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Targa (TRGP) to Purchase Grand Prix Pipeline Stake for $1B

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Targa Resources (TRGP - Free Report) is set to buy Blackstone Energy Partners’ 25% stake in the Grand Prix NGL Pipeline. The North American energy infrastructure company will shell out $1.05 billion in cash for the transaction, a portion of which will come from its recent note offerings. Upon completion of the deal — expected sometime in the first quarter — TRGP will have full ownership of the Permian Basin conduit.

The Grand Prix Pipeline can transport gathering and processing volumes of up to 1 million barrels per day from Targa Resources’ Permian Basin positions in West Texas and central Oklahoma to its Mont Belvieu fractionation and export facilities. Investors should know that TRGP farmed out 25% of the Grand Prix Pipeline to funds managed by Blackstone in 2017.   

Per the midstream services provider, the pipeline commenced full operations in the third quarter of 2019 and has since bettered expectations consistently. The Blackstone pact will help to simplify Targa Resources’ operations and, at the same time, augment its fee-based cash flow stream.  

Zacks Rank & Key Picks

Targa Resources — which primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas — currently carries a Zacks Rank #4 (Sell).          

Meanwhile, investors interested in the energy sector might look at operators like Murphy USA (MUSA - Free Report) , Helmerich & Payne (HP - Free Report) and Patterson-UTI Energy (PTEN - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA: Over the past 60 days, this El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2022 improve 4%. MUSA, which surpassed third-quarter bottom-line estimates by 18.7%, is valued at around $6.1 billion.

Murphy USA has a trailing four-quarter earnings surprise of roughly 51%, on average. MUSA has seen its shares gain 39.1% in a year.

Helmerich & Payne: Helmerich & Payne is valued at some $4.8 billion. The Zacks Consensus Estimate for HP’s fiscal 2023 earnings has been revised 19.9% upward over the past 60 days.

Helmerich & Payne, headquartered in Tulsa, OK, has a trailing four-quarter earnings surprise of roughly 51%, on average 124.2%. HP shares have surged 63.2% in a year.

Patterson-UTI Energy: PTEN beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 169.2%, on average.

Patterson-UTI is valued at around $3.7 billion. PTEN has seen its shares gain 69.1% in a year.

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