Deep Blue to buy Diamondback’s Environmental Disposal Systems business in $750M deal

Deep Blue Midland Basin said Tuesday it agreed to acquire Environmental Disposal Systems from Diamondback Energy (NASDAQ:FANG) in a $750M deal, nearly doubling its water management scale.

As part of the agreement, Diamondback (NASDAQ:FANG) will maintain a 30% equity interest in Deep Blue and receive ~$675M in upfront cash proceeds, with the potential to receive as much as $200M of additional cash proceeds through performance-based earnouts until year-end 2028.

Formed in 2023 as a joint venture between Diamondback (FANG) and Five Point Infrastructure, Deep Blue has built the Midland Basin's largest independent water infrastructure platform, and the company said the acquisition will continue that trajectory.

Earlier Tuesday, Diamondback Energy (FANG) said it agreed to sell its 27.5% equity stake in EPIC Crude Holdings to Plains All American Pipeline and Plains GP Holdings for ~$500M in net upfront cash and an additional $96M contingent payment if a capacity expansion of EPIC Crude is formally sanctioned before year-end 2027.