Oil Driller Diamondback Braces for 10% Price Shock in Shale Sector
(Bloomberg) -- Shale driller Diamondback Energy Inc. is bracing for a 10% jump in costs next year amid supply-chain snarls rippling through the oil industry.
Although oilfield-service companies have been up front about the squeeze they’re feeling from higher labor and material costs, the explorers that hire them have been largely mum -- until Diamondback dropped a bombshell on a Tuesday morning conference call.
Diamondback, a Permian Basin-focused driller whose ticker symbol is FANG, has more than doubled its market value this year and is one of the best-performing oil stocks in the S&P 500 Index. The company pledged Monday to hold output steady through at least the end of 2022, despite soaring crude prices and worsening energy crises in Asia and Europe.
That could change, however, if there’s a change of heart among investors who have been disdainful of production increases, Chief Executive Officer Travis Stice said. “If a company comes out and starts growing, and gets recognized in the stock market for their growth, that’s going to change the calculus for our board and how we allocate capital towards growth,” he said.
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