Targa Resources Corp. to Acquire Blackstone Energy Partners’ 25% Interest in Grand Prix NGL Pipeline for $1.05 Billion

Rhea-AI Summary

Targa Resources Corp. (NYSE: TRGP) announced a definitive agreement to acquire Blackstone Energy Partners' 25% interest in the Grand Prix NGL Pipeline for $1.05 billion in cash. This acquisition allows Targa to own 100% of the pipeline, which transports up to one million barrels per day of natural gas liquids to Mont Belvieu, Texas. The deal, valued at approximately 8.75 times the estimated 2023 adjusted EBITDA, is expected to enhance Targa’s fee-based margins and cash flow stability. The acquisition is anticipated to close in Q1 2023.

Positive

• Acquisition enhances Targa's ownership of the Grand Prix NGL Pipeline, expected to boost fee-based margins.
• Estimated 2023 adjusted EBITDA of 8.75 times acquisition price signifies strong financial performance.
• Strengthens cash flow stability and supports potential capital returns to shareholders through dividends and share repurchases.

Negative

• None.

HOUSTON, Jan. 03, 2023 (GLOBE NEWSWIRE) -- Targa Resources Corp. (NYSE: TRGP) ("Targa" or the "Company") announced today 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.

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 or any other public health crises, commodity price volatility due to ongoing or new global conflicts, 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 recent acquisition about?

Targa Resources Corp. is acquiring Blackstone Energy Partners' 25% interest in the Grand Prix NGL Pipeline for $1.05 billion in cash.

When is the acquisition of the Grand Prix NGL Pipeline expected to close?

The acquisition is expected to close in the first quarter of 2023.

What is the capacity of the Grand Prix NGL Pipeline?

The Grand Prix NGL Pipeline can transport up to one million barrels per day of natural gas liquids.

How does this acquisition impact Targa Resources' financials?

The acquisition is valued at approximately 8.75 times the estimated 2023 adjusted EBITDA, potentially enhancing Targa's fee-based margins and cash flow stability.

What is the strategic importance of owning 100% of the Grand Prix Pipeline?

Owning 100% of the Grand Prix Pipeline simplifies Targa's operations and may increase revenue opportunities from the recently announced Daytona Pipeline expansion.