Pipeline operator Targa Resources said on Monday it would buy Stakeholder Midstream in a $1.25 billion all-cash deal, expanding its processing capacity in the key Permian Basin.
Dealmaking in the midstream sector has been picking up pace as companies look to cut costs or add scale and gain access to attractive oil- and gas-producing regions, as well as export facilities on the U.S. Gulf Coast.
“This 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,” Targa CEO Matt Meloy said in a statement.
Targa expects Stakeholder to generate adjusted free cash flow of about $200 million annually.
U.S. midstream companies are also benefiting from rising natural gas demand driven by LNG exports and soaring power generation tied to AI operations, cryptocurrency mining and data centers.
In November 2024, Energy Transfer said it would buy WTG Midstream Holdings for about $3.25 billion, expanding its transportation and processing footprint in the Permian.
Targa expects to fund the acquisition, which is expected to close in the first quarter of 2026, with cash and its existing $3.5 billion revolving credit facility.
(Reporting by Katha Kalia in Bengaluru; Editing by Shreya Biswas and Sriraj Kalluvila)