Diamondback and KKR Plan Deep Blue Water Acquisition

A water dispatcher has to know where a barrel can go before deciding where it should go. Across Deep Blue's Midland Basin network, that decision involves pipelines, storage, treatment, disposal capacity and the requirements of the customer waiting at the other end.

Diamondback Energy and KKR are proposing to change who owns that coordination. In a November 10, 2026 agreement, the companies said they would buy Five Point Infrastructure's 70% stake in Deep Blue Midland Basin LLC. Diamondback already owns 30%; the transaction would leave Diamondback and KKR jointly owning the entire business after closing.

For Diamondback, the investment reaches into a service its oil-and-gas operations depend on daily. For KKR, the entry comes with an established producer relationship and a physical network serving the Midland Basin in West Texas, where managing water is part of keeping development plans workable.

What Diamondback and KKR agreed to buy

The transaction concerns Five Point's ownership interest in Deep Blue, rather than an acquisition of Five Point Infrastructure itself. The seller's announcement specifies cash consideration, while the official releases leave the purchase price and the buyers' individual post-closing stakes undisclosed. Closing is expected in Q4 2026, subject to regulatory approvals and customary conditions.

KKR expects to fund its investment primarily through Global Infrastructure Investors V. Diamondback CEO Kaes Van’t Hof describes Deep Blue as essential to transporting nearly 2M barrels of water daily for Diamondback's operations, connecting the ownership decision to a requirement that will still be there after the transaction paperwork is finished.

That makes the producer's place in the deal unusually instructive. Diamondback arrives as a customer with an existing equity interest and knowledge of the network's role in its own operations. A financial investor can study utilization and growth opportunities; this customer also has a development calendar that depends on the service continuing to work.

KKR Partner James Cunningham frames Deep Blue as an initial investment in a potentially broader relationship with Diamondback. The commercial appeal starts with a functioning water business, while the possibility of further collaboration gives the partnership room to develop beyond this single ownership transfer.

How Deep Blue became a business Diamondback could sell into

Deep Blue began in 2023 as a joint venture between Diamondback and Five Point. The formation agreement paired infrastructure with a 15-year dedication for Diamondback's produced water and supply water across a 12-county Midland Basin area. Diamondback received approximately $500M upfront and retained a 30% interest, keeping a financial connection to assets it had monetized.

In September 2025, Deep Blue announced an agreement to acquire Environmental Disposal Systems from Diamondback in a transaction valued at $750M. That agreement again preserved Diamondback's 30% interest and renewed the 15-year dedication. Both amounts belong to those earlier transactions; neither is the disclosed price of the proposed 2026 stake purchase.

The sequence shows a producer repeatedly changing the capital arrangement around infrastructure it continues to use. Selling assets can release capital while a long service relationship keeps the operating connection intact. Buying alongside KKR now puts Diamondback more directly into the choice of the network's next investment partner.

Five Point CEO and Managing Partner David Capobianco helped build Deep Blue around that relationship. His firm's proposed exit follows a period of infrastructure development and acquisitions, leaving an incoming investor to assess a network with operating history and established demand rather than a collection of proposed facilities waiting for customers.

What the water network actually coordinates

Deep Blue's water-management services connect gathering, transportation, storage, treatment, recycling, reuse and disposal. The company describes using flow measurements, water-quality information, subsurface data and customer forecasts to route water through the system. The useful product is the coordination among those assets as customer requirements change.

A producer needs water for some activities and takeaway for the water its operations produce. Storage helps bridge timing differences, while treatment quality affects possible reuse. Those relationships explain why adding pipeline mileage alone offers an incomplete picture of the business: the destination, chemistry and schedule have to fit together.

Deep Blue says its current network includes more than 2,000 miles of pipeline, nearly 5M barrels per day of permitted produced-water capacity and 142M barrels of storage. Its announcement reports managing more than 2.2M barrels daily. These are company-reported figures, and permitted capacity, daily activity and stored volume measure different things.

Co-founder and CEO Scott Mitchell leads a business headquartered in The Woodlands and Midland, Texas. Deep Blue's leadership page also identifies co-founder Ben Smiley as COO, Robert Norton as Chief Commercial Officer and Kirk Manes as CFO. Their operating, commercial and financial responsibilities converge around the same question: where investment can make the existing network more useful to the customers already depending on it.

Where industrial reuse could take the partnership

Deep Blue describes developing treatment systems for broader industrial applications, including power generation and data-center cooling. Those possibilities give the network's water resources another prospective set of customers. The official acquisition announcement likewise identifies technology and industrial uses as potential avenues for growth beyond oil and gas.

Turning that possibility into repeatable business requires matching treatment, location and delivery requirements with an industrial buyer's needs. A water resource becomes commercially useful through that matching work, along with the infrastructure connecting source and customer. The acquisition releases provide no specific new industrial contract or committed project that would justify booking those possibilities as established demand.

For operators considering a reuse arrangement, the practical questions concern the delivered water specification, dependable volume and infrastructure supporting the handoff. Deep Blue's existing oilfield network gives the partnership an operating base from which to pursue that work. The development effort still has to meet the requirements of each additional use.

If the proposed transaction closes, Scott Mitchell's team will be serving its established producer customers with a different ownership partnership behind it. Diamondback's next development schedule and Deep Blue's next routing decision will keep giving that partnership concrete work to fund, even as the company explores where else its water can go.