Midland, Texas – September 2, 2025 – Diamondback Energy, Inc. (NASDAQ: FANG) made two major announcements today that reinforce its strategic focus on Permian Basin development while unlocking value from midstream assets. The company is simultaneously advancing water infrastructure scale through Deep Blue Midland Basin LLC and monetizing its midstream equity stake in EPIC Crude Holdings, LP.
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🌊 Deep Blue Expands with $750 Million EDS Acquisition
Deep Blue Midland Basin LLC (“Deep Blue”), a joint venture formed in 2023 by Diamondback and Five Point Infrastructure, will acquire Environmental Disposal Systems, LLC (“EDS”) from Diamondback in a deal valued at $750 million.
- Diamondback will receive $675 million in upfront cash plus up to $200 million in earnouts through 2028.
- Diamondback retains a 30% equity interest in Deep Blue and renewed a 15-year water dedication across a 12-county Midland Basin footprint.
Strategic impact:
- Nearly doubles Deep Blue’s scale, cementing its position as the Midland Basin’s largest independent water infrastructure provider.
- Post-acquisition system includes 1.2 million bpd of treatment/recycling capacity, 1,871 miles of pipeline, and 3.4 million bpd of permitted disposal capacity.
- Expands customer base while accelerating sustainable produced water recycling solutions.
Scott Mitchell, CEO of Deep Blue, emphasized the deal’s role in “shaping the future of water management in the Midland Basin”, while Diamondback CEO Kaes Van’t Hof highlighted its value creation and ongoing alignment with Deep Blue as both partner and customer.
⛽ Plains Acquires Diamondback’s 27.5% Stake in EPIC Crude
Separately, Diamondback announced the sale of its 27.5% equity interest in EPIC Crude Holdings, LP to Plains All American Pipeline, L.P. and Plains GP Holdings for $500 million upfront cash plus a potential $96 million contingent payment if a capacity expansion is sanctioned before 2027.
- The deal implies a $2.85 billion valuation for EPIC Crude, with contingent consideration bringing the potential value to $3.2 billion.
- Expected to close in early 2026, pending regulatory clearance under the Hart-Scott-Rodino Act.
- Diamondback will remain an anchor shipper on the EPIC Crude pipeline, maintaining its Gulf Coast crude flow while redeploying capital.
“This is a great outcome for Diamondback, generating a meaningful return on our invested capital,” said Kaes Van’t Hof.
🔑 Bigger Picture: Recycling Capital, Strengthening Focus
Taken together, these transactions highlight Diamondback’s disciplined portfolio strategy:
- Unlocking midstream value through the EPIC Crude divestiture while retaining commercial access.
- Doubling down on water infrastructure with Deep Blue, a critical enabler of high-intensity Midland Basin development.
- Recycling capital back into upstream priorities, positioning the company for sustained growth and shareholder returns in its core Permian footprint.
As Diamondback reshapes its portfolio, it is simultaneously expanding critical infrastructure and strengthening its balance sheet — a clear signal of its long-term commitment to operational efficiency, sustainability, and capital discipline in the Permian Basin.
