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Diamondback and KKR to Acquire Five Point's 70% Stake in Deep Blue
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Key Takeaways
FANG and KKR plan to acquire Five Point's 70% stake in Deep Blue, gaining joint ownership.
Deep Blue's water network supports sourcing, transport, recycling and disposal across the Midland Basin.
FANG needs nearly 2 million barrels of water transport daily; closing is expected in Q4 2026.
Diamondback Energy (FANG - Free Report) has entered into an agreement with KKR to jointly acquire Five Point Infrastructure’s 70% interest in Deep Blue Midland Basin LLC, a water infrastructure platform serving operators across the Midland Basin. According to Diamondback’s press release, the proposed transaction would give Diamondback and KKR joint ownership of all of Deep Blue once it is completed. The deal remains subject to customary regulatory approvals and other closing conditions, and the companies expect it to be completed in the fourth quarter of 2026.
Proposed Deal Builds on Diamondback’s Existing Stake
Deep Blue was established in 2023 as a joint venture between Diamondback and Five Point. Diamondback already owns 30% of the business. Under the announced agreement, Diamondback and KKR plan to acquire Five Point’s remaining 70% interest. The announcement does not specify the final ownership split between the two buyers.
Deep Blue operates an integrated water infrastructure network in the Midland Basin. Its services cover the water cycle, including sourcing, transportation, storage, recycling and disposal. The company has expanded through a combination of acquisitions and organic investment, building a network that supplies water and provides takeaway solutions to a broad group of exploration and production (E&P) customers.
Why Water Infrastructure Matters to Diamondback
Water is an essential input in oil and gas operations, and producers also need reliable systems to handle water generated during development and production. Access to sourcing, transport, recycling and disposal capacity can support operating continuity and help companies manage water more efficiently. Deep Blue’s network is designed to address several of these requirements through one platform.
The asset has particular relevance to Diamondback’s own operations. Chief executive officer Kaes Van’t Hof said the company’s core activities require reliable transportation of nearly 2 million barrels of water per day. The proposed transaction is intended to secure this capability over the long term, reducing uncertainty around an important infrastructure need in the Midland Basin.
Deep Blue’s services also extend across a large E&P customer base, rather than being described as serving Diamondback alone. That gives the platform a role in the wider regional energy ecosystem. The platform’s ability to provide reliable water supply and takeaway solutions, encourage reuse and reduce reliance on freshwater could make it strategically important as operators manage their resource requirements.
KKR Adds Infrastructure Investment Experience
The agreement combines Diamondback’s operating knowledge of West Texas with KKR’s experience investing in and scaling energy businesses. Diamondback has operated in the region for nearly two decades, while KKR is participating as an infrastructure investor. KKR said its investment will be funded primarily through KKR Global Infrastructure Investors V.
The companies also see the transaction as a potential starting point for a broader relationship. Their announcement points to opportunities to work together on other infrastructure requirements in the region. For Diamondback, that could create avenues to participate in infrastructure development beyond its traditional exploration and production activities. However, the companies have not detailed specific additional projects or committed investment plans.
What Investors Should Monitor
The proposed acquisition offers a strategic rationale, but the announcement leaves several financial questions unanswered. It does not disclose the purchase price, the precise ownership allocation between Diamondback and KKR or the expected effect on the former’s revenues, earnings, capital spending or cash flow. Without those details, investors cannot yet quantify the transaction’s potential contribution to the company’s financial performance.
Investors should watch for further information on transaction terms, the closing process and Deep Blue’s future investment plans. The platform’s customer activity, infrastructure utilization, expansion spending and ability to generate returns will also matter when assessing its longer-term value. The potential for new technology or industrial applications in the Permian Basin was mentioned by Diamondback’s CEO, but those opportunities remain prospective rather than established sources of growth.
Completion is expected in the fourth quarter of 2026, subject to regulatory approvals and customary closing conditions. Until the transaction closes, Five Point’s 70% stake has not transferred to the proposed buyers. As with other forward-looking plans, the expected benefits may differ from actual outcomes because of execution challenges, market conditions and other risks.
Bottom Line
Diamondback’s agreement with KKR is a proposed ownership change at Deep Blue, not a completed acquisition. If finalized, it would give the partners joint ownership of a water infrastructure platform that supports Diamondback’s substantial operational needs and serves other E&P customers in the Midland Basin. The strategic case centers on securing water-handling capacity and developing essential regional infrastructure. For investors, the next key milestones are closing the transaction and obtaining clearer information about its financial terms and expected returns.
Marathon Petroleum is valued at $106.16 billion. The company is a leading U.S. independent refiner, marketer and transporter of petroleum products, with a strong refining footprint and an extensive midstream business. Marathon Petroleum benefits from its integrated operations, strategic refining assets and diversified earnings streams across the energy value chain.
Delek US Holdings is valued at $3.94 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.
Canadian Natural Resources is valued at $98.31 billion. It is an independent energy company. Canadian Natural Resources is engaged in the exploration, development, production and marketing of crude oil, natural gas and natural gas liquids.
View the Zacks #1 Rank List
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Diamondback and KKR to Acquire Five Point's 70% Stake in Deep Blue
Key Takeaways
Diamondback Energy (FANG - Free Report) has entered into an agreement with KKR to jointly acquire Five Point Infrastructure’s 70% interest in Deep Blue Midland Basin LLC, a water infrastructure platform serving operators across the Midland Basin. According to Diamondback’s press release, the proposed transaction would give Diamondback and KKR joint ownership of all of Deep Blue once it is completed. The deal remains subject to customary regulatory approvals and other closing conditions, and the companies expect it to be completed in the fourth quarter of 2026.
Proposed Deal Builds on Diamondback’s Existing Stake
Deep Blue was established in 2023 as a joint venture between Diamondback and Five Point. Diamondback already owns 30% of the business. Under the announced agreement, Diamondback and KKR plan to acquire Five Point’s remaining 70% interest. The announcement does not specify the final ownership split between the two buyers.
Deep Blue operates an integrated water infrastructure network in the Midland Basin. Its services cover the water cycle, including sourcing, transportation, storage, recycling and disposal. The company has expanded through a combination of acquisitions and organic investment, building a network that supplies water and provides takeaway solutions to a broad group of exploration and production (E&P) customers.
Why Water Infrastructure Matters to Diamondback
Water is an essential input in oil and gas operations, and producers also need reliable systems to handle water generated during development and production. Access to sourcing, transport, recycling and disposal capacity can support operating continuity and help companies manage water more efficiently. Deep Blue’s network is designed to address several of these requirements through one platform.
The asset has particular relevance to Diamondback’s own operations. Chief executive officer Kaes Van’t Hof said the company’s core activities require reliable transportation of nearly 2 million barrels of water per day. The proposed transaction is intended to secure this capability over the long term, reducing uncertainty around an important infrastructure need in the Midland Basin.
Deep Blue’s services also extend across a large E&P customer base, rather than being described as serving Diamondback alone. That gives the platform a role in the wider regional energy ecosystem. The platform’s ability to provide reliable water supply and takeaway solutions, encourage reuse and reduce reliance on freshwater could make it strategically important as operators manage their resource requirements.
KKR Adds Infrastructure Investment Experience
The agreement combines Diamondback’s operating knowledge of West Texas with KKR’s experience investing in and scaling energy businesses. Diamondback has operated in the region for nearly two decades, while KKR is participating as an infrastructure investor. KKR said its investment will be funded primarily through KKR Global Infrastructure Investors V.
The companies also see the transaction as a potential starting point for a broader relationship. Their announcement points to opportunities to work together on other infrastructure requirements in the region. For Diamondback, that could create avenues to participate in infrastructure development beyond its traditional exploration and production activities. However, the companies have not detailed specific additional projects or committed investment plans.
What Investors Should Monitor
The proposed acquisition offers a strategic rationale, but the announcement leaves several financial questions unanswered. It does not disclose the purchase price, the precise ownership allocation between Diamondback and KKR or the expected effect on the former’s revenues, earnings, capital spending or cash flow. Without those details, investors cannot yet quantify the transaction’s potential contribution to the company’s financial performance.
Investors should watch for further information on transaction terms, the closing process and Deep Blue’s future investment plans. The platform’s customer activity, infrastructure utilization, expansion spending and ability to generate returns will also matter when assessing its longer-term value. The potential for new technology or industrial applications in the Permian Basin was mentioned by Diamondback’s CEO, but those opportunities remain prospective rather than established sources of growth.
Completion is expected in the fourth quarter of 2026, subject to regulatory approvals and customary closing conditions. Until the transaction closes, Five Point’s 70% stake has not transferred to the proposed buyers. As with other forward-looking plans, the expected benefits may differ from actual outcomes because of execution challenges, market conditions and other risks.
Bottom Line
Diamondback’s agreement with KKR is a proposed ownership change at Deep Blue, not a completed acquisition. If finalized, it would give the partners joint ownership of a water infrastructure platform that supports Diamondback’s substantial operational needs and serves other E&P customers in the Midland Basin. The strategic case centers on securing water-handling capacity and developing essential regional infrastructure. For investors, the next key milestones are closing the transaction and obtaining clearer information about its financial terms and expected returns.
FANG's Zacks Rank & Other Key Picks
Currently, FANG holds a Zacks Rank #2 (Buy).
Investors interested in the energy sector might consider other top-ranked stocks, such as Marathon Petroleum (MPC - Free Report) , Delek US Holdings (DK - Free Report) and Canadian Natural Resources Limited (CNQ - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum is valued at $106.16 billion. The company is a leading U.S. independent refiner, marketer and transporter of petroleum products, with a strong refining footprint and an extensive midstream business. Marathon Petroleum benefits from its integrated operations, strategic refining assets and diversified earnings streams across the energy value chain.
Delek US Holdings is valued at $3.94 billion. It is a diversified downstream energy company engaged in petroleum refining, renewable fuels, asphalt production and logistics operations. Delek US Holdings operates multiple refineries in the United States and is committed to delivering safe, reliable energy while investing in cleaner energy initiatives.
Canadian Natural Resources is valued at $98.31 billion. It is an independent energy company. Canadian Natural Resources is engaged in the exploration, development, production and marketing of crude oil, natural gas and natural gas liquids.