Diamondback Energy, Inc. (NASDAQ:FANG) Q4 2022 Earnings Call Transcript

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And so in order to address that, we examined our spacing assumptions, both side to side and top to bottom, and made adjustments to try to minimize those frac pressure interferences. Spread some zones out further, spread some zones above and below further, but essentially went into a section — half of section this time was our development strategy and completed all the wells at one time and then brought them all on at one time. And that was a painful decision because it’s a lot easier. In fact, I’ve been — I’ve said it before that I’ll take criticism from drilling the very best zone, but we found out that, that actually wasn’t the right development strategy, and we took some things for that in 2019. But as you can see, we put some details in our — on Slide 16, as you alluded to.

We’re — in the Midland Basin, our well results are equivalent to what we were seeing in 2017. So very proud of the technical team and their diligence to try to crack a very difficult problem and then the courage to stay with that decision through periods when we were questioned about that development strategy. So I hope that answers your question, Arun.

Arun Jayaram : That’s helpful. And maybe just a follow-up. I wanted to get some thoughts on some of the initial well results from FireBird. I believe in that transaction, you guys underwrote just over 350 gross locations, but you highlighted some potential upside based on co-development opportunities. I was wondering thoughts on maybe some of the initial results in the Wolfcamp A, which I don’t think was part of your original assessment of locations that you paid for.

Kaes Van’t Hof : Yes, great question, Arun. I think FireBird, at the end of the day, is the quintessential Diamondback deal, where we know the space and like the back of our hand and have been communicating with the FireBird team as they tested their position further West in the basin than others have in the past. And we follow the results closely and posted a couple of recent results that I think confirm a couple of things, but also give us some hope on upside in the central prospect. And there’s a couple of wells sand the future may vary on the Far West side. This was probably the farthest West test to date and not an area we underwrote, and you have a very good Wolfcamp A result Far West. And then in the Southern portion of the position, you have this — sorry, you have the four corners two-wells Wolfcamp A and Lower Spraberry.

And we underwrote Lower Spraberry with Wolfcamp A upside across the central prospect, and it’s looking more like you can have Lower Spraberry with Wolfcamp A co-development across that position. So early days yet, but definitely a positive sign from the FireBird deal, and our technical team’s work in getting that deal across the finish line.

Operator: Our next question comes from David Deckelbaum from Cowen.

David Deckelbaum : The first question is really just a follow-up on Arun’s question. you’ve seen a thematic of your peers testing additional zones this year. Maybe can you give us a sense of the 330 to 350 wells you’re doing this year? current inventory?

Kaes Van’t Hof : Yes, David, you’re breaking up a little bit there. So I’m going to try to repeat what I thought you said, which is, what other zones are we testing outside of our traditional development zones across the basin. Is that correct?

David Deckelbaum : That’s correct. Sorry about that.

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