Exciting New Developments for EPIC Crude
HOUSTON — Diamondback Energy, Inc. (NASDAQ: FANG), Kinetik Holdings Inc. (NYSE: KNTK), and EPIC Midstream Holdings LP are thrilled to announce a set of transformative transactions designed to strengthen the growth and financial stability of EPIC Crude Holdings, LP. This affiliate of EPIC Midstream is poised to gain significantly from these strategic changes.
Notable Advances in the Partnership
This partnership has led to Diamondback and Kinetik acquiring a 30% stake in EPIC Crude. As a result, both companies now hold a combined ownership of 27.5%, while EPIC Midstream retains a substantial 45% equity interest and continues to oversee its operations.
Increased Commitments from Diamondback
Diamondback is strengthening its growth strategy by converting its previous commitments with EPIC Crude into a more substantial volume pledge of 200,000 barrels per day (MBpd). This change comes on the heels of Diamondback’s recent merger with Endeavor Energy Resources, placing it as the third-largest crude producer in the Permian Basin.
Kinetik's Enhanced Transportation Plan
Kinetik is enhancing its operations with a new transportation plan that connects its crude gathering system directly to the EPIC Crude pipeline. This collaboration will streamline resource transportation, reinforcing both companies’ positions in the market.
Long-Term Commitments and Financial Gains
These initiatives from both partners are set to launch in 2025 and will continue until 2035. The combined long-term volume commitments amount to over 33% of EPIC Crude’s total capacity. This is supported by minimum volume commitments (MVC), which bolster the operational stability of EPIC Crude.
EPIC Crude is dedicated to reducing controllable costs, which will lead to better financial returns and maximize value for all stakeholders. This focus on efficiency places the company in an advantageous position for the future.
The Growth Path of EPIC Crude
Currently, EPIC Crude is transporting more than 600 MBpd and has successfully secured MVCs or contracts for about 90% of its total volumes for 2025. Furthermore, it has extended the weighted average contract life, demonstrating a strong strategy that provides customers access to markets and docks in Corpus Christi along with the Dated Brent market through the EPIC dock.
Leadership Insight
Brian Freed, Chief Executive Officer of EPIC Midstream, shared his thoughts on the transformation: "These transactions set EPIC Crude up for ongoing strategic and financial success. Our partners’ long-term commitments highlight the importance of this asset in moving crude production from the Permian Basin to the Corpus Christi market."
Kaes Van’t Hof, President and CFO of Diamondback, pointed out the significance of these developments: "This set of transactions is a major step toward ensuring a dependable and cost-effective way to transport crude from our expanded portfolio for years to come."
Jamie Welch, President and CEO of Kinetik, expressed excitement for the partnership: "We are eager to team up with Diamondback and EPIC Midstream, as our commitments not only boost our operational capabilities but also deliver substantial value for our customers seeking access to top-tier markets."
Looking to the Future of EPIC Crude
With EPIC Crude’s financial outlook looking increasingly solid, the company is optimistic about improving its credit rating. The combination of better leverage, an investment-grade customer base, and a robust long-term contract profile positions EPIC Crude for sustainable growth.
Looking ahead, there’s potential for a large-scale expansion of the crude oil pipeline in the Permian Basin, with limited capital needs primarily for extra pumps. This opportunity underscores EPIC Crude’s strong market position, with partners considering options for about one-third of the expansion capacity.
About EPIC Midstream and EPIC Crude
Founded in 2017, EPIC Midstream manages midstream infrastructure in various basins, including the Delaware and Midland regions. With a sprawling 700-mile Crude Oil and NGL Pipeline, it links crude oil and natural gas liquids to key markets.
Also originating in 2017, EPIC Crude Holdings, LP operates an extensive pipeline system from Texas to Corpus Christi, maintaining a high capacity of 600,000 barrels per day and expandable to 1,000,000 barrels per day. This infrastructure is crucial for operations across various regions in Texas.
Frequently Asked Questions
What recent transactions have taken place involving Diamondback and Kinetik?
Diamondback and Kinetik have recently acquired a 30% equity interest in EPIC Crude, which significantly increases their ownership and enhances operational partnerships.
How will these transactions affect EPIC Crude's operations?
These transactions will boost crude volume commitments and improve financial returns, fostering both growth and efficiency for EPIC Crude's operations.
What future plans does EPIC Crude have for pipeline expansion?
EPIC Crude is anticipating a future expansion project that is expected to be economically beneficial and supported by fully underwritten contracts.
What is EPIC Crude's current transportation capacity?
EPIC Crude is currently transporting over 600,000 barrels per day and has contracts covering approximately 90% of its total volumes for 2025.
Who are the key executives involved in these transactions?
Brian Freed of EPIC Midstream and Kaes Van’t Hof of Diamondback are key executives discussing the transformative changes and strategic partnerships.
