Diamondback, Five Point establish water infrastructure JV in Midland Basin

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Diamondback Energy, Inc. (NASDAQ: FANG) and Five Point Energy LLC have unveiled a strategic joint venture to establish Deep Blue Midland Basin LLC (“Deep Blue”). This new entity aims to create the largest independent water infrastructure platform in the Midland Basin. Diamondback Energy will retain a 30% equity stake in Deep Blue Midland Basin and has received approximately $500 million in upfront cash proceeds as part of the deal.

Integrated Water Infrastructure Network with Over 800 Miles of Pipelines

The joint venture’s focus will be on developing an extensive midstream water infrastructure network, featuring more than 800 miles of pipelines for various water-related operations such as gathering, transport, disposal, and reuse. Deep Blue Midland Basin’s network is designed to handle a permitted disposal capacity of approximately two million barrels per day, and the joint venture will also manage over 65 million barrels of water storage.

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Future Growth Funded by Additional $500 Million Equity Capital

Deep Blue Midland Basin will not only handle Diamondback Energy’s water supply within a 12-county area in the Midland Basin for 15 years but also has the capability for third-party growth. To fund these growth projects and possible acquisitions, Five Point Energy and Diamondback Energy anticipate contributing an additional $500 million in follow-on equity capital.

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What the Executives Are Saying

Scott Mitchell, CEO of Deep Blue Midland Basin, commented, “This joint venture affords us the unique opportunity to execute on our vision of sustainable produced water management utilizing one of the largest platforms in the core of the Midland Basin.”

Kaes Van’t Hof, President and CFO of Diamondback Energy, also shared, “This is the opportune time to monetize this business while retaining meaningful upside through our equity ownership. We look forward to participating in the future growth of this business.”

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Legal Advisory and Additional Support

Skadden, Arps, Slate, Meagher & Flom LLP and Winston & Strawn LLP served as legal advisors to Deep Blue Midland Basin. Piper Sandler acted as the financial advisor, and Akin Gump Strauss Hauer & Feld LLP was the legal counsel for Diamondback Energy.

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