Targa Resources Corp. said it has agreed to sell its 25% equity stake in the Gulf Coast Express Pipeline (GCX) for $857 million.

targa infrastructure

Houston-based Targa said it expects to receive full proceeds in the second quarter. The independent midstreamer did not disclose the buyer or provide additional details.

Targa in 2021 had emphasized efforts to manage its leverage lower, simplify its balance sheet and return more capital to shareholders.

The 530-mile GCX pipeline launched operations in 2019 and can carry up to 2 Bcf/d of natural gas. Kinder Morgan Inc., Altus Midstream and DCP Midstream are the other owners of GCX.

Additionally, last month Targa announced a deal to repurchase interests in its development company joint ventures (DevCo) from investment vehicles affiliated with Stonepeak Partners LP for approximately $925 million.

While Targa had $3.2 billion of available liquidity at the close of 2021 to fund the DevCo deal, analysts at Tudor, Pickering, Holt & Co. (TPH) said the GCX transaction was anticipated by the market to bolster liquidity levels.

Management had previously cited the GCX asset as a potential sale candidate, noting that pipeline operators routinely unload stakes in assets to finance new projects and bolster overall financial stability.

The TPH analysts welcomed the GCX transaction as a positive step to offset the DevCo expense while staying on a modest leverage track.

“While the divestiture was viewed as an increasing likelihood by the market given completion of the DevCo buy-in last month…the transaction price comes in well ahead of the previously rumored $750 million and reduces the net DevCo outlay to just $68 million,” the TPH team said.