FANG · 10-Q · 2026Q2 · Full report
Derivative Commodity Hedging
Diamondback Energy, Inc. · 2026-08-05 · Importance 26 · Surprise 6 · No source text
Second-quarter derivative results reflected a $262 million net loss on natural gas contracts and a $194 million net gain on oil contracts. The natural gas loss included a $290 million decline in unsettled contract values, primarily from unfavorable basis differentials, partially offset by $28 million of higher settlement cash receipts. The oil gain included a $270 million increase in unsettled positions as market prices declined relative to contract prices, partially offset by a $76 million decrease in settlement cash receipts. For the six-month period, natural gas contracts generated a $278 million gain, while oil contracts produced an additional $124 million loss.
Key facts
- The decrease in gain on derivative instruments in Q2 2026 compared to Q1 2026 included a net loss of $262 million attributable to natural gas contracts and a net gain of $194 million attributable to oil contracts. source
- Increase in gain on derivative instruments for the six months ended June 30, 2026 compared to 2025 primarily reflected a $278 million gain attributable to natural gas contracts comprised of $249 million increase in cash received on settlement and $29 million increase in value of unsettled natural gas costless collars and basis swaps, partially offset by a $124 million additional loss attributable to oil contracts. source
- For Jul. - Dec. (OIL) the Company had a Basis Swap of 85,000 Bbls per day indexed to Argus WTI Midland with a weighted average differential of $1.09. source
- For Jul. - Dec. (OIL) the Company had a Roll Swap of 150,000 Bbls per day indexed to WTI Cushing with a weighted average differential of $2.89. source
- For Jul. - Sep. (NATURAL GAS) the Company had a Basis Swap of 650,000 MMBtu per day indexed to Waha Hub with a weighted average differential of $(1.87). source
- For Jul. - Dec. the Company had a Two-Way Collar on natural gas of 840,000 MMBtu per day indexed to Henry Hub with a weighted average floor price of $2.87 and ceiling price of $6.35. source
- The Company had Put contracts for Jul. - Sep. on Brent of 20,000 Bbls per day with strike price $52.50 and deferred premium $1.60. source
- The Company had a Jul. - Sep. Basis Put of 290,000 Bbls per day on WTI - Brent with a weighted average differential of $(42.76) and deferred premium $1.52. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +2.8% | Increase in gain on derivative instruments for the six months ended June 30, 2026 compared to 2025 primarily reflected a $278 million gain… |
| operating_income | negative | realized | -1.2% | The decrease in gain on derivative instruments in Q2 2026 compared to Q1 2026 included a net loss of $262 million attributable to natural… |
| operating_income | unclear | committed | — | For Jul. - Dec. (OIL) the Company had a Basis Swap of 85,000 Bbls per day indexed to Argus WTI Midland with a weighted average… |
| operating_income | unclear | committed | — | For Jul. - Dec. (OIL) the Company had a Roll Swap of 150,000 Bbls per day indexed to WTI Cushing with a weighted average differential of… |
| operating_income | negative | committed | — | For Jul. - Sep. (NATURAL GAS) the Company had a Basis Swap of 650,000 MMBtu per day indexed to Waha Hub with a weighted average… |
| operating_income | mixed | committed | — | For Jul. - Dec. the Company had a Two-Way Collar on natural gas of 840,000 MMBtu per day indexed to Henry Hub with a weighted average… |
| cash | mixed | committed | — | The Company had Put contracts for Jul. - Sep. on Brent of 20,000 Bbls per day with strike price $52.50 and deferred premium $1.60. |
| operating_income | mixed | committed | — | The Company had a Jul. - Sep. Basis Put of 290,000 Bbls per day on WTI - Brent with a weighted average differential of $(42.76) and… |