TCFD INDEX
2026
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Governance Board Oversight
Diamondback’s Board of Directors oversees long-term business success and viability, including company strategy, vision, and risk profile. The SSCR Committee oversees company sustainability programs and activities, including oversight of climate-related risks and opportunities. The SSCR Committee also assists management in setting strategy, establishing goals, and integrating sustainability matters into strategic and tactical business activities company wide. The Board believes full and open communication between management and the Board is essential for effective risk management and oversight. The Board and Executive Chairman meet regularly with the Chief Executive Officer, Chief Operating Officer, and senior executive team members to discuss operations strategy, opportunities, key challenges, and risks, including climate-related risks. Executive officers are also available to address any questions or concerns raised by the Board on risk management or other matters. Additionally, the Chief Operating Officer has appointed an Environmental Director, who may confer with the Board on relevant risk management matters. Additional information regarding the Board’s role in risk oversight, including climate-related risk, is included in Diamondback’s 2026 Proxy Statement.
Management Oversight
The executive management team sets company sustainability and business strategies, approves goals, provides resources to meet performance targets, and oversees sustainability practices, including climate approach. Annually, the Board approves the capital investment budget based on the executive management team’s recommendation, including technology investments to reduce emissions. Approximately $45 million was approved and allocated for 2025 to invest in emissions-reducing technology. Diamondback executives regularly discuss strategic risks and opportunities arising from carbon emissions regulatory changes, fees associated with changes, and product demand shifts to electric and fuel-efficient vehicles.
Strategy
Climate-related risks and opportunities
The company considers potential climate-related risks in all operational planning. Relevant risks include current and emerging regulation, technology, legal, market, reputation, and acute and chronic physical risks. Please see the 2025 10-K Annual Report for potential material financial risks, including climate-related risks.
2026 TCFD Index
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Risk Type
Description
CURRENT REGULATION
Diamondback monitors existing and emerging GHG regulations and potential business impact by performing multiple scenario analyses to test the company’s portfolio resiliency. New legislation has been introduced and proposed at federal and state levels to quantify and limit GHG emissions. The federal government also provides monetary incentives to develop alternative energy sources.
EMERGING REGULATION
Emerging and proposed regulations are closely followed. The company’s current operating plan accounts for stricter emissions and methane monitoring and regulation than currently required. Diamondback’s emissions reduction targets (GHG intensity and methane intensity) drive most decisions related to responsible development. We believe these targets will keep us ahead of emerging regulatory risks.
TECHNOLOGY
Cross-functional employees analyze new and emerging technologies for emission monitoring and control. We believe using these technologies is crucial to operating in an environmentally responsible manner. Quarterly round-table discussions are held with Engineering- and Infrastructurerelated field personnel to identify design changes to better capture emissions moving forward.
LEGAL
Potential legal risks are closely monitored and managed, including those related and unrelated to climate.
MARKET
Company revenues, operating results, profitability, future rate of growth, and the carrying value of company oil and natural gas properties depend significantly on prevailing prices for oil and natural gas. Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty, and a variety of additional factors beyond Diamondback’s control. These factors include, but are not limited to, alternative fuel price and availability, conservation measures, and technological advances which could reduce company product demand. Climate risk is evaluated using scenario analyses of technology and market conditions considering supply, demand, and pricing scenarios at least as challenging as IEA’s Sustainable Development Scenario. These scenario analyses are an important tool used by management and Board of Directors to create annual and long-term operating plans.
REPUTATION
ACUTE PHYSICAL
CHRONIC PHYSICAL
Opportunity Type
Description
Electrical infrastructure is established prior to placing most new wells on production. A multi-functional team of facilities engineers, land representatives, reservoir engineers, and completion engineers plan Diamondback’s development and associated infrastructure needs. Through weekly discussions, the teams have provided line power to a significant number of completed wells since 2019.
Use of loweremission sources of energy through full-field In 2022, the company drilled its first well using a electrification. drilling rig powered by line power. As of Q1 2025, Diamondback’s four primary hydraulic fracturing fleets were electric (e-fleet). While increased electrical infrastructure use is expected to reduce emissions, this strategy also could reduce capital cost.
Reducing flaring is vital to company and industry success. Excessive flaring can be a major impediment to a successful upstream business plan. Since aiming to eliminate routine flaring by 2025, as defined by the World Bank, Diamondback has made substantial investments which have reduced routine flaring to near-zero levels across operations.
Increased revenues through gas Collaborations with midstream business partners Diamondback’s reputation could decrease or increase the cost of doing captured rather have ensured adequate takeaway is established business, depending on various stakeholder perception. Potential risks, as than flared. prior to wells coming online. By doing so, flared set forth in the TCFD, include risks tied to changing customer or community gas is reduced, increasing company revenue perceptions of an organization’s contribution to or detraction from a lowerand decreasing environmental footprint. As of carbon economy transition. 2025, ~90% of crude oil production is covered Acute physical risks (including floods, tornadoes and hurricanes) are by real-time continuous monitoring of methane included in risk assessments. As with other oil and gas operators, emissions, allowing leaks to be found and Diamondback’s operations can be affected by extreme weather conditions. repaired in a timely manner. No acute physical risks are seen affecting business any more than normal operational risks. Extreme weather conditions are considered when modeling the company’s business plan. We are confident in the organization’s ability to continue operations in those scenarios. No chronic physical risks impacting the business in the short-, medium- or long-term are anticipated. No chronic physical risks (including sea level rise or chronic extreme freezes or heat waves) are affecting business any more than normal operational risks.
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Impact on Strategy
Thoughtful investments to address identified climaterelated risks and opportunities are a focus. Diamondback considers risks as far into the future as practicable given regulatory, economic, and technological variabilities. Much speculation often exists around climate-related risks and opportunities. While the company may not always be positioned to act on a potential risk or opportunity without sufficient information, prudence is prioritized. Consistent with the company’s environmental responsibility approach, Best Available Control Technology (BACT) is installed on all new facilities and wells to limit and capture air emissions. BACT projects include various infrastructure applications, such as fitting tanks with vapor recovery towers and compressors projected to capture more than 95% of possible emissions. We set goals to reduce greenhouse gas and methane emissions intensity. Since January 1, 2021, Diamondback has been committed to achieving zero net Scope 1 GHG emissions from oil and gas production. Along with taking steps to cut emissions and reduce GHG intensity, carbon offsets were purchased equivalent to the company’s remaining Scope 1 emissions.
Climate Resilience
Scenario-planning analysis suggests Diamondback’s strategic focus on high-return, low-cost Permian Basin operations should allow continued monetization of reserves even in the most carbon-constrained scenarios. As a result, we believe it is unlikely that company assets will become stranded over the projected period through 2050. To analyze potential risks to Diamondback’s oil and gas portfolio in a carbon-constrained environment, the IEA
2026 TCFD Index
World Energy Outlook (WEO) 2025 was used to examine various supply-and-demand scenarios through 2050. Three WEO scenarios tested portfolio resilience: Stated Policies Scenario (STEPS), Current Policies Scenario (CPS), and Net Zero Emissions by 2050 Scenario (NZE). • STEPS: Shows trajectory implied by today’s policy settings • CPS: Reflects only energy and climate policies that are formally enacted in existing laws and regulations, without assuming any future policy changes or announced commitments • NZE: Maps a way to achieve a 1.5 degrees Celsius stabilization in global average temperature rise IEA’s STEPS represents robust potential actions to reduce global fossil fuel demand. This scenario is an adequate test of Diamondback’s resiliency and ability to profitably develop and produce energy resources in a demand-constrained world. STEPS indicates that companies producing oil and gas at the lower end of breakeven costs will be best positioned to succeed, as lowest-cost resources would be developed first.
Diamondback operates primarily within the lower-cost Permian Basin
Diamondback operates primarily within the Permian Basin spanning West Texas and southeastern New Mexico. The Permian Basin encompasses several sub-basins, including the Midland and Delaware Basins. In its December 2025 report, “2026 E&P and Natural Gas Outlook,” J.P. Morgan identifies the Midland and Delaware Basins as two of the most economic North American onshore oil resource plays, with an estimated breakeven cost of ~$55 per barrel and $50 per barrel, respectively.
4
Full-Cycle Breakeven Oil Price by Basin $/BBL $90.00 $79.74
$80.00 $73.31
$70.00
$66.38 Average: $61.64
$59.30
WTI Oil $/bbl
$60.00 $50.00
$60.66
$54.96 $48.34
$50.45
$40.00 $30.00 $20.00 $10.00 $0.00 DJ Basin
Delaware
Midland
Eagle Ford
Bakken
Uinta
PRB
SCOOP/STACK
Source: JPM 2026 E&P and Natural Gas Outlook
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Diamondback is a leading low-cost operator among North American oil shale players
To corroborate J.P. Morgan’s 2025 breakeven analysis results, an internal study found the company’s asset base is expected to be profitable down to ~$30 per barrel. This was calculated as the per-barrel West Texas Intermediate (WTI) oil price needed to generate enough cash flow to fund the capital required to maintain an estimated full year 2025 oil production through 2026. Diamondback went a step further and calculated over 8,800 economic drilling locations at an assumed price of $50 WTI (~53% below 2050 CPS price of $106 per barrel). Based on the company’s estimated long-term completion pace required to keep 2025 oil production flat, this implies nearly two decades of economic inventory. If STEPS or CPS outlined by the IEA materialize over the next 30 years, oil and gas prices are likely to increase as efforts to limit fossil fuel consumption occur. However, in both cases, the lowest-cost resources are still considered first for development. At the $30 per barrel breakeven cost calculated internally by Diamondback, current data suggests the company will be well below STEPS’ and CPS’ 2050 projected breakeven prices. This indicates the organization’s strong position to continue producing oil and gas economically, helping meet the global oil demand. When compared to Net Zero Emissions by 2050 (NZE) scenario, Diamondback would be positioned to continue producing oil and gas economically beyond 2030.
World Oil Demand (MMBO/D) Stated Policies (STEPS)
Current Policies (CPS)
120.0 100.0 80.0 60.0 40.0 20.0 0.0 2010
2024
2035
2050
Source: International Energy Agency (2025), World Energy Outlook 2025, IEA, Paris
IEA Crude Oil Price (USD/BBL) Stated Policies (STEPS)
Current Policies (CPS)
Net Zero Emissions (NZE)
FANG B/E
120 100 80 60 40 20 0 2010
2024
2035
Source: International Energy Agency (2025), World Energy Outlook 2025, IEA, Paris
2026 TCFD Index
2050
6
Risk Management
As an exploration and production company, Diamondback faces a number of risks, including climate-related risks. Management is responsible for the company’s day-to-day risk management. The Board of Directors and its committees are responsible for risk management oversight. The Board is also responsible for confirming risk management processes designed and implemented by management are adequate and functioning as expected. Well-established risk identification, mitigation, prioritization, and management practices control business risks. Risk management processes extend to how potential climate-related risks are addressed. The identification of organization-wide and project-specific risks enables development of effective measures to avoid, mitigate, or address those risks. Diamondback seeks to continuously improve management processes, such as implementing an enterprise risk management (ERM) system to strengthen risk management and mitigation processes. Through the ERM process, risks with significant potential to affect the business are identified and mitigated. Severe weather, process safety, sustainability, environmental, and legal risks are among areas examined through the ERM process. Climate may impact many different business aspects. These impacts are integrated across multiple ERM risk categories. The ERM process includes an annual risk review with executive leadership and Board of Directors.
Metrics and Targets
Metrics Scope 1 and 2 GHG emissions are tracked from all sources, including flaring and gas-driven engines. Data is reported on an absolute basis and as an intensity relative to gross barrels of oil equivalent produced. Data Operated Emissions in 2025: • Scope 1 Emissions – 2,388,165 mt CO2e • Flared Hydrocarbons – 1,364,300 mt CO2e • Other Combustion – 849,677 mt CO2e • Other Vented Emissions – 129,313 mt CO2e
• • •
Fugitive Emissions – 44,875 mt CO2e Scope 2 Emissions – 1,660,486 mt CO2e Calculated Scope 3 Emissions (Use of Sold Products) – 107,506,367 mt CO2e
Targets In 2025, we refreshed our 2019 medium-term targets to reflect progress in reducing Scope 1 GHG and methane emissions intensity while also acknowledging the evolution of the reporting regulatory framework and the significant increase in our asset base following the Endeavor acquisition. These refreshed environmental targets were set with what we believed to be an informed view of our future operations and the applicable regulatory framework, understanding that longer term targets would require capital investments and extended timeframes to deliver results and continue to drive our goal of sustained performance improvement. As with all of our business and operational targets, we continually re-evaluate our emissions targets as the assumptions on which they were established have and will continue to shift. In light of these operational and regulatory changes, we have removed our previously disclosed target to reduce our Scope 1+2 greenhouse gas emissions intensity by at least 50% from 2020 levels by 2030. We have kept our targets of: • Maintain Scope 1 GHG intensity at 2024 levels • Reduce methane intensity by 20% from 2024 levels by 2030 • Flare less than 0.2% of gross gas produced (FANG operated) “Net Zero Now” Commitment Effective January 1, 2021, we committed to achieving zero net Scope 1 GHG emissions from our production. Along with taking steps to cut emissions and reduce GHG intensity, carbon offsets equivalent to the company’s remaining Scope 1 emissions will be purchased. Diamondback retired carbon offsets of ~2.39 million metric tons of CO2e emitted during 2025. Projects associated with these offsets include carbon dioxide capture, transportation, and sequestration in North America.
2026 TCFD Index
500 West Texas Ave., Suite 100, Midland, TX 79701 | www.diamondbackenergy.com Questions regarding this report? Please contact IR@diamondbackenergy.com. © 2026 Diamondback Energy. All trademarks belong to their respective owners. All rights reserved. October 2026