Diamondback Energy Inc. (NASDAQ:FANG) will sell its Environmental Disposal Systems LLC unit to Deep Blue Midland Basin LLC in a $750 million deal that expands Deep Blue’s water infrastructure footprint across West Texas.
The agreement, announced with partner Five Point Infrastructure LLC, secures Diamondback’s 15-year commitment to produce and supply water services across 12 counties.
Diamondback will keep a 30% stake in Deep Blue and receive about $675 million in upfront cash, with the potential for another $200 million through performance-based payments by 2028.
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The deal nearly doubles Deep Blue’s scale, with more than 3 million barrels per day of permitted disposal capacity, 1.2 million barrels per day of recycling capacity, and 1,871 miles of pipeline across the basin.
Formed in 2023 as a joint venture between Diamondback and Five Point, Deep Blue has quickly become the largest independent water infrastructure platform in the Midland Basin. CEO Scott Mitchel said the transaction enhances sustainability by expanding water recycling for upstream development.
Kaes Van’t Hof, CEO of Diamondback, called the deal “meaningful value” while maintaining alignment with Deep Blue as a partner and customer. David Capobianco, CEO of Five Point, said the company is “setting an industry standard” for water management in U.S. energy production.
Separately, Diamondback agreed to sell its 27.5% interest in EPIC Crude Holdings LP to Plains All American Pipeline LP (NASDAQ:PAA) for $500 million in cash and up to $96 million in contingent payments if expansion milestones are met. The sale, which values EPIC Crude at $2.85 billion, is expected to close in early 2026 pending regulatory clearance.
Sector performance can also be tracked through the Energy Select Sector SPDR Fund (NYSE:XLE) and the iShares U.S. Energy ETF (NYSE:IYE).
Price Action: FANG shares are trading lower by 0.13% to $148.57 at last check Tuesday.
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