Deep Blue Midland Basin LLC has completed the acquisition of Environmental Disposal Systems LLC (EDS) from Diamondback Energy Inc, expanding its water management infrastructure for exploration and production companies in the Permian sub-basin.
Midland, Texas-based oil and gas company Diamondback retains a 30 percent stake in Deep Blue, which it formed 2023 with Houston, Texas-based investor Five Point Infrastructure LLC, a joint statement said.
“We’re excited to add EDS to our rapidly growing independent water infrastructure platform, the largest in the Midland Basin”, Deep Blue chief executive Scott Mitchell said in a company statement.
“The integration of EDS will create tremendous value for current and prospective customers who seek operational excellence and commercial synergies.
“This acquisition exemplifies our ability to scale alongside rising industry demand, as we continuously develop sustainable solutions that contribute to the Texas economy and U.S. energy leadership”.
The Woodlands and Midland-based Deep Blue is to have 1.2 million barrels per day (bpd) of treatment and recycling capacity, 1,871 miles of interconnected pipeline, 3.4 million bpd of permitted disposal capacity and 783,000 dedicated acres after the acquisition, according to the announcement of the deal September 2.
As part of the agreement, Diamondback renewed a 15-year commitment to Deep Blue for produced water and supply water within 12 counties of mutual interest in the Midland Basin.
Diamondback received around $695 million in upfront cash and will potentially receive up to $200 million from performance-based earnouts until 2028, the statement said.
“In conjunction with the transaction, Deep Blue successfully closed a $950 million seven-year senior secured term loan B facility to fund a portion of the purchase price and pay down a revolving credit facility”, the statement added.
Earlier Diamondback signed an agreement to sell its 27.5 percent stake in EPIC Crude Holdings LP, owner of EPIC Crude Oil Pipeline, to Plains.
Stretching over 800 miles, the pipeline system carries Delaware Basin and Midland Basin supply from locations near Crane, Midland, Orla and Wink, Texas, and Eagle Ford supply from locations near Gardendale and Hobson, Texas. The pipeline system delivers the oil to EPIC Crude Holdings’ 3.4-million-barrel Robstown Terminal near Corpus Christi, according to EPIC Midstream.
The pipeline system, which became fully operational April 2020, has a nameplate capacity of 600,000 bpd, expandable up to one million bpd, and nearly seven million barrels of operational storage, according to EPIC Midstream.
Diamondback will receive around $500 million in net upfront cash and $96 million in contingent cash should a capacity expansion of EPIC Crude be formally sanctioned by 2027, Diamondback said in a statement on its website September 2.
The parties expect to close the transaction “early 2026”, Diamondback said.
“This is a great outcome for Diamondback, generating a meaningful return on our invested capital”, Diamondback chief executive and director Kaes Van’t Hof said. “We look forward to maintaining our strong commercial relationship with the EPIC Crude and Plains teams as an anchor shipper on the EPIC Crude pipeline”.
To contact the author, email jov.onsat@rigzone.com
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
element
var scriptTag = document.createElement(‘script’);
scriptTag.src = url;
scriptTag.async = true;
scriptTag.onload = implementationCode;
scriptTag.onreadystatechange = implementationCode;
location.appendChild(scriptTag);
};
var div = document.getElementById(‘rigzonelogo’);
div.innerHTML += ” +
‘
‘ +
”;
var initJobSearch = function () {
//console.log(“call back”);
}
var addMetaPixel = function () {
if (-1 > -1 || -1 > -1) {
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
} else if (0 > -1 && 96 > -1)
{
/*Meta Pixel Code*/
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1517407191885185’);
fbq(‘track’, ‘PageView’);
/*End Meta Pixel Code*/
}
}
// function gtmFunctionForLayout()
// {
//loadJS(“https://www.googletagmanager.com/gtag/js?id=G-K6ZDLWV6VX”, initJobSearch, document.body);
//}
// window.onload = (e => {
// setTimeout(
// function () {
// document.addEventListener(“DOMContentLoaded”, function () {
// // Select all anchor elements with class ‘ui-tabs-anchor’
// const anchors = document.querySelectorAll(‘a .ui-tabs-anchor’);
// // Loop through each anchor and remove the role attribute if it is set to “presentation”
// anchors.forEach(anchor => {
// if (anchor.getAttribute(‘role’) === ‘presentation’) {
// anchor.removeAttribute(‘role’);
// }
// });
// });
// }
// , 200);
//});
