talked about some of the reasons for that uh is there anything structural on there you know for that to continue or how are you viewing loe for the rest of the year yeah i think if you look at the top line topics number um you know the the dollars were actually flat quarter over quarter uh so the loe beat was was driven by you know the production beat um i i think you know from water and doing the things that they can they do the little things they do to save, you know, a dollar here and there that adds up. And, you know, I don't think we're going to see LOE trend down in the back half of the year. I think we like that kind of circling that $6 number or a little higher. But, you know, I think if we continue to see volume outperformance, we could see some upside to that number. But, you know, I do believe that some of this inflation stuff we have on power and water and tubulars, you know, will flow through on the top-line LOE number as well. So, you know, the team feels pretty confident in that $6 range, you know, but, again, that's...

I'll also say that, you know, the KPIs that we track that the team can control on LOE look as good as they've ever looked. As well as some of the things we've done in the field post-endeavor integration, integrating two large field organizations takes a little longer than the office, but we're starting to see the benefits of that in terms of moving to a pump-by-exception company, a lot more automation. You know, I think that, you know, AI is helping Diamondback in the office today, but I think AI is going to be an automation are going to be very big drivers of, you know, the production base, you know, either shallowing or costing less to maintain.

That's great detail. Thank you.

One moment for our next question. Our next question comes from the line of Doug Legate with Wolf.

Your line is now live. well thanks again thanks guys for having me on um okay so i've got a couple of things the first one i want to take you back to your first comment about the trade-off between the balance sheet and your um your buybacks i think you've been more vocal than most about avoiding pro-cyclical share buybacks but you could make you could do some serious damage to your balance sheet with the kind of free cash flow you're generating so my question is where are you prepared to take that too in terms of building cash and balance sheet as opposed to going after debt redemptions, but actually just sitting cash to resist net debt? That's my first question. And my follow-up very quickly is the capital efficiency is extraordinary. Your latest type curves are significantly above 2025. You've run through a number of the reasons why that's happening. My question is, would you take the capital efficiency and lower your spending in 27, or would you take the incremental production and keep the capex flat? And I know you talked a little bit about growth, but just curious on the trade-off between those two things as well.

A near-term discussion, I think, on the debate of, I think, you know, today and today's market, it made sense. The flexibility there, Doug, and, you know, I think that also then balance sheet, take out our, you know, be prepared to take out our 2020.

I appreciate the answers, Kase.

Thanks, Doug.

One moment for our next question. Our next question comes from the line of Jeff Jay with Daniel Energy Partners. Your line is live.

Hey, guys. Just wanted to follow up on what you said earlier, Case, about the deployment of AI and predictive maintenance and remote sensing, etc. How far down the pike are you on that? And I guess what's the timeline look like to you for the deployment of those technologies out there to try to even improve your uptime?

The first inning, right? I mean, I think in five years, we're going to look back and say, you know, we were such rookies at all this stuff, and it's going to be a huge help to our production base. But, Chad, anything we're doing and seeing?

Yeah, we're really excited about the progress, but it is incredibly early.

We're tackling it first on artificial lift and using the AI and the automation to help manage that optimization on a day-to-day process, which is going really, really well for us. And then the team's doing a great job just managing downtime with some of these tools, and that's been that.

So still very early, but lots of room to run.

Yeah, it's kind of a numerator denominator thing, right? The the lower downtime, lower spend, lower decline rate, okay, then we don't have to spend as much capital to sustain production. So, I mean, just a 1% move in that decline rate, which we've been fighting for a long time, it can make a big difference.

Thanks, guys.

Thanks, Jeff.

One moment for our next question. Our next question comes from the line of Paul Sankey with Sankey Research. Paul, you are live.

Morning, all. Can you hear me okay?

Yeah, Paul, we got you.

Hey, guys. Hey, Case, you mentioned that the NAV, you were kind of coy about it, but you said that the NAV went up more or less during the quarter. Can you just talk a little bit more about how you think about the NAV now, particularly, first of all, obviously, on the upstream performance side? I don't know if you want to throw the oil price in there, but also the other businesses and whether or not, you know, it's still a key driver of buyback attractiveness. Thanks.

But I also think as we're looking at type curves and wall performance and, you know, the Barnett development, you know, the Barnett, you know, I think as those things can do in our job, I think on the other businesses, a good amount of midstream value with our deep blue and multiples equation as I think that business line in this basin. So, you know, I think we're going to be very money ahead on that investment. But all of that ties up together, and, you know, a reduced share count and a lower net debt value pops out of a higher per share value.

One moment for our next question. Our next question comes from the line of Gabe Daoud with Truist. Your line is now open.

Thanks, Operator. Morning, Kaze and everyone. Kaze, I was hoping maybe you could get a little more color on just the last point that you hit on on the water side.

Is there anything that you're seeing just given some of the changes the ROC has made to injection?

Are you seeing any constraints at this point or maybe concern about constraints moving forward?

With Deep Blue, I think there's a lot of lessons doing over there that we can translate over here. But in general, I would say Deep Blue used the asset base that we gave them with Diamondback as the anchor customer and done a great job adding third-party business and also, you know, working to connect the system and improve.

Okay, so that's helpful. And then just to follow-up, I think this year, you know, you had non-DNC spend of $600 million across some science and midstream. Just curious, like, how does that change into 27? Does the Barnett, like, require any incremental midstream or facility spend that maybe we're not thinking of, or is the answer there no? Thanks, guys.

I think generally, you know, as we get to, you know, new batteries and, you know, we're working on in the beginning and then reduces.

Okay. Makes sense.

Thank you. One moment for our next question. Our next question comes from the line of Derek Whitfield with Texas Capital. Your line is live.

Good morning, all, and congrats on a solid update this quarter.

Thanks, Derek.

I wanted to start on the operational front. Could you speak to some of the design changes you incorporated this quarter to drive lower equipment costs per well?

Equip side, that's the biggest gap to pull, and it's one of the reasons why we're starting to lean into some of the U-turn development because we have a frontier for lateral lengths, and can we get to a point where our average lateral length continues to creep up beyond 12,000 feet and has more efficiency? And so that's really what you're seeing. The biggest change for that well, it just dries down your per foot.

I think some things have come out of the scope as well. So, you know, we're always looking at each little line item. But, you know, Danny's point is, you know, the equip piece and the infrastructure piece, that's nonproductive capital, right? And we want to minimize the non-oil producing capital in our CapEx budget.

Great. Makes sense. And as my follow-up, maybe wanted to touch back on the EOR question from earlier. Could you speak to the lessons you guys have learned so far in how you're thinking about broadening this program as you look out beyond the first 50 wells?

And then looking at the overall portfolio of the thousands of wells that we operate, you know, where are those rock types situated? And then thinking about sort of the chemical composition of the surfactant and which ones are working best and which different rock types. And so that's sort of the ongoing process and, you know, like I said earlier, I think we're really just early innings on this and, you know, the team's learning a lot and, you know, the initial results that we're seeing from this 12-wheel package are really promising from these twelve and apply it to the next group of wells that we do in the future and yeah I think this is something that like Case talked about earlier where we could see some shallowing of the decline rate and then the decision on you know do we take capital out of the system or do we lean in but yeah overall that's sort of the details of where we are today thanks and

a great update one moment for our next question our next question comes from the line of charles mead with johnson rice charles your line is left good morning case to you and your team um i want to go back to to uh your shareholder letter and you know your theme of volatility and see if you maybe share your view on on the macro um we've been living in the world with a lot of volatility But I'm curious, you know, we see some this morning, but I'm curious, do you think that, you know, stopping the bombing and opening the state from use is what's going to kind of end the volatility? Or are you anticipating that there's been some structural changes in the oil market that, you know, even if we do get these agreements that we're going to be living with more volatility going forward?

On geopolitical, that's broken down a little bit over the last couple of months, but in the system, someone smarter than me explained the market as basically a sine wave because of everything that's happened and everything's been disrupted. And at times, there's going to be heightened volatility on the upside and heightened volatility on the downside with, you know, a steady state, you know, far from a possibility today. So I think generally chasing headlines over the last three months has been exhausting. And I think crude oil that comes out of inventories today has to be replaced tomorrow and over a multi-year period that should result in a bid for oil for a longer period of time here.

Got it. Thank you. And then a second question on the Wolf Camp D. You wrote about that in your shareholder letter that you've been driving down costs there. And if I look at slide 11, it's actually interesting. That looks like the Wolf Camp D is actually the biggest rate of change from 25 to 26 as far as your lateral footage. So I'm curious two things. Which direction does the causality work there? Are you getting the costs down because you're drilling more of them and learning more, or is it the other way around that you're drilling more because you've gotten the cost down?

And perhaps you could also talk about what, you know, the other side of the equation there, what you're seeing in productivity trends in the Wolf Camp D. And they're actually hitting their stretch goal, so that does improve the returns of the Wolf Camp D. You know, what has more Wolf Camp D into our program is that when we merged with Endeavor, you know, they had some acreage in kind of the sweet spot of the Wolf Camp D, kind of midland county eastern midland county versus where as much upside but as these other zones get productivity per foot while adding these zones has been consistent to now uh up this year so um credit to the team but but i think it's also just a combination of a larger asset base with more with more places to allocate capital post uh post endeavor thanks for the cover case one moment for

our next question. Our next question, oh, one moment for our next question. Our next question comes from the line of Leo Mariani with Ross. Your line is now open.

Hi, good morning. I see there really hasn't been much in the way of Delaware Basin activity over the last, you know, handful of quarters. Can you give us an update, kind of what's planned, you know, for that asset? Is that just going to kind of, you know, sit there and kind of slowly decline over time? Is it something you're going to look to get back after kind of later on down the road? Just any color would be great.

Yeah, I mean, while there's no capital being allocated to the Delaware this year, there are some interesting things happening over there, major capital allocated there this year or likely next.

Okay. And then just on EOR, I know it's kind of early days and you guys are still analyzing results, but at this point, do you think that you've had clear economic benefit on at least some of the wells out there? Maybe not all of them. I know it works better on some versus others, but are you convinced that there's economic benefit in terms of incremental capital that's gone into some of those existing wells?

Yes, 100%. You know, the average was, but the dispersion is just so wide. And so, you know, I liken it to, you know, a Wolf Camp B frack in 2014 versus a Wolf Camp B frack today. You know, these are Wolf Camp B fracks from 2014. And we've got to figure out what's going on beneath the surface. And I think with the quality of the data and our ability to process it as quickly as we can today is going to allow for continuous improvement.

Okay. Thank you.

Thanks, Leo.

Thank you. This concludes the question and answer session. I would now like to turn the call back over to Case Vanhoef, CEO, for closing remarks well thank you thank you for your participation in today's conference this does conclude the program you may now disconnect