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Targa Resources (TRGP) Inks Three Back-to-Back Agreements

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Midstream service provider Targa Resources Corp. (TRGP - Free Report) recently announced the completion of the sale of 25% joint venture interest in the Grand Prix natural gas liquids ("NGL") pipeline to private equity giant Blackstone Energy Partners. Simultaneously, Targa completed a deal with a portfolio company of Blackstone, EagleClaw Midstream Ventures, LLC. Also, Targa signed a letter of intent ("LOI") with energy infrastructure provider Kinder Morgan (KMI - Free Report) and DCP Midstream, LP for jointly developing the proposed Gulf Coast Express Pipeline Project.

Blackstone Deal

The Grand Prix pipeline will connect Permian Basin in west Texas and New Mexico to Targa’s plant in Mont Belvieu, east of Houston. The pipeline will transport volumes from the Permian Basin and the company’s North Texas system to its fractionation and storage complex in the NGL market hub at Mont Belvieu. Targa expects Grand Prix’s transport capacity to be approximately 300,000 barrels per day (bpd), expandable up to 550,000 bpd. The pipeline is expected to come into service in the second quarter of 2019.

Targa expected the total capital expenditure associated with the Grand Prix project to be around $1.3 billion, out of which the company was supposed to spend approximately $250 million in 2017. The deal with Blackstone is expected to help Targa make ample net capital savings. It will also provide Targa financial and strategic benefits. Grand Prix is likely to enhance the company’s ability to move customer volumes from the wellhead in the Permian Basin and North Texas to key petrochemical and export markets.

EagleClaw Agreement

The EagleClaw deal supports a long-term Raw Product Purchase Agreement. Per the agreement, EagleClaw will receive transportation and fractionation services from Targa, as committed before, for the private natural gas gathering and processing company's Delaware Basin production. The deal is expected to provide Targa with long-term progressive fee-based cash flow.

Gulf Coast Express Pipeline Project

The project will serve the growing need for Permian Basin natural gas in the Texas Gulf Coast key markets. The pipeline will likely have the capacity to carry 1.92 billion cubic feet of natural gas every day, which is likely to commence operations by the second half of 2019. Kinder Morgan will construct and operate the pipeline project with a 50% stake. Targa Resources and DCP Midstream are each expected to have 25% ownership in the pipeline.

About Targa Resources

Headquartered in Houston, TX, Targa Resources Corp owns general and limited partner interests in Targa Resources Partners LP. It is engaged in providing midstream natural gas and natural gas liquid services in the United States. The company operates its business through two business segments: Natural Gas Gathering and Processing and NGL Logistics and Marketing. Targa also markets natural gas liquids produced and purchased in selected United States markets. The company also offers refinery services and wholesale propane marketing operations.

Price Performance

Targa Resources has lost 13.9% of its value year to date compared with the 6.2% fall of its industry.

Zacks Rank and Stock to Consider

Targa Resources currently has a Zacks Rank #3 (Hold).

A better-ranked stock in the oil and energy sector is Lonestar Resources US Inc. . It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lonestar Resources’ sales for 2017 are expected to surge 60.2% year over year. The company delivered a positive earnings surprise of 62.5% in the second quarter of 2017.

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