Targa to buy Permian gas processor Lucid Energy Delaware for $3.55 billion

(Bloomberg) — Targa Resources Corp. has agreed to buy Permian natural gas processor Lucid Energy Delaware LLC from Riverstone Holdings LLC and Goldman Sachs Asset Management for $3.55 billion in cash.

Lucid provides gas gathering, treating and processing services in the Permian’s Delaware Basin. The deal is expected to close in the third quarter, pending regulatory approval, Targa said Thursday in a statement. 

Deals in the Permian of West Texas and New Mexico, the most prolific US shale play, are multiplying as oil and gas prices soar. Gas pipelines and processing facilities in the region have become increasingly valuable assets as the US exports record amounts of liquefied natural gas overseas amid a global shortage of the heating and power-plant fuel. Permian gas conduits are in such short supply that traders are betting producers in the basin will have to sell their supply at a discount next year.  

“The strength of Targa’s standalone financial position has afforded us the flexibility to consider attractive opportunities to grow our business through acquisitions,” Chief Executive Officer Matt Meloy said in the statement. The deal “aligns with our integrated strategy as we are expanding and diversifying our Permian Basin footprint with Lucid’s complementary presence at an attractive investment multiple.” 

Lucid has about 1,050 miles (1,690 kilometers) of gas pipelines and about 1.4 billion cubic feet per day of cryogenic processing capacity in service or under construction, primarily in New Mexico. Evercore and Mizuho Securities USA served as Targa’s financial advisers, while Jefferies advised the seller group, according to the statement.