Targa Resources has signed agreements to sell a 45% interest in certain assets in North Dakota’s Bakken shale play to funds managed by GSO Capital Partners and Blackstone Tactical Opportunities in a $1.6bn all-cash transaction.
The company will implement the transaction through the sale of a 45% stake in Targa Badlands, which holds all of Targa’s assets in the Bakken and Three Forks Shale plays of the Williston Basin in North Dakota.
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The transaction will offer a stake in assets that include around 480 miles of crude oil gathering pipelines, 125,000 barrels of operational crude oil storage, and 260 miles of natural gas gathering pipelines to Blackstone.
In addition, Badlands holds the Little Missouri natural gas processing plant with a current gross processing capacity of around 90 million cubic feet per day (MMcf/d) and a 50% interest in the 200MMcf/d Little Missouri 4 gas processing plant being constructed in a joint venture with Hess Midstream Partners.
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.”
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By GlobalDataAccording to the deal, Targa will remain the operator and hold majority governance rights in Badlands.
Targa and Blackstone are expected to fund future growth capital on a pro rata basis.
Once the deal is completed, the companies will be entitled to receive a minimum quarterly distribution from Badlands based on their initial investments.
GSO Capital Partners senior managing director Michael Zawadzki said: “Given its extensive asset footprint across the core of the highly prolific Williston Basin, we believe Badlands is well positioned for continued growth.”
The proceeds from the transaction will be used to pay down Targa’s debt and for general corporate purposes.
Subject to relevant regulatory approvals and other closing conditions, the completion of the sale is expected to take place in the second quarter of this year.
