Targa Resources to Acquire Blackstone Energy Partners' 25% Interest in Grand Prix NGL Pipeline for $1.05 Billion
Targa Resources Corp., January 4, 2023
One of the three major sectors of the oil and gas business, Midstream refers to the transportation and storage of crude oil and natural gas. After production, petroleum products can be transferred by pipeline, rail, truck, oil tanker or barge for further refining and/or...
Pipelines are metal or plastic tubes of varying sizes used to transport crude oil, refined petroleum products, and natural gas liquids from production areas to refineries and other processing facilities all around the world. Pipelines transport billions of barrels of crude oil...
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Targa Resources Corp. ("Targa" or the "Company") has announced a definitive agreement to acquire Blackstone Energy Partners' ("Blackstone") 25 percent interest in Targa's Grand Prix NGL Pipeline ("Grand Prix") for $1.05 billion in cash plus customary working capital adjustments. Targa will own 100 percent of Grand Prix upon closing.
Grand Prix has capacity to transport up to one million barrels per day of natural gas liquids ("NGL") to the NGL market hub at Mont Belvieu, Texas. Grand Prix connects Targa's gathering and processing positions throughout the Permian Basin, North Texas, and Southern Oklahoma (as well as third-party positions) to Targa's fractionation and storage complex at Mont Belvieu. The acquisition price represents approximately 8.75 times Grand Prix's estimated 2023 adjusted EBITDA multiple and allows Targa to further benefit by now owning 100 percent of the recently announced Daytona Pipeline expansion of Grand Prix.
"The performance of our Grand Prix NGL Pipeline has exceeded expectations since it began full operations in the third quarter of 2019, integrating our leading NGL supply aggregation position in the Permian Basin to key demand markets in Mont Belvieu and along the U.S. Gulf Coast. Our business has strong momentum for 2023 and this acquisition further simplifies Targa while also increasing our fee-based margin and providing additional cash flow stability," said Matt Meloy, Chief Executive Officer of Targa. "Given our expected record 2022 EBITDA and the strength of our outlook for 2023, we expect to remain comfortably within our long-term consolidated leverage ratio target range of 3 to 4 times. This acquisition further supports our already strong cash flow profile and ability over time to return an increasing amount of capital to our shareholders through common dividend increases and common share repurchases," added Meloy.
The acquisition is expected to close in the first quarter of 2023 with an effective date of January 1, 2023.
Truist Securities, Inc. is serving as Targa's financial advisor and Vinson & Elkins LLP is acting as Targa's legal counsel on the transaction.
About Targa Resources Corp.
Targa Resources Corp. is a leading provider of midstream services and is one of the largest independent midstream infrastructure companies in North America. The Company owns, operates, acquires and develops a diversified portfolio of complementary domestic midstream infrastructure assets and its operations are critical to the efficient, safe and reliable delivery of energy across the United States and increasingly to the world. The Company's assets connect natural gas and NGLs to domestic and international markets with growing demand for cleaner fuels and feedstocks. The Company is primarily engaged in the business of: gathering, compressing, treating, processing, transporting, and purchasing and selling natural gas; transporting, storing, fractionating, treating, and purchasing and selling NGLs and NGL products, including services to LPG exporters; and gathering, storing, terminaling, and purchasing and selling crude oil. Targa is a FORTUNE 500 company and is included in the S&P 500. For more information, please visit the Company's website at www.targaresources.com.
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