Doubles scale in the Midland Basin and further solidifies leadership in sustainable produced water management
Deep Blue Midland Basin LLC, the Midland Basin’s largest independent water infrastructure platform, today announced the closing of its previously announced acquisition of Environmental Disposal Systems, LLC (“EDS”) from Diamondback Energy, Inc. (“Diamondback”). Deep Blue was formed in 2023 as a joint venture between Diamondback and Five Point Infrastructure.
Diamondback maintained a 30% equity interest in Deep Blue and received approximately $695 million in upfront cash proceeds. Diamondback will also have the potential to receive up to $200 million of additional cash proceeds through performance-based earnouts until the end of 2028.
With nearly 2,000 miles of pipeline and millions of barrels per day of capacity, Deep Blue delivers comprehensive water management services in the critically important Midland Basin – from gathering and transporting to treating, recycling and disposing of produced water.
“We’re excited to add EDS to our rapidly growing independent water infrastructure platform, the largest in the Midland Basin,” said Scott Mitchell, Chief Executive Officer of Deep Blue. “The integration of EDS will create tremendous value for current and prospective customers who seek operational excellence and commercial synergies. This acquisition exemplifies our ability to scale alongside rising industry demand, as we continuously develop sustainable solutions that contribute to the Texas economy and U.S. energy leadership.”
In conjunction with the transaction, Deep Blue successfully closed a $950 million seven-year senior secured term loan B facility to fund a portion of the purchase price and pay down a revolving credit facility. Deep Blue received inaugural corporate ratings of BB- from Fitch Ratings and S&P Global Ratings and Ba3 from Moody’s Investors Service, with a stable outlook from all three agencies.
J.P. Morgan Securities LLC served as lead financial advisor to Deep Blue.
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