Diamondback Energy Inc., Midland, Tex., and investment firm KKR agreed to jointly acquire Five Point Infrastructure LLC’s 70% stake in Deep Blue Midland Basin LLC, a full-cycle water infrastructure platform in the Permian's Midland basin. Financial details were not disclosed.

Upon closing, which is expected in this year’s fourth quarter subject to regulatory approvals and closing conditions, Diamondback and KKR will jointly own 100% of Deep Blue, building on Diamondback’s existing 30% ownership interest.

Deep Blue, which was formed in 2023 as a joint venture between Diamondback and private equity and infrastructure investor Five Point, operates an integrated water infrastructure network that provides water services including sourcing, transportation, storage, recycling, and disposal.

“The Deep Blue system is critical for Diamondback’s core operations, which require reliable transportation of nearly 2 million barrels of water per day,” said Kaes Van’t Hof, Diamondback’s chief executive officer.

The acquisition is aimed at supporting Deep Blue's continued investment traditional full-cycle water infrastructure across West Texas, and, said Van’t Hof, “establishes a strategic partnership that is well positioned for traditional growth with additional opportunities to expand outside of oil and gas through advancements in new technology and potential industrial use cases in the Permian basin.”

In addition to robust Permian oil and gas activity, the rapid expansion of AI data centers in West Texas is creating a water-demand challenge, prompting industry interest in treating and reusing the Permian's vast volumes of produced water as a potential cooling-water source.