Diamondback Energy and Five Point Energy announced today the formation of a new joint venture entity, Deep Blue Midland Basin LLC. This strategic joint venture creates the largest independent water infrastructure platform in the Midland Basin with substantial excess capacity in place to pursue third-party growth.

Deep Blue Highlights:

• Integrated midstream water infrastructure network with over 800 miles of pipelines for gathering, transport, disposal and reuse
• Permitted disposal capacity of approximately 2 million barrels per day and over 65 million barrels of water storage
• Extensive recycle facilities in place with capacity to supply over 500,000 barrels per day of recycled water for completions activity
• Initial dedication across substantially all of Diamondback’s acreage in the Midland Basin

As part of the transaction, Diamondback entered into a 15-year dedication for its produced water and supply water within a 12-county area of mutual interest in the Midland Basin. Diamondback will retain a 30% equity interest in Deep Blue and received approximately $500 million in upfront cash proceeds, with potential for more cash proceeds through performance-based earnouts over the next 24 months. Additionally, Five Point and Diamondback anticipate collectively contributing $500 million in follow-on equity capital to fund future growth projects and acquisitions.

In conjunction with closing the joint venture, Deep Blue also executed long-term acreage dedications with two investment-grade customers, totaling over 20,000 acres with expected produced water volumes of over 75,000 barrels per day during 2024.

Scott Mitchell, CEO of Deep Blue said, “Deep Blue is thrilled to announce our partnership with Diamondback and Five Point in the Midland Basin. This joint venture affords us the unique opportunity to execute on our vision of sustainable produced water management utilizing one of the largest platforms in the core of the Midland Basin. In addition to supporting Diamondback’s long-term growth plans and advancing their reuse objectives, Deep Blue plans to grow its footprint while driving the advancement of new technology solutions for our customers.”

“Diamondback is excited to announce our Deep Blue partnership with Five Point,” stated Kaes Van’t Hof, President and CFO of Diamondback. “This strategic joint venture has the assets, management and producer support to create significant value for Diamondback stockholders. We have spent nearly a decade building a differentiated water infrastructure platform in the Midland Basin, and believe this is the opportune time to monetize this business while retaining meaningful upside through our equity ownership. The joint venture has already had significant third-party commercial success, and we look forward to participating in the future growth of this business.”

David Capobianco, CEO of Five Point and Chairman of Deep Blue, said, "Our joint venture with Diamondback reinforces Five Point’s leadership in environmental water management solutions and our status as the industry’s preferred partner. Deep Blue’s basin-wide footprint and excess capacity ideally position it to grow and consolidate in the Midland Basin while bringing next-generation water management solutions to our customers, including recycling, enhanced evaporation and desalination technologies."

Skadden, Arps, Slate, Meagher & Flom LLP and Winston & Strawn LLP served as legal counsel to Deep Blue. Piper Sandler served as financial advisor, and Akin Gump Strauss Hauer & Feld LLP served as legal counsel to Diamondback.

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