Diamondback Energy and Kinetik have expanded their ownership in EPIC Crude, the parent company of the EPIC Crude Oil Pipeline in Texas, through a deal with EPIC Midstream.
The agreement sees both companies jointly acquiring a 30% stake in the 1,126km long crude oil pipeline, which runs from Orla to the Port of Corpus Christi. Commissioned in 2020, the 30” pipeline provides services to the Midland, Delaware, and Eagle Ford basins.
As a result of the acquisition, Diamondback Energy and Kinetik each hold a 27.5% interest in the pipeline. EPIC Midstream, which is backed by Ares Management, retains a 45% stake and will continue to manage the pipeline’s operations.
EPIC Midstream CEO Brian Freed said: “Along with our execution over the past couple of years, these transactions position EPIC Crude for continued strategic and financial success. The business continues to be transformed, and the strategic importance of this asset is supported by our Partners’ long-term commitments.
“EPIC Crude continues to be a critical asset for Permian Basin crude production egress to the Corpus Christi market.”
The EPIC Crude Oil Pipeline currently operates with a capacity of more than 600,000 barrels per day (bpd), with the potential to reach a maximum capacity of 1,000,000bpd. Additionally, it offers operational storage of approximately 7.5 million barrels.
The pipeline network includes terminals at various locations such as Orla, Pecos, Saragosa, Crane, Wink, Midland, Helena, and Gardendale, along with connectivity to the Port of Corpus Christi for export access.
Diamondback Energy announced that it is converting its previous commitment to EPIC Crude into a significantly larger volume commitment of 200,000bpd. This move is aimed at accommodating the increased crude production following its $26bn merger with Endeavor Energy Resources.
Kinetik has also entered into a new transportation agreement with EPIC Crude and is establishing a new connection between its crude gathering system and the EPIC Crude pipeline.
The long-term volume commitments from both companies are expected to start in 2025 and continue until 2035. These commitments are backed by minimum volume guarantees, which will account for over 33% of EPIC Crude’s total capacity.
Diamondback Energy president and chief financial officer Kaes Van’t Hof said: “This series of transactions signifies a major step in ensuring reliable, cost-effective takeaway out of the basin for our expanded crude portfolio for a significant period of time, and positions EPIC Crude to be our preferred crude pipeline given our increased ownership stake and expanded governance role in the joint venture.”
