Diamondback Energy and Kinetik Holdings announced Tuesday they have acquired a combined 30% equity in the 800-mile EPIC Crude pipeline connecting Delaware to Midland Basin, and Eagle Ford shale. The two companies will each own 27.5% of EPIC Crude, while parent EPIC Midstream will retain a 45% stake.   

This acquisition marks a continuation of the consolidation trend in the U.S. energy sector, which saw a flurry of deals totaling $250 billion in 2023. As companies seek to deploy excess cash, increase reserves, and improve efficiency, such partnerships are becoming increasingly attractive.

Earlier this month, Diamondback completed its $26 billion acquisition of Endeavor Energy Resources, solidifying its position as the third-largest oil and gas producer in the Permian Basin.

 The EPIC Crude transaction will provide Diamondback with a cost-effective outlet for its expanded crude portfolio, according to CFO Kaes Van't Hof.

EPIC Crude oil pipeline system plays to EPIC's 3.4-million-barrel Robstown Terminal near Corpus Christi. The pipeline began full operations in April 2020 and has a current capacity of 600,000 barrels per day.

The pipeline has the potential to expand its supply capacity to 1 million barrels per day and includes approximately 7 million barrels of operational storage.

Diamondback said it is increasing its commitment to EPIC Crude to 200,000 barrels daily to accommodate additional crude volumes from the Endeavor Energy acquisition.