Targa Resources Inc., whose veteran energy team is building a portfolio of natural gas gathering, processing and pipeline assets throughout the United States with partner Warburg Pincus, said Thursday it will buy two integrated gas systems in Texas and Louisiana from ConocoPhillips for an undisclosed amount.
The Texas assets consist of an integrated gathering and processing system with 1,200 miles of low and high-pressure lines, gathering from 2,800 wells and 750 wellhead and central delivery locations in the Permian Basin, covering parts of eight Texas counties from San Angelo to Big Springs.
The Louisiana assets also consist of an integrated gathering and processing system, covering approximately 2,000 square miles from Lake Charles to Lafayette, with approximately 700 miles of pipeline and processing capacity of about 260 MMcf/d and 14,000 bbl/d of natural gas liquids raw mix production. The Louisiana system supplies approximately 40% of the Lake Charles industrial and refinery market.
“Our corporate strategy is to leverage our experience to enhance the value of acquisitions through asset optimization, selective reinvestment, and add-on acquisitions,” said Targa CEO Rene R. Joyce. “This acquisition is an ideal first step in our strategy and provides a firm foundation for future growth.”
Joyce, former president of operations for Tejas Gas Group, formed the company with several other prominent gas executives and Warburg in 2003. Other members of Targa’s management team include Roy E. Johnson, Joe Bob Perkins, Michael Heim and Jeffrey J. McParland.
Johnson previously was vice president of development at Tejas. Perkins directed business development at Tejas, but is probably better known as the former president of wholesale and power generation at Reliant Energy (now Reliant Resources Inc.). Heim was the former COO of Coastal Field Services Co. and former president of Coastal States Gas Transmission Co. McParland is former senior vice president of finance for Dynegy Inc. and former CFO of PG&E Gas Transmission.
Peter R. Kagan, a Warburg Pincus managing director, said Warburg chose to fund Targa “because of its past success in a variety of midstream businesses. We believe that management can succeed in stabilizing these assets and in using this acquisition as a building block towards the creation of a meaningful midstream company.”
Targa has already had received all of the required regulatory approvals and expects to close on the acquisition this month. Targa and Warburg will fund the entire equity amount. Warburg has invested approximately $1 billion in energy companies since the late 1980s, predominantly in exploration and production, power, and oilfield and other services.
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