Sept 24 (Reuters) - Oil and gas firms Diamondback Energy (FANG.O) , opens new tab and Kinetik Holdings (KNTK.N) , opens new tab on Tuesday said they acquired a 30% equity interest in the EPIC Crude pipeline system.

The companies will each own 27.5% of EPIC Crude, while parent EPIC Midstream will continue to own a 45% stake in the pipeline.

WHY IT IS IMPORTANT

The consolidation wave in the U.S. energy sector that triggered $250 billion worth of deals in 2023 has stretched into this year, as companies look for opportunities to deploy their cash hoard, boost reserves, and become cost-effective.

Earlier this month, Diamondback bought privately held rival Endeavor Energy Resources in a $26 billion cash-and-stock deal, making it the third-largest oil and gas producer in the Permian Basin of West Texas and New Mexico.

The EPIC Crude transaction will ensure a "cost-effective takeaway out of the basin for our expanded crude portfolio," Diamondback Chief Financial Officer Kaes Van't Hof said in a statement.

CONTEXT

EPIC Crude is an 800-mile crude oil pipeline system that connects the Delaware, Midland Basin, and Eagle Ford supply to EPIC's 3.4 million barrel Robstown Terminal near Corpus Christi.

The pipeline system entered full service in April 2020.

BY THE NUMBERS

EPIC Crude has a capacity of 600,000 barrels per day (bpd), which is expandable up to 1 million barrels per day, and about 7 million barrels of operational storage.

Diamondback said it is converting its existing commitment on EPIC Crude into a larger volume commitment of 200,000 bpd to accommodate additional crude barrels from its completed deal with Endeavor Energy.

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https://www.reuters.com/markets/deals/diamondback-kinetik-buy-30-stake-epic-crude-pipeline-2024-09-24/