Travis D. Stice
Chairman of the Board and Chief Executive Officer at Diamondback Energy
Thank you, Adam. And welcome to Diamondback's first quarter earnings call. In February. Russia launched an unprovoked invasion of the sovereign nation of Ukraine. We at Diamondback strongly condemn Russia's actions and aggression. Our thoughts and prayers are with the millions of men, women and children affected by this unjust war and while we desire a quick and peaceful resolution to this conflict, we recognize that this war could go on for quite some time. We will continue to support the innocent victims of Ukraine just as we did earlier this year when we announced a $10 million commitment to various non-profit entities providing vital humanitarian support.
Russia's actions have plunged the global energy markets in the turmoil. As the world and especially our allies in the European Union grapple with the potential loss of a major source of their energy supply and rethink their respective energy policies, this war has magnified the interconnectivity of the global energy equation and the impact post Cold War globalization has had on all supply chains. It has also reminded world of the importance of the traditional oil and gas to the global economy. As we are witnessing the impact, high energy costs can have on the consumer and the economy in real time as the war end in the resulting governmental sanctions continue, Russia's oil production is expected to be impacted by shut-ins, natural declines, storage limitations and low
Exports, creating a global shortage of oil.
Over the next few years, we will need to make up for this loss production and we believe that the US oil and gas industry is best suited to provide the low cost, environmentally friendly barrels needed to ensure global energy supply. However, today we are operating in a constrained environment with inflationary pressures continuing to increase across all facets of our business. Also labor and material shortages are now present across the supply chain. We at Diamondback are fortunate to have secured the necessary equipment, personnel and materials to run our 2022 capital program. But increase in activity now would result in capital efficiency degradation. It will now meaningfully contribute to fixing the global supply and demand imbalance in the oil market today.
Therefore, Diamondback remains committed to maintaining our current oil production levels of approximately 220,000 net barrels of oil per day.
While we believe that efficiently growing our production base is achievable over the long term, we do not feel that today is the appropriate time to begin in dollars, that would not equate traditional barrels into multiple quarters from now. We continue to focus on capital efficiency and strive to operate with the highest level of environmental and social responsibility. At Diamondback, we plan to invest approximately $60 million to produce our direct emissions and lower our carbon intensity including ending routine flaring by 2025. This figure does not include the 100s of millions of dollars we have spent to electrify our production fields and to build pipelines to ensure we produce and transport fluid with the lowest emissions intensity possible.
These investments are not only good for the environment but also smart economic decisions that we expect will lower our operating costs. By investing in infrastructure in our high activity levels, we now have the ability to run a dedicated electric fleet for the foreseeable future. We have partnered with Halliburton to secure our first electric frac fleet, which will run in our Martin County acreage of power generated from the central location and delivered via existing lines, reducing our Scope one emissions profile. This partnership will also lower our cost per foot, primarily due to fuel savings, decrease our footprint on location and increase our operational efficiency as a result of lower maintenance and non-productive time.
We expect this fleet to be operational in the fourth quarter. In 2021, we also announced initiatives to reduce our Scope one greenhouse gas emissions for GHG intensity by at least 50% and reduce methane intensity by at least 70% from 2019 levels by 2024. In 2021 alone, we reduced our Scope one GHG and methane intensity by 15% and 20% respectively from the 2020 levels. Lastly, we launched our Net Zero Now strategy under which as of January 1 of 2021, every hydrocarbon produced by Diamondback is anticipated to have zero net Scope one GHG emissions as we offset these emissions with certified carbon credits.
Moving to first quarter performance, our production of 223,000 barrels of oil exceeded the high end of our guidance range, creating 1.4 billion in operating cash flow. We were able to keep our capital costs in check. Spending $437 million in capex during the quarter. Nearly hitting the low end of our guidance range of $435 million to $475 million and pushing our free cash flow for the quarter to $974 million. We returned $555 million cash back to our stockholders or $3.09 per share, representing 57% of Q1 2022 free cash flow and 50% of adjusted free cash flow which we calculated by adding back the $135 million in cash we used to terminate certain future hedge positions. This return has made the stock repurchases, the base dividend in our first variable dividend.
As we have said in the past, our share repurchase program is opportunistic and we start with our plan of evaluating our share repurchases just as we would with any acquisition. A buyback must generate a return well in excess of our weighted average cost of capital assuming a reasonable mid cycle oil price. In the first quarter, oil price debt[Phonetic] was approximately $60 a barrel and as such, we were able to take advantage of some of the volatility in the market and repurchased 57,000 shares at an average price of $117 a share.
Through the end of the first quarter, we have spent about $440 million or 20% of the $2 billion program our Board authorized last September. Additionally, we once again increased our growing base dividend, which we view as our primary, constant and predictable form of shareholder returns. It is now at $2.80 a share on an annualized basis, up 7% quarter-over-quarter and approaching our target of $3 a share. We have now increased our base dividend by quarterly CAGR of over 11% since it was initiated in 2018. Today, this represents a current yield of just over 2%.
Finally, with the free cash flow return through our base dividend and repurchase program which is now equal at least 50% of our free cash flow for that particular quarter and we have committed to make our investors whole by distributing the rest of that free cash flow via a variable dividend. This strategy gives us the ability to be flexible and opportunistic when distributing capital above and beyond our base dividend and most importantly allows at least 50% of free cash flow to be returned. For our strategy, we allocated $423 million to our first variable dividend in this quarter or $2.35 per share, putting our total dividend payout in the first quarter at $3.05 per share or nearly a 10% total dividend yield. We met our commitment to return at least 50% of free cash flow to our stockholders and use the remaining cash to strengthen our financial and operating position.
In the quarter, we fully redeemed $500 million of notes due in 2024 and $1 billion of notes due in 2025. We also took advantage of the flat long end of the curve by pricing $750 million in new 30-year senior notes at 4.25%. This liability management exercise reduced our absolute debt by $750 million, $20 million, pushed out the average weighted maturity of our debt profile by 5 years and kept average weighted cost of debt flat. With only one tranche of near-term maturities outstanding, we are pleased with the progress we have made to improve our investment grade balance sheet and are nearing our leverage target of approximately one-time[Phonetic] a $50 oil, which would equate to approximately $3.5 billion, in absolute debt at the current level.
We also continue to put our cash to work by high grading our existing inventory position through small bolton acquisitions and we are excited about walking up our reward position with the acquisitions we completed in January. This bolton added approximately 6,000 net acres in Ward County and gave us an additional 60 long lateral locations with an 80% net revenue interest in a high rate of return there. In fact, we have already begun drilling the position. But do not expect to have production until late this year.
As we look to our outlook for the rest of 2022, our simple plan has not changed. Maintain oil production of approximately 220,000 barrels of oil per day, by spending between $1.75 billion and $1.9 billion. At the current strip pricing, this production and capital spend equates to approximately 400 -- $4.5 billion of free cash flow which per our returns framework gives us a minimum of $2.25 billion of cash back to our investors. We are off to a good start for the year. Mitigating inflationary pressures while justifying our social and environmental license to operate. We believe our capital discipline and returns profile is still best near term path to equity value creation while our operational execution provides differentiated returns to our shareholders. With these comments now complete, operator, please open the line for questions.
