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    Targa to acquire Permian midstream assets

Summary

Acquisition from Lucid Energy encompasses 600,000 dedicated acres in the Delaware Basin.

by: Dale Lunan

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Targa to acquire Permian midstream assets

Houston-based midstream operator Targa Resources said June 16 it had reached a definitive agreement with privately-held Lucid Energy Group to acquire Lucid’s Delaware Basin midstream assets for $3.55bn in cash.

The assets include about 1,050 miles of natural gas pipelines and some 1.4bn ft3/day of gas processing capacity in-service or under construction, most of it in the southern New Mexico portion of the Delaware. Current rig activity on Lucid’s 600,000 dedicated acres supports more than 20 years of drilling inventory.

With strong drilling activity across the Permian Basin and robust commodity prices, Targa expects EBITDA this year in the $2.675-$2.775bn range, affording it the strength to pursue the Lucid acquisition as a cash transaction.

“The strength of Targa’s standalone financial position has afforded us the flexibility to consider attractive opportunities to grow our business through acquisitions, as evidenced by our ability to finance the purchase of Lucid utilising available cash and debt,” Targa CEO Matt Meloy said.

Subject to customary conditions, including regulatory approvals, the transaction is expected to close in Q3 2022.