Diamondback Energy, Inc. (FANG) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 2, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Diamondback Energy First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Adam Lawlis, Vice President of Investor Relations. Please go ahead.

Adam Lawlis

Thank you, Gina. Good morning, and welcome to Diamondback Energy's first quarter 2023 conference call. During our call today, we will reference an updated investor presentation and stockholder letter, which can be found on Diamondback's website. Representing Diamondback today are Travis Stice, Chairman and CEO; Kaes Van't Hof, President and CFO; and Danny Wesson, COO.

During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

I'll now turn the call over to Travis Stice.

Travis Stice

Thank you, Adam, and Adam mentioned that we released a shareholder letter last night in conjunction with our press release. I hope you find that useful. We believe that it not only increases transparency directly to our shareholders, but also improves efficiency. So we'll move right into questions. Operator, if you would open the line and begin with our first question.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Neal Dingmann of Truist Securities. Your line is now open.

Neal Dingmann

First, thanks, Travis, for the new format. Appreciate it. Travis, my first questions for you or Danny, on one of the top [indiscernible] that service costs. Specifically, are you able to quantify how your continued operational efficiencies have recently mitigated the cost? And just wondering how you all think about spot versus long-term contracts in the current environment?

Travis Stice

I think, Neal, the read through that question is, kind of what the CapEx is going to look like in the back half of the year. And I think there's -- and I will let Danny talk about the specific operational efficiencies we've seen year-to-date, that's offset most of the inflationary pressures. But when we talk about deflation, it's really -- that's raw materials. It's diesel, it's sand, it's steel, particularly on steel, because we're buying our steel needs multiple quarters in advance. So we know what that steel cost is. And it's already down for the future purposes $20 to $25 a foot.