Targa Resources Corp. (NYSE: TRGP) announced on February 19, 2019 that it has entered into definitive agreements to sell a 45 percent interest in Targa Badlands LLC (“Badlands”), the entity that holds all of Targa’s assets in North Dakota, to funds managed by GSO Capital Partners and Blackstone Tactical Opportunities (collectively, “Blackstone”) for $1.6 billion in cash (the “Transaction”).
Under the terms of the executed agreements, Targa will continue to be the operator and will hold majority governance rights in Badlands. Future growth capital is expected to be funded on a pro rata basis. Badlands will pay a minimum quarterly distribution to Blackstone and to Targa based on their initial investments, and Blackstone’s capital contributions will have a liquidation preference upon a sale of Badlands.
The Badlands assets and operations are located in the Bakken and Three Forks Shale plays of the Williston Basin in North Dakota and include approximately 480 miles of crude oil gathering pipelines, 125,000 barrels of operational crude oil storage, approximately 260 miles of natural gas gathering pipelines and the Little Missouri natural gas processing plant with a current gross processing capacity of approximately 90 million cubic feet per day (“MMcf/d”). Additionally, Badlands owns a 50 percent interest in the 200 MMcf/d Little Missouri 4 (“LM4”) Plant that is anticipated to be completed in the second quarter of 2019.
“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,” said Joe Bob Perkins, chief executive officer of the company. “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.”
Michael Zawadzki, senior managing director and co-head of energy at GSO Capital Partners 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.”
Targa expects to use the net cash proceeds to pay down debt and for general corporate purposes including funding its growth capital program. The Transaction is expected to close in the second quarter of 2019 and is subject to customary regulatory approvals and closing conditions.by