Targa to gain full ownership of Grand Prix NGL Pipeline

Targa Resources Corp. agreed to acquire Blackstone Energy Partners’ 25 percent interest in Targa’s Grand Prix NGL Pipeline for $1.05 billion in cash plus customary working capital adjustments. Targa will own 100 percent of Grand Prix upon closing.

Grand Prix has capacity to transport up to 1 million barrels per day of natural gas liquids (NGLs) to the NGL market hub at Mont Belvieu, Texas. Grand Prix connects Targa’s gathering and processing positions throughout the Permian Basin, north Texas and southern Oklahoma (as well as third-party positions) to Targa’s fractionation and storage complex at Mont Belvieu. The acquisition price represents about 8.75 times Grand Prix’s estimated 2023 adjusted EBITDA multiple and allows Targa to further benefit by now owning 100 percent of the recently announced Daytona Pipeline expansion of Grand Prix, according to the company.

“The performance of our Grand Prix NGL Pipeline has exceeded expectations since it began full operations in the third quarter of 2019, integrating our leading NGL supply aggregation position in the Permian Basin to key demand markets in Mont Belvieu and along the U.S. Gulf Coast,” says Matt Meloy, CEO of Targa, in a company press release.

“Our business has strong momentum for 2023, and this acquisition further simplifies Targa while also increasing our fee-based margin and providing additional cash flow stability,” Meloy adds. “Given our expected record 2022 EBITDA and the strength of our outlook for 2023, we expect to remain comfortably within our long-term consolidated leverage ratio target range of three to four times. This acquisition further supports our already-strong cash flow profile and ability over time to return an increasing amount of capital to our shareholders through common dividend increases and common share repurchases.”

The acquisition is expected to close in the first quarter of 2023 with an effective date of Jan. 1.

Truist Securities Inc. is serving as Targa’s financial adviser and Vinson & Elkins LLP is acting as Targa’s legal counsel on the transaction.