Diamondback Energy Braces for Q4 Earnings Hit as Oil Prices Slide

Diamondback Energy, Inc. FANG, in its recent SEC filing, flagged a tougher pricing environment for the fourth quarter, as falling oil and gas prices weigh on revenues. The update offers a clear snapshot of the pressure facing U.S. shale producers after a volatile year for crude markets, with oversupply worries and trade concerns overpowering geopolitical risks.

Oil & Gas Realizations Move Lower

The company said the average realized price for its oil production dropped to $58 per barrel in the fourth quarter, down from $64.60 per barrel in the previous three-month period. This decline mirrors broader market trends, as oil prices fell more than 9% during the fourth quarter ending December 2025. Natural gas pricing also weakened, with Diamondback Energy realizing $1.03 per thousand cubic feet (Mcf) after hedging, compared with $1.75 per Mcf in the third quarter.

These lower realizations are significant for a producer like Diamondback Energy, where pricing has a direct impact on cash flows and near-term profitability. The company’s update suggests that even disciplined operators are not insulated from broader commodity cycles.

Market Pressures Extend Beyond Diamondback Energy

The pricing headwinds highlighted by Diamondback Energy, currently carrying a Zacks Rank #3 (Hold), are not isolated. Brent crude futures fell roughly 19% in 2025, marking their steepest annual decline since 2020 and the third consecutive year of losses. The U.S. benchmark West Texas Intermediate crude posted a similar drop of nearly 20% for the year.

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Just days before Diamondback Energy’s disclosure, Exxon Mobil Corporation XOM also warned that lower crude prices could cut its quarterly upstream earnings by $800 million to $1.2 billion. Similarly, Shell plc SHEL has cautioned that its oil trading performance weakened sharply in the fourth quarter. Thereby, it expects the fourth-quarter results to be much lower than the previous quarter, largely due to a steep fall in crude oil prices. Recent months have seen increased volatility in global oil markets, driven by geopolitical uncertainty and changing demand trends.

Together, these signals underline the extent of pressure across the energy sector as producers adjust to weaker pricing assumptions.

What Analysts Are Expecting Next

Analysts say Diamondback Energy’s realized pricing was slightly weaker than expected for oil and natural gas liquids, though gas realizations were largely in line with forecasts. According to Siebert Williams Shank & Co., the softer pricing is likely to put some pressure on fourth-quarter earnings, prompting analysts to revise their models to reflect actual market conditions. The outlook suggests that while pricing remains a headwind, expectations already reflect a more cautious view of the energy market as producers head into the new year.

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This article originally published on Zacks Investment Research (zacks.com).

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