Targa Resources (TRGP) is doubling down on the northern Delaware Basin. On Dec. 1, the company announced it will acquire Stakeholder Midstream for $1.25B. The price represents ~6x estimated unlevered FCF in 2026.
The Stakeholder deal will add about 460 miles of low-pressure gathering pipe and ~180 MMcf/d of processing capacity across Yoakum and Gaines counties, TX and Lea County, NM. Stakeholder also brings sour gas treating capability, a small crude gathering system, and carbon-capture operations that qualify for federal 45Q tax credits.
Details on the private Stakeholder assets and counterparties are available for clients on the “G&P System Analysis” dashboard in Energy Data Studio. The top producers on the system include Burk Royalty, Hilcorp and Ring Energy.
Stakeholder’s primary strategic value for Targa is its gas G&P footprint. Stakeholder’s Campo Viejo gathering system (shown in yellow on the map) includes two gas processing plants currently running at around 60% utilization. The assets are contiguous to Targa’s own G&P systems in the Delaware (shown in purple and red on the map), and the spare processing capacity gives TRGP meaningful operating leverage to capture future growth and optimize flows across its Permian network.
East Daley Analytics’ latest plant inlet data shows the Stakeholder system producing ~15 Mb/d of NGLs. Once TRGP builds the necessary interconnects, these barrels could help fill its recently announced Speedway system, tightening the race for NGL supply in the Permian.
Any change in flows would likely depend on contracts expiring. But a rerouting of Stakeholder barrels would apply pressure to competing pipelines, including Enterprise Products’ (EPD) Seminole and Chaparral pipelines and ONEOK’s West Texas LPG. The systems all interconnect with Stakeholder plants and already face competition for Permian NGLs. TRGP’s acquisition of Stakeholder adds another headwind.
The deal also creates optionality for TRGP to monetize non-core pieces like Stakeholder’s San Andres crude gathering network. TRGP has demonstrated an interest in extracting value from peripheral assets, such as its 2019 sale to Blackstone of a 45% interest in its Badlands asset in North Dakota. The company could revisit divestitures if leverage begins to drift toward the upper end of its target range.
Investor takeaway: The Stakeholder acquisition enhances TRGP’s Permian optionality, positions Speedway for higher throughput, and heightens NGL barrel competition — potentially altering flows across multiple long-haul systems. – Garrett Streit Tickers: TRGP.
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