Plains All American Pipeline, L.P. and Plains GP Holdings have announced that a wholly owned subsidiary has entered into a definitive agreement to acquire a 55 percent non-operated interest in EPIC Crude Holdings, LP from subsidiaries of Diamondback Energy, Inc. and Kinetik Holdings Inc. The transaction is valued at approximately $1.57 billion, inclusive of approximately $600 million of debt.
Transaction Structure and Terms
The agreement includes a potential $193 million earnout payment contingent upon the formal sanctioning of a pipeline expansion to at least 900,000 barrels per day capacity before year-end 2027. The transaction is expected to provide immediate accretion to distributable cash flow, with synergistic opportunities anticipated to generate mid-teens unlevered returns.
The remaining 45 percent interest in EPIC Crude Holdings is owned by a portfolio company of Ares Management Corporation, which also serves as the system operator.
Asset Portfolio
EPIC Crude Holdings operates the EPIC Crude Oil Pipeline, which provides long-haul crude oil transportation from the Permian and Eagle Ford basins to the Gulf Coast market at Corpus Christi. The asset portfolio encompasses approximately 800 miles of long-haul pipelines, operating capacity exceeding 600,000 barrels per day with low-cost expansion capabilities, approximately 7 million barrels of operational storage, and over 200,000 barrels per day of export capacity.
Strategic Benefits
The acquisition enhances Plains’ ability to provide customers with additional upstream connectivity and improved downstream market access and optionality. The transaction expands Plains’ existing Permian wellhead-to-water strategy whilst offering synergy potential that is expected to improve the acquisition multiple over the coming years.
The system benefits from long-term minimum volume commitments from high-quality customers, providing revenue stability and cash flow predictability. Plains expects the pro forma leverage ratio to remain within its target range, excluding NGL divestiture proceeds, with the company utilising its strong balance sheet to finance the transaction through cash and debt.
Executive Commentary
Willie Chiang, chairman, chief executive and president of Plains, expressed enthusiasm about collaborating with the EPIC Management team. He described the transaction as strengthening Plains’ position as the premier crude oil midstream provider whilst complementing the company’s asset footprint and enhancing customer offerings.
Chiang emphasised that the combination of Plains’ stake in EPIC Crude Holdings with existing integrated Permian and Eagle Ford assets reinforces the company’s commitment to providing high levels of connectivity and flexibility for customers. He noted that further linking gathering systems to Corpus Christi enhances market access whilst ensuring customers have reliable, cost-effective routes to multiple demand centres.
The executive highlighted that the combined assets would enable synergy capture through additional service offerings whilst driving value via expanded scale and integration. He noted that Plains’ financial flexibility allows for balance sheet financing of the acquisition whilst maintaining the pro forma leverage ratio within established targets.
Chiang indicated that the interest in EPIC Crude Holdings would benefit Plains, its partners, and unitholders by creating additional return of capital opportunities.
Timeline and Regulatory Approval
The transaction is expected to reach completion by early 2026, subject to customary closing conditions including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The acquisition represents a significant expansion of Plains’ midstream infrastructure capabilities, positioning the company to capture increased volumes from key US shale basins whilst enhancing its integrated crude oil transportation and storage network.
For more information visit www.plains.com
