Diamondback Energy, Inc. (NASDAQ: FANG) ("Diamondback") and Five
Point Energy LLC (“Five Point”) announced today the formation of a
new joint venture entity, Deep Blue Midland Basin LLC (“Deep
Blue”). 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.
About Deep Blue
Deep Blue is headquartered in Houston and
Midland, Texas and develops, owns, and operates integrated
midstream water infrastructure networks to manage water for
exploration and production companies throughout the Midland Basin.
The company’s mission is to create value for its customers and
stakeholders by addressing their long-term water management
requirements through integrated pipeline systems and sustainable
water management practices. Deep Blue’s goal is to minimize
disposal through water recycling and advanced technologies such as
desalination and enhanced evaporation. Deep Blue strives to provide
safe, reliable, and efficient solutions that support a thriving
industry while protecting the environment and advancing more
sustainable industry practices. For more information about Deep
Blue, please visit: www.deepbluewater.com.
About Five Point Energy
Five Point Energy is a leading private equity
firm focused on building businesses within the environmental water
management and sustainable infrastructure sectors. The firm was
founded by industry veterans who have had successful careers
investing in, building, and running midstream infrastructure
companies. Five Point’s strategy is to buy and build assets, create
companies, and grow them into sustainable enterprises with premier
management teams and industry-leading E&P partners. Based in
Houston, Five Point targets equity investments up to $1 billion and
has approximately $4 billion of capital under management across
multiple investment funds. For more information about Five Point
Energy, please visit: www.fivepointenergy.com.
About Diamondback Energy
Diamondback is an independent oil and natural gas company
headquartered in Midland, Texas focused on the
acquisition, development, exploration and exploitation of
unconventional, onshore oil and natural gas reserves in
the Permian Basin in West Texas. For more
information about Diamondback please
visit: www.diamondbackenergy.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act, which involve risks, uncertainties, and
assumptions. All statements, other than statements of historical
fact, including statements regarding Diamondback’s: future
performance; business strategy; future operations (including
drilling plans and capital plans); estimates and projections of
revenues, losses, costs, expenses, returns, cash flow, and
financial position; reserve estimates and its ability to replace or
increase reserves; anticipated benefits of strategic transactions
(including acquisitions, joint ventures and divestitures); and
plans and objectives of management (including plans for future cash
flow from operations and for executing environmental strategies)
are forward-looking statements. When used in this news release, the
words “aim,” “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,”
“may,” “model,” “outlook,” “plan,” “positioned,” “potential,”
“predict,” “project,” “seek,” “should,” “target,” “will,” “would,”
and similar expressions (including the negative of such terms) as
they relate to Diamondback are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. Although Diamondback believes that the
expectations and assumptions reflected in its forward-looking
statements are reasonable as and when made, they involve risks and
uncertainties that are difficult to predict and, in many cases,
beyond Diamondback’s control. Accordingly, forward-looking
statements are not guarantees of future performance and
Diamondback’s actual outcomes could differ materially from what
Diamondback has expressed in its forward-looking statements.
Factors that could cause the outcomes to differ materially
include (but are not limited to) the following: changes in supply
and demand levels for oil, natural gas, and natural gas liquids,
and the resulting impact on the price for those commodities; the
impact of public health crises, including epidemic or pandemic
diseases, and any related company or government policies or
actions; actions taken by the members of OPEC and Russia affecting
the production and pricing of oil, as well as other domestic and
global political, economic, or diplomatic developments, including
any impact of the ongoing war in Ukraine on the global energy
markets and geopolitical stability; instability in the financial
sector; concerns over a potential economic slowdown or recession;
inflationary pressures; rising interest rates and their impact on
the cost of capital; regional supply and demand factors, including
delays, curtailment delays or interruptions of production, or
governmental orders, rules or regulations that impose production
limits; federal and state legislative and regulatory initiatives
relating to hydraulic fracturing and the use and/or disposal of
water in oil and gas operations, including the effect of existing
and future laws and governmental regulations; physical and
transition risks relating to climate change and the risks and other
factors disclosed in Diamondback’s filings with the Securities and
Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which
can be obtained free of charge on the Securities and Exchange
Commission’s web site at http://www.sec.gov.
In light of these factors, the events anticipated by
Diamondback’s forward-looking statements may not occur at the time
anticipated or at all. Moreover, Diamondback operates in a very
competitive and rapidly changing environment and new risks emerge
from time to time. Diamondback cannot predict all risks, nor can it
assess the impact of all factors on its business or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those anticipated by any
forward-looking statements it may make. Accordingly, you should not
place undue reliance on any forward-looking statements made in this
news release. All forward-looking statements speak only as of the
date of this news release or, if earlier, as of the date they were
made. Diamondback does not intend to, and disclaims any obligation
to, update or revise any forward-looking statements unless required
by applicable law.
Diamondback Investor Contact
Adam Lawlis+1 (432) 221-7467alawlis@diamondbackenergy.com
Deep Blue Media ContactRobert Norton+1 (303)
775-3562robert@deepbluewater.com
Five Point Media ContactDaniel Yunger+1 (917)
574-8582daniel.yunger@kekstcnc.com
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