Permian Basin pure-play Diamondback Energy Inc. saw its oil and natural gas output bottom in the third quarter, and it is eyeing a slight increase through the end of the year — but not by much until  prices recover.

Fourth quarter output is expected to meet a production target of 170,000-175,000 b/d of oil, CEO Travis Stice said. However, he warned that the industry could fall over its skis if it does not watch the warning signs ahead.

“Diamondback’s production level in the fourth quarter is the proposed baseline for our future activity plans, and we anticipate we can hold this production flat in 2021 while spending 25-35% less capital than in 2020,” he said.

Diamondback, like many of its Lower 48 peers, curtailed production in the second quarter and shut down most...