May 4 (Reuters) - U.S. shale producer Diamondback Energy ( FANG )

raised its annual production forecast on Monday, after

beating Wall Street expectations for first-quarter profit on a

rally in oil prices.

The first quarter was marked by geopolitical uncertainty and

extreme volatility in oil prices, which have surged more than

87% this year after the U.S.-Israeli war on Iran disrupted

supply chains and damaged key energy infrastructure.

Although Diamondback's operations are based in the U.S., the

company benefits from higher commodity prices. Its realized

price for each barrel of oil produced came in at $72.53,

compared with $70.06 a year earlier.

"Because of our positioning, our preparation and this price

signal, we are bringing incremental barrels to the market

immediately," CEO Kaes Van't Hof said in a statement adding that

the company was well positioned to respond to the current macro

environment.

The company now expects to produce more than 972,000 barrels

of oil equivalent per day in 2026, compared with its prior

projection of 926,000 to 962,000 boepd.

It also raised its capital expenditure budget to roughly

$3.9 billion in 2026, from $3.75 billion previously.

During the first quarter, Diamondback produced 979,356

boepd, up from 850,656 boepd a year earlier.

The Midland, Texas-based company posted an adjusted profit

of $4.23 per share for the three months ended March 31, compared

with analysts' estimates of $3.30 per share, according to data

compiled by LSEG.

Shares of the company were down 1% after the bell.