Targa Resources Corp. Executes Agreements to Acquire Bolt-On Assets for $200 Million

Rhea-AI Summary

Targa Resources Corp. (NYSE: TRGP) has announced the acquisition of Southcross Energy Operating LLC and its subsidiaries for $200 million. This transaction, valued at around 4 times adjusted EBITDA, highlights significant synergy potential and the ability to operate an idle plant with a capacity of 200 million cubic feet per day. The acquisition, which includes fee-based contracts primarily for low pressure wellhead gathering, is expected to close in Q2 2022, pending customary conditions.

Positive

• Acquisition priced at approximately 4 times adjusted EBITDA.
• Potential for further synergies to reduce acquisition multiple.
• Ability to activate a currently idle plant with 200 million cubic feet per day capacity.
• Majority of contracts are fee-based, assuring revenue stability.
• Simplification achieved through acquiring remaining T2 joint venture interests.

Negative

• None.

HOUSTON, March 17, 2022 (GLOBE NEWSWIRE) -- Targa Resources Corp. (NYSE: TRGP) (“Targa” or the “Company”) announced today that it has executed agreements to acquire Southcross Energy Operating LLC and its subsidiaries in South Texas for $200 million.

Transaction Highlights

• Attractive acquisition price represents approximately 4 times adjusted EBITDA multiple
• Further synergy potential to reduce acquisition multiple over time
• Potential to move a currently idle 200 million cubic feet per day plant
• Fee-based contracts, with the vast majority of volumes being low pressure wellhead gathering
• Continued simplification through acquisition of remaining T2 joint venture interests
  

Wells Fargo Securities, LLC is serving as Targa’s financial advisor and Winston & Strawn LLP is acting as Targa’s legal counsel on the transaction. The acquisition is expected to close in the second quarter of 2022 following customary closing conditions.

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 midstream infrastructure assets and its operations are essential 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 natural gas liquids (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 400.

For more information, please visit the Company’s website at www.targaresources.com.

Forward-Looking Statements

Certain statements in this release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the Company’s control, which could cause results to differ materially from those expected by management of the Company. Such risks and uncertainties include, but are not limited to, weather, political, economic and market conditions, including a decline in the price and market demand for natural gas, natural gas liquids and crude oil, the impact of pandemics such as COVID-19, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and non-OPEC oil producing countries, the timing and success of business development efforts, and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company does not undertake an obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact the Company's investor relations department by email at InvestorRelations@targaresources.com or by phone at (713) 584-1133.

Sanjay Lad
Vice President, Finance & Investor Relations

Jennifer Kneale
Chief Financial Officer

FAQ

What is Targa Resources Corp.'s acquisition of Southcross Energy?

Targa Resources Corp. is acquiring Southcross Energy Operating LLC and its subsidiaries for $200 million.

What is the significance of the $200 million acquisition by Targa Resources?

The acquisition is valued at around 4 times adjusted EBITDA, indicating an attractive purchase price with potential for future synergies.

When is the expected closing date for Targa Resources' acquisition?

The acquisition is expected to close in the second quarter of 2022, subject to customary closing conditions.

How many cubic feet can the newly acquired plant process?

The acquired plant has the capacity to process 200 million cubic feet per day.

What types of contracts does Targa Resources hold for the acquired assets?

The majority of the contracts are fee-based, primarily focusing on low pressure wellhead gathering.