Diamondback Energy and KKR have agreed to acquire Five Point Infrastructure’s 70% stake in Midland Basin water operator Deep Blue Midland Basin for cash.
The deal would give Diamondback and KKR joint ownership of the Midland Basin water infrastructure business, in which the former already holds a 30% interest.
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The financial terms of the deal were not disclosed by the companies.
KKR’s participation in the transaction will be funded mainly via its KKR Global Infrastructure Investors V fund.
Deep Blue was formed in 2023 as a joint venture (JV) between Diamondback and Five Point.
The company operates an integrated water infrastructure system in the Midland Basin, delivering full-cycle water management services such as source water procurement, transportation, storage, treatment, recycling, and responsible disposal.
The infrastructure is designed for energy customers across the region, providing solutions that support water resource management and increased water reuse.
Deep Blue CEO Scott Mitchell said: “When we launched Deep Blue, alongside Five Point and Diamondback, our vision was to build a best-in-class integrated produced water management platform in the Midland Basin.
“Five Point’s partnership and strategic guidance have been instrumental in bringing that vision to life, as we expanded our footprint, developed our infrastructure and met our customers’ needs.
“This transaction marks an exciting next chapter as we build on our foundation in continued strategic partnership with Diamondback and now KKR.”
Currently, Deep Blue oversees more than 2.2 million barrels (mbbl) of water per day and delivers over 800,000 barrels per day (bpd).
The company’s portfolio consists of over 2,000 miles of pipeline, permitted capacity of around five million barrels per day for produced water, and a storage capacity of 142mbbl.
Operations have expanded through both new infrastructure and targeted acquisitions.
Diamondback, based in Midland, Texas, operates as an independent oil and natural gas company, specialising in the acquisition, development, exploration, and exploitation of unconventional, onshore reserves in the Permian Basin in West Texas.
The divestment of Deep Blue comes during a busy period for Five Point and its limited partners, marked by several investments and asset sales.
Among recent activities are the initial public offerings of LandBridge and WaterBridge, as well as progress on PowerBridge’s Alpha Digital Campus in Reeves County, Texas.
These also include the $1.25bn sale of the natural gas platform Twin Eagle to Expand Energy, and the sale of Northwind, a sour-gas gathering, treating, and processing system, to MPLX for about $2.4bn.
Both Diamondback and KKR stated that the partnership may present opportunities for further collaboration on infrastructure projects in the West Texas region.
Diamondback CEO Kaes Van’t Hof said: “Through our strategic partnership with Five Point, we are proud to have established and scaled a world-class water infrastructure platform in the Midland Basin.
“The Deep Blue system is critical for Diamondback’s core operations, which require reliable transportation of nearly 2 million barrels of water per day.”
The transaction is expected to close in the fourth quarter of 2026, subject to customary regulatory approvals and closing conditions.
