Deep Blue Midland Basin Strengthens Water Infrastructure Leadership

Deep Blue Midland Basin Enhances Its Operations

In a significant move to solidify its position as the premier independent water infrastructure platform in the Midland Basin, Deep Blue Midland Basin LLC has announced the acquisition of Environmental Disposal Systems, LLC (EDS) from Diamondback Energy, Inc. This acquisition marks an important milestone for Deep Blue, further expanding its capabilities in sustainable produced water management.

Details of the Acquisition

The acquisition of EDS is valued at $750 million, and it represents a major leap in Deep Blue’s operational scale. This strategic agreement includes a 15-year commitment from Diamondback to Deep Blue for produced water and supply water in a defined 12-county area in the Midland Basin. Alongside this arrangement, Diamondback retains a 30% equity stake in Deep Blue, underscoring the enduring partnership between these industry leaders. The deal is set to provide Diamondback with approximately $675 million in upfront cash proceeds, alongside the potential for additional cash through performance-based earnouts reaching up to $200 million, contingent upon meeting specific benchmarks until 2028.

Strategic Growth and Innovation

Scott Mitchell, CEO of Deep Blue, expressed enthusiasm about the acquisition, stating that it not only broadens their operational footprint but also enhances their mission to optimize water management while focusing on sustainability. He emphasized that this transaction is poised to provide customers with unparalleled operational scale and innovative solutions that could redefine water management practices in the Midland Basin.

Impact on Water Management Infrastructure

The acquisition will expand the Deep Blue operation sustainably, featuring:

• 1.2 million barrels per day of treatment and recycling capacity
• 1.6 million barrels per day of water gathering capacity
• 1,871 miles of interconnected pipeline
• 3.4 million barrels per day of permitted disposal capacity
• 783,000 dedicated acres for operations

Founded as a joint venture between Diamondback and Five Point Infrastructure in 2023, Deep Blue has rapidly developed into a critical player within the Midland Basin’s water infrastructure landscape. This acquisition not only exemplifies Deep Blue’s commitment to reliability but also unlocks new operational and commercial synergies. With EDS in their portfolio, Deep Blue expands its customer network, which already includes prominent industry operators.

Voices from Leadership

Kaes Van’t Hof, CEO of Diamondback, highlighted the significance of this transaction, noting its value not just for financial returns but also for ongoing operational alignment with Deep Blue as a long-term partner. Their collaboration is envisioned as a cornerstone of the future water management system, able to meet demanding operational schedules.

David Capobianco, CEO of Five Point, corroborated the vision, stating that the partnership is dedicated to setting a new standard in resource-efficient water management for energy production in the U.S. Such advancements underscore Deep Blue's benchmark role in sustainable practices through innovative technologies.

Deep Blue's Commitment to Sustainability

Deep Blue’s headquarters in The Woodlands focuses on developing comprehensive midstream water infrastructure to manage water needs for exploration and production companies. The company is committed to addressing the long-term water management needs of its clients through integrated pipeline solutions while promoting sustainability with technologies like advanced water recycling, desalination, and enhanced evaporation methods.

Future Endeavors and Enhancements

As Deep Blue continues to broaden its operations and integrate the acquisition of EDS into its portfolio, they aim to not only support the demands of their current clientele but also pave the way for future players in the market. The enhanced infrastructure is a critical move to ensure that water management remains efficient and sustainable in the evolving energy landscape.

Frequently Asked Questions

1. What does the acquisition of EDS mean for Deep Blue?

This acquisition significantly enhances Deep Blue’s operational scale and strengthens its leadership in sustainable water management within the Midland Basin.

2. How will this impact customers?

Customers will benefit from increased operational capacity and innovative solutions for water management, ensuring greater efficiency and sustainability.

3. What is the financial value of the acquisition?

The acquisition of Environmental Disposal Systems is valued at $750 million.

4. Who remains a key partner in Deep Blue?

Diamondback Energy continues to play a vital role, maintaining a 30% equity interest in Deep Blue while providing ongoing water management support.

5. What is Deep Blue’s main focus moving forward?

Deep Blue is focused on optimizing water management practices while ensuring sustainability through advanced recycling technologies and integrated infrastructure strategies.

About The Author

Riley Hayes here, a financial writer and specialist committed to assisting individuals in navigating the intricate world of finance. My love is using my blog and articles to simplify complex financial ideas into understandable, doable guidance. Having worked in finance for many years, I try to give my readers the information and resources they need to make wise financial choices.

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