Plains to buy 55% in EPIC Crude for $1.6bn

A subsidiary of Plains All American Pipeline and Plains GP Holdings has agreed to buy a 55% non-operated stake in EPIC Crude Holdings from Diamondback Energy and Kinetik Holdings for around $1.57bn. Plains said in a September 2 announcement that the transaction would include the assumption of around $600mn of debt.

EPIC Crude Holdings operates the EPIC Crude oil pipeline, which transports oil from the Permian Basin and Eagle Ford shale to the Texas Gulf Coast. The announcement confirms a Reuters report from late August, which said that EPIC’s owners were exploring a potential sale. (See NorthAmOil Week 34)

The EPIC assets consist of around 800 miles (1,287 km) of long-haul pipelines, with operating capacity of over 600,000 barrels per day (bpd), as well as roughly 7mn barrels of operational storage and over 200,000 bpd of export capacity. There are also opportunities to expand capacity on the system. Indeed, Plains said it had agreed to a potential $193mn earnout payment should an expansion of the pipeline to a capacity of at least 900,000 bpd be formally sanctioned before the end of 2027.

Ultimately, EPIC could be expandable to a capacity of up to 1mn bpd according to its website.

A portfolio company of Ares Management operates EPIC and will retain its 45% interest in the pipeline.

Plains noted that the transaction “enhances and expands” its existing Permian wellhead-to-water strategy.

“The combination of our stake in EPIC Crude Holdings coupled with our existing integrated Permian and Eagle Ford assets enhances our commitment to offering a high level of connectivity and flexibility for our customers,” stated Plains’ chairman, CEO and president, Willie Chiang. “By further linking our Permian and Eagle Ford gathering systems to Corpus Christi, we are enhancing market access and ensuring our customers have reliable, cost-effective routes to multiple demand centres.”

The transaction is expected to be completed by early 2026, subject to customary closing conditions including antitrust clearance. Plains anticipates that it will be “immediately accretive to distributable cash flow with synergistic opportunities expected to result in mid-teens unlevered returns”.

Reuters cited two industry sources as saying that the deal could attract some antitrust scrutiny, given Plains’ status as one of the largest pipeline operators focused on the Permian Basin.

Plains’ assets in the Permian include the Cactus and Cactus II pipelines – which Reuters noted have a combined capacity of over 1mn bpd – as well as interests in the BridgeTex and Wink-to-Webster pipelines.