Deep Blue Midland Basin LLC, a joint venture between Diamondback Energy and Five Point Energy LLC, announced the acquisition of Lagoon Operating in a press release on June 3.
According to the release, the Lagoon assets, primarily located in Martin County, comprise 105 miles of large-diameter pipeline, 240,000 barrels per day (bpd) of disposal capacity, and an additional 544,000 bpd of permitted disposal capacity. These assets are expected to enhance Deep Blue's recycling capabilities and are supported by a portfolio of acreage dedications and Minimum Volume Commitments (MVCs) from leading producers in the region.
"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 CEO of Deep Blue Scott Mitchell in the release. “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."
According to the release, Deep Blue has secured third-party commercial contracts and expanded its asset base since its inception in Sept. 2023. These agreements cover approximately 60,000 acres with seven new counterparties. With the Lagoon transaction, Deep Blue now boasts approximately 2.5 million bpd of permitted produced water disposal capacity and over 1,000 miles of large-diameter pipeline with a redelivery capacity exceeding 600,000 bpd.
"We are proud to have built the premier sustainable water management platform in the Midland Basin, and to count among our partners many of the Permian Basin's most respected producers,” said CEO of Five Point and Chairman of Deep Blue David Capobianco in the release. “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."
Deep Blue, headquartered in The Woodlands and Midland, develops and operates integrated midstream water infrastructure networks to manage water for exploration and production companies throughout the Midland Basin, focusing on sustainable practices like water recycling, desalination, and enhanced evaporation.
Diamondback Energy, based in Midland, is an independent oil and natural gas company specializing in the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.
Five Point Energy, a private equity firm headquartered in Houston, focuses on building businesses within the environmental water management and sustainable infrastructure sectors, leveraging industry expertise to create and grow companies into sustainable enterprises with management teams and partners.