UPDATE 1-Diamondback Energy sees Permian Basin at 350 to 400 rigs by year-end

(Adds details from call and price action)

By Liz Hampton

Feb 23 (Reuters) - U.S. shale producer Diamondback Energy on Wednesday said the largest U.S.-producing basin could be running some 350 to 400 rigs by the end of the year, up from around 300 currently, as oil prices have climbed to over $90 a barrel.

The company, which plans to keep its Permian oil production flat this year, said output growth is being led by private firms, and more recently oil majors.

As oil activity picks up, many oil drillers are facing higher costs for goods and services, and labor shortages. Diamondback said it was mitigating some of those pressures through operational efficiencies.

"Anything that requires boots or tires in the Permian Basin is going to continue to be tight," Chief Executive Officer Travis Stice told investors on the company's fourth-quarter earnings call.

Shares were up about 2.9% in early trading at $131.75. U.S. crude futures were up 1.7% to $93.50 a barrel.

Diamondback said it did not meet its goal of flaring less than 1% of gross gas produced for the year. It said the shortfall was due to assets it acquired from QEP Resources.

Last week Scott Sheffield, CEO of rival Pioneer Natural Resources, said more needed to be done to reduce flaring in the Permian Basin, and placed the majority of the blame on private firms.

(Reporting by Liz Hampton in Denver; Editing by Mark Porter)