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Diamondback & Kinetik Secure 30% Interest in EPIC Crude Pipeline
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Diamondback Energy, Inc. (FANG - Free Report) and Kinetik Holdings Inc. (KNTK - Free Report) , an oil and gas storage and transportation company, in collaboration with EPIC Midstream Holdings LP have unveiled a series of transactions aimed at fortifying the financial foundation and operational efficiency of EPIC Crude Holdings, LP. These actions not only enhance the growth prospects of EPIC Crude (oil pipeline system) but also improve its long-term strategic alignment with FANG and KNTK.
Through these transactions, FANG and KNTK acquired a 30% equity interest in the EPIC Crude pipeline system, with each partner now owning 27.5%. EPIC Midstream, EPIC Crude pipeline system’s parent company, retains a 45% stake and continues to manage the operations of the pipeline system. This strengthened relationship signals a long-term commitment to enhancing crude oil transportation capacity from the Permian Basin, one of the most prolific oil-producing regions in the world.
Significance of FANG's Larger Volume Commitment
One of the most impactful elements of this strategic alignment is the Midland, TX-based oil and gas exploration and production company’s conversion of its existing volume commitment into a significantly larger one. Following its recent merger with Endeavor Energy Resources, FANG has committed to transporting 200,000 barrels per day through EPIC Crude’s pipeline. This increase aligns with FANG’s new role as the third-largest crude producer in the Permian Basin, highlighting its need for reliable transportation capacity.
This enhanced commitment is expected to position EPIC Crude as the preferred crude transportation option for FANG, offering greater flexibility and cost-effectiveness. Additionally, this development ensures that FANG’s expanded crude portfolio will have access to critical markets, including Corpus Christi and the Dated Brent market.
KNTK’s New Transportation Arrangement With EPIC Crude
KNTK has secured a new transportation arrangement with EPIC Crude, further solidifying its strategic role in the project. Its crude gathering system will now connect directly to the EPIC Crude pipeline, allowing for seamless transportation of crude to Corpus Christi. This direct connection not only optimizes transportation efficiency but also ensures that KNTK can provide its customers with more access to premium markets.
Long-Term Volume Commitments and Outlook
FANG and KNTK have made long-term volume commitments that will extend from 2025 through 2035. These commitments are expected to represent more than 33% of EPIC Crude’s volume capacity, fully supported by minimum volume commitments (“MVCs”). Such MVCs are crucial for stabilizing revenue streams for EPIC Crude and guaranteeing a minimum threshold of product flow through the pipeline.
By securing these long-term agreements, EPIC Crude can focus on reducing controllable costs, boosting financial returns and maximizing stakeholder value. This ensures the pipeline’s capacity remains optimally utilized while securing reliable cash flow through 2035.
Strategic Importance of EPIC Crude for the Permian Basin
EPIC Crude is a crucial player in the Permian Basin, where crude oil production continues to rise. The pipeline has the capability to transport more than 600 MBpd and as of 2025, has secured contracts or MVCs for approximately 90% of its total volumes. This not only solidifies EPIC Crude’s role as an indispensable part of the region’s oil transportation infrastructure but also extends the weighted average contract life, ensuring long-term stability for its operations.
One of the key competitive advantages of EPIC Crude lies in its differentiated strategy that provides the company’s customers with access to multiple markets. The pipeline offers direct routes to Corpus Christi, one of the most strategic hubs for crude oil exports, as well as connections to the Dated Brent market via the EPIC dock. This broad market access allows producers to optimize pricing and navigate the global oil market more effectively.
EPIC Crude’s Financial Strength and Expansion Prospects
The financial profile of EPIC Crude continues to improve, supported by increasing credit ratings and favorable leverage metrics. The company's investment-grade customers and long-term contracts create a solid foundation for continued growth. Furthermore, EPIC Crude remains the only significant pipeline operator in the Permian Basin with the potential for a large-scale expansion project.
This potential expansion could further boost EPIC Crude’s transport capacity while requiring minimal capital investment, primarily focused on installing additional pumps along with the existing pipeline infrastructure. Importantly, any expansion would be entirely underwritten by contracts with FANG, KNTK and other partners, ensuring that the project is economically viable from the outset.
Role of FANG and KNTK in EPIC Crude’s Success
The collaboration between FANG, KNTK and EPIC Midstream represents a significant step toward securing long-term crude oil transportation from the Permian Basin. Kaes Van’t Hof, president and chief financial officer of FANG and Jamie Welch, president and chief executive officer of KNTK, have expressed strong optimism about the partnership's potential to generate incremental value for crude customers seeking access to premium markets.
In addition to the expanded ownership stakes, both companies now have an increased governance role in the joint venture. This involvement provides FANG and KNTK with greater influence over the future direction of EPIC Crude, ensuring the pipeline aligns with the companies’ long-term strategic objectives.
Positioning for Future Success
With its strategic partnerships, growing volume commitments and potential for expansion, EPIC Crude is well-positioned for long-term success. The series of transactions announced by FANG, KNTK and EPIC Midstream reinforce the pipeline's importance as a critical transportation link for crude oil producers in the Permian Basin.
As the business continues to transform, Brian Freed, CEO of EPIC Midstream, emphasizes the growing strategic importance of the asset supported by long-term commitments from partners and a focus on enhancing financial returns. Likewise, Robert Kimmel, a partner at Ares Private Equity Group, believes EPIC Crude is poised for shared business and owner success as the company enters its next phase of growth.
Zacks Rank & Key Picks
Currently, FANG and KNTK each has a Zacks Rank of #3 (Hold).
TechnipFMC is valued at $11.73 billion. In the past year, its shares have risen 32.1%. FTI is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry.
Houston, TX-based Vaalco Energy is valued at $608.97 million. The oil and gas exploration and production company currently pays a dividend of 25 cents per share, or 4.26%, on an annual basis. EGY is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
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Diamondback & Kinetik Secure 30% Interest in EPIC Crude Pipeline
Diamondback Energy, Inc. (FANG - Free Report) and Kinetik Holdings Inc. (KNTK - Free Report) , an oil and gas storage and transportation company, in collaboration with EPIC Midstream Holdings LP have unveiled a series of transactions aimed at fortifying the financial foundation and operational efficiency of EPIC Crude Holdings, LP. These actions not only enhance the growth prospects of EPIC Crude (oil pipeline system) but also improve its long-term strategic alignment with FANG and KNTK.
Through these transactions, FANG and KNTK acquired a 30% equity interest in the EPIC Crude pipeline system, with each partner now owning 27.5%. EPIC Midstream, EPIC Crude pipeline system’s parent company, retains a 45% stake and continues to manage the operations of the pipeline system. This strengthened relationship signals a long-term commitment to enhancing crude oil transportation capacity from the Permian Basin, one of the most prolific oil-producing regions in the world.
Significance of FANG's Larger Volume Commitment
One of the most impactful elements of this strategic alignment is the Midland, TX-based oil and gas exploration and production company’s conversion of its existing volume commitment into a significantly larger one. Following its recent merger with Endeavor Energy Resources, FANG has committed to transporting 200,000 barrels per day through EPIC Crude’s pipeline. This increase aligns with FANG’s new role as the third-largest crude producer in the Permian Basin, highlighting its need for reliable transportation capacity.
This enhanced commitment is expected to position EPIC Crude as the preferred crude transportation option for FANG, offering greater flexibility and cost-effectiveness. Additionally, this development ensures that FANG’s expanded crude portfolio will have access to critical markets, including Corpus Christi and the Dated Brent market.
KNTK’s New Transportation Arrangement With EPIC Crude
KNTK has secured a new transportation arrangement with EPIC Crude, further solidifying its strategic role in the project. Its crude gathering system will now connect directly to the EPIC Crude pipeline, allowing for seamless transportation of crude to Corpus Christi. This direct connection not only optimizes transportation efficiency but also ensures that KNTK can provide its customers with more access to premium markets.
Long-Term Volume Commitments and Outlook
FANG and KNTK have made long-term volume commitments that will extend from 2025 through 2035. These commitments are expected to represent more than 33% of EPIC Crude’s volume capacity, fully supported by minimum volume commitments (“MVCs”). Such MVCs are crucial for stabilizing revenue streams for EPIC Crude and guaranteeing a minimum threshold of product flow through the pipeline.
By securing these long-term agreements, EPIC Crude can focus on reducing controllable costs, boosting financial returns and maximizing stakeholder value. This ensures the pipeline’s capacity remains optimally utilized while securing reliable cash flow through 2035.
Strategic Importance of EPIC Crude for the Permian Basin
EPIC Crude is a crucial player in the Permian Basin, where crude oil production continues to rise. The pipeline has the capability to transport more than 600 MBpd and as of 2025, has secured contracts or MVCs for approximately 90% of its total volumes. This not only solidifies EPIC Crude’s role as an indispensable part of the region’s oil transportation infrastructure but also extends the weighted average contract life, ensuring long-term stability for its operations.
One of the key competitive advantages of EPIC Crude lies in its differentiated strategy that provides the company’s customers with access to multiple markets. The pipeline offers direct routes to Corpus Christi, one of the most strategic hubs for crude oil exports, as well as connections to the Dated Brent market via the EPIC dock. This broad market access allows producers to optimize pricing and navigate the global oil market more effectively.
EPIC Crude’s Financial Strength and Expansion Prospects
The financial profile of EPIC Crude continues to improve, supported by increasing credit ratings and favorable leverage metrics. The company's investment-grade customers and long-term contracts create a solid foundation for continued growth. Furthermore, EPIC Crude remains the only significant pipeline operator in the Permian Basin with the potential for a large-scale expansion project.
This potential expansion could further boost EPIC Crude’s transport capacity while requiring minimal capital investment, primarily focused on installing additional pumps along with the existing pipeline infrastructure. Importantly, any expansion would be entirely underwritten by contracts with FANG, KNTK and other partners, ensuring that the project is economically viable from the outset.
Role of FANG and KNTK in EPIC Crude’s Success
The collaboration between FANG, KNTK and EPIC Midstream represents a significant step toward securing long-term crude oil transportation from the Permian Basin. Kaes Van’t Hof, president and chief financial officer of FANG and Jamie Welch, president and chief executive officer of KNTK, have expressed strong optimism about the partnership's potential to generate incremental value for crude customers seeking access to premium markets.
In addition to the expanded ownership stakes, both companies now have an increased governance role in the joint venture. This involvement provides FANG and KNTK with greater influence over the future direction of EPIC Crude, ensuring the pipeline aligns with the companies’ long-term strategic objectives.
Positioning for Future Success
With its strategic partnerships, growing volume commitments and potential for expansion, EPIC Crude is well-positioned for long-term success. The series of transactions announced by FANG, KNTK and EPIC Midstream reinforce the pipeline's importance as a critical transportation link for crude oil producers in the Permian Basin.
As the business continues to transform, Brian Freed, CEO of EPIC Midstream, emphasizes the growing strategic importance of the asset supported by long-term commitments from partners and a focus on enhancing financial returns. Likewise, Robert Kimmel, a partner at Ares Private Equity Group, believes EPIC Crude is poised for shared business and owner success as the company enters its next phase of growth.
Zacks Rank & Key Picks
Currently, FANG and KNTK each has a Zacks Rank of #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like TechnipFMC plc (FTI - Free Report) and Vaalco Energy, Inc. (EGY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TechnipFMC is valued at $11.73 billion. In the past year, its shares have risen 32.1%. FTI is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry.
Houston, TX-based Vaalco Energy is valued at $608.97 million. The oil and gas exploration and production company currently pays a dividend of 25 cents per share, or 4.26%, on an annual basis. EGY is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.