Houston-based Targa Resources Corp. said Monday it will buy pipeline assets in the increasingly active Permian Basin for up to $1.5 billion.
Targa is acquiring pipeline systems from Denver-based Outrigger Energy within the Permian’s Delaware and Midland basins. Targa will pay a minimum of an initial $565 million that could grow up to $1.5 billion based on performance measures by the end of February 2019.
“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 CEO Joe Bob Perkins said in the announcement, noting that the region has decades of drilling inventory in prolific oil and gas areas.
The Outrigger Delaware gas gathering and processing and crude gathering assets are located in Loving, Winkler and Ward counties that are already supported by contracts for an average of 14 years. Targa plans to connect the network to its existing Sand Hills system, extending Targa’s Permian Basin footprint across the Delaware and Midland Basins. Targa also plans to evaluate future connections to its Versado system. Currently, there’s 40,000 barrels per day of crude gathering capacity on the Outrigger Delaware system.
The Outrigger Midland gas gathering and processing and crude gathering assets are located in Howard, Martin and Borden counties. Targa expects to connect the Outrigger Midland assets to its WestTX system in Martin County.
The deal is expected to close by the end of March.