Diamondback Vitality Inc. and 5 Level Vitality LLC have shaped a three way partnership, Deep Blue Midland Basin LLC, which creates the biggest impartial water infrastructure platform within the Midland Basin with substantial extra capability in place to pursue third-party development, Diamondback stated.
The three way partnership leads to an built-in midstream water infrastructure community with over 800 miles of pipelines for gathering, transport, disposal, and reuse, Diamondback stated in a information launch Monday. With its headquarters in Houston and Midland, Texas, Deep Blue additionally has a permitted disposal capability of roughly two million barrels per day and over 65 million barrels of water storage, in depth recycle amenities in place with the capability to provide over 500,000 barrels per day of recycled water for completions exercise. Deep Blue develops, owns, and operates built-in midstream water infrastructure networks to handle water for exploration and manufacturing firms all through the Midland Basin, with a mission to create worth for its clients and stakeholders by addressing their long-term water administration necessities by way of built-in pipeline techniques and sustainable water administration practices, in line with the discharge.
As a part of the transaction, Diamondback stated it entered a 15-year dedication for its produced water and provide water inside a 12-county space of mutual curiosity within the Midland Basin.
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Diamondback, which can retain a 30 p.c fairness curiosity in Deep Blue, obtained roughly $500 million in upfront money proceeds, with the potential for additional cash proceeds by way of performance-based earnouts over the following 24 months. Moreover, 5 Level and Diamondback anticipate to collectively contribute $500 million in follow-on fairness capital to fund future development initiatives and acquisitions, in line with the information launch.
Along side closing the deal for the three way partnership, Deep Blue stated it additionally executed long-term acreage dedications with two investment-grade clients, totaling over 20,000 acres with anticipated produced water volumes of over 75,000 barrels per day throughout 2024. The purchasers weren’t disclosed.
“This three way partnership affords us the distinctive alternative to execute on our imaginative and prescient of sustainable produced water administration using one of many largest platforms within the core of the Midland Basin”, Deep Blue CEO Scott Mitchel stated. “Along with supporting Diamondback’s long-term development plans and advancing their reuse aims, Deep Blue plans to develop its footprint whereas driving the development of recent expertise options for our clients”.
“This strategic three way partnership has the property, administration, and producer assist to create vital worth for Diamondback stockholders. We now have spent practically a decade constructing a differentiated water infrastructure platform within the Midland Basin, and consider that is the opportune time to monetize this enterprise whereas retaining significant upside by way of our fairness possession. The three way partnership has already had vital third-party industrial success, and we look ahead to taking part sooner or later development of this enterprise”, Diamondback President and CFO Kaes Van’t Hof stated.
“Our three way partnership with Diamondback reinforces 5 Level’s management in environmental water administration options and our standing because the {industry}’s most popular associate”, 5 Level CEO and Deep Blue Chairman David Capobianco stated. “Deep Blue’s basin-wide footprint and extra capability ideally place it to develop and consolidate within the Midland Basin whereas bringing next-generation water administration options to our clients, together with recycling, enhanced evaporation, and desalination applied sciences”.
Water Partnership in Stateline Area
In an earlier information launch, WaterBridge NDB LLC, a portfolio firm of 5 Level, stated it partnered with WPX Vitality Permian LLC, a subsidiary of Devon Vitality Corp., to kind NDB Midstream LLC. The ensuing partnership is the biggest personal water infrastructure system within the prolific Stateline area of the Delaware Basin in Loving County, Texas, and Lea and Eddy counties in New Mexico, Waterbridge NDB stated.
In reference to the transaction, Devon and NDB Midstream entered a long-term settlement through which Devon dedicated all of its produced water inside a big space of mutual curiosity, together with an preliminary dedication of roughly 52,000 acres, and contributed 18 saltwater disposal wells with round 375,000 barrels per day of permitted capability and 210 miles of produced water pipelines for gathering, transportation, disposal, and reuse. As a part of the transaction, Devon obtained a 30 p.c fairness curiosity in NDB Midstream, in addition to a dedication by 5 Level to fund a portion of the preliminary construct of the system growth, in line with the discharge.
“We’re enthusiastic about this partnership which can present Devon with a major enhance in permitted water dealing with capability, delivering each dependable circulate assurance and entry to considerable assets and infrastructure to assist Devon’s future drilling plans and the corporate’s produced water reuse and recycling operations”, Devon Vice President for Advertising and marketing and Midstream and NDB Midstream Board Member Greg Horne stated.
Capobianco, who can also be WaterBridge NDB Chairman, stated, “Our three way partnership with Devon is among the largest within the water sector to this point, and is transformative for WaterBridge because it considerably expands our industry-leading platform’s scale, industrial attain, and strategic worth. Since WaterBridge’s founding in 2016, now we have been pioneers of midstream water administration, progressively addressing the produced water wants of our blue-chip shoppers and decreasing reliance on freshwater sources for drilling and completion actions. The way forward for WaterBridge couldn’t be brighter as we work to convey extremely progressive options to market within the close to future, together with desalination hubs”.
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