Targa Resources Corp. to acquire Permian Basin gathering and processing system for $1.25 billion
- $1.25 billion purchase price represents ~6 times 2026 estimated unlevered adjusted free cash flow
- Underpinned by long-term acreage dedications of ~170,000 acres and attractive fee-based contracts
- Stable volume profile with significant additional economic drilling opportunities
- Further enhances Targa’s leading sour gas treating capabilities and expands Targa’s gathering and processing (G&P) footprint in the Permian Basin
- Increases scale and cash flow with minimal impact to pro forma leverage
Targa Resources Corp. announced a definitive agreement under which a wholly-owned subsidiary of Targa will acquire Stakeholder Midstream, LLC for $1.25 billion in cash.
Stakeholder provides natural gas gathering, treating, and processing services and crude gathering and storage services in the Permian Basin, including approximately 480 miles of natural gas pipelines, approximately 180 million cubic feet per day (MMcf/d) of cryogenic natural gas processing and sour treating capacity, carbon capture (CCUS) activities generating 45Q tax credits, and a small crude oil gathering system. Stakeholder’s assets are anchored by long-term, fee-based contracts across approximately 170,000 dedicated acres underpinned by attractive acreage with activity that has exhibited very low decline rates, supporting a durable volume profile. Additionally, Stakeholder’s sour gas treating and CCUS activities complement Targa’s best-in-class treating and CCUS footprint in the Permian.
Targa expects Stakeholder to generate unlevered adjusted free cash flow of approximately $200 million annually with minimal capital needs, very low integration costs and attractive acreage with a stable volume profile.
“This acquisition is a nice bolt-on asset that has meaningful free cash flow supported by a stable to modestly growing volume profile with minimal capital needs and executed at an attractive valuation. We believe this transaction is a continuation of our strategy of identifying opportunities to create shareholder value with balance sheet strength,” said Matt Meloy, Chief Executive Officer of Targa.
“We are very familiar with the acquired assets and have strong relationships with some of the largest producers on the system. Targa’s organic growth opportunity set coupled with this accretive bolt-on transaction positions us well to enhance our already strong growth profile,” added Meloy.
“From our formation, Stakeholder set out to create midstream infrastructure to service one of the nation’s leading energy-producing regions. It has been a pleasure and an honor to partner with first-class team members, customers, the community and vendors who contributed their expertise, dedication and creativity to the overall success of the Stakeholder platform and the broader San Andres play,” said Gaylon Gray, Co-Chief Executive Officer of Stakeholder.
“We would like to recognize our financial sponsor, EnCap Flatrock Midstream, and our board of directors for their partnership and ongoing support since we started this journey. The Stakeholder team is excited to watch the continued development and growth of its platform going forward under Targa’s leadership.”
Additional Information and Advisors. Completion of this transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close in the first quarter of 2026. The Company expects to fund the acquisition using its strong liquidity position, including cash on hand and its existing $3.5 billion revolving credit facility. Pro forma for the transaction, the company expects limited impact to its leverage ratio and will remain within its long-term leverage target range of 3.0 to 4.0 times.
RBC Capital Markets is serving as Targa’s financial advisor, and Latham & Watkins LLP is acting as Targa’s legal counsel on the transaction.
Jefferies is acting as the exclusive financial advisor to Stakeholder in connection with this transaction. Stakeholder’s legal advisors are Willkie Farr & Gallagher and Clifford Chance.
Related News
Related News
- ExxonMobil halts 1-Bft3d blue hydrogen project in Texas
- 236-mile Texas-to-Gulf pipeline reaches FID in $2.3-B LNG expansion push
- Bechtel shares findings of tragic accident at Port Arthur LNG facility
- Aramco and Yokogawa commission multiple autonomous control AI agents at Fadhili gas plant
- Ukraine will resume gas imports via Transbalkan route in November
Comments