Targa Resources sells 45% interest in Bakken Assets for $1.6 billion

Photo: North Dakota.gov.

HOUSTON -- Targa Resources Corp. has announced that it has entered into definitive agreements to sell a 45% interest in Targa Badlands LLC, the entity that holds all of Targa’s assets in North Dakota, to funds managed by GSO Capital Partners and Blackstone Tactical Opportunities for $1.6 billion in cash.

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 mi of crude oil gathering pipelines, 125,000 bbl of operational crude oil storage, approximately 260 mi of natural gas gathering pipelines and the Little Missouri natural gas processing plant with a current gross processing capacity of approximately 90 MMcfd. Additionally, Badlands owns a 50% interest in the 200 MMcfd Little Missouri 4 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, CEO 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.

Evercore is serving as Targa’s exclusive financial adviser and Vinson and Elkins LLP is acting as Targa’s legal counsel on the Transaction. Citi is serving as Blackstone’s exclusive financial adviser and Akin Gump Strauss Hauer & Feld LLP is acting as Blackstone’s legal counsel on the Transaction.

Targa management will discuss the Transaction on its previously announced fourth quarter 2018 earnings conference call and webcast. The conference call will be webcast live over the internet and may be accessed either through webcast or telephone dial-in.

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