Diamondback Energy, Inc.FANG
Diamondback Energy, Inc. Commitments Disclosure
COMMITMENTS AND CONTINGENCIES
The Company is a party to various routine legal proceedings, disputes and claims arising in the ordinary course of its business, including those that arise from interpretation of federal and state laws and regulations affecting the crude oil and natural gas industry, personal injury claims, title disputes, royalty disputes, contract claims, employment claims, claims alleging violations of antitrust laws, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of the Company’s current operations. While the ultimate outcome of the pending proceedings, disputes or claims and any resulting impact on the Company, cannot be predicted with certainty, the Company’s management believes that none of these matters, if ultimately decided adversely, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s assessment is based on information known about the pending matters and its experience in contesting, litigating and settling similar matters. Actual outcomes could differ materially from the Company’s assessment. The Company records accrued liabilities for contingencies related to outstanding legal proceedings, disputes or claims when information available indicates that a loss is probable and the amount of the loss can be reasonably estimated.
Commitments
The following is a schedule of minimum future payments with commitments that have initial or remaining noncancellable terms in excess of one year as of December 31, 2025:
| Year Ending December 31, | Transportation Commitments(1)(2) | Electrical Power Agreements(3) | Other Operating Agreements(4) | Electrical Fracturing Fleet(5) | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| 2026 | $ | 275 | $ | 125 | $ | 114 | $ | 50 | ||||||||||||||||||
| 2027 | 316 | 128 | 43 | 50 | ||||||||||||||||||||||
| 2028 | 313 | 98 | 14 | 24 | ||||||||||||||||||||||
| 2029 | 312 | 95 | 6 | — | ||||||||||||||||||||||
| 2030 | 312 | 21 | 6 | — | ||||||||||||||||||||||
| Thereafter | 1,485 | 28 | 24 | — | ||||||||||||||||||||||
| Total | $ | 3,013 | $ | 495 | $ | 207 | $ | 124 | ||||||||||||||||||
(1)Total costs incurred under take-or-pay and throughput obligations were approximately $449 million, $337 million and $266 million in 2025, 2024 and 2023, respectively.
(2)The Company has committed to transport gross quantities of crude oil and natural gas on various pipelines under a variety of contracts including throughput and take-or-pay agreements. The Company’s failure to purchase the minimum level of quantities would require it to pay shortfall fees up to the amount of the original monthly commitment amounts included in the table above.
(3)The Company has fixed price contracts with various suppliers for the purchase of electrical power through 2032.
(4)The Company is party to various operational agreements containing fixed or minimum payments, which include the rental of compressors, sand purchases, produced water disposal and miscellaneous other operating leases. The amounts in the table above represent our fixed or minimum payments under the aforementioned types of agreements.
(5)The Company has commitments for the Company’s electric fracturing fleet and related power generating services.
At December 31, 2025, the Company’s delivery commitments covered the following gross volumes of oil:
| Year Ending December 31, | Oil Volume Commitments (Bbl/d) | |||||||
| 2026 | 150,000 | |||||||
| 2027 | 150,000 | |||||||
| 2028 | 50,000 | |||||||
| 2029 | 50,000 | |||||||
| 2030 | 50,000 | |||||||
| Thereafter | 50,000 | |||||||
| Total | 500,000 | |||||||
The Company and Five Point currently anticipate collectively contributing $500 million in follow-on capital to fund future growth projects and acquisitions for Deep Blue.
Environmental Matters
The United States Department of the Interior, Bureau of Safety and Environmental Enforcement ordered several oil and gas operators, including a corporate predecessor of Energen Corporation, to perform decommissioning and reclamation activities related to a Louisiana offshore oil and gas production platform and related facilities. In response to the insolvency of the operator of record, the government ordered the former operators and/or alleged former lease record title owners to decommission the platform and related facilities. The Company has agreed to an arrangement with other operators to contribute to a trust to fund the decommissioning costs, however, the Company’s portion of such costs are not expected to be material.
Several coastal Louisiana parishes and the State of Louisiana have filed numerous lawsuits under Louisiana’s State and Local Coastal Resources Management Act (“SLCRMA”) against numerous oil and gas producers seeking damages for coastal erosion in or near oil fields located within Louisiana’s coastal zone. The Company is a defendant in five of these cases. The Company has exercised contractual indemnification rights where applicable. Plaintiffs’ SLCRMA theories are unprecedented and there remains significant uncertainty about the claims (both as to scope and damages). Although the Company cannot predict the ultimate outcome of these matters, the Company believes the claims lack merit and intends to continue vigorously defending these lawsuits.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.