Tightly held Targa Resources Inc. plans to spin off its North Texas midstream assets, which include 3,950 miles of integrated natural gas gathering pipelines, two natural gas processing plants and a fractionator in the Fort Worth area, through an initial public offering (IPO) of 16.8 million common units.

Targa Resources Partners LP initially will operate in the Forth Worth basin, which is the center of the Barnett Shale gas production growth in Texas. The limited partnership plans to gather, process and sell gas, with initial operations in the Fort Worth area. No date was set for the IPO.

All of the units in the IPO will be sold by Targa Resources Partners. Citigroup, Goldman, Sachs & Co., UBS Investment Bank and Merrill Lynch & Co. will act as joint book-running managers, and they will be allowed to purchase up to an additional 2.52 million common units. The partnership plans to use proceeds form the offering to establish its operations and retire inter-company debt with Targa. In turn, Targa will use the funds it receives to reduce its debt.

As currently filed with the Securities and Exchange Commission, the common units will represent 58.1% of the outstanding equity of Targa Resources Partners, or 61.4% if the underwriters exercise in full their over-allotment option. Targa will indirectly own the partnership’s remaining equity interests.

Houston-based Targa was begun two years ago, initially with an investment by private equity investor Warburg Pincus (see Daily GPI, April 2, 2004). Its biggest investment to date was the $2.475 billion purchase of Dynegy Inc.’s midstream operations last year (see Daily GPI, Aug. 3, 2005).

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.