Diamondback Energy Inc. is selling certain water assets to its midstream affiliate, Rattler Midstream LP, through a recent dropdown transaction.

Rattler, according to an Oct. 21 release, agreed to pay $160 million in cash to acquire the assets, which consist primarily of produced water gathering and disposal systems, produced water recycling facilities and sourced water gathering and storage assets acquired by Diamondback through its acquisitions of QEP Resources and Guidon Operating earlier this year.

Additionally, Rattler and Diamondback amend commercial agreements on Oct. 21 covering the produced water gathering and disposal and sourced water gathering services between Rattler and Diamondback to add certain Diamondback leasehold acreage to the Rattler dedication.

Rattler Midstream is a growth-oriented Delaware limited partnership formed in July 2018 by Diamondback Energy to own, operate, develop and acquire midstream infrastructure assets in the Midland and Delaware basins of the Permian. The company recently also completed the acquisition of a majority interest in a Midland Basin gas gathering and processing company from West Texas Gas Inc. and its affiliates through a JV with a private affiliate of an investment fund.

Rattler intends to fund the dropdown transaction, expected to close in the fourth quarter, through cash on hand and borrowings under its revolving credit facility.

Raymond James & Associates Inc. and Hunton Andrews Kurth LLP are financial and legal advisers, respectively, to the conflicts committee of the board of directors of the general partner of Rattler in connection with the transaction.

Onshore