Diamondback Energy Sells 27.5% Equity Interest in EPIC Crude Holdings for $500 Million

Diamondback Energy has agreed to sell its 27.5% stake in EPIC Crude Holdings to Plains All American Pipeline for approximately $500 million in upfront cash and an additional $96 million contingent payment. The transaction is expected to close by early 2026, subject to customary conditions. Diamondback CEO Kaes Van’t Hof stated that the deal generates a "meaningful return on our invested capital."

Diamondback Energy, Inc. (NASDAQ: FANG), a leading independent oil and natural gas company, has announced the sale of its 27.5% equity interest in EPIC Crude Holdings, LP to Plains All American Pipeline, L.P. and its subsidiary, Plains GP Holdings (collectively "Plains"). The transaction is valued at approximately $500 million in upfront cash, with an additional $96 million contingent payment if EPIC Crude's capacity expansion is approved by 2027. The deal is expected to close by early 2026, subject to customary closing conditions and regulatory approvals.

The transaction values EPIC Crude at $2.85 billion, with a $350 million contingent consideration component. This sale is part of Diamondback's strategy to generate a meaningful return on its invested capital. According to Kaes Van’t Hof, CEO of Diamondback, "We look forward to maintaining our strong commercial relationship with the EPIC Crude and Plains teams as an anchor shipper on the EPIC Crude pipeline."

The EPIC Crude pipeline provides long-haul crude oil takeaway from the Permian and Eagle Ford basins to the Gulf Coast market at Corpus Christi. Plains, a publicly traded master limited partnership, owns and operates midstream energy infrastructure and provides logistics services for crude oil and natural gas liquids (NGL). The acquisition strengthens Plains' position as the premier crude oil midstream provider, complements its asset footprint, and enhances its customer offering.

Plains expects the transaction to be immediately accretive to distributable cash flow and create synergistic opportunities, resulting in mid-teens unlevered returns. The remaining 45% interest in EPIC Crude Holdings is owned by a portfolio company of Ares Management Corporation ("EPIC Management"), which also serves as operator.

Diamondback's sale of its stake in EPIC Crude Holdings is a significant move in the midstream energy sector, reflecting the ongoing consolidation and strategic repositioning of companies in the industry. This transaction is expected to have a positive impact on both Diamondback and Plains, aligning with their respective strategic goals and financial objectives.

References:
[1] https://www.stocktitan.net/news/FANG/diamondback-energy-inc-announces-the-sale-of-its-equity-interest-in-4z1ob7yx0pbg.html
[2] https://www.stocktitan.net/news/PAA/plains-to-acquire-55-interest-in-epic-crude-holdings-b04al2bbncbg.html