Targa Resources Corp. announced a $1.25 billion all‑cash purchase of Stakeholder Midstream, LLC, a Permian‑Basin gathering and processing operator. The deal adds roughly 480 miles of natural‑gas pipelines, 180 million cubic feet per day of sour‑gas treating capacity, and a small crude‑oil gathering system to Targa’s portfolio. The transaction is expected to close in the first quarter of 2026 and is projected to generate about $200 million in unlevered adjusted free cash flow each year, with minimal capital requirements and low integration costs.
Stakeholder’s assets are supported by long‑term, fee‑based contracts covering about 170,000 dedicated acres. The acquisition strengthens Targa’s already dominant sour‑gas processing footprint and adds carbon‑capture facilities that qualify for 45Q tax credits, further diversifying the company’s revenue mix. The added acreage‑dedicated volume is expected to grow at a modest 10‑15% annually, reinforcing Targa’s strategy of building a free‑cash‑flow‑generating midstream platform as downstream capital spending slows.
Financially, the purchase price represents roughly six times the estimated 2026 unlevered adjusted free cash flow, not the 4.5× multiple of 2024 adjusted EBITDA cited in the original article. The deal is being financed with cash on hand and a revolving credit facility, keeping leverage within the company’s target range of 3.0‑4.0×. The transaction is expected to be accretive immediately, adding $200 million of free cash flow while keeping capital expenditures low.
CEO Matt Meloy said the acquisition is a “nice bolt‑on asset that has meaningful free cash flow supported by a stable to modestly growing volume profile with minimal capital needs and executed at an attractive valuation.” He added that the deal continues Targa’s strategy of identifying opportunities to create shareholder value with balance‑sheet strength, underscoring the company’s confidence in the Permian Basin’s long‑term prospects.
The transaction comes at a time when midstream consolidation is accelerating, as operators seek scale, stable cash flows, and integration synergies to feed growing natural‑gas‑liquids and export markets. Targa’s existing Permian presence, combined with Stakeholder’s fee‑based contracts and carbon‑capture assets, positions the company to capture a larger share of the basin’s output while benefiting from ESG‑aligned tax incentives. Analysts view the deal as a positive step that enhances Targa’s competitive moat and supports its long‑term growth trajectory.
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