Targa Resources to acquire Stakeholder Midstream in $1.25bn deal

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Targa Resources, through its fully owned subsidiary, has agreed to acquire US-based oil and gas company Stakeholder Midstream for $1.25bn in cash.

Stakeholder offers natural gas gathering, treating and processing services, as well as crude oil gathering and storage services in the Permian Basin.

The company operates approximately 480 miles (772km) of natural gas pipelines, with a daily cryogenic natural gas processing and sour treating capacity of around 180 million cubic feet per day.

It also manages carbon capture activities that generate 45Q tax credits and runs a small crude oil gathering system.

The oil and gas company’s assets are supported by long-term, fee-based contracts across around 170,000 dedicated acres.

According to Targa, these contracts are backed by acreage with low decline rates, providing a stable volume profile.

With the addition of Stakeholder’s natural gas gathering, treating, and processing infrastructure, Targa will expand its presence in the Permian Basin.

The transaction is expected to close in the first quarter of 2026, pending regulatory approval and other customary closing conditions.

Targa CEO Matt Meloy said: “This acquisition is a nice bolt-on asset that has meaningful free cash flow supported by a stable to modestly growing volume profile with minimal capital needs and executed at an attractive valuation.

“We believe this transaction is a continuation of our strategy of identifying opportunities to create shareholder value with balance sheet strength.

“We are very familiar with the acquired assets and have strong relationships with some of the largest producers on the system.

“Targa’s organic growth opportunity set, coupled with this accretive bolt-on transaction, positions us well to enhance our already strong growth profile,” added Meloy.

Targa anticipates that Stakeholder will contribute around $200m in annual free cash flow, with minimal capital expenditure requirements and low integration costs.

The company plans to finance the acquisition using available liquidity including cash on hand and its existing $3.5bn revolving credit facility.

Targa said the transaction is expected to have a limited impact on its leverage ratio, which will remain within its long-term target range of 3.0–4.0 times.

RBC Capital Markets is acting as financial advisor to Targa on this transaction, and Latham & Watkins is providing legal counsel.

Jefferies is serving as exclusive financial advisor to Stakeholder, and Willkie Farr & Gallagher and Clifford Chance are acting as legal advisors.

Stakeholder co-CEO Gaylon Gray said: “From our formation, Stakeholder set out to create midstream infrastructure to service one of the nation’s leading energy-producing regions.

“It has been a pleasure and an honour to partner with first-class team members, customers, the community and vendors who contributed their expertise, dedication and creativity to the overall success of the Stakeholder platform and the broader San Andres play.

“We would like to recognise our financial sponsor, EnCap Flatrock Midstream, and our Board of Directors for their partnership and ongoing support since we started this journey.

“The Stakeholder team is excited to watch the continued development and growth of its platform going forward under Targa’s leadership.”

In April this year, the WPC joint venture (JV) comprising WhiteWater, MPLX and Enbridge partnered with Targa Resources to build the Traverse pipeline.

The Blackcomb Pipeline JV will own the Traverse pipeline, with WPC holding a 70% stake, Targa Resources 17.5% and MPLX 12.5%.

"Targa Resources to acquire Stakeholder Midstream in $1.25bn deal " was originally created and published by Offshore Technology, a GlobalData owned brand.

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