Diamondback Energy, the third-largest Permian Basin producer behind Exxon Mobil and Chevron, is adding drilling rigs and fracking crews in West Texas as crude prices climb amid the ongoing Iran conflict. The U.S. oil benchmark stood at $105 per barrel on May 4—a staggering 85% increase since early 2025.
The Midland-based company implemented a “stoplight” system last year when it signaled a “red light” for U.S. shale production, citing the impact of President Donald Trump’s tariff war and increased OPEC output. Now, with the Strait of Hormuz effectively closed—handling roughly 20% of global oil and LNG flows—the outlook has shifted dramatically.
“While our ‘stoplight’ analogy served its purpose over the past year, we’re setting it aside now as conditions have shifted to favor growth,” Diamondback CEO Kaes Van’t Hof wrote to shareholders. “Diamondback is well-positioned to respond to the current environment.”
First-quarter Permian production averaged 521,000 barrels daily, exceeding the upper end of guidance at 512,000 barrels. The company projects at least 520,000 barrels per day through year-end, up from the previous midpoint of 505,000. Capital expenditure will increase from $3.75 billion to $3.9 billion in 2026.
Drilling rigs will grow from 15 early this year to 17-18, while fracking crews expand from four to five. The initial focus centers on completing previously drilled but unfinished wells to rapidly increase output.
The broader industry has seen relatively flat rig counts since the Iran conflict began. Some private producers like Continental Resources have increased activity, though major publicly traded companies have largely maintained existing capital plans.
Including natural gas, Diamondback expects to produce at least 972,000 barrels of oil equivalent daily this year, up from 944,000 previously—positioning the company just behind Chevron’s just-over-1 million barrels. Exxon, the dominant Permian player, plans to increase output from 1.7 million barrels daily this year to 1.8 million, ultimately reaching 2.5 million by 2030.