Diamondback Energy is adding rigs and frack crews immediately after a Q1 beat, raising 2026 output guidance as the Iran war drives oil prices higher.
Diamondback Energy , one of the biggest pure-play Permian Basin producers in West Texas, said Monday it is immediately boosting oil output in response to the ongoing price rally driven by the Iran war making it the first major shale operator to openly break from the capital-discipline playbook that has defined the sector since 2022.
In a letter to shareholders on Monday, CEO Kaes Van't Hof announced the company averaged 521,000 barrels of oil per day in the first quarter of 2026 exceeding even the high end of its guidance range of 502,000 to 512,000 bpd and that it plans to sustain those levels or higher through the rest of the year.
'While our 'stoplight' analogy for the macro environment served its purpose over the last year, we are going to put it on the sidelines for now as the light has turned green, and Diamondback is well-positioned to respond to the current macro environment,' Van't Hof wrote. The company is adding two to three drilling rigs and plans to run five fracking hydraulic fracturing crews consistently through the remainder of 2026 to maintain output above 520,000 bpd.
Full-year 2026 oil production guidance has been raised to 520,000 bpd, up from a prior midpoint of 505,000 bpd. Total production guidance, including natural gas, rises to 972,000 barrels of oil equivalent per day from 944,000 boe/d previously. Capital expenditures for 2026 are being bumped from $3.75 billion to $3.9 billion a modest increase relative to the scale of the production lift. The Stoplight Is Gone Van't Hof's 'stoplight' framework had been a defining feature of Diamondback's communications throughout 2025.
Under it, the company categorized the macro environment as red cut activity, yellow hold steady, or green grow. For the better part of last year, Diamondback remained on yellow cautious on growth, focused on capital efficiency and share buybacks even as rivals debated whether the Iran war premium in crude prices would last. Monday's letter puts that framework on the shelf.
Van't Hof cited strong demand and a sustained price environment as the triggers, while noting that the wave of oversupply that had been 'widely telegraphed for the better part of the last two years continues to get pushed to the right.
' The Q1 production beat came despite weather-related disruptions from Winter Storm Fern in January and was not the result of higher-than-planned spending Diamondback invested $933 million in Q1, below the midpoint of its $900 million to $975 million guidance range. The company said it also benefited from 'executing ahead of plan' during the quarter. Sector-Wide Momentum Diamondback is the third-largest Permian operator behind ExxonMobil and Chevron.
Exxon was already planning to grow Permian volumes from 1.7 million bpd to 1.8 million bpd in 2026 on its way to 2.5 million bpd by 2030. Chevron is maintaining output just above 1 million boe/d. Other operators have signaled similar moves. Continental Resources reversed a planned 20% cut to its 2026 capital budget in early April.
ConocoPhillips has raised 2026 CapEx guidance to $12-$12.5 billion and plans to add a rig in the Permian's Delaware sub-basin in the second half of the year. BP's bpX Energy is targeting roughly 8% shale production growth in 2026. The Baker Hughes U.S. rig count rose for the second straight week to 547 total rigs as of May 1, with oil rigs at 408.
Analysts at Citi project that public shale producers could add around 20 rigs and more than 100,000 bpd of incremental output by 2027 if prices hold at current levels, with private operators likely to move faster. For now, Diamondback has moved first among the majors and with a production base already running 3% above its own guidance, the company is entering the second half of 2026 with both the inventory depth and the operational capacity to accelerate further if the macro holds. By Zerohedge
FANG Permian Basin Shale Oil Production Oil Prices Iran War Oil Rally Kaes Van't Hof Permian Output Guidance 2026 U.S. Shale Drilling Oil Capex 2026
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