Deep Blue Midland Basin Acquires Diamondback’s Environmental Disposal Systems for $675 Million
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Deep Blue Midland Basin and Five Point Infrastructure entered into an agreement for Deep Blue to acquire Environmental Disposal Systems (EDS) from Diamondback Energy, nearly doubling Deep Blue’s scale and advancing its leadership in sustainable produced water management.
The EDS acquisition is valued at $750 million and as part of the agreement, Diamondback renewed its 15-year dedication to Deep Blue for produced water and supply water within a 12-county area of mutual interest in the Midland Basin.
Diamondback will maintain a 30 percent equity interest in Deep Blue and will receive approximately $675 million in upfront cash proceeds, subject to customary closing conditions and adjustments. 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.
“This transaction enhances our footprint and accelerates our mission to optimize water management across the Midland Basin while prioritizing greater sustainability by recycling massive amounts of produced water for upstream development. It ensures our customers benefit from unmatched scale and innovative solutions while shaping the future of water management in the Midland Basin,” said Scott Mitchell, chief executive officer of Deep Blue.
“This transaction provides meaningful value for Diamondback while allowing us to remain closely aligned with Deep Blue as both a partner and a customer. Together, we are creating the premier system that supports the most demanding development schedules in the Midland Basin,” said Kaes Van’t Hof, chief executive officer and director of Diamondback.
“As a pioneer in produced water infrastructure and state-of-the-art water treatment practices, Five Point is proud to back Deep Blue, in partnership with Diamondback. Deep Blue is raising the bar and setting an industry standard for resource-efficient water management across U.S. energy production,” said David Capobianco, chief executive officer of Five Point and chairman of Deep Blue.
Formed in 2023 as a joint venture between Diamondback and Five Point, Deep Blue has rapidly built the Midland Basin’s largest independent water infrastructure platform. This acquisition continues that trajectory, adding reliability and unlocking new opportunities to capitalize on operational and commercial synergies across the integrated system. EDS also broadens Deep Blue’s customer base, which already includes several of the leading operators in the Midland Basin.
Deep Blue is headquartered in The Woodlands 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.
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