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Houston-based energy company could invest billions for Permian assets

One of Houston’s largest public energy companies could sink more than a billion dollars in pipeline assets in the Permian Basin.

Targa Resources Corp (NYSE: TRGP), a company based out of Houston, is purchasing Outrigger Energy’s assets, a company based out of Denver, for $565 million. But that number could increase to $1.5 billion based on performance measures, according to a release. The assets are located in two of the main portions of the Permian Basin; Delaware and Midland. The cash deal is expected to close in the first quarter of this year.

The Delaware gas gathering and processing and crude gathering assets blanket about 145,000 acres and include 70 million cubic feet per day of processing capacity. There is about 40,000 barrels per day of crude gathering capacity.

The Midland gas gathering and processing and crude gathering assets spread out over 105,000 acres and include 10 million cubic feet per day of processing capacity. There is also about 40,000 barrels per day of crude gathering capacity.

“The acquisition of the Outrigger Permian assets complements our existing gas gathering and processing footprint very nicely, while expanding our reach deeper into both the Delaware and Midland basins,” Targa Resources CEO Joe Bob Perkins said in the release. “As structured, this transaction is accretive in 2017, and we believe that the earn-out structure de-risks the overall transaction profile and aligns us with the continued success of the acquired assets.”

RBC Capital Markets acted as the exclusive financial adviser while Locke Lord LLP provided legal counseling for Targa Resources.

According to Houston business journal research, Targa Resources is the 23rd largest public company in Houston.

In the midst of things several Houston based companies have been solidifying their holdings in the Permian Basin. Houston-based Noble Energy Inc. (NYSE: NBL) announced Jan. 16 it will acquire Midland, Texas-based Clayton Williams Energy Inc. (NYSE: CWEI) in a $2.7 billion cash-and-stock deal that will significantly increase its Delaware Basin footprint, and Houston-based Plains All American Pipeline LP (NYSE: PAA) is investing in its midstream footprint in the Permian Basin with an expansion of its 310-mile Cactus Pipeline.

Article written by HEI contributor Lydia Ezeakor.

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