U.S. oil production has likely peaked and will start to decline due to price plunge, Diamondback CEO warns
A pump jack operates near a gas turbine power plant in the Permian Basin oil field outside of Odessa, Texas, U.S. February 18, 2025.
Eli Hartman | Reuters
U.S. onshore oil production has likely peaked and will start to decline due to the recent plunge in crude prices, jeopardizing the nation’s position as the world’s largest fossil fuel producer and its energy security, the CEO of Diamondback Energy told shareholders in a letter this week
U.S. crude oil prices have tumbled about 17% this year as recession fears due to President Donald Trump’s tariffs weigh on demand expectations. At the same time, OPEC+ producers led by Saudi Arabia are rapidly increasing supply to the market.
Adjusted for inflation, there have only been two quarters since 2004 when front-month oil prices have been as cheap as they are now, excluding 2020 when the Covid-19 pandemic swept the world, Diamondback CEO Travis Stice wrote.
“Therefore, we believe we are at a tipping point for U.S. oil production at current commodity prices,” Stice warned the company’s shareholders in a letter published Monday. “It is likely that U.S. onshore oil production has peaked and will begin to decline this quarter,” Stice told investors in his letter, pointing to cuts in activity levels.
Diamondback is an independent oil and gas producer focused on the Permian Basin, the most prolific oil patch in the U.S. The company is the third biggest oil producer in the Permian and the sixth biggest in the continental U.S., according to data from Enverus.
U.S. crude oil prices rose more than 4% to $59.56 per barrel Tuesday as domestic production is expected to decline.
Energy security at risk
The shale revolution over the past 15 years has transformed the U.S. into the largest fossil fuel producer in the world, with the country producing more oil and gas than Saudi Arabia and Russia combined, the CEO said.
“This has transformed our economy and given the United States a level of energy security not thought possible at the beginning of this century,” Stice told investors. “Today’s prices, volatility and macroeconomic uncertainty have put this progress in jeopardy,” the CEO warned.
West Texas Intermediate Prices
Depending on how much oil prices fall, the amount of capital needed for the U.S. to produce 13 million barrels per day and for the Permian to produce 6 million bpd “might be an untenable lift for the business model that we put in place, where we’re returning so much back to our investors who own the company,” Stice told analysts on Diamondback’s earnings call Tuesday morning.
“We don’t have a crystal ball in the rest of the world, but we have a very good view of what the U.S looks like, and right now, that’s a business that’s slowing dramatically and likely declining in terms of production,” Stice said.
Onshore production to decline
The number of crews fracking shale for oil and gas has already fallen 15% this year with crews in the Permian Basin down 20% from a peak in January, Stice estimated, warning that number of crews will likely decline further.
Rigs focused on oil production are expected to decline nearly 10% by the end of the second quarter and fall further in the third, the CEO said.
Diamondback has cut its capital budget by about $400 million to $3.4 billion to $3.8 billion this year. Trump’s steel tariffs are the biggest cost headwind the oil producer is currently fighting, Stice said. Those tariffs have increased well costs by about 1% or $40 million annually, the CEO said. Efficiency gains are expected to offset rising costs as activity slows in the coming quarters, he said.
Diamondback has dropped three rigs and one completion crew, and the company expects to remain at these levels through the majority of the third quarter, the CEO said in his letter. It now expects to drill between 385 to 435 wells this year and complete 475 to 550 wells.
“To use a driving analogy, we are taking our foot off the accelerator as we approach a red light,” Stice said. “If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed.”
Just one year after ZEEKR went public on the US stock market, its majority shareholder, Geely, is offering the Chinese EV automaker an opportunity to go private once again.
As we’ve pointed out several times in the past (especially the last month or so), Chinese EV automaker ZEEKR ($ZK) continues to build momentum overseas as it gears up to continue expanding its presence to new markets around the world (just not in the US yet, sorry).
We recently visited Shanghai and Hangzhou in China, where ZEEKR was our host. At the Shanghai Auto Show, we explored the automaker’s entire lineup on the showroom floor and also got a rare opportunity to drive ZEEKR EVs on public roads in China, which we were quite impressed with.
Several other brands under the Geely umbrella, including Lynk & Co., were also present during that drive day. Geely currently owns approximately 65.7% of ZEEKR and is now hoping to make that investment whole, as it has proposed that the automaker delist in the US and become a private company.
ZEEKR has option to delist in US and become wholly-owned by Geely
As reported by CnEVPost, Geely Automobile Holdings submitted a non-binding offer to ZEEKR today, proposing to delist it from the Nasdaq in the US and take the Chinese EV automaker private. That letter was confirmed via an announcement from the Hong Kong stock exchange.
In May 2024, ZEEKR went public in the US on the NYSE under the ticker symbol “ZK,” trading as American depositary receipts (ADRs). Then, in November of 2024, Geely increased its stake in ZEEKR after a musical chairs restructuring in which the latter acquired 21% of Lynk & Co from the former and its 30% stake in Volvo Cars. As a result, Geely owns about 65% of ZEEKR.
As the majority shareholder, Geely now wants ZEEKR to delist from the US stock market so it can wholly acquire it to “drive resource consolidation, avoid duplication, reduce costs, and build long-term value.”
According to the non-binding proposal letter filed today, Geely is offering to acquire all issued and outstanding ZEEKR shares and ADSs at a proposed purchase price of $2.57 per share or $25.66 per ADS. The proposed purchase of the remaining 34.3% of the automaker would equate to about $2.2 billion from Geely without any evident hurdles to continuing business as usual.
Instead, Geely hopes to create a unified listing platform and consolidate the automaker’s assets and resources to become more competitive in the passenger EV segment and, per Geely, help “define ZEEKR’s future strategic direction to address global market and economic challenges.”
ZEEKR’s stock in the US is currently up following news of Geely’s privatization plans. We’ve contacted ZEEKR for a comment, and were sent the following release from Geely.
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Finally, Mitsubishi is bringing a new EV to the US. Mitsubishi confirmed plans to launch a new EV in North America that will be based on the next-gen Nissan LEAF. Here’s what we know so far.
Mitsubishi will use the Nissan LEAF for its new EV
Earlier this year, Mitsubishi told US dealers (via Automotive News) that a new EV would arrive in 2026. Sources said the new electric car will closely resemble Nissan’s updated LEAF.
The company officially announced its upcoming EV on Tuesday, giving us a better idea of what to expect. Mitsubishi confirmed its upcoming EV will, in fact, be based on the new Nissan LEAF. The Japanese automakers will work together to launch it across the US and Canada as part of Mitsubishi’s long-term growth plan.
Nissan revealed the third-gen LEAF in March, upgrading it in nearly every way. The new Nissan LEAF drops the iconic hatch design for a crossover and includes a native NACS port to access Tesla Superchargers.
Based on its CMF-EV platform, the same one underpinning its electric SUV, the Ariya, Nissan’s new LEAF has “significant range improvements.”
Although official specs will be revealed soon, Nissan’s vehicle program chief, Francois Bailly, told TopGear.com that the new LEAF is expected to have a WLTP driving range of up to 373 miles (600 km).
The updated LEAF will arrive in the US and Canada later this year as one of ten new or refreshed vehicles from Nissan and its luxury Infiniti brand.
As part of its North American growth strategy, dubbed Momentum 2030, Mitsubishi will launch “a new or significantly revised vehicle every year between 2026 and 2030,” starting with the 2025 Outlander.
Mark Chaffin, president and CEO of Mitsubishi’s North American operations, said after launching the new business plan (Momentum 2030), dealers were asking “for more concrete timing and plans.”
Chaffin added that today’s announcement “is the first of many to come that reinforce our commitment to the US market. “
Mitsubishi’s North American sales rose 11% year-over-year (YOY) in the first quarter to 31,637 units. Chaffin said the new EV will diversify its lineup with “a blend of internal combustion engines, plug-in hybrids and electric vehicles.” The company will share more details, including prices and specs, closer to launch in Summer 2026.
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Another day, another exciting post from Rivian founder and CEO RJ Scaringe sharing images of the upcoming R2 EV. This is the third R2 update from Rivian in as many days, as the American automaker’s second flagship model configuration inches closer to full-fledged production.
As we pointed out earlier this week, Rivian ($RIVN) continues to succeed by selling its first two flagship models—the R1S and R1T, which are now in the second generation. The automaker’s Q1 2025 report, posted yesterday, solidified that statement, detailing gross profits for a second consecutive quarter that have unlocked a $1 billion investment from joint venture partner Volkswagen Group.
Another interesting update from yesterday’s shareholder letter was progress on the Rivian R2 – a smaller, more affordable BEV that has already secured hundreds of thousands of pre-orders and could very well enable Rivian’s “Model 3 moment.”
Per Rivian, R2 validation builds are underway in Normal, Illinois, and are on track for scaled production next year. Just hours after the quarterly report went public, Rivian CEO RJ Scaringe shared some images of the validation R2 builds on social media, offering our best look at its development progress yet.
R2 images look cool, but don’t get too excited about its wheels
The two Rivian R2 images above were posted by Scaringe on X yesterday evening with the following caption:
Validation builds for R2 are progressing on our pilot line!! Can’t wait for R2!!
The images join a picture of Rivian’s new Maximus drive unit, which will power the R2 BEVs, which Scaringe shared earlier this week. While drive units are exciting to hardcore BEV enthusiasts, especially when you think of the cost-per-unit savings the lighter and optimized assembly Maximus unit will offer, but most people want to see a physicaly BEV body to ogle. Scaringe delivered.
The images of the validation R2 builds showcase tremendous progress for Rivian as it looks to deliver a smaller and more affordable model to the masses. Judging by the number of reservations, those consumers are ready.
Most of the reactions to Scaringe’s post were excited. One user asked for more details about the R2’s all-black wheels seen in the image above, to which Scaringe responded that they are only for Rivian development vehicles, so don’t expect to see them in the Gear Shop—unless, perhaps, you keep spamming the CEO about it until they add them!
Less friendly comments pertained to the build quality of the R1T and R1S models currently rolling out of Rivian’s Normal facility, imploring RJ and his team to spend more time on quality control before deliveries. I’ll admit that my R1S came with a couple of early cosmetic and software hurdles, but it’s been smooth sailing since.
I’d also argue that Rivian is already assembling and delivering better quality builds than Tesla, which has been in the production game a lot longer. You don’t see many (or any?) Rivians with mismatched paint panels, but I digress.
Rivian will have plenty of time to get all the production bugs out in Normal as it continues progressing on its new 1.1 million-square-foot manufacturing expansion, which will be home to R2 production next year. For now, we will keep an eye on RJ’s accounts to see what exciting R2 images he and Rivian will share next. Stay tuned.
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