Targa Resources has agreed to sell 45% stake in its midstream assets in North Dakota to funds managed by GSO Capital Partners and Blackstone Tactical Opportunities (together called Blackstone) for $1.6bn in an all-cash deal.
The North Dakota midstream assets of Targa Resources, which are held by the company’s subsidiary Targa Badlands (Badlands) include nearly 772km of crude oil gathering pipelines, about 418.4km of natural gas gathering pipelines, 125,000 barrels of operational crude oil storage, and the Little Missouri natural gas processing plant.
The Little Missouri gas processing facility has a current gross processing capacity of about 90 million cubic feet per day (MMcf/d). Badlands also has a stake of 50% in the 200 MMcf/d Little Missouri 4 (LM4) Plant, which is expected to be ready in the second quarter of this year.
GSO Capital Partners senior managing director and energy co-head Michael Zawadzki said: “We are delighted to partner with Targa and look forward to building upon the strong operating performance, commercial activity, and customer service capabilities of Badlands.
“Given its extensive asset footprint across the core of the highly prolific Williston Basin, we believe Badlands is well positioned for continued growth.”
All the assets and operations of Badlands are located in the Bakken and Three Forks Shale plays of the Williston Basin. The midstream assets were acquired by Targa Resources Partners from Saddle Butte Pipeline in December 2012 for $950m and renamed as Targa Badlands.
In 2015, Targa Resources signed a deal worth around $6.7bn to take 100% ownership in Targa Resources Partners.
The company expects to use the net cash proceeds from the current stake sale in the North Dakota midstream assets to pay down debt and also for general corporate purposes such as funding its growth capital program.
Targa Resources CEO Joe Bob Perkins said: “We are very proud of our talented employees and assets in the Badlands, and our joint venture with Blackstone will support us in continued growth while providing best in class service to our customers in the Bakken.
“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.”
The transaction, which is subject to customary regulatory approvals and closing conditions, is anticipated to be completed in the second quarter of 2019.