Targa Resources Partners LP said Thursday it will acquire all of Saddle Butte Pipeline LLC’s ownership of its Williston Basin crude oil pipeline and terminal system as well as its natural gas gathering and processing operations for $950 million in cash.
The assets are in the heart of the Bakken Shale in McKenzie, Dunn, and Mountrail counties, ND, and include 155 miles of crude oil pipelines. The business has combined crude oil storage capacity of 70,000 bbl, including the Johnsons Corner Terminal with 20,000 bbl of storage (to be expanded to 40,000 bbl) and Alexander Terminal with capacity of 30,000 bbl. The deal also includes 95 miles of gas gathering pipelines and a 20 MMcf/d gas processing plant with an expansion under way to increase capacity to 40 MMcf/d.
The operations are backed by producer dedications under long-term contracts that include 260,000 acres of crude oil production and more than 100,000 acres of natural gas production. The partnership said it expects that growth capital expenditures of more than $250 million will be required in 2013 to support system expansions necessary to meet producer activity.
“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.
The deal, subject to conditions and adjustments, is expected to close during the fourth quarter. The partnership said it expects over time to fund the acquisition and associated growth with 50% debt and 50% equity.
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