Diamondback Energy Inc., Kinetik Holdings Inc., and EPIC Midstream Holdings LP have entered deals structured to “support growth and strengthen the financial profile” of EPIC Crude Holdings LP, an EPIC Midstream affiliate, the companies said Sept. 24.
Diamondback and Kinetik acquired a 30% equity interest in EPIC Crude, resulting in each partner holding 27.5% of EPIC Crude. EPIC Midstream continues to manage operations of EPIC Crude with 45% equity interest.
Diamondback is converting its existing commitment on EPIC Crude into a larger volume commitment of 200,000 b/d to accommodate additional crude barrels from Diamondback’s merger with Endeavor Energy Resources, which made Diamondback the third largest crude producer in the Permian basin, the company said.
Kinetik is also entering into a new transportation arrangement with EPIC Crude and a new connection between Kinetik’s crude gathering system and the EPIC Crude pipeline.
The combined long-term volume commitments are expected to begin in 2025 and extend until 2035, supported by minimum volume commitments and representing over 33% of EPIC Crude’s volume capacity.
EPIC Crude is a 700-mile, 30-in OD crude oil pipeline that extends from Orla, Tex., to the Port of Corpus Christi and services the Midland, Delaware, and Eagle Ford basins. The pipeline is currently operating at a capacity of greater than 600,000 b/d and has a maximum capacity of 1,000,000 b/d, as well as total operational storage of about 7,500,000 bbl. EPIC Crude includes terminals in Orla, Pecos, Saragosa, Crane, Wink, Midland, Helena, and Gardendale, with Port of Corpus Christi connectivity and export access.
“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,” said Kaes Van’t Hof, president and chief financial officer of Diamondback.
