Targa Resources is selling a 45% stake in its Bakken pipeline assets in a US$1.6 billion deal with two private equity firms. The pipeline operator is selling its North Dakota assets – known as Targa Badlands – to funds managed by GSO Capital Partners and Blackstone Tactical Opportunities.
Targa will continue to be the operator and will hold majority governance rights in Badlands. The transaction is expected to close in the second quarter of 2019.
“Selling a minority interest in the Badlands at an attractive valuation allows us to satisfy a substantial portion of our estimated 2019 equity funding needs and provides us with significant flexibility looking forward,” said Targa’s CEO, Joe Bob Perkins. The Houston-based company is one of the largest midstream operators in North America.
“Given its extensive asset footprint across the core of the highly prolific Williston Basin, we believe Badlands is well positioned for continued growth,” said GSO’s senior managing director and co-head of energy, Michael Zawadzki.
The Badlands assets and operations, located in the Bakken and Three Forks plays in the Williston Basin, include around 480 miles (772 km) of crude-gathering pipelines, 125,000 barrels of operational crude storage and roughly 260 miles (418 km) of gas-gathering pipelines.
Also included in the assets is the Little Missouri gas-processing plant, which has a gross processing capacity of around 90 mmcf (2.5 mcm) per day. Additionally, Badlands owns a 50% interest in the 200 mmcf (5.7 mcm) per day Little Missouri 4 plant, which is due to be completed in the second quarter of 2019.
Targa also reported a US$106 million loss for the fourth quarter of 2018, compared with a US$283 million profit a year earlier. Its fourth-quarter revenues were nearly US$2.60 billion, down from over US$2.70 billion in the same quarter of 2017. Wall Street’s fourth-quarter consensus revenue expectations had been higher, at US$2.74 billion.
“Key projects are coming online for us in 2019, including additional gathering and processing facilities, another fractionator in Mont Belvieu, Texas, and our Grand Prix NGL pipeline, which will connect much of our [gathering and processing] NGL supply to Mont Belvieu,” said Perkins.