TRGP - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to date Targa Resources Corporation Third Quarter 2018 Earnings Webcast and Presentation. [Operator Instructions]. It is now my pleasure to turn the conference over to your host Sanjay Lad, Director of Investor Relations. Please proceed.

Sanjay Lad

Thank you, Haley. to Resources Quarter Corp. welcome Call Earnings and Targa for morning, the XXXX Third Conference Good

the supplement The Resources Investors or with Corp., quarter section Targa, quarter third earnings at TRC the release of our company targaresources.com. on are available presentation for website Targa third the earnings along

are expectations has forward-looking In during projected might that that in this any presentation posted by materially or should differ our considered also covered company's be predictions addition, statements. from and harbor results actual XXXX an the updated website. safe to statements call Act include been those could Securities note investor and provisions Any made the the statements Please XXXX. of forward-looking of

differ, the our SEC reports year subsequently For a discussion with annual of company's ended factors and SEC. that XX-K refer to December filings, recent please for including could filed the on results report Form cause XXXX, the XX, to actual

Executive Joe Chief Pryor, the for Officer. We'll the speakers Our team Scott Bob. results I a Joe Chief outlook, then it over will and wrap following Bob McDonie, Financial And the session: and who President, senior Processing; will Jennifer third with Jen on that, questions. and members take also Marketing; Joe Pat Chief call business and and begin we the Meloy, and will Gathering today's by few XXXX Officer. now have Matt, followed call quarter Q&A update management Logistics will highlights, with developments Muraro, call up be to will provide your President; commercial discuss and for Kneale, available turn before an President, Perkins, Bobby Officer; today Matt Commercial

Joe Perkins

joining. thank you Good morning, for Sanjay. Thanks, everyone to and

full XXXX beyond. call. our the positioning Targa disclosed a to third It's momentum of for busy and couple providing us the history, our in and at its quarter and of our quarter, top previously last XXXX more operational importantly, year financial positive months end For exceed best financial guidance achieved Targa been since

we day Johnson Plant online short highly XXX at Plant that Basin. brought was million time, utilized our During successfully Targa. in Midland Johnson The the cubic per

We continue activities and Channelview. splitter crude start condensate at off are that to

now closed some the of are of asset our start-up. from petroleum per equity raised ATM SouthOK million million day Hills business. program, $XXX of issuance We and began system. $XXX We recently We of about sale we under Plant XXX logistics our the our in strata cubic million Hickory feet common

of projects by Our major which of projects many these months eight the and completed the will end less be first underway half is of remain away. track on year, now than next

last June XXXX the projects that of the continued over commercial that and continue our as than previously you be expected outlook Targa the basins urge strategic with since continue provided discussed fractionators, website additional time, in projects noticed we Mont an recently and last that footprint list are underway. first course, to year of our identify are focus add asset in as long-term of day increasing prepare rather the We complete to as published in integrated We projects our permits were long had and competitive Targa to customers. of needs The of two to providing in drive our that the robust additional and are Belvieu, fractionation of outlook commodity gas XXXX. practicable further attractive construction projects, projects existing near- and leverage fractionation continue our sure the to and now we long XX our to for X, And to for ordered months, moving attractive incremental long-term for XXXX. to These will our takeaway, note, our of additional adjusted crude items refreshed of XXXX morning. repeat and and added in which export further infrastructure. which working we shown leading further I'll the received presented described incremental attractive I'm continue existing base. prices much-needed and we completed June November per progress XXX,XXX to commercial additive key as barrels strengthen need with for or And Both our and in and frac infrastructure for services With and the the utilization advantage that that of to and X for Targa outlook. Targa deals projects processing, capacity and Those our successes the domestic today, outlook are estimate same with listed, already to our Train business need to And on the all and Fundamentally, to you EBITDA earnings quickly that published continued underpin are opportunities XXXX. on we publish. those projects did enhance the higher high outlook our significantly outlook. announced longer-term forward help a that drive smaller agreements deals from of this the we combination for asset posted these pipeline and and volumes invest June new we to tailwinds call, that aligned the integrate have tailwinds NGL pursue projects our we meet resist outlook. production now leadtime trains growth Since to recently execute this. NGL

significantly about when $X billion than estimated of We're look with also in CapEx that in XXXX XXXX XXXX. providing preliminary about year outlook, growth first at of declining that November we XXXX earlier For growth published And XXXX. example, you one and about estimated billion has XXXX is if EBITDA CapEx version $X occurring June our level net in XXXX $X billion. this adjusted

We two on is XXXX X. year billion CapEx recently frac to total. are three additional of after and total after more announced That spending XXXX currently forecasting $X.X plants the processing aggregate about X Train an forecast of one billion plus be and plant $X.X inclusive

to closely. assumptions better providing of success shareholder it consistent bet hard-working this exciting Targa. an state incremental time they that a also I'll last the be significant really a and understand Targa, commercial will employee and This really and to call My update is previous shows what from in it are months. help to exciting The our have incremental confirm this turn projects at time. the from the investors now over and the We that, the those study also a be as outlook, Matt. is growth aggregate over of of outlook Targa with employees who outlook modeling the since that update to accomplished the With XX is time long-term together announced

Matthew Meloy

to in Plant million highly activity with in capacity second the critical this Thanks, through Joe on Bob, September of is and expect cubic rich is XXXX. per of our Prix is phases volumes good complex interconnected volumes the we regions in track remainder online the A quarter year which throughout In Delaware, are to these expected cubic begin Each of the XXXX. of Missouri NGL high-pressure our Plant of plant. gathering and processing, operations feet Badlands, utilized to and long of run at growth on In will first the flowing in producer remains Belvieu. quarter, little site on Basin. remain completed morning, in to pushed system, the per be second completed Permian to is majority pipeline operating and our utilized XXX ordering and the with the online availability day increasing quickly equipment and the heart Commercial to strata. the end timing over expected we be increase, for remains into in came current Mont include gathering construction and highly Delaware continuing through quarter with production activity XXXX Midland, Permian as expected complete winter and our and Johnson late commodity continues the in robust plants million next this everyone. plant to our continue. proactively Gas quarter continued second our will Grand fractionators feet to the in of XX% items and portion inlet strong be outlook In The XXX the footprint XXXX, LMX significant lead Midland, trend XXX the many day expected strong operating was positive this and our Permian the be have by is production at mile being With multi-plant of months. Plant environments. been will also the with price gas next of the the Permian of multisystem

operational Turning XXXX with takeaway the expected budget Oklahoma Prix the and be on pipeline on the the Grand Downstream second from construction Southern to the and North pipeline continues of Permian, time on NGL NGL Texas. our quarter in Business, project remained to to and fully support

XXXX. per for Permian increase from XXX,XXX Grand segment perspective lead as pipeline's long strengthen, capacity Prix which will ordering early the outlook for begun of and we day the approximately have as items Our expect to continues the barrels we expansion, and originating to

run significantly capacity incrementally with extremely the Grand Mont fractionation Prix's addition value. is as facilities our market expand low-cost in continue will to The projects which station We and long-term required, enhances further pump Belvieu capacity. at tied,

flexibility, operations to was start quarter to our Train part addition QX We XXXX. enhance and of the fractionator, facility of has in our shifted second early Train now our X and QX. the part Charles the of begin will operational which are to first utilizing targeted operations we Lake X welcome last in the of

Permian have average utilized include These expected With moving new fractionator fully X for the higher trains. $XXX XXXX, quarter at will first and supply barrel future. Mont Basin expect million, Train for NGL X fractionation estimated a of to previous a are some as two Bob respectively. Belvieu, in especially Targa demand increasing cost X little to the day outlook with also Train second online forward the accelerating to mentioned, for be robust infrastructure fractionation expenditures are services, total a per we our X Y-grade We customer related of construction XXX,XXX from cost. Joe be and fractionator infrastructure and than strata. the of are and and

volumes We on third supported by returns parties. other processing expect increasing by to long-term and attractive gathering and complemented producers and contracts generate with very Targa fee-based these projects,

expansion the contracts. long-term much by volume addition, underpinned pipeline Prix supplied will of Grand our fractionator our be In by

in to processing and of to for customers, frac provide During volume strong this assurance cost XXXX given capital of are In and with for capabilities enhancement at refrigeration and Galena along expect low we And the previously into to this Galena given between long We grades vessel NGLs, depending our growth forward. enhance we enhancement tightness thereafter, supply things. our availability dialogue an XXXX and facility. expect period downstream market barrels LPG XX%, persist propane, our per increase continuing this and to size continued increase Mont low we X and additional of remain market and approximately demand, additional export and our of capabilities, estimate support growth leadtime supply existing going continued 'XX included with services, frac we growth remain butane guidance. our relatively further gathering tightness low Park, now our of contracted for active are of We for existing the Belvieu mix capacity offtake. to market the items and month upon strong among outlook affective ordering fractionation pipeline would our customers Park million capacity come perspective would announced by export is already that other with

pipeline and quarter or the added additional XXXX. some working additional fourth term. on the remains and fully and to have essentially Coast pipeline GCX project with Express on of on add gas the in We volumes budget and Gulf operational be Construction to expected are continues, contracted residue volume time the

support Additionally, we access basin the progress on gas premier will are markets continuing of receipt, customers. commercializing takeaway needs for residue the to delivery Permian infrastructure provide to Westward forecasted strategic the our from to and which and provide incremental make pipeline, the

which with of significant portion construction, Grand Jen integrated midstream under bring underway We - projects Train for our I our to committed a and on beyond. continuing growth a including to and the remain with number our third expansions, frac substantial track X reliability. projects bolster line organic update. months, And flow will customers. in adjusted EBITDA a service sight service increasing Targa's growth with Prix to in to the XXXX, Our eight discuss providing our provides us and and and offering turn to to over of online of next customers processing best-in-class remains provide XXXX provide call to cash quarter to now Targa the over financial results that, currently

Jennifer Kneale

the million, morning, Good flow the EBITDA $XXX X.XXx. crude $XXX by in and $XX the for quarter fractionation the in Coastal condensate and volumes million crude which quarterly of Permian. Gathering Processing operating third receipt adjusted Targa growth, the was XX%. compared splitter staffing recognition We Sequentially, been quarter, third the same higher quarter to when and resulting expansions reported and second previously gas million and operating was have the been September, related facilities. Badlands, processing increase and and higher distributable volumes Matt. for The annual late would in in of prices cash of record increased than and and volumes. SouthOK, which gathered period XXXX, of export quarter driven adjusted volume received Without Thanks, EBITDA in million, strong segment, quarter have Permian, our recognized WestOK in margin and the the our in driven continued in attributable regions by downstream coverage sequential expenses X.XXx. inlet the quarter new gathering LPG increased payment, higher third for fourth system dividend to of this everyone. to for has higher higher In commodity agreement oil to $XX our third both underway coverage dividend XX% natural Badlands paid third the we payment increasing has quarter, the

second is volumes SouthOK over the operating each growth Midland quarter at gas from increased over in facility from volumes increased from the result Arkoma capacity. increasing volumes quarter Delaware little with in our inlet and the Inlet Permian in WestOK our of X% volumes regions. the quarter Permian Third X% as second natural over SCOOP Missouri growth Permian and inlet second quarter Badlands' continued a increased STACK. volumes full X% X% the increased of systems.

flooding Volumes from inlet to since return the result third a the decreased Texas South to During quarter, high-level volumes of rainfall. XX% prior a as have of levels flooding.

second our been second oil quarter. quarter. margin second in richer margin XX% in operating facility, higher crude production Badlands month when for our in $XX Our by million XX% driven growth third volumes, averaged third inlet the up we higher the G&P segment, and higher in by Marketing has Permian LPG higher averaging in per quarter, dedicated prices. quarter LPG the X.X At by and were Logistics across The the quarter, strong predominantly increased quarter third increased recoveries gathered improved business volumes million gathered over acreage. our driven volumes our quarter per Coastal of Galena crude XXX,XXX gas, In NGL predominantly Fractionation sequentially, over fractionation performance a to the the compared third the the to export. third barrels day increased margin. and XX% barrels driven Park quarter, export higher volumes

XXXX coverage pleased to full with to adjusted performance X.Xx. previously also very year XXXX disclosed The top-end expect year full financial the of year-to-date are and track our our exceed and We precede guidance. operational dividend EBITDA on

The million was compared other for driven financial-related payment shorter second by in payable estimated be of in contingent Permian earnout is to quarter with May our discount the the the a the period. to consideration million to increase value estimate matters, Moving the XXXX. $XX acquisition fair currently $XXX payments

quarter, condensate, $X.X During for of versus gas a third ratio the processing approximately and third was natural of remaining positions, on hedges the covenant compliance of we the approximately our the approximately estimate and approximately TRP's percent have volumes Targa's current of and hedged of X.Xx we proceeds was additional NGLs we On of quarter, of liquidity billion. XX% from X.Xx. of at equity estimate volumes. XX% equity for commodity And of natural of third executed for XX% of gathering of XX% compliance XXXX, we've end quarter NGLs. based our hedged condensate, XXXX, the basis, the XX% debt At XX% leverage consolidated the that gas end quarter field

and Our our consolidated reported was raised to In positive. & ratio approximately debt-to-EBITDA Standard to BB outlook October, flat X.Xx. upgraded rating credit Poor's the

of having looking common issuance now Similar our maintenance approximately million XX. expect approach under have Bob we looking continue net capital September fund program EBITDA and increase our have through come year today, projects XXXX expect multifaceted continuing And XXXX, of relative forward growth of XXXX earlier, be our raised to for our $X.X forward, September Year-to-date, year-over-year the with approximately ventures, net higher projects will combination $X visibility spent Full billion a many new equity billion. CapEx to capital about the billion is CapEx to asset we CapEx XXXX, to program. online additional to million net the XXXX, beyond announced growth from growth greater through XX. Given key flexibility is forecasted to flexibility utilize now through short as ATM as about be $XX spent also $XXX with sales joint $X.X XXXX. term, $X given mentioned we estimate with billion and Joe around preliminary a we EBITDA over to benefit to to

assets. Targa and asset. in the this in with are select counterparties will minority sell of potentially continue group already Badlands we morning, to announced commercialize operate the as to small Additionally, our process interest a

for very in and a strong employees very the outlook long-term a growth North business. of Dakota attractive We have team

potential contracts, nature of Badlands of assets Bakken, that performance sheet and long-term asset maintain benefit believe strong portion to our the fee-based control We monetizing program and our outlook remain sacrificing nature focused to on growth to continuing the in strategic the balance operation without Targa minority or the finance provide flexibility. significant and proactively this assets. improving strength a of interest the the we Given of

we to when and described published to fair EBITDA June long-term back help including we XXXX strong. that outlook asset to interest it executed expected that Targa's to all illustrated on As was XXXX first Bob is consider outlook minuses XXXX the to earlier, Joe that say double joint then some from if a is growth for like Targa have sales, we that since finance sales venture then, and look very

Our assumption for any forecast or from this export out in include morning published last we assumed through any of continuous long-term contract an unidentified LPG EBITDA are rapidly what commercial success continued assumed any XXXX and outlook highlights expectation do with consistent projects, The not XXXX. increasing business. our put June, margin

highly announced We incremental commercial including forecast volumes reflecting not an from yet already agreements. the online are likely to fractionation X existing Train plans need expected additional handle premium the to period estimated over mid-XXXX, and in

list beyond in for included We growth XXXX. the are outlook a which also not additional highlight of opportunities,

expectation coverage cash commercial and success. increasing dividend fundamentals, continued of which and which Some are sitting that require are XXXX but increasing outlook Targa wholly reflects debt rapidly in and the will others expected flow. result additional in of our free JV will sheet a very midterm, with left strength tangible, in execution of are and like balance acquisition stronger This it here interest our

executing remains prudent to growth businesses and incremental budget, service, a and we in control, on our commercially add financing our on what underlying Our current in our opportunities to projects on perform manner. getting on focus continuing time in

for that, line-up with questions. the So please Haley, open

Operator

Instructions]. [Operator

first from comes Shneur Gershuni Our UBS. question of

Shneur Gershuni

you that guidance said you they when information with XXXX, out to put the great of the and remarks, I assume hate start such question. your at of kind the all I for XXXX a today, look technical JV. I prepared as But With in this doesn't out believe

of actually to original original on correct would an be knows this today. way how it than look were is you DevCo, but of So higher it guidance if of DevCo your at let compared at the with it apples-to-apples sort the everything to DevCo? was to that if we it is where million-or-so, it basis, the look you compare $XXX number Who to out sort before to

Jennifer Kneale

That is exactly right.

DevCo JV you if those interest, we've some and factored sales obviously or the partially assets, about So in think that not previously. of were JVs in the done, the of

on would haven't assume obviously. an this we obviously higher outlook any of so basis, be sales, that we done asset any And ventures if joint we those also apples-to-apples haven't or executed

Shneur Gershuni

clarification. the for Thanks

two Just questions quick here.

our today, as specifically the fracs, environment areas other on Given in well. but is

As gone? market of Are to and backlog, added fees? in ultimately translate Are have higher new getting the assets returns overall? how better you sort you to terms this FID you contract longer are able terms discussions the and higher into

Joe Perkins

Good question. Yes.

deals a of obviously our incoming have or longer XX for getting we for and longer-term related on more But typically currently fractionation some. are we to by downstream focused are long-term. nature, with assets, that We years lot services fractionation regards are

For Grand Prix, long-term well. there are as contracts

needs, made are just working that have fractionation with short-term the with but we that needs for time. time. and of trying customers do transportation Not work to to longer or provide So period services, a shorter longer-term may our them our

Shneur Gershuni

season can some doing I same very to the X turn frac, peers you're assume achieve typical And talked Several eat than announcement out X able your your your around additional today. or any elsewhere That fries to your about, Do lines. those in have last are you you LPG average? work one as makes that more you've follow-up. high screws sense. NGL the out by during of just see opportunities of earnings on evidenced returns Brownfield to better capacity

Joe Perkins

Yes.

capacity. increase always looking can how our to So assets see we we're at potentially

Charles time. a range facility work while We there more, to a increase and our a done also Belvieu we've a to little frac frac. Mont summer the reliability turnarounds in or our small well. utilizing just done are as over run wide in get did able additional to But Lake We even minor way

board, see be other like the drawing that find fractionation do is, over relatively we Those turning are to small where well. we we market with may incremental capacity, things to rock on as some able have tight the additional are any capacity. but how which the we So all

Joe Perkins

refer some we those almost say the so would I of and call, the go didn't returns. talk infinite to multiple, far previous We to about we in think project as

Matthew Meloy

frac capital, Yes. the Not for bring down the much

Operator

question next Colton Tudor Bean comes Our from of Holt. Pickering

Colton Bean

like XX, Looks EBITDA the XX provide bit what should XXXX just been more range of somewhere versus of the as to you the end would can in one range color a to other?

Jennifer Kneale

I mean, I think could various potentially that from our perspective, talking we part spent the tightness the a about country impact around of lot of in XXXX places business.

to we will similar around trend assets. being and end constraints and think activity appreciation of activity. prices you is towards extent enjoyed that guidance experienced throughout Obviously, in variables, slowdown the that commodity our levels commodity are that system it issues So potentially Permian the Obviously, the about be big of then QX that higher our obviously of XXXX. and if about could just prices prices one. higher can we That some producer

Colton Bean

like was that, XX% CX, it fill give frac there, is expansion of take Then the may a comments can be capacity with And been XXX,XXX fractionators? coming sense. Makes the Galena seems on it fracs? CX the of to the Park. just handle barrels million just month you the out has the Do Okay. to Matt XX sufficient just capacity, anticipate barrels volumes circling back capacity at nearly kind expanded day a looking of if you the or

Matthew Meloy

of that. more Yes. to I'll on a over to color Scott kind little actually give it turn

Scott Pryor

Yes.

at a the items of other number lead perspective, announcement already of way guys you in we've Park long line capacity projects look think it I should at Galena refrigeration from for a that increased announced. with ordering the is

to to specifically Matt's well adjacent order XX%. capacities. gives and The was first dollars to which also forward depending was what XXXX. mid-XXXX. basically capacity of in of points pipeline debottlenecks a the would moments docs quarter our but us upon of Those propane. refurbishment lot which a Park, be to our online in that as of gives The existing down what That us reach are well whether dollars propanes behind those Galena one of Galena that again got products open our in we enhances seeing increase dock the are further capacity. from refrigeration was refrigeration be increased we We're But significant that nominally both And types then of our script refrigeration as of capacity XXXX, the spending Belvieu XXXX to older be as upon in up are speaking, sufficient an ability see refurbishment of of or projects at moving pipeline loading saying butanes, XXXX footprint types of should a about that it's learning, online we based our opportunities types for types Mont we've that unit loading, we butanes, our that ships as we're Park One today. moderate of of the docs. on to and with for

reason and footprint products simultaneously and is to continuously expand, and we have handle add what we an are and can one we Now thing to footprint we refrigeration announced we depending our butanes will at expanding with types look above existing facility additional today the is of loading our through order for it's if necessary why upon that opportunities the over The both the propanes get same always those. in time. refrigerate

you varying see to variables. there types much relative reason volume of those the degree how the why So can of doc you across put is a

Colton Bean

final I And then, question... helpful. That's guess, it. the Got Jen,

Joe Perkins

the Scott lost our XXXX, script, is our as case in leverages moderate and highly capital, place for XXXX forecast to One, adds. and existing the quick in XXXX Two in referred in investment outlook. already

opinion. a really of kind making deal already place good made. making it there expand secondly, having leverage and is capacity. our And in investments a and the to it's infrastructure the great So had in are we've numbers that, other lonely moderate in of already investment the my already about by We of incremental there asset power

Colton Bean

Or Yes. just potential Jen, that? you are that Badlands the any plus sale? at or G&P, crude? the minority then, clarify on That's Is helpful. looking Badlands G&P guys And

Jennifer Kneale

as that processing the LLC gas the Yes. entity, both We're owns assets in minority and is the which and a at Dakota. partial up gathering looking Badlands sale all entity natural the of North interest it crude

Operator

Our next question comes from Jeremy Tonet [ph] of JPMorgan.

Unidentified Analyst

I have guidance question assumptions. just one the on

that these on the provide timing more And behind can to any incremental XXXX some to opportunities growth the given looking here? lot processing assumptions? a processing expansions as do pulling X, other any And potential being also of ahead this point? there forward So see the follow-up plants Slide assumptions of Grand at for are that, just within color at backlog, the added expansion the Prix you you mainline

Matthew Meloy

you I maybe Jen start there. from guess, and can go I'll then

the of gathering volumes and the drive our with So customers, base this fractionation, if deals the we have assumptions companies. Grand then in get higher but processing we underlying will through and Prix incremental down producers, upsides, some third-party, going midstream

something potentially the Prix barrels. XXX,XXX So the would fractionation could from is times Grand which to those up and this and lead the into about putting initial expand volumes more higher could about for that talk about the lead success on drive even capacity continued commercial We our XXX,XXX did facilities.

needed in that this forecast. be So would

Joe Perkins

XXXX. In XXXX, early you as as said

Matthew Meloy

Yes.

kind of It estimate. plans kind the after timing in would of it within this mentioned I the we exact need XXXX. that plants would as that on ratably those you be coming come other processing period side We through clear, time of be is can could said, reasonable is to XXXX. when give have of and forecast, Just early online, on didn't And a we we announced of think three that period.

Joe Perkins

And the say we we XXXX. other did did mention fraction

Matthew Meloy

That's Train right. And assume, X, Yes. XXXX. I that

Jennifer Kneale

forecast and That Yes. will to XXXX. EBITDA to contribute

obviously We we online, additional easy modeling growth be of X out Permian when should haven't additional the timing to you're predict Permian come processing. will hopefully if our fairly but expected of plans described the the need when

Joe Perkins

The Page you of question, into also way of upside, right emphasize additional there no in X. wage to invest column the mentioned which unidentified I is built that, are the unknown, the the asked to some that want

Unidentified Analyst

That's really helpful color.

going to processing, be color can like assumptions you just volume Permian provide those Is XX% XXXX? Just at a looking are assumptions like any behind How this, follow-up volume like in there? guidance like sub it the or you Permian, until on here. guidance - guys the

Matthew Meloy

Yes.

you 'XX we 'XX for out haven't given the in quarter's guidance summary view next call earning more detailed February. We shaking anticipate how of yet. full We the giving see

wanted we'll in 'XX, significant early blender February. give this for there assumed Permian probably for to but detail you regarding more but in 'XX. we'll So the are the look information growth provide little some We forecast, more a give

Operator

question comes Crédit next Our Dounis Spiro Suisse. from of

Spiro Dounis

flow wanted funding getting start growth that's Just all inflection to that with off and to cash coming. this

nature visibility products. of have appear EBITDA guys high the here You on a the these given itself to just

make but to higher curious little to about you forward? could multifaceted going talked sense maybe approach, at bit know we Just leverage, run a see more

Jennifer Kneale

this Jen. Spiro, is

that and we want in beyond, about flexibility or more it to as gives capacity additional I us EBITDA potentially in that would think obviously bit the leverage more for XXXX, certainly do. a quarters lot a us XXXX we is, visibility and comfort the leading letting also one if but ramp have give us when leverage think we quarter to gives higher on little I think

and I I we XX%, think more going obviously we And than always a if forward, flexibility we equity, debt think, about to the XX%. same we we we issue on manage want, like than prudently we to equity have XXXX, lower obviously potentially had call balance sheet. go think XX% about that are that flexibility So talked but bit funded felt less historically little it focused

Spiro Dounis

heard well. on others about Okay. pretty LPG we exports, you're the that And forward as obviously positively then talking going just from outlook

wonder of side? like things rate demand really and from trying sense give still sticky more buyer of if the much that sentiment that or eating Just be color arbitrage, type cooking? driven And is a just may to market on how of

Matthew Meloy

of look that number We into obviously it would things a couple a different add It's at that. from angles. of

the of see perspective. domestic our we're One growth fractionation growth plants, at that when footprint that pipeline, side, just haul production upstream look system, which, gas we the from and a this going we're seeing our think The gathering at that you our the about fundamental all long increase our increased expansion whether processing propanes jump on sure to to and find Because is. find that our seeing make footprint demand of while domestically, the footprint to butanes doesn't allows it that, have us see to domestically that order of to in our off market to means its not for integrated water. has place way

edge. the the way down We water's have to all

that, that As of move result will production increase direction. that a

in that great perspective. we're So a position from

we're U.S. demand growth needed and the those the Africa we will production with is that in We've the the obviously we're seeing complement that and to East. the demand the the in demand areas Far the the in through side, pools before one increase U.S. the in and Far certainly On other types that that of obviously marketplace. is predominantly feed India opportunities domestically within other growing continued China calls, only And continuing have see think supply East, growth to mentioned it if you in about

So supply of are more and certain to out the degree. becoming a it's marketplaces supply more to and bit U.S. little of of accustomed demand origination push the a a a pull And

other feed it's basis, So a things its that, lot from it's from both grow availability There's side, helps obviously market there. it's demand that - and of fees domestic to that demand, growth supply PDH demand.

Operator

Our next of RBC Schultz TJ from question Markets. comes Capital

Torrey Schultz

on upside just how first raise far current that some And operated to the think expected through expectations the to trying end your base XX-year the quantify of renewal outlook. expiring through your mentioned hit agreements contracted dealing as given I potential as in much are And the of think outlook? the the of what's with those I just agreements. XXXX currently Matt, agreements the you But you XX-year Just fracs, or

Matthew Meloy

Yes.

have much a term, coming have said, that portfolio the in is we the we few both months. really provided this XX rolling renewal long-term there We for and years up ago of contracts not and a and of next we agreements, in XX, a Really short T&F

X, a of fractionation the do coming But have lot to with is Train side. on capacity not on. there to on So more come coming X with up we contract to X going that's extend obviously and able

agreements execute continue satisfy demand. able we'll to to longer-term that to So

Torrey Schultz

then think payments other XXXX? of And invitations you that could by or Okay. growth Or to online we if is - contractual roll existing we and provide frac about of just if beyond to start volume any for some think occurs? context if beyond just commitments transport coming the and third off NGL about when some transport parties, the

Matthew Meloy

we transportation very have comes shorter a we that on, Prix to some able are made makes and of going pipes some term, the are Day So be have kind long when on other volumes we're term. side, some X some to move off Grand

moving there be going get over we're kind portfolio frame, - that a that. to some the time benefit of that but is is going it's in to of transportation So that this it

So it's going Prix. to to more Grand more be overtime moving and

Joe Perkins

new to reality, stuff, assumed Prix. most be our of most of our stuff vast on as In new Grand should going the

Operator

Dennis from comes question Merrill next America Bank Our Lynch. of of Coleman

Dennis Coleman

of know have anything as that lot locked a GCX I here obviously a if can but as the Is that's liquids, opportunity, to gas bring Or you gas? that well. you but of processing that's up needs get lot the market obviously capacity additional I wonder there? there? focus this interest, on, capacity Just on anything opportunities all might you for about there talk you talk and the about,

Matthew Meloy

turn answer it Pat to to one. I'm to that over going

Patrick McDonie

about distant Wister takeaway obviously of gas an year, of announced far working BCF move Permian. the too we out additional pipeline, participate did residue situation. We we world talking day in on as GCX to are is along the October and in the that past, everybody Yes. in next project Permian in also would the which GCX comes the

We are active. very

We away gas make and sure take markets lot contracts have our gas. and that a to our of customer's

get of across also have Permian. it contracts short the period customers to interruptions through potential Our those

and consumption about helps of well out April It some coming to through the of population time consumption to general from DCX the sites frame. October both think there. lot time, winter prior throughout next alleviate of that you we coming of forward it's problem. that haven't you be of like gas over the obviously work gas interesting ourselves If and the a everyone it got online, there of going and year obviously be issues to in an seen for But residue we there will will years We position that's and that gas next continue on sure. Permian Wister to growth in solution moves, the yet, Permian. America continued project and make less hopefully

Joe Perkins

Dennis, a term, firm our the term. spot. your much In short majority what we question a we has the how the vast has component, of multiyear of vast, about short have characterized is

flexibility across supply and more variations far we're weeks. bit and little a in that gas we manage stuff flexibility, variability have daily in to But type to are with of have there we unexpected volumes. because time long We ever is for producer have days managed and across have always than been producer a

think in other than our in a We customers So Targa position. we're players good better with for in a position the with most are Permian, example.

Dennis Coleman

that Obviously, if right of sale? follow-up, can, Badlands you on the funding just of sale? assume high is And question across DevCo potential I expense you go year. My thought positive, as you've buy a a a Or or being helpful. similar? Would it's should that as the your a and leading it very while talked you budget. impact investment That's is Great. renewed have impact could will using variety grade cost a capital. of it about like it S&P a the lower? fairly I used part Is I towards of interest look it be DCF EBITDA interest this method, Is still does there expense it up arsenal? any then that more is updated potential that not you ended of back? on kind the wonder wonder just lastly,

Jennifer Kneale

So it's Dennis. question, a follow-up quite a

those that we toolbox. our XXXX time a of or XXXX describing financing. or And approach from of potential that capital, end our and XXXX a of asset multifaceted common perspective, describing XXXX, really in utilizing think that what And public different of preferred sales. obviously obviously capital to in terms a number in through could were frankly mean spend go entered I lot then private tools

to what as program. we to and very as I think, be about 'XX we is think will increasing partially forward obviously how look finance EBITDA, the advantageous this beyond, growth to us So

the structure buy which very to think perspective. did interest four Related JV that favorable help sale DevCo, was of I from the financing nice years a flexibility those potentially got back a that that to interest, a We also partial to would very we Badlands. announced we is us. in structure Obviously, and the

had because where already I list to just bit further that we've done is on probably if that down we'll the now, think a rank little it. I right

that And minority outlook next. do when EBITDA, that evaluating given our terms in think would so a higher. list increasing we're Obviously, interest related just we the my may my announcing in expense about Badlands, and on are in about be question or part going follow-up EBITDA on your that's our backhaul presentation, list to then that what sure reconciliation sale rates the we of we're #X LIBOR assume interest potentially obviously higher, is And we I'm first the not today here.

a So taking there. approach those just to we're conservative assumptions

one the obviously our there anything than be take it ready. couple step forward. outlook could fact is they of takes the in I upgrade in of path I of put years rating it's June the last front S&P more sure a with good spend very but now we outlook think see and And here, pleased motive think of the have refreshed related balance as want that highlights mean else. job story obviously is will flexible to but well. the sheet going to year to investment where the that to frankly, agencies that And that the so and future a ultimately a unfolding getting we're try with grade with time last positive have XXXX them stronger very factor obviously in done when more we've going to that's much a over that lot understand and working take, a you good the the us then think we'll that us, we're results, together November company that and so and we we make I of

Operator

Tristan Our next question comes from of Richardson SunTrust.

Tristan Richardson

of back about circling in capital feeling significant refrigeration to Mont there line more think would capabilities announcing a be export Just Belvieu. capabilities export LPG the Is terms the with deployment before required? regional to the and

Matthew Meloy

I to doc keep ceiling refrigeration. about I and And can doing thing each line In Scott in phases, Belvieu to end wondering our and expanding that work. right. talked really outlook, engineer know this done to what we the bottleneck. we we mean, Galena Park don't the going is. we're We're add have remove incrementally we're are between some putting say in

of fractionation. So we off need bottlenecks. type those good to do gives adding If see continue more, liquids us this additional run refrigeration of coming rate expand we can XXX to we

Tristan Richardson

customers by we then should And the more underwritten the supply or think helpful. That's accommodate enhancement just optimization about push? general to

Matthew Meloy

have into When as contracts got a and new both. entering are as you a a large facility up role It's that you of one. we are coming

it's term. more contract and how running. than add So to the business contracts. with working things add We're hard necessarily poise of to continuing this add expansion the are more We're to

and the outlook but see across total $XXX about having about of discussions we're we We probably our volumes didn't about for the refrigeration. given coming and additional we're capital returns expansion. this the really facilities talk million around capital, really $XXX the we feel fully good So million, this contracted, but for not it's contracts, that

line the So depending see forward. time for good upon to think about we're how going returns you going

Operator

Our from comes Wolfe Research. Keith next question of Stanley

Keith Stanley

But missed the XXXX I outlook if pipeline? Whistler exclude this. Sorry, is the include or

Jennifer Kneale

does XXXX not the The outlook pipeline. include

Keith Stanley

kind to commit With urgency just a of seeing less that moving to being pipeline. customers developed? on pipes and still follow-up that on Okay. actively X Whistler? forward And are you now, is Or now from act

Matthew Meloy

less and is it no. seeing actively interest, We're develop. not being is answer The

Operator

our And from Securities. Sunil Global question of last is Seaport Sibal for today

Sunil Sibal

reported marketing and in the seems bit a of fair three how and we kind winter pretty in quarter of segment going I of into couple in quarters the quarter what strong that think had you me wondering like you that a uptick months. seen was you've for seasonal logistics should typically next considering segment, questions today. of Couple a about the

Matthew Meloy

to do We and typically X relative led business, in X. wholesale which has some our question. have and to seasonality QX stronger QX Good

short-term we have but just QX. saw though QX as still our going we and then across opportunities say And some QX, shakes helped we some have seasonal and fractionation to us what What continue both export in expect business the to shorter-term out. business, like there. did and this be play We across fractionation look have opportunities well. it's do to strong really really out will across wholesale is same in in strong, exports doc, to how volume certainly facilities tougher and factors, which So see some that's volumes factors have the in was QX the of would seasonal to we just still in and we our fractionation

Sunil Sibal

And then price sort that. laid that couple on of terms of the that? guidance commodity out, of Okay. you in assumptions What's longer-term clarifications underlying

Jennifer Kneale

per assumes and $XX natural There's WTI, of a $X.XX per gallon footnote NGLs. on the MMBtu $X.XX for barrel per crude gas and page

Sunil Sibal

lastly just metrics, in terms all do exiting you guidance with in of the of the the then And it. where XXXX leverage terms leverage see that out? you Got laid

Jennifer Kneale

leverage 'XX perspective, guidance this the we going additional or clarification expect from when forecast. having I you free to our the our X about are not in But outlook then beginning additional at give think strong think on and a with sort XXXX. of of point to range, we Xx and in exactly and of 'XX forecast lot very think end leverage is in what be about of goal this to a cash time flow consolidated this

outlook on very, about we it balance from of shape this that very think term perspective, refreshed this have our again us sheet morning, you good at is there I the would that think in So delivering no mean our outlook. end is when

Operator

to to and for like concludes Lad call I today's the back Ladies any remarks. would closing turn you. question-and-answer Sanjay gentlemen, Thank session. this over

Sanjay Lad

appreciate a Great. be morning, you Thanks everyone Targa have I in Jen Resources. have. great we and that this was Thanks, will on may and and any for call the follow-up questions day. interest available your

Operator

thank great in Everyone day. participating Ladies for today's today's does conference. disconnect. a you have This you all conclude and may and gentlemen, program

Targa Resources (TRGP) 8 Nov 182018 Q3 Earnings call transcript