Targa to acquire Stakeholder Midstream in $1.25 billion Permian deal

Targa Resources Corp. agreed to acquire Stakeholder Midstream for $1.25 billion in cash, a move that will expand the company’s gathering and processing position in the Permian Basin and add stable, fee-based cash flow supported by long-term acreage dedications. The deal, announced Dec. 1, is expected to close in the first quarter of 2026 pending regulatory approvals.

The acquisition brings Targa roughly 480 miles of natural gas gathering lines, 180 MMcf/d of cryogenic processing and sour-gas treating capacity, a small crude gathering system and ongoing carbon capture activities that generate federal 45Q tax credits. Stakeholder’s system is anchored by contracts across about 170,000 dedicated acres, with production that has shown low decline rates — a feature Targa highlighted as key to the system’s predictable volume profile.

Targa said Stakeholder is expected to deliver about $200 million per year in unlevered adjusted free cash flow with minimal capital requirements and low integration costs. At the announced price, the purchase equates to roughly six times expected 2026 unlevered free cash flow.

“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,” said Matt Meloy, Targa’s chief executive officer. “We believe this transaction is a continuation of our strategy of identifying opportunities to create shareholder value with balance sheet strength.”

Meloy added that Targa is familiar with Stakeholder’s system and producers and said the deal enhances the company’s organic growth platform.

For Stakeholder, the transaction marks the culmination of a development effort focused on the San Andres play and broader Permian growth.

“From our formation, Stakeholder set out to create midstream infrastructure to service one of the nation’s leading energy-producing regions,” said Gaylon Gray, co-CEO of Stakeholder. He credited employees, customers and partners for building out the platform and said the team looks forward to seeing it expand under Targa’s ownership.

Targa plans to finance the acquisition with cash on hand and its existing $3.5 billion revolving credit facility. The company said pro forma leverage should remain within its long-term target range of 3.0× to 4.0×.

RBC Capital Markets is serving as Targa’s financial advisor, and Latham & Watkins is legal counsel. Jefferies advised Stakeholder, with Willkie Farr & Gallagher and Clifford Chance serving as its legal advisors.

Houston-based Targa is one of North America’s largest independent midstream operators, with assets that gather, treat, process and transport natural gas and NGLs to domestic and international markets.