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INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The following table provides the Company’s provision for (benefit from) income taxes and the effective income tax rate for the dates indicated:

Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
(In millions, except for tax rate)
Provision for (benefit from) income taxes$(26)$18 $2 $43 
Effective tax rate11.7 %13.6 %4.8 %11.4 %

The Company’s effective income tax rates for the three and nine months ended September 30, 2025, and 2024, differed from the amounts computed by applying the United States federal statutory tax rate to pre-tax income for the periods primarily due to net income attributable to the non-controlling interest.

In connection with the closing of the Sitio Acquisition, the Company acquired prepaid income tax balances of approximately $14 million and deferred tax assets of $5 million related to loss carryforwards. The Company also recognized a deferred tax liability of approximately $122 million.

In March 2024, Diamondback converted 5,278,493 shares of the Company’s Class B Common Stock along with 5,278,493 OpCo Units into an equivalent number of shares of the Company’s Class A Common Stock. In connection with this transaction, the Company recognized a $28 million increase in its deferred tax asset and an $11 million increase in its valuation allowance through additional paid-in capital.

During the three and nine months ended September 30, 2024, the Company maintained a partial valuation allowance against its deferred tax assets considered not more likely than not to be realized, based on its assessment of all available evidence, both positive and negative as required by applicable accounting standards. The remaining valuation allowance was released in full during the fourth quarter of 2024.
On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the “Act”), was enacted. The Act included multiple provisions applicable to U.S. income taxes for businesses, including immediate expensing of research or experimental expenses, bonus depreciation for qualified tangible property, deductible intangible drilling costs for purposes of the corporate “book” minimum tax and enhancements to limits on business interest expense deductions. The Company accounted for the Act in the period of enactment and concluded there was not a material impact to the Company’s current or deferred income tax balances.