Houston-based energy company Targa Resources Partners said Thursday it will pay $950 million in cash to acquire oil and gas assets located in North Dakota’s Bakken Shale play from Saddle Butte Pipeline.
The assets changing hands include a crude oil pipeline and terminal system, as well as natural gas operations, located in North Dakota’s Williston Basin region. The business consists of roughly 155 miles of crude oil pipelines, and another 95 miles of natural gas pipelines, spread across three counties.
In addition to the purchase cost, Targa said in its announcement of the deal that it expects to spend more than $250 million next year to expand the system it is acquiring. The transaction is expected to close by the end of the year, pending regulatory approvals.
Targa is being advised on the acquisition by Vinson & Elkins team led by Houston-based M&A partner Christopher Collins, who—along with capital markets partner David Oelman—also advised Targa on the company’s public offering of 9.5 million common shares, which was also announced Thursday. Targa said the money raised through the public offering could be used to fund the deal with Saddle Butte or to repay debt.
The V&E team advising Targa on the acquisition also includes tax partner John Lynch and environmental counsel Larry Pechacek. Targa’s general counsel, Paul Chung, is a former V&E attorney.
Durango, Colorado-based Saddle Butte, meanwhile, has enlisted Thompson & Knight to advise on the sale. Energy transactions partner Arthur Wright, corporate and securities partner Jeffrey Zlotky, and tax partner R. David Wheat led a Dallas-based team for the firm.
Greg Ward is Saddle Butte’s general counsel.
The deal is the latest major transaction involving the oil-rich Bakken Shale rock formation. Last month, Halcon Resources Corporation spent $1.45 billion to buy a collection of assets in the region from Petro-Hunt. Thompson & Knight advised Halcon on that deal, while V&E represented the Canada Pension Plan Investment Board in a sidecar deal with Halcon to provide financing. In September, V&E advised Denbury Resources when it sold its Bakken Shale holdings to Exxon Mobil for $1.6 billion.
While the Bakken Shale play stretches to Montana and Canada, it has helped transform North Dakota into the country’s second-largest oil-producing state behind Texas. (As The Am Law Daily has reported, the mining boom has also resulted in increasing populations in North Dakota in recent years and an uptick in crime and litigation that has overwhelmed the state’s court system.)
Saddle Butte has spent much of the past year locked in a legal battle with Calgary-based pipeline company Enbridge Energy over a pipeline project that Saddle Butte says would lower the cost of transporting North Dakota’s ever-growing supply of Bakken crude oil. Saddle Butte subsidiary High Prairie Pipeline wants to connect its proposed pipeline to a Minnesota terminal operated by Enbridge, but Enbridge is seeking approval of its own $2.5 billion project that would take Bakken oil from North Dakota via the company’s Minnesota terminal to a transportation hub in Wisconsin. The Enbridge project is awaiting the approval of state and federal regulators.
Regulatory filings show that Perkins Coies environmental partner Pamela Anderson has represented High Prairie on requests sent to the Federal Energy Regulatory Commission and the U.S. Department of State asking that the federal government intervene in the matter and force Enbridge to approve the High Prairie pipeline project. Anderson tells The Am Law Daily that Saddle Butte’s asset sale to Targa does not affect the legal proceedings between High Prairie and Enbridge, and that those companies are continuing their efforts to resolve their dispute.