Targa Resources Partners LP is acquiring oil/natural gas gathering and processing assets in the Midland and Delaware sub-basins of the Permian Basin for an initial cash payment of $565 million.

Targa is acquiring Outrigger Delaware Operating LLC, Outrigger Southern Delaware Operating LLC and Outrigger Midland Operating LLC.

“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. The producer acreage that we will serve through this acquisition has decades of drilling inventory in prolific areas, with multiple stacked pay zones,” said Joe Bob Perkins, CEO of parent Targa Corp.

The Outrigger Delaware gas gathering and processing and crude gathering assets are in Loving, Winkler and Ward counties in Texas. They are underpinned by producer dedications of more than 145,000 acres under long-term, largely fee-based contracts, with a weighted average contract life of 14 years, the company said.

Outrigger Delaware assets include 70 MMcf/d of gas processing capacity. Targa plans to connect the Outrigger Delaware assets to its existing Sand Hills system, extending its Permian Basin footprint across the Delaware and Midland basins. Targa also plans to evaluate future connections from Outrigger Delaware to its Versado system. Currently, there is 40,000 b/d of crude gathering capacity on the Outrigger Delaware system.

The Outrigger Midland gas gathering and processing and crude gathering assets are in Howard, Martin and Borden counties in Texas. They are underpinned by producer dedications of more than 105,000 acres under long-term, largely fee-based contracts, with a weighted average contract life of 13 years. Outrigger Midland has 10 MMcf/d of processing capacity, and Targa expects to connect the Outrigger Midland assets to its WestTX system in Martin County. There is also 40,000 b/d of crude gathering capacity on the Outrigger Midland system.

“We also are excited about the opportunities to combine Outrigger Permian’s existing crude gathering infrastructure and our expertise in crude gathering in another basin as a new platform for growth in the Permian,” Perkins said. “As structured, this transaction is accretive in 2017, and we believe that the earn-out structure de-risks the overall transaction profile and aligns us with the continued success of the acquired assets.”

Combined, the assets add more than 250,000 dedicated acres in the Delaware and Midland basins. There is “significant organic growth potential from continued producer development in the plays,” the company said in a deal presentation.

Pro forma for the transaction, Targa has about two million dedicated acres in the Permian. About 65% of active Permian rigs are on or within 10 miles of Targa assets. Combined, the company’s assets will have about 2 Bcf/d of processing capacity by the end of this year.

In the Delaware, once the transaction is completed Targa will have more than 5,000 miles of pipelines across three systems (Outrigger Delaware, Sand Hills and Versado). There will be about 475 MMcf/d of processing capacity across the three systems as well.

In the Midland, Targa will have more than 5,500 miles of pipelines across Outrigger Midland WestTX and the San Angelo Operating Unit. By the end of the year Targa will have about 1,450 MMcf/d of Midland Basin processing capacity.

Assuming attainment of margin-based earn-outs on existing contracts, the total value of the deal could increase to $1.5 billion through 2019, Jefferies analysts said in a note.

Closing is expected during the first quarter.

The deal is just the latest in the red-hot Permian, where producers and midstream operators have found welcome refuge from the diminished economics of other oil/natural gas plays.