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Diamondback reduces its capex plan and production forecast amid macroeconomic uncertainties

Diamondback Energy, a U.S. shale oil and gas producer, lowered its production and capital budget forecasts for 2025 on Monday as global energy demand is impacted by macroeconomic uncertainty.

The tariffs imposed by Donald Trump have increased uncertainty in the oil industry. A trade war that follows is expected to reduce global economic growth, and, therefore, energy demand.

The company announced that it would reduce its capital budget for 2025 by approximately $400 million, to between $3.4 and $3.8 billion.

The company said that during the current period of macro-instability, it would drill and complete fewer oil wells to maximize its free cash flow.

Diamondback expects to produce between 857,000 and 910,000 barrels of oil-equivalent per day (boepd) in 2025, down from its earlier forecast of between 883,00 and 909,000 boepd.

The company has also stated that it will continue to maintain its current level of activity, or even reduce it further if the oil price continues to fall or worsens.

The output of the U.S. Shale Producer will remain high despite the reduction. Diamondback's first-quarter production increased by 84.5% over the previous year to 850.656 boepd.

According to LSEG, the higher production, coupled with the increase in natural gas prices, helped Diamondback achieve an adjusted profit per share of $4.54 for its first quarter. This was better than Wall Street's expectations of $4.13.

The average price of natural gas in the third quarter was $2.11 per 1,000 cubic feet, a more than two-fold increase from the previous year.

The average natural gas price has risen in recent quarters. It reached a two-year-high on March 10 due to record flows of LNG export facilities, and fears over supply as we approach the summer season. (Reporting from Tanay Dhumal, Bengaluru. Editing by Leroy Leo.)

(source: Reuters)