Riverstone, Goldman Sachs Asset Management exits Lucid to Targa Resource Corp for $3.55 billion

“The acquisition is expected to be immediately accretive to distributable cash flow per share,” said Targa CEO Matt Meloy.

  • Targa’s acquisition of Lucid is influenced by strong financial performance in the energy sector
  • The acquisition gives Targa opportunities to expand and diversify its Permian Basin footprint
  • Riverstone and Goldman Sachs say they achieved their goal during the 4-year hold

Investors Riverstone Holdings and Goldman Sachs Asset Management are exiting Lucid Energy Delaware, a natural gas processor in the Permian Basin, for $3.55 billion in cash to Targa Resources Corp. in a deal announced Thursday.

Lucid provides natural gas gathering, treating, and processing services in the Delaware Basin, including approximately 1,050 miles of natural gas pipelines and approximately 1.4 billion cubic feet per day (“Bcf/d”) of cryogenic natural gas processing capacity in service or under construction located primarily in Eddy and Lea counties of New Mexico.

Targa has performed exceptionally well under the current elevated demand for natural gas. Its standalone 2022 financial and operational outlook has continued to improve given the strength of commodity markets and producer activity levels.

Targa now estimates full year standalone adjusted EBITDA to be between $2.675 billion and $2.775 billion and reported year-end leverage ratio of about 2.7 times. Targa’s updated financial expectations assume natural gas liquids (“NGL”) composite prices average $1.05 per gallon, crude oil prices average $100 per barrel and Waha natural gas prices average $6.00 per million British Thermal Units (“MMbtu”) for the remainder of 2022.

“The acquisition is expected to be immediately accretive to distributable cash flow per share,” said Targa’s chief executive Matt Meloy. “This acquisition further supports our already strong cash flow profile and ability to return an increasing amount of capital to our shareholders through common dividend increases and common share repurchases,” added Meloy.

Both Scott Lebovitz, partner and co-head of the infrastructure investing business within Goldman Sachs Asset Management and Baran Tekkora, partner at Riverstone and co-head of private equity said they were satisfied with the performance of Lucid under their four year old joint partnership.

“Since the joint acquisition of Lucid in 2018, Lucid has significantly grown volumes and EBITDA and has differentiated itself as a highly sought-after midstream operator with a best-in-class safety and environmental track record,” said Tekkora.