Outrigger Energy, along with certain of its partners and affiliates, has agreed to divest three midstream subsidiaries in the Permian Basin to Targa Resources for up to $1.5bn.
The subsidiaries include Outrigger Delaware Operating, Outrigger Southern Delaware Operating, and Outrigger Midland Operating.
Under the deal, Targa Resources will acquire Outrigger Delaware’ assets including over 140 miles of natural gas gathering pipeline, 70 MMcfd of cryogenic processing capacity in Loving County, Texas and crude gathering infrastructure with 40,000 barrels of oil per day of capacity.
The firm will also purchase Outrigger’s Southern Delaware system that is currently under construction and will provide area customers with access to the Waha Hub.
The scope of the deal also include Outrigger Midland, which has over 100 miles of natural gas gathering pipeline, 10 MMcfd of cryogenic processing capacity in Martin County, Texas and a crude gathering system with 40,000 barrels per day of capacity.
Outrigger president and CEO Dave Keanini said: “With our systems located in the highest growth areas of the Midland and Delaware Basins, it was extremely important for us to transfer our assets to a midstream company that has the experience, staffing, and resources to accommodate the growth rates these systems will experience over the next several years.”
Outrigger Energy said that the natural gas and crude oil midstream systems cover over 250,000 acres in prolific Delaware and Midland Basins.
Targa Resources expects the acquisition to complement its existing gas gathering and processing assets while strengthening its operations in the Delaware and Midland Basins.
Targa Resources CEO Joe Bob Perkins said: "The producer acreage that we will serve through this acquisition has decades of drilling inventory in prolific areas, with multiple stacked pay zones.
"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."
Planned to be completed in the first quarter 2017, the transaction is subject to customary regulatory approvals and other closing conditions.