Targa Resources Corp has agreed to acquire Outrigger Energy LLC’s three midstream subsidiaries in the Permian Basin for a cash consideration of up to $1.5 billion. The deal is expected to close in the first quarter of this year. Citi is serving as exclusive financial adviser to Outrigger on the transaction. Outrigger is backed by Denham Capital.
DENVER–(BUSINESS WIRE)–Outrigger Energy LLC (“Outrigger”) and certain of its partners and affiliates, today announced the signing of definitive agreements with a subsidiary of Targa Resources Corp. (“Targa”) whereby Targa has agreed to acquire Outrigger’s three midstream subsidiaries in the Permian Basin (“Outrigger Permian”) for cash consideration of up to $1.5 billion, subject to certain adjustments. Outrigger Permian includes natural gas gathering and processing and crude oil gathering systems spanning Loving, Winkler, Ward, Reeves and Pecos Counties, Texas in the Delaware Basin (“Outrigger Delaware”), and Martin, Howard and Borden Counties, Texas in the Midland Basin (“Outrigger Midland”).
Dave Keanini, Outrigger’s President & CEO, stated, “We are very pleased with the midstream systems we’ve developed in the Midland and Delaware Basins and this transaction with Targa represents a great outcome for our customers, employees, and investors. The success of this transaction is a testament to Outrigger’s ability to develop midstream solutions for our producer customers and diligently execute these projects to ensure high quality midstream infrastructure is in place to serve them.” Mr. Keanini continued, “with our systems located in the highest growth areas of the Midland and Delaware Basins, it was extremely important for us to transfer our assets to a midstream company that has the experience, staffing, and resources to accommodate the growth rates these systems will experience over the next several years. We have complete confidence in Targa’s ability to exceed those expectations and believe our customers will be in very capable hands going forward.”
“Dave Keanini, Amit Jhunjhunwala and the full Outrigger team have been exceptional partners,” said James Cunningham, Managing Director at Denham Capital. “This team has developed a series of great assets in a highly competitive marketplace and we’re excited to announce this transaction and the value created for our investors. We look forward to continuing our partnership with the Outrigger team and building on this success.”
Outrigger Permian Assets
Outrigger Delaware includes over 140 miles of natural gas gathering pipeline, 70 MMcfd of cryogenic processing capacity in Loving County, Texas and crude gathering infrastructure with 40,000 barrels of oil per day of capacity. The transaction also includes Outrigger’s Southern Delaware system that is currently under construction and will provide area customers with access to the Waha Hub.
Outrigger Midland includes over 100 miles of natural gas gathering pipeline, 10 MMcfd of cryogenic processing capacity in Martin County, Texas and a crude gathering system with 40,000 barrels per day of capacity.
Under the terms of the agreements, Outrigger and its affiliates will receive initial cash consideration of $565 million after closing of the transaction. In addition, Targa will pay additional cash consideration of up to $935 million in 2018 and 2019 based on the achievement of certain performance-linked measures tied to Outrigger Permian’s existing contracts. The transaction, which is expected to close in the first quarter 2017, is subject to customary regulatory approvals and other closing conditions
Citi is serving as exclusive financial adviser and Vinson & Elkins LLP as legal counsel to Outrigger.
About Outrigger Energy LLC
Based in Denver, Colo., Outrigger Energy is a private, full service midstream energy company specializing in greenfield project development with a focus in liquid-rich natural gas and crude oil basins in the Permian Basin of West Texas, the Rockies, and Mid-Continent areas. Outrigger will retain its Powder River Basin assets and management will continue to pursue new midstream opportunities in the Permian Basin and other areas across North America. Outrigger is supported by its equity partners, Denham Capital and Brion G. Wise. For more information about Outrigger, visit www.outriggerenergy.com.
About Denham Capital
Denham Capital is a leading energy-focused global private equity firm with more than $8.4 billion of invested and committed capital across eight fund vehicles. The firm makes direct investments across all stages of the corporate lifecycle. Denham’s investment professionals apply deep operational and industry experience and work in partnership with management teams to achieve long-term investment objectives. For more information about Denham Capital, visit www.denhamcapital.com.
About Brion G. Wise
Brion G. Wise is a private investor and has over 35 years of experience in the oil and gas industry. Mr. Wise founded Western Gas Resources, Inc. in 1971 and served the company in various executive and board positions until its sale to Anadarko Petroleum Corp. in 2006 for $5.3 billion.