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A slew of Permian Basin operators said they plan on raising capital budgets to counter the effects of rising costs. But they also plan to continue rolling out rich rewards to investors as cash flows balloon. Devon Energy, for instance, raised its expected 2022 capex by 10% at midpoint to $2.2 billion-$2.4 billion. Meanwhile, Coterra Energy increased capex by 10% above previous guidance to $1.6 billion-$1.7 billion, largely to combat oil-field inflation. While those companies also have operations outside the Permian, pure-play Pioneer Natural Resources has also boosted capex 7% to a range of $3.6 billion-$3.8 billion. Another pure-play, Diamondback Energy, expects to spend 2% more this year than previously planned. Inflation, especially in the Permian, continues to bite, with the companies seeing significant cost increases for both fracking and drilling. “We still haven't been able to offset all of the fixed pricing increases we've seen,” said Diamondback CEO Travis Stice during his company’s second-quarter call. Like nearly every other independent, the Permian players reported billions of dollars of free cash flow. However, not much of this is expected to go to new production.

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