A wholly owned subsidiary of Plains All American Pipeline and Plains GP Holdings, collectively Plains, has signed a definitive agreement to acquire a 55% interest in EPIC Crude Holdings from Diamondback Energy and Kinetik Holdings.
Valued at around $1.57bn, the deal includes around $600m of debt and may include an additional $193m earnout payment.
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This strategic move is set to immediately boost distributable cash flow and provide mid-teen unlevered returns.
The EPIC Crude Oil Pipeline, owned and operated by EPIC Crude Holdings, boasts a capacity exceeding 600,000 barrels per day (bpd), with potential for low-cost expansion. It connects the Permian and Eagle Ford basins to the Gulf Coast.
Besides the EPIC Pipeline, the assets of EPIC Crude Holdings encompass around 800 miles of long-haul pipelines.
EPIC’s assets also include around seven million barrels of operational storage and export capacity of more than 200,000bpd.
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By GlobalDataThe acquisition is set to offer customers increased connectivity from upstream locations to downstream markets, reinforcing Plains’ strategy from the Permian wellhead to water.
The transaction is supported by long-term commitments from Plains’ key customers and is expected to improve the acquisition multiple in the coming years through synergies and growth in the Permian region.
Plains anticipates maintaining its pro forma leverage ratio within the target range, even when excluding proceeds from its recent natural gas liquids divestiture.
The strong balance sheet will be leveraged to finance the deal through a combination of cash and debt.
This deal is also expected to support further capital return opportunities due to the immediate accretion to distributable cash flow.
Plains All American Pipeline chairman, CEO and president Willie Chiang said: “The combination of our stake in EPIC Crude Holdings coupled with our existing integrated Permian and Eagle Ford assets enhances our commitment to offering a high level of connectivity and flexibility for our customers.
“By further linking our Permian and Eagle Ford gathering systems to Corpus Christi, we are enhancing market access and ensuring our customers have reliable, cost-effective routes to multiple demand centres.
“The combined assets will allow us to capture synergies through additional service offerings, and drive value via expanded scale and integration.”
Completion of the transaction is expected by early 2026, pending the satisfaction of customary closing conditions including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Ares Management, which also acts as an operator, holds the remaining 45% interest in EPIC Crude Holdings.
Legal counsel for Diamondback Energy in this transaction was provided by Akin Gump Strauss Hauer & Feld.
