Diamondback Energy, Kinetik Holdings, and EPIC Midstream have announced a series of transactions designed to strengthen the growth and financial stability of EPIC Crude Holdings, a key player in the Permian Basin’s energy landscape. These moves are part of a broader effort to secure EPIC Crude’s long-term success and enhance its strategic alignment with both Diamondback and Kinetik.
As part of the deal, Diamondback and Kinetik have each acquired a 27.5% equity interest in EPIC Crude, bringing their combined ownership to 30%. EPIC Midstream, which manages the day-to-day operations, retains a 45% stake in the company. This ownership structure underscores the confidence these companies have in EPIC Crude’s role in the region’s energy infrastructure.
One of the standout elements of the agreement is Diamondback’s decision to significantly increase its crude oil volume commitment to EPIC Crude, bumping it up to 200,000 barrels per day. This commitment reflects Diamondback’s expanded production capabilities following its recent merger with Endeavor Energy Resources, which positioned Diamondback as the third-largest crude oil producer in the Permian Basin.
Kinetik has also entered into a new transportation arrangement with EPIC Crude and is establishing a connection between its crude gathering system and EPIC’s pipeline, further solidifying their partnership. These new commitments from both Diamondback and Kinetik are expected to start in 2025 and continue through 2035, providing long-term stability for EPIC Crude’s operations. These long-term agreements are supported by minimum volume commitments (MVCs), which will account for more than 33% of EPIC Crude’s overall capacity.
EPIC Crude is also taking steps to reduce controllable costs and enhance financial returns, aiming to maximize value for all its stakeholders. The company currently transports over 600,000 barrels per day and has secured contracts or MVCs for approximately 90% of its 2025 total volumes. This ensures not only strong performance in the near term but also extends the weighted average contract life, providing a solid foundation for the future.
The unique structure of EPIC Crude allows its customers to access all major markets in Corpus Christi, as well as the global Dated Brent market through its dock, making it a key player in the region’s energy logistics. Brian Freed, CEO of EPIC Midstream, highlighted the significance of these recent moves, stating that they mark a critical step in ensuring EPIC Crude’s 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,” said Freed.
Diamondback’s President and CFO, Kaes Van’t Hof, also emphasized the importance of these transactions, noting that they ensure reliable, cost-effective transportation for Diamondback’s expanded crude portfolio. 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.”
Kinetik CEO Jamie Welch expressed excitement about partnering with Diamondback and EPIC Midstream, stating, “Our volume commitment, alongside Diamondback, will generate incremental value for our crude customers seeking access to a premium market.”
The financial profile of EPIC Crude continues to improve, supported by long-term contracts, investment-grade customers, and expected improvements in its credit ratings. Additionally, the company is considering expanding its pipeline capacity in the Permian Basin, an opportunity that could provide significant returns with minimal capital investment. The potential expansion, focused primarily on adding additional pumps to the existing pipeline, could be carried out under fully underwritten contracts, with Diamondback and Kinetik having the option to take on roughly one-third of the additional capacity.
As EPIC Crude looks ahead, these transactions not only solidify its role in the Permian Basin but also position the company for long-term growth and financial stability. By aligning with industry leaders like Diamondback and Kinetik, EPIC Crude is well-positioned to remain a key player in the region’s energy future.
