Targa (TRGP) to Buy Lucid Energy in a $3.55B Transaction

Targa Resources Corp.


, the Houston, TX-based midstream energy infrastructure company, recently announced that it has signed a definitive agreement for the acquisition of the privately held natural gas processor in the Permian Basin – Lucid Energy Delaware, LLC. A wholly owned subsidiary of Targa will buy Lucid Energy from Riverstone Holdings and Goldman Sachs for cash consideration worth $3.55 billion.

Lucid Energy is considered one of the biggest private pipeline players in Permian and holds around 1,050 miles of natural gas pipelines. Moreover, it offers natural gas gathering, treating and processing services in the Delaware Basin, including about 1.4 billion cubic feet per day of cryogenic natural gas processing capacity in service or under construction predominantly in the Eddy and Lea counties in New Mexico, anchored by long-term, fixed-fee contracts.

Targa’s CEO Matt Meloy mentioned how TRGP’s robust financial position provided the company with the flexibility to consider attractive opportunities to expand its business through acquisitions as witnessed by the ability of the company to finance the purchase of Lucid Energy through available cash and debt. He further stated that this takeover is aligned with Targa’s integrated strategy as it looks to expand and diversify its Permian Basin footprint with Lucid Energy’s presence.

Moreover, Meloy expects the takeover of Lucid Energy to be immediately accretive to distributable cash flow per share and further support Targa’s solid cash flow profile.

The deal is anticipated to be closed by the third quarter of 2022, subject to customary closing conditions and a regulatory go-ahead.

Along with the acquisition announcement, Targa also updated its guidance for the year, with adjusted EBITDA now expected between $2.675 billion and $2.775 billion and a reported year-end leverage ratio of about 2.7 times. TRGP’s updated financial outlook assumes natural gas liquids composite prices to average $1.05 per gallon, crude oil prices to average $100 per barrel and Waha natural gas prices to average $6.00 per million British Thermal Units for the rest of 2022.

Targa Resources is a premier energy infrastructure company. A leading provider of integrated midstream services in North America, this operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas. It also provides services associated with natural gas liquids, including those to liquefied petroleum gas exporters and crude oil.

Targa currently has a Zacks Rank #3 (Hold). Those interested in the energy sector might want to look at some better-ranked stocks.

Earthstone Energy



SilverBow Resources



Civitas Resources


each sport a Zacks Rank #1 (Strong Buy). You can see

the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Earthstone’s 2022 earnings has been revised upward by about 29% over the past 60 days from $3.34 to $4.44 per share. Earthstone’s stock has increased 50.8% in a year.

The Zacks Consensus Estimate for ESTE’s 2022 earnings is projected at $4.44 per share, up about 255.2% from the projected year-ago earnings of $1.25.

SilverBow stock has gone up 41.6% in a year. The Zacks Consensus estimate for Silverbow’s 2022 earnings has been revised 52% upward over the past 60 days.

The Zacks Consensus Estimate for SBOW’s 2022 earnings is projected at $12.69 per share, up about 97.6% from the projected year-ago earnings of $6.42.

The Zacks Consensus Estimate for Civitas’ 2022 earnings is projected at $13.73 per share, up about 368.6% from the projected year-ago figure of $2.93.

The Zacks Consensus Estimate for CIVI’s 2022 earnings has been revised upward by about 58.4% over the past 60 days from $8.67 to $13.73 per share.

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