What happened: Diamondback Energy CEO Kaes Van’t Hof outlined the company’s growth strategy, operational challenges, and future opportunities in the Permian Basin during the Permian Basin Petroleum Association’s (PBPA) annual meeting.

Go deeper: Diamondback started as a Wexford Capital-backed private equity company in 2007 and went public in 2012. “I think Diamondback is the quintessential success story of the Permian Basin and shale in general,” Van’t Hof said. The company’s stock opened at about $17 per share under the ticker FANG and now trades around $148. Its market cap has grown from less than $1 billion at IPO to more than $40 billion today. Diamondback expanded aggressively through acquisitions, including Brigham Resources for $2.4 billion in 2016, Energen for $9.2 billion in 2018, and Endeavor Energy for $26 billion in 2024.

The big picture: Van’t Hof credited Midland as central to the company’s success. “Midland is what made us what we are,” he said. “That’s why we’re proud to call Midland home.” The Permian remains the most prolific shale play, with up to 10 productive zones in parts of the Delaware Basin and seven to eight in the Midland Basin. “The Permian is the gift that keeps on giving in terms of rock and rock productivity,” Van’t Hof said. Advances in drilling technology have accelerated operations. Diamondback now completes 5,000 lateral feet in a single day, work that took a month in 2012. “It’s a testament to regulatory certainty and freedom to do what we all do,” Van’t Hof said. Combined with cost discipline, these efficiencies allow Diamondback to generate more than $1 billion in free cash flow per quarter at $60 oil.

The company’s culture, Van’t Hof added, is built on “stay humble, stay hungry,” with an emphasis on execution and low-cost operations. “We really believe that the low-cost operator in a commodity-based business wins.”

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What they’re saying: Van’t Hof predicted more public-to-public mergers, calling consolidation essential for lowering costs and stabilizing the sector. “You’re going to see more public-to-public deals as costs get rationalized and size and scale continue to get rewarded,” he said. He also stressed the Permian’s role in broader U.S. economic growth. “This industry and this basin in particular is the poster child for manufacturing growth in America over the last 10 years,” Van’t Hof said. While most recent policy changes have been positive for the sector, he pointed to steel tariffs as the biggest drag on Diamondback’s business. With oil prices slipping by $10 and well costs rising 20%, tariffs create what he called “a double whammy” for Permian economics. He estimated they could add $50–75 million annually to expenses, raising well costs by 10–12%.

Despite depressed prices, Diamondback sees a long-term growth story in natural gas. “There’s such a big natural gas bull story in the public markets right now. We want to see Diamondback market their gas all over the country,” Van’t Hof said. Future demand from power generation, data centers, and other energy-intensive sectors could boost the market, with pipeline expansions scheduled to add 3 billion cubic feet of capacity in 2026–27 to ease bottlenecks.

The bottom line: Diamondback’s strategy blends efficiency, cost discipline, and opportunistic mergers and acquisitions. While tariffs and commodity prices weigh on margins, the company continues to bet on the Permian’s long-term strength and on its Midland roots to set itself apart from other public oil and gas companies.