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Diamondback grows profits, output

US independent reports cost reductions as well as profit for the quarter

US independent Diamondback Energy saw second-quarter production as well as profits rise as the company reported a reduction in operational costs and completed a midstream deal.

The shale specialist reported net income of $349 million for the quarter, compared to $301 million in the year-ago period.

Production stood at 280,400 barrels of oil equivalent, a gain of 149% from the year-ago period and a gain of 7% sequentially.

During the quarter the company also reported the $720 million in net cash proceeds received following the initial public offering in May of the company's Rattler Midstream affiliate.

Diamondback said the company drilled 89 gross horizontal wells during the period and brought 69 operated horizontal wells on production, with the average lateral length at 9833 feet during the quarter.

"Our per lateral foot well costs, which include every dollar spent bringing our operated wells to production, and the six months of production costs thereafter, are down 7% year over year from Q2 2018 in the Midland Basin and 16% in the Delaware Basin," chief executive Travis Stice said.

"As such, we are narrowing the midpoint of our 2019 capital budget and increasing the midpoint of our operated completions, which implies over $110 per completed lateral foot of improved capital efficiency versus our initial budget presented in December."

The company also it saw improvement to prior pricing woes, expecting to "realize 95% or greater of WTI for the second half of 2019, putting our widest oil basis differential quarters behind us," Stice added.

"By early next year, we expect to realize oil prices at parity with or greater than WTI, which we believe, combined with our track record of cost leadership, will fuel free cash flow per share growth well in excess of our future production growth."

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