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Why Targa Resources sees a benefit to acquiring Atlas

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Complementary assets

The deal with Atlas Pipeline Partners, L.P. (APL) will strengthen Targa Resources Partners LP’s (NGLS) position in the Permian Basin. The move will also broaden the company’s reach in the Eagle Ford Shale and Bakken Shale.

According to Targas’s management, “The acquisitions will significantly and immediately increase our scale and geographic diversity, accelerating the growth of our premier North American midstream platform. APL’s footprint solidifies the Partnership’s position as a leader in the Permian Basin, while adding top-tier assets in the Midcontinent and South Texas regions.”

combined permian footprint

Premier Permian footprint

Targa’s company presentation notes that pro forma NGLS will be the second-largest Permian processor with 1.4 Bcf per day (billion cubic feet) in gross processing capacity.

Atlas’ WestTX system will complement Targa’s existing assets in the Permian Basin.

pro forma permian capacity

Exposure to other basins

Atlas’ assets will also provide exposure to the Eagle Ford, Mississippi Lime, and SCOOP (South Central Oklahoma Oil Province) plays. Atlas’ SouthTX, SouthOK, and WestOK systems are currently operational in these plays.

Additional benefits

Apart from increasing scale and diversity, the combined midstream company will derive additional revenue along the natural gas liquids (or NGLs) value chain. The addition of APL’s NGLs production complements NGLS’ downstream assets in Mount Belvieu and Galena Park.

NGL Production

In the next article in this series, we’ll continue our look at this deal’s value proposition for Targa.

Key ETFs

Both NGLS and APL are components of the Alerian MLP (AMLP), the Global X MLP & Energy Infrastructure ETF (MLPX), and the Global X Funds ETF (MLPA).

 

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