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Diamondback, KKR to buy Five Point's stake in Permian water platform

By Reuters News

By Dharna Bafna

Nov 10 (Reuters) - Diamondback Energy FANG.O and private equity firm KKR KKR.N have agreed to acquire Five Point Infrastructure's 70% stake in Deep Blue Midland Basin, a water infrastructure firm in the Permian Basin, the companies said on Tuesday.

The financial terms of the deal were not disclosed.

The deal involves an estimated $2.1 billion in consideration for Five Point's stake in Deep Blue, a source familiar with the matter told Reuters.

Here are more details:

  • The companies said the investment could pave the way for further joint investments in infrastructure as energy and industrial activity expands across the Permian Basin

  • Deep Blue provides water sourcing, transport, recycling and disposal services in the Midland Basin

  • Diamondback, which already owned the remaining 30% stake in Deep Blue, said the system supports nearly 2 million barrels of water per day for its operations

  • Truist Securities analysts estimate Diamondback will contribute about $602 million to increase its ownership to 50% from 30%, while KKR will pay about $1.51 billion for the remaining 50%, assuming both buyers pay the same pro-rata price, with no acquisition-level financing, fees or earnout settlement

  • The transaction is expected to close in the fourth quarter this year

  • Diamondback Energy did not respond to a request for comment on the financial terms of the transaction, while KKR declined to comment

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