By Swagato Chakravorty
Targa Resources Partners LP (NGLS) will wholly purchase the Williston Basin crude pipeline and terminal system along with natural gas collection and processing operations currently owned by Saddle Butte Pipeline, LLC.
It’s a deal worth $950 million in cash, and the arrangement should be finalized around Q4, 2012.
The operations are located smack in the middle of the Bakken Shale in North Dakota, and it covers some 155 miles of crude pipelines. Altogether, the operation can store up to 70,000 barrels of crude oil, with the Johnsons Corner Terminal holding 20,000 barrels (expandable to 40,000) and the Alexander Terminal up to 30,000 barrels.
The natural gas collecting pipelines extend for 95 miles, and a processing plant that can handle 20 Mmcf/d (expanding to 40 Mmcf/d) is also part of the deal.
Targa projects investing almost $250 million into the operations through 2013 to expand it to meet necessary production levels.
This acquisition of a major, strategic midstream business complements our extensive portfolio of midstream assets, extends our footprint to the very attractive Bakken Shale play, further diversifies our business with the addition of crude oil gathering, and adds significant long-term growth in fee-based revenues," said Joe Bob Perkins, CEO of the general partner of the Partnership. "We are very excited to expand our geographic footprint into one of the most important oil producing basins in the country. The visible, long-term growth potential of this business complements our attractive portfolio of ongoing and future organic growth projects and enhances the Partnership's longer term distribution growth.
Targa intends to provide funding via 50 percent debt and 50 percent equity. The company’s present liquidity exceeds $1.1 billion, and the new acquisition should contribute another 10-15 percent of EBITDA to the extant 2013 guidance.
Following the new acquisition, Targa indicated that the company will likely maintain its 2013 distribution per unit guidance of 10 to 12 percent growth during 2012.
Targa gathers, processes, distributes, and sells natural gas and related liquids throughout the nation via an extensive network of pipelines. It mainly services the Louisiana Gulf Coast.