FANG · 10-Q · 2026Q3 · Full report

Permian Gas Constraints

Diamondback Energy, Inc. · 2026-11-04 · Importance 18 · Surprise 24

During the first half of 2026, widening differentials between Waha Hub and Henry Hub, driven primarily by regional Permian Basin takeaway constraints, adversely affected natural gas price realizations and contributed to periods of negative Waha Hub pricing in the second quarter. Differentials improved beginning in July as new pipeline capacity out of the Permian entered service, and third-quarter realized natural gas prices materially improved compared with the second quarter. Additional takeaway capacity, including capacity secured under contracts, was expected to enter service in the fourth quarter of 2026 and early 2027, which the company expects will further reduce its exposure to Waha Hub pricing.

Key facts

• Additional Permian takeaway capacity, including capacity under Diamondback contracts, is expected online in Q4 2026 and early 2027; Diamondback expects this to further reduce its Waha Hub pricing exposure. source
• In the first half of 2026, widening Waha-Henry Hub basis differentials adversely affected Diamondback's natural gas price realizations and caused periods of negative Waha Hub pricing, including in Q2 2026. source
• Beginning in July 2026, gas basis differentials improved as new Permian pipeline capacity entered service, and Diamondback's Q3 2026 realized natural gas price materially improved versus Q2 2026. source