Targa Resources sells stake in North Dakota shale to Blackstone Group

Targa Resources Corp. (NYSE: TRGP) has agreed to sell a 45 percent stake of Targa Badlands LLC (Badlands), the entity which holds all of Targa’s assets in North Dakota, to investment funds owned by GSO Capital Partners and Blackstone Tactical Opportunities. The transaction, valued at $1.6 billion, will be completed in cash according to Targa’s press release.

Targa Resources, based in Houston, is a pipeline operator and one of the largest midstream energy providers in North America. GSO Capital Partners and Blackstone Tactical Opportunities are both subsidiaries of the New York-based Blackstone Group (NYSE: BX). According to Private Equity International, the Blackstone Group is the world’s second-largest private equity firm, managing $472 billion in capital.

The release said that Targa will remain the operator of Badlands and retain a 55 percent majority stake in the company. The transaction’s cash payment will be used by Targa to decrease its debt and increase its capital program. The transaction is expected to close in the second quarter of 2019.

Badlands’ assets are located in the Bakken and Three Forks shale formations in North Dakota. The assets consist of 480 miles of crude oil gathering pipelines, 125,000 barrels of crude oil storage, 260 miles of natural gas gathering pipelines, the Little Missouri natural gas processing plant (which processes 90 million cubic feet of natural gas daily) and a 50 percent stake in the Little Missouri 4 natural gas processing plant, which will process 200 million cubic feet of natural gas daily when it is completed in the second quarter of 2019.

“We are very proud of our talented employees and assets in 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 at Targa. “Selling a minority interest in 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.”

“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,” said Michael Zawadzki, senior managing director and co-head of energy at GSO Capital Partners. “Given its extensive asset footprint across the core of the highly prolific Williston Basin [which includes the Bakken and Three Forks formations], we believe Badlands is well positioned for continued growth.”