Existing Partners increase ownership and
commitments to further strengthen EPIC Crude’s financial profile
and growth prospects
Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback”), Kinetik
Holdings Inc. (NYSE: KNTK) (“Kinetik”) and EPIC Midstream Holdings
LP (“EPIC Midstream”), today announced a series of transactions to
support the continued growth and strengthened financial profile of
EPIC Crude Holdings, LP (“EPIC Crude”), an affiliate of EPIC
Midstream, including:
- Diamondback and Kinetik (together, the “Partners”) acquired a
30% equity interest in EPIC Crude. The Partners now each own 27.5%
of EPIC Crude.
- EPIC Midstream continues to own a 45% equity interest in and
manage the operations of EPIC Crude.
- Diamondback is converting its existing commitment on EPIC Crude
into a significantly larger volume commitment of 200 MBpd to
accommodate additional crude barrels from Diamondback’s newly
completed merger with Endeavor Energy Resources. As a result of
that merger, Diamondback is the third largest crude producer in the
Permian Basin.
- 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 from the Partners are
expected to commence in 2025 and extend until 2035, fully supported
by minimum volume commitments (“MVC”) and representing over 33% of
EPIC Crude’s volume capacity.
- EPIC Crude and its Partners are continuing to focus on reducing
controllable costs and enhancing financial returns which will
further maximize value for all stakeholders of EPIC Crude.
- Taken together, these actions will position EPIC Crude for
long-term success while increasing its long-term strategic
alignment with Diamondback and Kinetik.
EPIC Crude continues to transport more than 600 MBpd and has
secured MVCs or contracts for approximately 90% of 2025 total
volumes while substantially extending the weighted average contract
life. EPIC Crude’s differentiated strategy helps its customers gain
access to all markets and docks in Corpus Christi, in addition to
the Dated Brent market through the EPIC dock.
“Along with our execution over the past couple of years, these
transactions position EPIC Crude for continued strategic and
financial success," said Brian Freed, Chief Executive Officer of
EPIC Midstream. “The business continues to be transformed, and the
strategic importance of this asset is supported by our Partners’
long-term commitments. EPIC Crude continues to be a critical asset
for Permian Basin crude production egress to the Corpus Christi
market.”
“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.
“We are excited to partner with Diamondback, Ares Management
funds and EPIC Midstream on these transactions,” said Jamie Welch,
President and Chief Executive Officer of Kinetik. “Our volume
commitment, alongside Diamondback, will generate incremental value
for our crude customers seeking access to a premium market.”
“Going forward, we believe EPIC Crude is even better positioned
for shared business, customer and owner success,” said Robert
Kimmel, Partner in the Ares Private Equity Group. “We remain
excited to partner with Brian and his team in this transformative
next chapter for EPIC Crude.”
EPIC Crude’s financial profile continues to strengthen and is
supported by continued improvement expected in its credit ratings.
Its improving leverage, investment grade customers, and long-term
contract profile provide a strong foundation for the business.
EPIC Crude has the only remaining opportunity for a large-scale,
highly economic crude oil pipeline expansion in the Permian. The
potential expansion project is highly economic given its limited
capital requirements, mostly focused on additional pumps for the
existing pipeline. EPIC Crude anticipates the potential expansion
project will be carried out with fully underwritten contracts, with
the Partners having an option for approximately one-third of the
expansion capacity.
About EPIC Midstream
EPIC was formed in 2017 to build, own and operate midstream
infrastructure in the Delaware, Midland and Eagle Ford basins.
EPIC’s Crude Oil Pipeline and NGL Pipeline each span approximately
700 miles and transport crude and natural gas liquids for delivery
from the Permian and Eagle Ford basins into the Corpus Christi
market. The Crude Oil Pipeline connects to the Port of Corpus
Christi, including EPIC’s Marine Terminal, third-party export
terminals and local refineries. EPIC’s NGL Pipeline has
connectivity to EPIC’s operated fractionation complex in Robstown,
Texas as well as Gulf Coast refiners, petrochemical companies and
export markets. EPIC is a portfolio company of funds managed by the
Private Equity Group of Ares Management. For more information,
visit www.epicmid.com.
About EPIC Crude
EPIC Crude Holdings, LP (“EPIC Crude”) was formed in 2017 to
build and operate the EPIC Crude Oil Pipeline, a 700-mile, 30”
crude oil pipeline that extends from Orla, Texas to the Port of
Corpus Christi and services the Midland, Delaware and Eagle Ford
basins. The Crude Oil Pipeline is currently operating at a capacity
of greater than 600,000 barrels per day (bpd) and has a maximum
capacity of 1,000,000 bpd, as well as total operational storage of
approximately 7,500,000 barrels. EPIC Crude includes terminals in
Orla, Pecos, Saragosa, Crane, Wink, Midland, Helena and Gardendale,
with Port of Corpus Christi connectivity and export access.
About Diamondback Energy, Inc.
Diamondback is an independent oil and natural gas company
headquartered in Midland, Texas focused on the acquisition,
development, exploration and exploitation of unconventional,
onshore oil and natural gas reserves primarily in the Permian Basin
in West Texas. For more information, please visit
www.diamondbackenergy.com.
About Kinetik Holdings Inc.
Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast
midstream C-corporation operating in the Delaware Basin. Kinetik is
headquartered in Houston and Midland, Texas. Kinetik provides
comprehensive gathering, transportation, compression, processing
and treating services for companies that produce natural gas,
natural gas liquids, crude oil and water. Kinetik posts
announcements, operational updates, investor information and press
releases on its website, www.kinetik.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240924530351/en/
Investor and Media Contacts: EPIC Midstream Holdings,
LP Mike Garberding Chief Financial Officer (346) 231-1776
mike.garberding@epicmid.com Kinetik Alex Durkee Investor
Relations (713) 574-4743 adurkee@kinetik.com Diamondback
Adam Lawlis Investor Relations (432) 221-7467
alawlis@diamondbackenergy.com
Kinetik (NYSE:KNTK)
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