Targa Resources Partners LP (The Partnership) has agreed to acquire 100 percent of Saddle Butte Pipeline, LLC’s ownership of its Williston Basin crude oil pipeline and terminal system and its natural gas gathering and processing operations for $950 million. The transaction is expected to close during the fourth quarter of 2012.
The business to be acquired is located in the heart of the oil-rich Bakken Shale Play in McKenzie, Dunn, and Mountrail counties, North Dakota, and includes approximately 155 miles of crude oil pipelines. The business has combined crude oil operational storage capacity of 70,000 barrels, including the Johnsons Corner Terminal with 20,000 barrels of storage capacity (expanding to 40,000 barrels) and Alexander Terminal with storage capacity of 30,000 barrels. The business also includes approximately 95 miles of natural gas gathering pipelines and a 20 MMcf/d natural gas processing plant with an expansion underway to increase capacity to 40 MMcf/d.
The operations are backed by producer dedications under long-term contracts that include approximately 260,000 acres of crude oil production and over 100,000 acres of natural gas production. Targa expects that growth capital expenditures of over $250 million will be required in 2013 to support system expansions necessary to meet producer activity.
“This acquisition of a major, strategic midstream business complements our extensive portfolio of midstream assets, extends our footprint to the very attractive Bakken Shale play, further diversifies our business with the addition of crude oil gathering, and adds significant long-term growth in fee-based revenues,” said Joe Bob Perkins, CEO of the general partner of the Partnership. “We are very excited to expand our geographic footprint into one of the most important oil producing basins in the country. The visible, long-term growth potential of this business complements our attractive portfolio of ongoing and future organic growth projects and enhances the Partnership’s longer term distribution growth.”