Targa Resources Corp. acquired Lucid Energy Delaware, LLC ("Lucid Energy") for $3.55 billion in cash (approximately 7.5x estimated 2023 adjusted EBITDA), a transaction completed in July 2022, structured as all cash (cash and debt financed).
Lucid Energy Delaware, LLC ("Lucid Energy") operates in Gathering and Processing, is based in United States - Delaware Basin, primarily Eddy and Lea counties, New Mexico. On June 16, 2022, Lasso Acquiror LLC, an indirect wholly-owned subsidiary of Targa Resources Corp., entered into a Purchase and Sale Agreement to acquire Lucid Energy Delaware, LLC from Riverstone Holdings LLC and Goldman Sachs Asset Management for $3.55 billion in cash. Lucid provides natural gas gathering, treating and processing services in the Delaware Basin, including approximately 1,050 miles of natural gas pipelines and approximately 1.4 Bcf/d of cryogenic processing capacity in service or under construction, located primarily in Eddy and Lea counties, New Mexico, with greater than 600,000 dedicated acres. Targa completed the acquisition in July 2022; the assets are now integrated into Targa Northern Delaware LLC.
Targa called Lucid a complementary and highly strategic acquisition of a leading Delaware Basin gathering and processing system that increases Targa's size and scale, adds long-term fixed-fee contracts and increases overall fee-based margin.
Long-term, fixed-fee contracts and acreage dedications across 600,000+ acres with over 20 years of drilling inventory; ~70% of current volumes from investment-grade producers; overlays highly economic crude oil and natural gas producing acreage. Near- and longer-term synergy potential expected to reduce the effective acquisition multiple over time. Integrated into Targa Northern Delaware LLC (Gathering and Processing segment); referred to in filings as the "Delaware Basin Acquisition."
The strength of Targa's standalone financial position has afforded us the flexibility to consider attractive opportunities to grow our business through acquisitions, as evidenced by our ability to finance the purchase of Lucid utilizing available cash and debt with estimated pro forma year-end 2022 leverage around 3.5 times, well within our long-term target.Matt Meloy, Chief Executive Officer, Targa Resources Corp.
Over the past several years, Lucid has firmly established itself as a leading midstream processor in the Delaware Basin, with a talented team, sophisticated operations and infrastructure, and strong customer partnerships.Mike Latchem, Chief Executive Officer, Lucid Energy
Advisory firms were not disclosed for this transaction.