Diamondback Energy is virtually immune to AGI disruption as a physical oil and gas producer, and may actually benefit from increased energy demand driven by AI data center power consumption.
Diamondback Energy is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional oil and natural gas reserves in the Permian Basin of West Texas and New Mexico. The company is one of the largest pure-play Permian Basin operators, with operations concentrated in the Midland Basin and Delaware Basin. Diamondback completed a transformative $26 billion merger with Endeavor Energy Resources in September 2024, making it the largest pure-play Permian Basin producer. The company also holds a controlling interest in Viper Energy (VNOM), a mineral and royalty interest company.
Diamondback sells its oil production primarily to refiners, marketers, and midstream companies at prices linked to WTI crude oil benchmarks. Key oil purchasers include major midstream/marketing companies operating in the Permian Basin. Natural gas is sold to gas processors and marketers. The company benefits from access to multiple oil and gas takeaway pipelines from the Permian Basin to Gulf Coast export facilities.
AGI cannot replace the physical extraction of oil and natural gas from underground reservoirs. Diamondback Energy is a Permian Basin-focused exploration and production company. Its core competencies -- geology, drilling operations, hydraulic fracturing, well completions, and production operations -- are deeply physical. AGI could optimize drilling plans, improve reservoir modeling, and enhance production scheduling, but these are operational improvements that benefit Diamondback rather than threaten it. Diamondback's customers are refineries and midstream companies that purchase crude oil and natural gas. Global demand for hydrocarbons remains massive and is not directly affected by AGI. In fact, the enormous electricity demands of AI data centers are increasing natural gas demand for power generation.