EPIC Crude Pipeline's $3 Billion Potential Sale: A Dual-Track Opportunity in the Permian Basin

The EPIC Crude Pipeline, a critical artery for U.S. crude oil exports, is at the center of a high-stakes $2.5–$3.5 billion sale process that could reshape the midstream sector's landscape. As the Permian Basin continues to consolidate and expand its production, the pipeline's strategic value—rooted in its expandable capacity, long-term contracts, and access to premium export markets—positions it as a dual-track asset for both defensive and growth-oriented investors.

Strategic Positioning in the Permian Basin

The Permian Basin, the U.S.'s most prolific oil-producing region, has seen a surge in production, driven by advancements in horizontal drilling and hydraulic fracturing. EPIC Crude's 700-mile pipeline system transports over 600,000 barrels per day (bpd) from the Permian and Eagle Ford basins to the Gulf Coast, with the potential to expand to 1 million bpd. This scalability is critical as producers seek reliable takeaway solutions to meet growing demand. The pipeline's direct connection to the Port of Corpus Christi—a hub for Dated Brent crude exports—further cements its role in global energy markets.

Recent infrastructure upgrades, such as the completion of the Port of Corpus Christi's four-phase Channel Improvement Project in June 2025, have enhanced the port's ability to handle larger vessels, boosting export efficiency. This development aligns with EPIC Crude's long-term strategy to capitalize on the premium Corpus Christi market, where crude prices often trade at a discount to WTI due to oversupply risks.

Dual-Track Value Proposition

Defensive Investors:
EPIC Crude's financial stability is underpinned by long-term minimum volume commitments (MVCs) from major producers like Diamondback Energy and Kinetik Holdings. These MVCs, extending through 2035, ensure consistent cash flows and reduce exposure to short-term market volatility. The pipeline's investment-grade credit profile, supported by its low leverage and diversified customer base, makes it an attractive defensive play in a sector often sensitive to commodity price swings.

Growth-Oriented Investors:
The pipeline's expansion potential is a key driver for growth. To reach the upper end of its $3.5 billion valuation, EPIC Crude must secure additional long-term contracts to justify the capital investment required for expansion. If successful, the project could increase throughput to 1 million bpd, significantly boosting revenue and EBITDA margins. The current ownership structure—45% by Ares Management, 27.5% by Diamondback, and 27.5% by Kinetik—suggests a willingness to prioritize strategic value over short-term gains, with both Diamondback and Kinetik open to selling their stakes if the right terms emerge.

Market Dynamics and Competitive Landscape

The midstream sector has seen a wave of consolidation, with larger players acquiring smaller pipelines to expand their footprint in the Permian. EPIC Crude's potential sale could attract bidders such as Enterprise Products Partners (EPD) or Plains All American (PAA), which already operate in the region and seek to strengthen their takeaway capacity. A $3 billion valuation would represent a premium to the sector's average EBITDA multiple of 8–10x, reflecting the asset's unique combination of scale, expansion potential, and strategic location.

Investment Implications

For investors, the EPIC Crude sale presents two scenarios:
1. If the sale is finalized at the higher end of the valuation range, the acquirer could see immediate EBITDA accretion, particularly if the expansion project is executed efficiently. This would benefit shareholders through higher cash flows and operational synergies.
2. If the sale stalls or falls short of expectations, the current owners (Ares, Diamondback, and Kinetik) may retain control and pursue organic growth through the expansion project. This path would maintain the pipeline's defensive characteristics while allowing for gradual value realization.

Conclusion

The EPIC Crude Pipeline's potential $3 billion sale is more than a transaction—it's a reflection of the Permian Basin's evolving dynamics. For defensive investors, the asset offers stable cash flows and a strong credit profile. For growth-oriented investors, its expansion potential and strategic positioning in a high-growth region present compelling upside. As the midstream sector continues to consolidate, EPIC Crude's dual-track value proposition makes it a must-watch asset in 2025. Investors should monitor the sale process closely, as the outcome could signal broader trends in the Permian's infrastructure landscape.

Investment Advice:
- Defensive investors may consider midstream ETFs or individual stocks with similar credit profiles to EPIC Crude, such as Enterprise Products Partners (EPD).
- Growth investors should track the progress of EPIC Crude's expansion project and the finalization of long-term contracts, which could unlock significant value.
- All investors should assess the broader Permian takeaway capacity crunch and how EPIC Crude's potential sale fits into the sector's long-term growth trajectory.