Deep Blue Midland Basin, the joint venture between Diamondback Energy and Five Point Energy, has acquired water infrastructure from Lagoon Operating Midland as the JV solidifies its position as a key player in sustainable water management in the core of the basin.

The value of the transaction wasn’t disclosed.

The Lagoon assets, largely in Martin County, Texas, include approximately 105 miles of large diameter pipeline, 240,000 bbl/d of disposal capacity and 544,000 bbl/d of additional permitted disposal capacity. Lagoon's assets “significantly expand” Deep Blue's existing recycling capabilities and are underpinned by a strong portfolio of acreage dedications and minimum volume commitments (MVC) from leading producers in the Midland Basin, according to a June 3 press release.

Since the JV was formed in September 2023, Deep Blue said it has added multiple third-party commercial contracts and continues to expand its asset footprint. The commercial agreements represent approximately 60,000 dedicated acres with seven new counterparties, according to the press release. With the closing of the Lagoon transaction, the company owns approximately 2.5 MMbbl/d of permitted produced water disposal capacity. The JV also holds 1,000 miles of large-diameter pipeline with redelivery capacity of over 600,000 bbl/d.

"The acquisition of Lagoon brings together complementary water systems that expand our footprint and unlock synergies across the broader business that will enhance efficiency, reliability and growth opportunities," said Deep Blue CEO Scott Mitchell. "The combined business reinforces Deep Blue's position as a leading sustainable water solutions provider, capable of navigating the changing needs of our customers in the Midland Basin."

David Capobianco, CEO of Five Point and chairman of Deep Blue, said the JV has built the Midland Basin’s “premier sustainable water management platform.”

“Deep Blue will continue to expand its customer base, bringing next generation water management solutions, including recycling, enhanced evaporation and desalination technologies to our partners," he said in the release.

Jackson Walker LLP and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to Deep Blue.


Diamondback Sets High Bar for Further Acquisitions