquisitions, may limit our operating or…

Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness.

References in this section to “us, “we” or “our” shall mean Diamondback Energy, Inc.

affect the market price of our shares of common stock or prevent our shareholders from realizing a premium over the market price for their shares of our common stock.

Evolving privacy-related laws could give rise to liabilities, which could adversely impact our business, results of operations or financial condition.

We have implemented and invested in, and will continue to implement and invest in, controls, procedures and protections (including internal and external personnel) that are designed to protect our systems, identify an…

We are subject to cybersecurity risks.

Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other countries may adversely affect the United States and global economies and could prevent us from meeting our f…

A terrorist attack or armed conflict could harm our business.

ability of the joint ventures to make distributions to us and the other joint venture partners.

We are also unable to control the amount of cash we receive from the operation of these entities.

We have ownership interests in several joint ventures, and we may enter into other similar arrangements in the future.

We own interests in certain pipeline projects and other joint ventures, and we may in the future enter into additional joint ventures, and our control of such entities is limited by provisions of the governing documen…

Our use of 2-D and 3-D seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations.

We rely on a few key employees whose absence or loss could adversely affect our business.

The IRA also imposes an excise tax of 1% on the fair market value of certain public company stock repurchases occurring on or after January 1, 2023.

what the specific provisions or the effective date of any such legislation would be.

In addition, the European Union and other non-U.S.

We qualify for the “end user” exception to the Mandatory Clearing Rule and the “non-financial end user” exception to the Margin Rule and we believe that the majority, if not all, of our hedging activities qualify for…

The Dodd-Frank Act established federal oversight of the over-the-counter derivatives market and entities, including us, that participate in that market.

Derivatives reform legislation and related regulations could have an adverse effect on our ability to hedge risks associated with our business.

Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.

The availability of a ready market for any oil and/or natural gas we produce depends on numerous factors beyond the control of our management, including those discussed.

We depend upon several significant purchasers for the sale of most of our oil and natural gas production.

The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate.

to post collateral.

We cannot assure you that our operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures.

The oil and natural gas industry is capital intensive.