Updated Version 3 - Diamondback Energy raises production forecast amid persistently high oil prices

The first paragraph has been rewritten, an outlook on expenditures has been added, and CEO and analyst comments have been incorporated throughout; charts added.

Vallari Srivastava

Reuters, November 2 - U.S. shale oil producer Diamondback Energy (FANG.O) raised its annual production forecast on Monday after the company’s third-quarter profit exceeded market expectations, thanks to supply disruptions triggered by conflict in the Middle East resulting in higher oil prices.

The eight-month-long Iran war has disrupted global energy supplies. In this quarter, the average benchmark Brent crude oil price rose 31% year-on-year to $89.27 per barrel.

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Diamondback began ramping up production earlier this year, aiming to deliver more crude oil to the market amid supply disruptions and rising prices.

The company has raised its production forecast for three consecutive quarters and now expects average daily production of about 1.015 million barrels of oil equivalent in 2026, up from the previous expectation of over 1 million barrels of oil equivalent.

The company now expects 2026 capital expenditures to range between $3.95 billion and $4.0 billion, compared to the previous estimate of $3.9 billion.

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"It is difficult to predict when global oil supplies will finally return to normal, so we expect the current volatility to persist," said CEO Kaes Van't Hof.

However, William Blair analyst Neal Dingmann noted that the company plans to conduct five simulfrac operations in 2027 (simultaneous fracturing in multiple wells), indicating the drilling program will be steadier than current activity.

In the third quarter, Diamondback's realized oil price jumped nearly 35% to $85.89 per barrel; daily production rose from 942,946 barrels of oil equivalent to 1.03 million barrels of oil equivalent year-on-year.

With data center construction expanding and liquefied natural gas (LNG) exports climbing, Diamondback also expects to benefit from increasing natural gas demand.

"We are working to establish partnerships with LNG companies... Over the next few years, we should be able to reach beneficial agreements with them," said Van't Hof.

The shale oil producer increased its quarterly dividend by 7.3% to $1.18 per share.

According to data compiled by LSEG, the Midland, Texas-based company reported adjusted earnings of $5.86 per share for the quarter, higher than analysts' estimate of $5.46 per share.

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