SCHEDULE: Diamondback Energy Repurchases Shares from SGF FANG

Diamondback Energy, Inc. entered into an agreement to repurchase up to 15 million shares from SGF FANG Holdings, LP, with an initial 2 million shares bought at $152.59.

Summary

• Diamondback Energy, Inc. (the "Company") and SGF FANG Holdings, LP ("SGF FANG") entered into a letter agreement on November 28, 2025, for the repurchase of Company common stock.
• SGF FANG, a significant shareholder, holds 99,686,727 shares, representing 34.8% of the Company's common stock outstanding as of October 31, 2025.
• The agreement grants SGF FANG the right, but not the obligation, to sell up to 3,000,000 shares per calendar quarter to the Company through December 31, 2026.
• On November 28, 2025, the Company agreed to repurchase an initial 2,000,000 shares from SGF FANG at the most recent NASDAQ closing price of $152.59 per share.
• The total potential shares to be repurchased under the agreement are up to 15,000,000 shares.
• The Company will cover SGF FANG's legal and other fees related to the agreement, up to $25,000 for negotiation/preparation and up to $25,000 per closing transaction.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While a large shareholder is reducing its stake, the company is actively repurchasing shares, which is generally viewed as a positive use of capital and can support share price. The structured nature of the agreement also suggests an orderly process.

Positives

• The share repurchase program can be accretive to earnings per share by reducing the number of outstanding shares.
• The structured repurchase agreement provides an orderly mechanism for a large shareholder to reduce its stake, potentially mitigating market overhang.
• The Company's willingness to repurchase shares indicates confidence in its valuation and efficient use of capital.

Negatives

• A significant shareholder reducing its stake could be perceived negatively by some investors, potentially signaling a lack of long-term conviction.
• The repurchase utilizes company capital that could otherwise be deployed for growth initiatives or other investments.

Risks

• The actual number of shares repurchased depends on SGF FANG's discretion and market conditions, introducing uncertainty.
• Market price fluctuations could impact the cost-effectiveness of future repurchases under the agreement.
• The Company's cash position will be affected by the repurchases, potentially limiting flexibility for other capital allocation decisions.

Future Outlook

The Repurchase Agreement provides a framework for SGF FANG Holdings, LP to systematically reduce its stake in Diamondback Energy, Inc. through December 31, 2026, with the potential for mutual extension. This indicates a planned, phased reduction of a significant shareholder's position, with the Company absorbing a portion of these shares.

Industry Context

Share repurchases are a common capital allocation strategy in the energy sector, often used by mature companies with strong cash flows to return value to shareholders and manage share count. The structured nature of this agreement with a major shareholder suggests a deliberate strategy to manage a large block of shares in the market.

Corporate Governance

Related Party Transactions

• The Repurchase Agreement between Diamondback Energy, Inc. and SGF FANG Holdings, LP constitutes a related party transaction, as SGF FANG is a significant beneficial owner of the Company's common stock (34.8%).

Stakeholder Impact

• Shareholders: Potential for reduced share count and increased earnings per share due to repurchases, which could support share price. However, a large shareholder's reduction in stake might raise questions.
• SGF FANG Holdings, LP: Provides a structured and liquid mechanism to monetize a portion of its investment in Diamondback Energy, Inc. over time.
• Company Management: Demonstrates active capital management and a commitment to returning value to shareholders, while also managing the exit of a major investor.

Next Steps

• SGF FANG Holdings, LP may elect to sell additional shares to Diamondback Energy, Inc. under the Repurchase Agreement, up to 3,000,000 shares per calendar quarter, through December 31, 2026.
• The Company and SGF FANG Holdings, LP will execute written transaction confirmations for each subsequent purchase and sale of shares.

Key Dates

Keywords

Diamondback Energy, SGF FANG Holdings, Share Repurchase, Stock Buyback, Schedule 13D, Common Stock, Corporate Governance, Investor Relations, Energy Sector