Diamondback Energy, Inc.

Hello, and welcome to Diamondback Energy fourth quarter 2024 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the conference over to Adam Lawless, Vice President of Investor Relations. You may begin.

Thank you, Tawanda. Good morning, and welcome to Diamondback Energy's fourth quarter 2024 conference call. During our call today, we will reference an updated investor presentation and letter to stockholders, which can be found on Diamondback's website. Representing Diamondback today are Travis Dice, Chairman and CEO, Case Vantov, President, Danny Wesson, COO, and Jerry Thompson, CFO. 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. And I'll turn the call over to Travis Dice.

Thank you, Adam, and welcome, everyone, and I appreciate you joining this morning. I hope you find the shareholder letter a meaningful way to communicate. And also, as Adam pointed out, we've got an updated investor deck out there that we can reference during our questions this morning. Operator, if you'll please open the line for questions.

Thank you. Ladies and gentlemen, as a reminder, to ask the question, please press star 1-1 on your telephones. then wait for your name to be announced. To withdraw your question, please press Start11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Neil Dingman with Truist Securities. Your line is open.

Morning, and Travis, congratulations not only to you, but obviously the kids and Jerry, but especially for a fantastic career. Look forward to seeing you soon. My first question is, Maybe just around that, again, another great quarter. My first question is really around the pre-cash flow sensitivity that you all show on slide 13. Specifically, you know, when looking at that, I'm just wondering, you know, you put a comment that I noticed on the bottom of the slide suggesting now around $67 a barrel produced the same pre-cash flow as 76 last year. I'm just wondering, does this continue to achieve through the larger scale? Is this, you know, a lot of the completion drive? I'm just wondering maybe if you could talk and discuss the drivers behind all this.

Yeah, Neil, that's a new number that we're going to start to look at here. I kind of equate that number to the same thing as a dividend break-even. It's basically what oil price gets you the same free cash flow per share as the prior year. And if that number is going down, capital efficiency is improving or you've done an accretive deal. And when we announced the Endeavor deal a little over a year ago, we said we'd have 10% plus free cash flow per share accretion. And, you know, here you are a year later showing that pre-cash flow per share is, you know, going down by $9 a barrel to equal the same number as last year. So, you know, it's going to be tough to keep moving that number down, $9 a barrel every year. But, you know, I think through a lower share count, lower cost structure, and quality inventory, you know, that's certainly going to be the goal.

No, great direction. The thing just keeps dropping. And then my second question is, Maybe on your DNC plans, can you talk about maybe, I don't know, Kay, as you look at it, completions per simulfrac crew or, you know, maybe talk, I'm just noticing the amount of completed wells and, you know, you all talk about sort of four to five of these simulfracs. And then secondly, noticed you all continue to complete several more wells than you drill like you did last year. Maybe just discuss that.

Yeah, so on the duct drawdown, you know, we're drilling less wells and we're completing, you know, a combination of things. We were ahead of plan last year, so we drilled more wells than we expected. And then we also, you know, acquired a lot of ducts with the Endeavor deal and a smaller amount with the TRP deal that closed earlier this year. So, you know, there's a pretty significant duct drawdown planned in the in the CAPEX budget. I would just say if we're ahead of schedule and, you know, CAPEX is looking good for the year, we'll probably, you know, reduce that drawdown and drill a few more wells, particularly right now given that, you know, putting pipes in the ground on the drilling side is almost as cheap as it's been in the last, you know, five or six years. So, I think we have flexibility in the plan, but, you know, really seeing the efficiencies come through here, right, with you know, drilling over 400 wells with 15 or 16 rigs this year versus last year. Going into the year, we thought we were going to drill 280 wells, diamondback standalone with 15 or 16 rigs. And then on the frac side, you know, basically the silo frac fleets are getting about 100 wells per fleet per year. That's kind of up from 80 a year ago. You know, just continued efficiencies in the field, and that's partly due to the a higher pump rate that we've implemented from some of the learnings from Endeavor. And, you know, I think we're still looking at ways to push that even higher. We're trying some things that might get us closer to 110, 120 wells per year. It's not on the plan today, but that's some upside that we could accrue to our shareholders.

Perfect. Thanks. Look forward to seeing you all.

Thanks, Neil.

Please stand by for our next question. Our next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open.

Yeah, good morning, and congratulations, Travis, and congratulations, Case. I think one of the takeaways, it seems, from the deck is, and post the Double Eagle acquisition, is that there might be a pause as it relates to M&A, given that it feels like you've consolidated a lot of the quality positions in the Permian. Case Travis, just love your perspective on that, and if that's the case, how do you think about leaning into the share repurchase program at these valuation levels?

Good morning, Neil. Thank you for your comments as well, too. We tried to articulate during the announcement of the double legal trade that this was really the last opportunity in the core of the Midland Basin, and if it in fact is the last opportunity, then and there's really not much left on a go-forward basis. That's our strategy. We took advantage of probably what was among the last meaningful assets in the Midland Basin.

Neil, not saying we're never going to do another deal again, but certainly need to digest here the quality of the inventory that we have. It puts us in a really good position to move more towards you know, the other side of the capital allocation discussion, which is the share repurchases and, you know, reducing the enterprise value. And, you know, I think at these levels, it's very obvious that share repurchases is a great use of capital. You know, at $70 oil, this business generates $20 a share of free cash flow in 2025. You know, current prices, that's, you know, essentially a 12.5%, 13% yield. So for us, that's cheap. And, you know, our goal is to continue to make our stock look cheap by improving, you know, per share metrics. And I think that's what we've laid out here with the 2025 plan.

Yeah. Okay. So on that buyback program, um, you have a very concentrated shareholder coming out of the endeavor transaction. So how do you think about maintaining the dry powder, uh, for potential, uh, sell downs there and how should the market be thinking about, uh, you know, your largest shareholder in general?

Yeah, I mean, I think the market, you know, should realize that we have a long-term patient shareholder in the Stevens family that, you know, has known this basin for 45 years and is very, very comfortable with the decision they made in, you know, merging with Diamondback. You know, this isn't a private equity investment that, you know, has to monetize for fun life. There's a lot of patients from their side. And, you know, we have conversations with them just like all of our other shareholders and, You know, they, like our other shareholders, you can see on page one of our roster, are encouraging us to lean into our buyback right now because the stock's cheap and, you know, the best use of capital is to buy back our shares. So, you know, lastly, I'd probably say that, you know, I think the market's gotten a little ahead of this, you know, lockup expirations over the coming, you know, months. And in my mind, there's a lot of other ways to reduce ownership that aren't you know, well-telegraphed marketed deals, and that's stuff that we're thinking about. I think we have the balance sheet capacity and the free cash flow generation, most importantly, to, you know, get creative on that front while still buying back shares in the open market.

Thanks, Keith. Thanks, Travis.

Thank you. Please stand by for our next question. Our next question comes from the line of John Freeman with Raymond James. Your line is open.

Yeah, good morning, and yeah, remarkable career, Travis, and congratulations, Case, Jerry, on the well-deserved promotion. I just want to start on looking at the midstream budget, the roughly $415 million on the midstream infrastructure budget. Is there anything that's sort of, I don't know, one time in nature related to either kind of Double Eagle or Endeavor transactions where you kind of either had to put in some infrastructure, facility upgrades, anything like that that we should be aware of?

Yeah, John, you know, I think, you know, one thing we highlighted is that there is 60 million of midstream CapEx in there, traditional midstream CapEx from the Endeavor water business, EDS. You know, if that business were to monetize, you know, likely into our deep blue JV, you know, that would reduce our CapEx burden depending on the timing of that business. And I think second to that, you know, we have some kind of accelerated environmental capex this year and probably a little bit next. But, you know, that's to the tune of $60 or $70 million at one time this year. So, a couple of things going away in the future. I'd say, in general, we'd like to get that infrastructure and other budget. down to kind of 5% to 7% of total capital from where it is today. And the teams, we've put it in Travis's letter, the teams have already worked on a best-in-class combined facility design that we expect will save us a million and a half or 10% or so per facility. And that'll add up over the years as we develop the asset base.

That's great. And then just a follow-up on Neil's earlier question on the ducks. Can you just remind us just rough numbers where you all sort of stood on ducks, you know, kind of pro forma for the double eagle transaction?

Yeah, we were carrying around, you know, just a little over 200 ducks total, 250 ducks total pro forma, the double eagle transaction. The double eagles coming over with about 50, you know, with that, you know, what you would add to that number that we call, you know, work in place wells that, you know, we don't expect that will be dug. They'll be brought online kind of, you know, sometime between now and close.

That's great. Thanks, guys. Appreciate it.

Thank you. Please stand by for our next question. Our next question comes from the line of David Deckelbaum with TV Cohen. Your line is open.

Thanks for taking my questions, guys, and just to echo everyone's congrats to you, Travis, Case, and Jeffrey. I was hoping just to step back a second just to revisit. I mean, obviously, Case, you made some comments about the attractiveness of the valuation of shares right now in the context of Stephen's family as well. You guys have this $1.5 billion commitment on asset sales, and I think you bridge that with free cash down to almost $10 billion of net debt by the end of the year. I guess, how do you think about the flexibility of getting above that 50% return of capital this year when you appreciate where your shares are now relative to how you see valuation? Or should we be looking for that net debt trigger before kind of getting away from that 50%, at least 50% commitment?

Yeah, I mean, David, I think that at least 50% commitment is going to remain regardless of the situation. Now, the execution of that, whether it's above 50% or not, I think will depend on, you know, the market conditions. And, you know, I think we, you know, in Q4, for instance, we leaned in a little bit. I think free cash flow beat even our internal expectations, but we were fully prepared to go over 50% of free cash returned in Q4 given the volatility we saw in December. I probably lean against going to 75 or 100 in these market conditions. I don't think we're there. I think we've got to get these non-core asset sales done and debt down. But we've got a lot of levers to pull, and I think if we saw more volatility than we're seeing right now, we'd be leaning in.

I appreciate that. And just, you know, the follow up on the infrastructure spend, obviously a trajectory coming down with some of the synergies of facility design. You talked about the potential with, you know, the sale to Deep Blue, but just also wanted to bring up like the slide around surface acreage and power generation. How do you feel, you know, or how do you think about sort of financing your own internal power needs? You know, how sort of imminent are these needs in terms of spend to expand what you would need just to service your own wells? And when do you think we would expect to hear some announcements around some of those solutions, whether it includes third-party commercial opportunities or just incremental spend to build out for your own operations?

Yeah, I'd say internally we've spent probably on average $70 to $100 million dollars a year on power for the last five or six years. So, I think there's 70 or 75 million in the budget this year for our power needs that's, you know, just poles and wires in the field. You know, I kind of separate that from our, you know, power JV we're looking at. And, you know, I think there's been a lot of discussions around power in the basin. You know, obviously, we're short power in the basin. I think what we're trying to pull together with A large IPP is can we build a large behind-the-meter gas power plant in the basin using Diamondback gas, but also having Diamondback receive some of that power back with a hyperscaler or data center operator taking on the lion's share of that power. That's in the works. We're still confidentially discussing it with the hyperscalers, getting feedback, and I think what separates Diamondback from others in this space is our flexibility and how nimble we are and how quickly we can move to get something done, let alone how much gas we have that needs a better market. So two separate things, but we'll continue to build out power in the field because it increases uptime as well as reduces LOE.

Appreciate the call, guys.

Thank you. Please stand by for our next question. Our next question comes from the line of Arun Jayaram with JP Morgan Securities. Your line is open.

Good morning. My first question, Travis and Case, is wondering if you could talk about the asset sale divestiture program you anticipate to execute on in terms of the Double Eagle transaction. Are these going to represent primarily midstream assets, but give us a sense of what you're what your plans are in terms of monetizations.

Yeah, you know, I think what we've been telling us, the market is that we think we can get these non-core asset sales done without selling operated acreage. And, you know, I think the lion's share of the value would come from a couple of our equity method investments that we list in our deck that have kind of been built out and are near monetization. And, you know, on top of that, our... midstream business that we acquired from Endeavor, the EDS water business likely, you know, has some synergies to merge into our Deep Blue JV, which is doing very, very well and winning a lot of third-party business in the basin. You know, I think that gets you most of the way there. You know, we've started to uncover a lot of assets from Endeavor that we acquired that are all over the country, but the biggest one is probably a sizable non-op position in the Delaware Basin, and that's likely, you know, your last kind of monetization candidate to get to that $1.5 billion.

Great. And maybe the follow-up, you know, your overall, you know, top-down capital efficiency screens quite well relative to our model industry's expectation in terms of the, you know, or unit of oil output, that metric you mentioned in the shareholder letter. One kind of question is that the CapEx number is accompanied by more, you know, kind of gross tills and did field a few questions around what are some of the implications for well productivity as we think about the 25 program versus last year?

Yeah, I think overall productivity is going to be as good as any year. this year, we've had a couple pretty banner years the last few years. I think a TIL number, while a lot of other peers don't even give that number, we put it out there for transparency purposes, but there's a lot of things that can move around in a TIL number. If one 20-wall pad is completed on December 30th of last year, you know, does it count for last year or this year? So, you know, there's some noise in that number. I think a true run rate, you know, we kind of got into the street to 500 wells a year-ish before Double Eagle, and Double Eagle has about 30 wells a year of development. So, I think somewhere in that, you know, 525 to 540 wells per year, assuming flat capital efficiency is kind of an apples to apples number. And, you know, I think your other question on On capital efficiency, we have posted this dollars of CapEx per VO produced, and I think that's a number that we want to hold ourselves to in the future. It's going to be tough to replicate the efficiency of 2025, given the duck drawdown, but that's the mission to the team. I think there's a lot of ancillary CapEx that's going to come down to replace that, and capital efficiency is going to remain strong. particularly on a relative basis to where the market is today.

Great. Thanks a lot.

Thank you. Please stand by for our next question. Our next question comes from the line of Derek Whitfield with Texas Capital. Your line is open.

Good morning, all, and echo everyone's congrats as well.

Thank you, Derek.

With regard to the Double Eagle transaction, how should we think about the capital and production impacts from your agreement with Double Eagle to accelerate non-core southern Midland Basin development, and when would that start to, or could that start to meaningfully impact your financials?

Yeah, Derek, on the capital side, there's zero capital. We're getting a carry, so no impact to us. Part of the rationale for that part of the deal is we were going to have to move a few rigs down south to secure some leasehold that had lower working interest and needed some horizontal wells to maintain the leasehold. We obviously have a good relationship with the Double Eagle guys and they needed a place for their couple rigs to go and so they're going to accelerate some development down there. I think the color we've given the market is that it's about $100 million of free cash flow on a consolidated basis in 2026. I'd probably say that 50% of that is for Viper. We'll talk about it on the Viper call, but the Reddington County piece was the second largest from an acreage perspective piece of the dropdown, and so this is kind of an unmodeled upside for the dropdown that in turn benefits the on-back through Viper's outperformance.

That's great. And then regarding your commentary on unmodeled synergies, Where do you see the greatest remaining opportunities now that your organizations are fully integrated?

I think we've really talked a lot about synergies around the drill bid and completions and the capital synergies. I think there's some longer-dated synergies in the field and the production world as we get the teams integrated and continue to share learnings and best practices. from the operating teams in the field and on the production and PDP side. Where can we see improvements, shared resources? Those things take a little longer than just converting a drilling rig or a completion crew over to a program. We're still in the middle of all that and the integration of the field organization really is going to you know, be hot and heavy this year, and we're excited to, you know, it'll be smaller things that are harder to measure, but, you know, it'll be a lot of things that will, you know, accrue hopefully to our LOE and OPEX budgets, you know, in future years.

Thanks. That's great.

Thank you. Please stand by for our next question. Our next question comes from the line of Kevin McCurdy with Pickering Energy Partners. Your line is open.

Hey, good morning. Do you have a breakdown of the 2025 CapEx plan for the legacy assets versus the CapEx for Double Eagle? I'm just trying to get a feel for how much lower the new legacy guide is compared to the prior commentary.

Yeah, Kevin, we gave out Double Eagle 200 million of CapEx for Q2 to Q4. for 27,000 barrels a day of oil. You know, their asset's a little oilier, so it was, I don't know, 40, something like that, 1,000 BOEs a day. And so if you look at our 3.8 to 4.2, you take 200 off that on each side, you're at 3.6 to 4. And it kind of ties 3.6 to 4 billion for the full year. And it kind of ties to where we guided Q1 of 2025, which is 900 million to a billion for, you know, 4.70 oil to 4.75 oil. you know, which ironically looks a lot like Q4 of 2024. So, you know, we were kind of moving towards, you know, given the volatility we've seen over the last quarter of last year and certainly some, you know, more headlines and volatility this year to kick things off, we figured, you know, cutting capital and growing less or, you know, growing zero prior to the double legal deal made a lot of sense. And so, yeah, you know, Q1 is a pretty good look at what we were planning to do prior to DE. And, you know, we certainly had to change our plans pretty quickly as that deal moved quickly. But I think in general, you're seeing a more capital efficient plan than expectations.

Great. Appreciate that detail. And as a follow-up, is there any CapEx associated with the assets that you might sell this year, both on the JV and the NANA?

I think the only thing... We highlighted this midstream CapEx number, which is $60 million or so. There's certainly some CapEx associated with the non-op in the Delaware, but it's not a meaningful overall number.

Appreciate it. Thank you.

Thank you. Please stand by for our next question. Our next question comes from the line of Paul Chin with Scotiabank. Your line is open.

Thank you. Good morning. And first, congratulations to Chavez and Case and Jerry. Maybe there's a case. Can you tell us that with the Jordanian ducks, how much do you estimate is the saving in CapEx on those 120, 130 ducks?

Yeah, Paul, you know, basically on a gross basis, you know, drilling right now is about $220 a foot. So on a net basis, you know, our average working interest is about $200 a foot. So you're basically at, you know, $2.2 to $2.4 million of wells. So I'd say overall it's probably about a $200 million savings this year. And, you know, I think, as I mentioned earlier in the call, the goal for the team is going to be how can we offset that in 2026 but, you know, reduce capex elsewhere.

Okay. And just curious that the cadence of the program, I mean, if we put double ego aside, should we assume that it's roughly about per rater each quarter the same number of wells that are coming on stream? Because when we're looking at the number of wells that you expect to bring, one would have to think, Given your strong productivity, that production will be somewhat higher than what you've got. So just curious, is there anything we should be aware in terms of the timing of the wells or anything?

No, I think we kind of said that 20 wells were brought into this year from last year. Who really knows what's going to happen at the end of this year? But I think this kind of low 500s before Double Eagle wells per year run rate, is a pretty good number with 30 added wells from Double Eagle. But with a program of 500 wells a year, wells moving forward or backward across the calendar line is not something we actively think about.

I see. All right, we're through. Thank you.

Thanks, Paul. Thanks, Paul.

Please stand by for our next question. Our next question comes from the line of Leo Mariano with Roth. Your line is open.

Hi, guys. I was hoping to dig a little bit more into the Double Eagle deal here and the synergies. You guys obviously spoke about it a little bit on the call and kind of alluded to some of this in the press release, but clearly FANG is a low-cost operator in terms of being able to drill and complete wells nicely under $600 per foot in the Midland. Do you kind of have a number for those guys in terms of what their kind of run rate was, just trying to get a sense of the well-caught savings over time here. And I'm also going to probably assume that maybe your LOE is also a bit lower than theirs. So I was hoping maybe you could kind of quantify kind of the DNC and LOE numbers there to give us a sense of maybe some potential savings over time.

Yeah, you know, for a group known for their land prowess, those guys are actually pretty good operators over there at Double Eagle. They're doing a pretty good job. You know, they were probably in the, you know, 625, 650 range. But on a private deal, we're going to model it with our cost structure. And we put that new kind of well cost out last year when we announced the trade. So that's probably the biggest number we put out. I think second to that, because of the adjacencies, we're not going to have to build as much infrastructure to service those assets. And yeah, I mean, I think from a timing perspective, you know, those guys that have been running five or six rigs and they ran them all in the southern portion of their asset and were about to move four or five rigs up to the north and, you know, choose through that inventory very, very quickly. And so we decided to move on the deal because, you know, so often in this business you've seen companies buy deals that have high decline curves and have to chase that decline curve with too much capital and too many rigs. And the outcome of that is, you know, inventory duration being shortened rather than lengthened. So we timed it well where, you know, we didn't acquire too much production and instead acquired a lot of upside that, you know, fits in well with our plan over the next 10 years.

Okay, that's helpful. I just want to take a minute on the capital side here. So I certainly noticed that your capitalized interest has kind of been going up the last few quarters. I'm sure a lot of that's related to the Endeavor deal. But just wanted to kind of check in on that. Is the capitalized interest included when you lay out the budget, you know, for 2025 here on the capital side?

Yeah, no. So capitalized interest seems to be the hot topic. I don't know if we've gone down to capitalized interest as something that's interesting in this business. But, you know, at the end of the day, we don't make the accounting rules. When you do a deal with a lot of undeveloped acreage, if you raise debt dollars to pay for it, those go in the capitalized section. For us, that runs through addition soil and gas properties, which is not in our CapEx budget. We're going to put our CapEx budget as what it takes to run the business. But our shareholder commitments and return commitments and all the math we do on our side does include that. But from a free cash flow definition perspective, we exclude it. And I think over the coming couple of years, as we pay down a significant amount of that debt, you know, that issue will be put to rest.

Thank you.

Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Doug LeGay with Wolf Research. Your line is open.

Hey, gentlemen. Good morning. This is actually Carlos in for Doug. And he most definitely expresses congratulations to you, Travis, Gary, and Case. Look, guys, what we're trying to figure out is you talk about a decade of inventory at the current pace, and that's presumably associated to your highest return screen. What would that look like if we applied the current strip to screen returns? Would that number change? And how much so? Thanks.

Yeah, I think the gold standard in the industry right now is sub-40 breakeven, and that's what we've been focused on and saying the decade reference. Obviously, inventory expands significantly as commodity prices go up. I think for us, that number is put in our deck on slide 12. We show kind of the $50 breakeven. that's 10% rate of return at $50 a barrel, right? We're not going to be wanting to drill that many wells in that situation. Instead, we'd like to have the balance sheet strength to be buying back shares in that situation. But I think from an overall strategy perspective, you know, the inventory is there. It's just about, you know, at what time do you have to prosecute that inventory? And we've tried to position ourselves to be the last person to have to drill the lower returning inventory but also have the lowest cost structure to be able to do it.

Gotcha. That's very helpful. And not to beat the dead horse here, but in terms of your ducks and the capital associated with that, how much of that capital benefit or at what rate do you expect that capital to come back throughout 2026? What's the cadence associated with the capital benefit reverting back to normal level?

You know, it's pretty level-loaded. You know, we have a very good, you know, forward visibility into what we're completing and what we're drilling. You know, I think we also went into this year, you know, running 18 or 19 rigs and realized that, you know, we were going to have a pretty sizable duck balance we could draw down. So, you know, we're going to be down at kind of 15 rigs here in the next couple weeks, and we'll probably keep that pace for most of the year. I think, as mentioned earlier... If things are going well on the year and we're towards the lower half of guidance, we'll probably drill 30 to 50 more wells and keep a relatively high duct balance. We really like that because it gives us operational flexibility, particularly with the size of these pads and the size of the development. So it's good to have somewhere to go when things go south, and that duct balance allows us to do that.

Awesome. Thank you, guys, and congrats again. Thanks.

Please stand by for our next question. Our next question comes from the line of Kaylee Eichelmein with Bank of America. Your line is open.

Hey, good morning, guys. On slide 28, you're breaking out surface acres in the Permian for the first time. Kind of suggests that you're getting close to securing maybe the Permian's first data center deal. How should we think about how the financial benefits are going to flow back And I'm thinking in terms of land sale revenues, will there be maybe a fixed price for gas? Could you even be paid in kind or through discounted power prices?

Yeah, good questions. You know, I think the land payment, in my mind, is the least important of all the payments, given the size of the land needed. You know, it's not a huge piece of property, but it's about 1,000 acres, and you can buy a lot of surface out here in the Permian cheap, and fortunately we have a lot of it. But I think the benefits to us would be participation from an equity perspective in the plant and on the power side, and also contributing all the gas needed for the plant. And the debate is on between us and our partners on how we want to structure that. You could look at things on a fixed price basis. You could look at a collar. You could look at an index. And I think what we're trying to do more flexible than most here, because in our situation, we're looking to take back a good amount of power ourselves, which I think will maintain our best-in-class LOE structure, particularly as power gets more scarce in the basin. So, a lot of moving parts, but we're very actively working on it today, and I think it could be exciting for the Permian and exciting for Dimebag shareholders.

I appreciate that, Keller. For my next question, I'm thinking about the Endeavor share overhang. Kind of going back to Neil's question, post-dropdown, you guys are a lot longer Venom stock. Do you think there's any opportunities to maybe creatively swap Venom shares for the seller shares in Vang?

Yeah, probably not something I can comment on, but I think Diamondback, from Diamondback's perspective, is happy with our ownership in Venom. I think the The stock's had a good run. I think the world's kind of waking up to the value of minerals. And Diamondback has a now $7.5, $8 billion stake in Venom that I think is truly unique. But we structured that deal with as much equity as we did because we look at net debt on a consolidated basis. And in our mind, it didn't make sense to lever up Viper in exchange for after-tax debt dollars at the parent. So we did a highly equitized trade, but, you know, I think from the Dimebag side, it gets us back over 50% ownership of Viper and leaves Viper under a lever to continue to consolidate its market because, you know, I think that mineral consolidation will, you know, be pretty significant over the coming years relative to upstream.

Thanks, Gaze. Travis Gaze, congrats to you guys both.

Thank you.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to CEO Travis Dice for closing remarks.

Thanks, everyone, for listening in this morning. I appreciate the attention. If you've got any follow-up questions, please reach out to the numbers provided. Thanks again. Y'all have a great day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.