In February 2018, we formed three development joint ventures (“DevCo JVs”) with investment vehicles affiliated with Stonepeak Infrastructure Partners (“Stonepeak”) to fund portions of Grand Prix NGL Pipeline (“Grand Prix”), Gulf Coast Express Pipeline (“GCX”) and an approximately 110 MBbl/d fractionator in Mont Belvieu, Texas (“Train 6”). For a four-year period beginning on the date that all three projects commenced commercial operations, we had the option to acquire all or part of Stonepeak’s interests in the DevCo JVs (the “DevCo JV Call Right”). The purchase price payable for such partial or full interests was based on a predetermined fixed return or multiple on invested capital, including distributions received by Stonepeak from the DevCo JVs.

In January 2022, we exercised the DevCo JV Call Right and closed on the purchase of all of Stonepeak’s interests in the DevCo JVs for $926.3 million (the “DevCo JV Repurchase”). Following the DevCo JV Repurchase, we own a 75% interest in Grand Prix Pipeline LLC, a 100% interest in Train 6 and owned a 25% equity interest in GCX, prior to the GCX Sale (as defined below) in February 2022. The change in our ownership interests was accounted for as an equity transaction representing the acquisition of noncontrolling interests. The amount of the redemption price in excess of the carrying amount, net of tax was $53.1 million, which was accounted for as a premium on repurchase of noncontrolling interests, and resulted in a reduction to Net income (loss) attributable to common shareholders. In addition, the DevCo JV Repurchase resulted in an $857.9 million reduction of Noncontrolling interests on our Consolidated Balance Sheets.

In April 2022, we completed the acquisition of Southcross Energy Operating LLC and its subsidiaries (“Southcross”) for a purchase price of $201.9 million (the “South Texas Acquisition”), subject to customary closing adjustments. We expect to make a final closing adjustment payment of approximately $1.5 million in the fourth quarter of 2022. We acquired a portfolio of complementary midstream infrastructure assets and associated contracts that have been integrated into our SouthTX Gathering and Processing operations, including the remaining interests in the two operated joint ventures in South Texas that we previously held as investments in unconsolidated affiliates and have been prospectively consolidated beginning in the second quarter of 2022. We accounted for the purchase as an asset acquisition and have capitalized $1.8 million of acquisition-related costs and assumed liabilities of $1.8 million as components of the cost of assets acquired. We allocated $28.1 million to our purchase of Southcross’ interest in the two operated joint ventures for purposes of consolidation and $169.7 million, $3.9 million and $5.3 million of the residual cost to property, plant and equipment, current assets and liabilities, net and other non-current assets, respectively.

On July 29, 2022, we completed the acquisition of all of the interests in Lucid Energy Delaware, LLC (“Lucid”) from Riverstone Holdings LLC and Goldman Sachs Asset Management for approximately $3.5 billion in cash (the “Delaware Basin Acquisition”), subject to customary closing adjustments. We funded the acquisition with (i) $1.5 billion in proceeds drawn under our Term Loan Agreement with Mizuho Bank, Ltd. (“Mizuho”) as the Administrative Agent and a lender, and other lenders party thereto (the “Term Loan Facility”), (ii) $750.0 million in aggregate principal amount of our 5.200% Senior Notes due 2027 (the “5.200% Notes”) and $500.0 million in aggregate principal amount of our 6.250% Senior Notes due 2052 (the “6.250% Notes”) pursuant to an underwritten public offering that closed in July 2022 and (iii) $800.0 million drawn on our $2.75 billion TRGP revolving credit facility (the “TRGP Revolver”). We recorded $16.9 million of debt issuance costs related to the Term Loan Facility, the 5.200% Notes and the 6.250% Notes in our Consolidated Balance Sheets. See Note 7 – Debt Obligations for further details on our financing activities.

The assets acquired in the Delaware Basin Acquisition provide natural gas gathering, treating, and processing services in the Delaware Basin, through owning and operating approximately 1,050 miles of natural gas pipelines and approximately 1.4 billion cubic feet per day (“Bcf/d”) of cryogenic natural gas processing capacity primarily in Eddy and Lea counties of New Mexico. The Delaware Basin Acquisition assets increase our footprint in the Delaware Basin and are integrated into our Permian Delaware operations.

The Delaware Basin Acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations, which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. The preliminary allocation of the purchase price, which is subject to certain adjustments, was based upon preliminary valuations from estimates and assumptions that management believes are reasonable; however, management’s estimates and assumptions are subject to change upon the completion of the final valuations or as information necessary to complete the fair value analysis is obtained. The valuation of the acquired assets and liabilities was prepared using fair value methods and assumptions, including projections of future production volumes, commodity prices, and other cash flows, market-participant assumptions (e.g., discount rate and exit multiple), expectations regarding customer contracts and relationships, tangible asset replacement costs, and other management estimates. The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs, as defined in Note 13 – Fair Value Measurements. These inputs require judgments and estimates at the time of valuation. We are in the process of finalizing valuations related to property, plant and equipment and identifiable intangible assets. The final valuation will be completed no later than one year from the acquisition date.

The following table summarizes the preliminary fair values assigned to assets acquired and liabilities assumed (in millions):


Cash and cash equivalents	$	9.9
Trade receivables, net of allowances (1)		210.2
Other current assets		6.5
Property, plant and equipment, net		1,678.8
Intangible assets, net		1,881.6
Other long-term assets		57.3
Current liabilities		(237.3	)
Other long-term liabilities		(100.8	)
Purchase price	$	3,506.2

(1)

The fair value of the assets acquired includes trade receivables of $210.2 million. The gross amount due under contract was $212.9 million, of which $2.7 million was expected to be uncollectible. Trade receivables, net of allowances, excludes $18.5 million that was due from Targa. We reflected this settlement of a preexisting relationship as a reduction of the purchase price in accordance with ASC 805.

The preliminary value of property, plant and equipment is determined using the cost approach and is primarily comprised of Gathering and Processing assets that will be depreciated on a straight-line basis over an estimated weighted-average useful life of 20 years. The associated useful lives of property, plant and equipment were based on the period over which the assets are expected to contribute directly or indirectly to our future cash flows.

The preliminary value of intangible assets is comprised of customer relationships, which represent estimated value of long-term contracts with customers, that will be amortized in a manner that closely resembles the expected benefit pattern of the intangible assets over an estimated useful life of 14 years. The associated useful lives of intangible assets were based on the period over which the assets are expected to contribute directly or indirectly to our future cash flows.

The results of operations attributable to the assets and liabilities acquired in the Delaware Basin Acquisition have been included in our consolidated financial statements as part of our Permian Delaware operations in our Gathering and Processing segment since the date of the acquisition. Revenue and Net Income attributable to the assets acquired for the period August 1, 2022 through September 30, 2022 were $104.0 million and $4.7 million, respectively. As of September 30, 2022, we had incurred $14.3 million of acquisition-related costs.

The following unaudited pro forma summary presents the consolidated results of operations for the three and nine months ended September 30, 2022 and 2021 as if the Delaware Basin Acquisition had occurred on January 1, 2021. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of our results of operations that would have occurred had the transaction been consummated at the beginning of the period presented, nor is it necessarily indicative of future results.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	5,391.1	$	4,595.2	$	16,604.0	$	11,869.4
Net income (loss)		288.2		242.4		1,087.9		514.9

The summarized unaudited pro forma information has been calculated after applying our accounting policies and reflects adjustments for the following:

In May 2022, we completed the sale of Targa GCX Pipeline LLC to a third party for $857.0 million (the “GCX Sale”). As a result of the GCX Sale, we recognized a gain of $435.9 million in Gain (loss) from sale of equity method investment in our Consolidated Statements of Operations in the second quarter of 2022.

See Note 6 – Investments in Unconsolidated Affiliates for further discussion on South Texas Acquisition and GCX Sale.