Could the reason be "Reserve Based Lending" Jim? How does an emperor keep its clothes on in a data room?

I have never heard of a drop down transaction until now. https://www.diamondbackenergy.com/news-releases/news-release-details/diamondback-energy-inc-announces-drop-down-transaction

"A drop-down transaction is a financial maneuver where a borrower transfers collateral from restricted entities to an unrestricted subsidiary, allowing that subsidiary to incur new debt without being bound by the original financing agreements. This strategy is often used by companies to manage their capital structure and navigate financial challenges."

https://www.dechert.com/content/dam/dechert%20files/knowledge/onpoint/2023/1/Liability-Management-Transactions-Part-II-Drop-down-Transactions.pdf

With Permian tier 1 locations almost exhausted, lower productivity per well, higher operating costs how does a pure play Permian pubco prevent self liquidation?

Question originated here on oilystuffblug with the lower left hand graph....

So how does a pure shale oil player like Diamondback in the Permian imply a PDP R/P ratio of 8, on an SEC filing, no less, when its wells have a first year exponential decline 69.3%?

The only explanation I have for that is the goal posts for PDP defintions has been moved to include PUD's. The SEC has historically allowed proximity based PUDS adjacent to a producing parent well (3,000 feet +/- ?) to be booked up to 50-60% of type curve EUR, I believe. This possible explanation might be related to Conway's link regarding DUC's, which I believe Endeavor had a bunch of. I do not know. PUD's don't have to be DUC's, they can just be proximity based PUD locations.

I found this from 2023, the first quarter of the game using the new longer lateral playbook. The cummulative production profile shows the benefits of bigger IP's from more shale exposure, and suggests 2023 EUR's are headed higer. I am not buying that. Elsewhere they appear to be headed lower.

My only other explanation (this one also a dumbass roughneck from Flatonia explanation) is when do they book these PDP reserves? If it is within 90 days of IP, the booking EUR must look awesome. If it based on BOE, at 6:1, it must look double awesome. And Midland and Martin Counties are sure getting gassy:

FANG GOR, Midland Basin.

This begs the question regarding debt ($18 B, with a big 'ol fat B) to asset ratios and how lenders feel about this "asset" stuff. If its my account I'd take their PDP estimates and discount it 60%.

I guess dividend hounds buy stock in the shale oil sector for dividends and not growth. I'd be pissed if my shares got diluted to buy Endeavor and then whacked another $20B because, come to find out, the people in charge paid too much for Endeavor? Damn.

Still thinking about this....