Travis D. Stice
Chairman of the Board and Chief Executive Officer at Diamondback Energy
Thank you, Adam, and welcome to Diamondback's fourth quarter earnings call. 2022 was another great year for Diamondback. We successfully executed on our capital program, accelerated our return of capital plan and generated record cash flow. I'm very proud of all that we were able to accomplish and look forward to what I believe will be another strong year for the Company. Looking back at last year, we produced over 223,000 barrels of oil per day, exceeding our production expectations. This is primarily the result of our well performance, which continues to trend in the right direction as our normalized oil production in the Midland Basin improved by 6% year-over-year and nearly 20% when compared to 2020. We continued to optimize our multi-zone co-development strategy, which we pivoted to prior to the pandemic by tweaking our frac designs, spacing assumptions and landing zones to maximize our returns.
On the operations side, we've also built out substantial water infrastructure, which allows us to implement simul-frac completions across our position. This type of completion is consistently more efficient than a traditional zipper frac design because we can complete approximately 80 wells per year with just one crew. When you add in the additional efficiencies we're seeing from our Halliburton e-fleet, our completion savings are approximately $50 a foot. Last year was not without its challenges from significant inflationary pressures, particularly with casing, equipment availability and weather-related downtime. However, kudos [Phonetic] our operational team did what it always does, deliver best-in-class execution. Our ability to hold our capital budget flat and stay within our original guidance range while also exceeding our production target is something you should expect from Diamondback as we push to deliver differentiated results quarter after quarter.
Financially, we generated over $7 billion in EBITDA and $4.6 billion in free cash flow or nearly $26 per share, both records for the Company. We made significant progress on our return of capital plan, increasing our cash return commitment in the middle of the year to return at least 75% of free cash flow to stockholders. In total, we returned 68% of our free cash flow in 2022, which equates to $3.1 billion through a combination of our base and variable dividend and share repurchase program, buying back nearly 8.7 million shares at an average price of $126 per share for a total of $1.1 billion. This represents 5% of our shares outstanding when we announced our program in September of 2021. An additional $2 billion was returned through our base and variable dividend with the total dividend growth of nearly 5 times when compared to 2021. In total, we returned $11.31 per share in dividends.
In the fourth quarter alone, we returned over $860 million or $5.65 per share with a total dividend yield of nearly 9%. This included an increase to our annual base dividend of $0.20, now $3.20 per share annually or $0.80 per quarter, representing 54% year-over-year growth. We also announced multiple strategic transactions in the fourth quarter that better position us for the long term. We made two Midland Basin acquisitions, Lario and FireBird, both of which are now closed and seamlessly integrated that added over 500 high-quality opportunities and 83,000 net acres to our portfolio. This additional inventory, along with the associated production and cash flow, has solidified our size and scale in the Midland Basin, giving us a strategic advantage as we execute on our capital programs for the decades to come.
Last summer, we bought in all the outstanding units of Rattler, which gives us additional flexibility to think strategically about our existing midstream portfolio. We now have the ability to monetize assets that trade at a higher multiple than our upstream business and use the proceeds to strengthen our balance sheet or acquire additional upstream assets. The first example of this was the sale of our 10% interest in the Gray Oak crude oil pipeline to Enbridge. We achieved a 1.75 multiple on our invested capital and used the proceeds to partially fund the cash portion of the Lario acquisition.
As we evaluated both our Rattler operated assets and equity method investments, we've also monetized multiple noncore upstream positions. We have now divested nearly $600 million in upstream assets since the third quarter of last year, which includes two recent deals in Southeast Glasscock and Ward and Winkler counties. These assets simply did not compete for immediate capital within our portfolio. We have now increased our noncore asset target sales from $500 million to at least $1 billion by the end of this year. Last year, we improved our leverage ratio, now below 1 times, and also pushed the tenor of nearly 90% of our debt past five years, with over $2 billion due in the 2050 at an average coupon of below 5%. We will continue to use free cash flow and proceeds from our noncore asset sales to lower our overall debt profile, continually improving our financial position.
As we move into 2023, we expect to deliver relatively flat pro forma production year-over-year. When you account for the 11 months of Lario and a full year of FireBird production contribution, our guidance reflects 260,000 barrels of oil a day and $2.6 billion in capex, while running 15 rigs and four simul-frac crews.
In closing, 2022 was an outstanding year for the Company. We generated record free cash flow and distributed nearly 70% of it to our shareholders, strengthened our balance sheet, extended our inventory runway and continued to produce one of the highest margin barrels in the industry. Looking ahead, our business model is working, and we are confident in our 2023 outlook and our ongoing ability to continue generating peer-leading returns for our stockholders.
With these comments now complete, operator, please open the line for questions.
