TRGP - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Targa Resources Corporation Fourth Quarter 2018 Earnings Webcast and Presentation. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Investor of Director Lad, Relations. Sanjay begin. Sir, you may

Sanjay Lad

Targa, to Thank our at XXXX quarter fourth fourth earnings Resources quarter welcome with presentation targaresources.com. company, Resources the you, Good morning, quarter Investors Corp., Targa for available Tom. earnings the release or earnings the website The the along fourth Corp. and TRC are call on supplement Targa for of section

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

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

for President; Our Meloy, Perkins, Executive Joe Chief today Officer. be will Matt call Chief Jen Officer; Kneale, and the Financial speakers

discuss Jen the before Joe With financial an questions. provide quarter and President, President, We over we now members will available McDonie, by today's begin then will update results management few who will highlights, senior Processing; fourth a Bobby I'll strategic Gathering Chief turn the and Marketing; and and team followed and and Matt, on Joe have Scott Pat that, Q&A: take development also Bob will and for the XXXX Bob. our Pryor, to outlook, Muraro, XXXX commercial Logistics Officer. following Commercial call with for expectations operational call present business

Joe Perkins

busiest to for transformational joining with the Thank our Sanjay. the was fourth ever pleasure what should as again XXXX year-end quarter another at year everyone viewed call. be one and you this It's of a years XXXX Targa, for and morning. be to Thanks, company. you

operations guidance, dedicated senior and process. capital potential importantly, for are common Targa $XXX of reimbursement day total, day by the asset year. capacity. course Grand employees extension natural XXX and the $XXX processing only called over of of approximately XXXX of company and billion $XXX feet exceeded joint across supported projects under construction investment-grade Basin one our Announced our EBITDA the already safety issued including Targa construction those so of that provided notes projects Mont $X a on Raised began and billion began agreements large sales. to million headlines, as capacity. added per million course record of And annual expansion another new In of construction on disclosed a with the incremental DevCos of major Targa Delaware approximately incremental the safe the X.X is capital year that XXX,XXX-barrel infrastructure company. on and per execution job approximately full into adjusted construction number Generated innovative with gas Created our savings cubic Prix per highlights Most Approved continued of from $XXX Belvieu G&P at significant EBITDA company. long-term closing. processing talented and by XXXX, fractionators complemented existing focus up proceeds Over in feet on Oklahoma. or our Announced cubic million the previously equity day million at energy began facilities new two with Announced complex. $X,XXX,XXX,XXX. southern our of ventures million development in the Targa

slowed into and we've months down. XXXX not X.X only we're Now

again. Targa rates, demonstrating story. happy growth Prix New to billion saying and We acquisition We've X.X-year notes of for the Prix significant of $X.X closed week. another we'll and major further STACK Oklahoma, the in Grand with really for game-changer is projects at aggregate of the bondholder secured Year, every supporting follow Targa. region executed XX-year So senior definitive the completed again, say exciting NGL we central some It next Prix far, development quarter, been agreements closely announce announced an Grand months, additional Williams now, be our extension complex. And It integrated definitive was competitive pipeline attractive our us will earlier the strategic of important and seems it this in underway does and support project. that XX% this we into deal needs on we very earn long-term for a executed CapEx and agreements that business, billion. NGL like estimated volume Permian out. a Badlands These and our Those approximately this we commitments for announced including you announce of leverages that the will the Belvieu a base, for our net fractionation who very proceeds Mont Prix on deal sale of recently Williams XXXX, over Grand meet few time our for it $X.X of interest for transportation and know Prix Grand in substantially generating proceeds new Grand many at tremendous were equity asset our

is you. complemented production for substantially drive our our with position integrated long-term this Number is will scale strength outlook investor for cash observations line the believe reputation of and free underway will more underway, and from two, plus the and become to increased sight recently one other widely has a a Gathering transportation, growth significantly expansions, to operator. G&P coverage Targa means has amount commercial the like footprint An significant visible of Targa that size, unique few one, strong what fee-based some increasing midstream unmatched midstream a of was continued Targa he and of plus infrastructure diversity soon customer attractive lead deleveraging position for rapid peer Permian franchise recently companies. companies NGL long-term that and growth our largely markets. company me. a highly of companies and us providing It plus experience picture of an only a increasing strong Mont infrastructure path I Belvieu flows, at very to large our of made and high exports growth utilization is as growing projects we'll cap domestic completed volumes Targa clearly growth. Number join robust flow group Targa. fractionation, and in cash to appreciated, to him and that scaled, commercial outlook Processing has special Our The success. Targa That on growth, path by positions. projects visible Targa list coming three, a to he combination above Number Targa investment-grade position. and And integrated asset high-performing, our said, EBITDA premium path, in success I'd NGL is highly share Fundamentally, fee-based on the with short business. G&P summarized, other significantly-sized improvement. downstream projects and and from dividend among And online an

likely introductory comments, questions statements and to cash expenditures I'd like as address flow. free I my to its respect wrap So and with should about capital be up where Targa directly

in long-term team, Targa the Targa Targa very are the closely the customers opportunities, Targa a and believe, assets, As good investor, Targa the we spot. privileged I to a with work

Our the different profile peer than because been last size blessed relative and years. high-return an companies has with projects timing will few strategic over Targa simply of be our abundance to

high-return strategic those funded and prioritized have partnered, not should certainly opportunities, creatively have them. We them, we pursuing ignored

of the second capital of relative in With utilized expenditures a it to turn path our experience to are is improvement. situation, growth, of coverage high resulting coming on scaled and lower Now a half and midstream that, such we flow rapid will and Targa projects increase in in beginning prioritize with over join peer in online, And we'll to creating visibility levels EBITDA. I'll even companies. list highly that a continue lower levels CapEx on deleveraging XXXX, path, rapid cash high-performing, investment-grade to now above dividend Matt. group clearly our short

Matthew Meloy

and Thanks, everyone. Joe Bob, morning, good

now and year, positioning that year. into Let's in over over record-setting XXXX the inlet XX% volumes specifics into XXXX translate get increased and Field total previous XXXX Targa's increased and our our XXXX the previous of Overall, the Permian of some beyond. XX% for the discuss how G&P

we is day highly highly Hopson cubic was cubic utilized. late XXXX expected operation both While early In our recently completions remains throughout million production The regions quarter And Plant Plant begin and some activity per will have start-up. as came and to feet utilized temporary and robust, and also and production in Permian million next at XXX quickly despite online be September large await per to in the XXX across Midland expansions XXXX. well Johnson the of delay feet via online Delaware operations Delaware, asset begin with commercial underpinned region, expected come quarter. day portion are producers to of Permian levels continued and to infrastructure producers Pembrook company budgets our late growth Basins, or Midland, activity the expect our substantial in adjusted is the of In forecasts, Permian in our completed investment-grade a operating expect Plant remain strong. we second many deal underway. In a second

Grand would our capacity, cubic Little quarter even XXXX. in fractionators track Our is day vast per feet additional multisystem capacity. of operating facility Plant plants per through processing Belvieu. multiplant, complex fourth Peregrine in is with remains to our million have at Permian majority be the cubic million on volumes feet additional and Badlands, of will volumes and NGL our a expected XXX the to completed day be footprint at in Prix These quarter been Missouri if XXX XXXX, second our Falcon had higher of the to to completed across the flowing Mont interconnected the we be our Plant the In

year. XXXX to X is will second and second half in of ramp Our Little Missouri the the be the over progressively quarter of online expected Plant

volumes XX% in Our prior XXXX average over volumes. the increased year's average crude oil gathered

As gas XXXX continue continued crude producer Badlands. we growth well both and the expect results in in to improve, for

Business. are the will and Turning to to this progressively expected fully year. Grand mid-year, Downstream operational be over volumes the half Prix second of around ramp

long-term expand additions which station low-cost as pump significantly further Grand to with able capacity are Prix's project's incrementally We enhances the value. required,

week, expansion the Grand target day, over third with expected is barrels from Basin. term opening Prix attractive This Kingfisher market is from NGL second of items strategic volumes capacity of of long an Conway cost phase, Targa CapEx up long pipeline's will per and Park. Williams segment initial our Bluestem XXXX assets Permian additional and region and in by to low-cost Mont barrels Pipeline the which will are capacity million. to through $XXX other the Williams' approximately interconnect We lead STACK and it's day. this the XXX,XXX of central Prix the the expansion parties pump stations of expansion per extension the quarter Last Oklahoma. of in to forecast. our we in STACK further the Belvieu into Grand the County, incremental will DJ for of to a extension Prix approximately into The direct XXXX, an a of highly Grand access Grand announced ordering increase Prix approximately originating have adding asset and to included and will NGLs from The downstream for Galena XXX,XXX extension a first cost significant in-service

unique purchase with Williams also is Frac a increase As supporting an That volumes. This of part deal provides or and of Mont business committed Targa incremental an XX% example capital X Belvieu. to in equity position, X one of initial Targa's depending interest may option this on Train option while our in overall our leveraging deal, efficiency.

our fractionation business. to Turning

XXXX. Belvieu Our increasing facilities full fourth volumes Mont year with highly remain during over XXXX utilized continue in quarter, fractionation the to XX%

utilized Our XXX,XXX-barrel second begin day fractionator operations per Train in start-up. X expected quarter to will next be and is at the new highly

per Trains Belvieu is NGL be is We pipelines. X day second in two are expect XXX,XXX-barrel fractionation to the They the new quarter on X. from Mont Construction to fractionation supply market and expected increasing Y-grade as throughout trains, directed to underway new first XXXX, of XXXX, quarter remain online tight and Targa respectively.

Galena robust X In Grand coming Park, outlook are LPG NGL track a on expansions Mont our to fractionation and Prix. new mid-year to we be which accommodate will complete between Dock for Mont us largely pipeline rebuild Y-grade supply Belvieu, increasing our the export from will by XXXX. for business, Our and Belvieu of

the capabilities CapEx of We million at on export enhance of to million approximately moving our our Midland third as much-needed The essentially to fully some We're a customers. to are the project facility. quarter forecast. Gulf expansion residue on residue our export also budget GCX in this to barrels Basin the butane current go other per gas a strategic capacity the Dulce. with among takeaway forward, the rates increase to depending remains size pipeline the barrels refrigeration demand, very continues, and seeing estimated of increase continue expected operational in in of our provides pipeline per forward and Coast residue project Construction takeaway Park the planned of and and our to In on from effective Waha LPG Agua for and/or month, Galena gas things. will included and commercialize to to quarter expansion project will work this our Targa vessel load of capacity X supply, interested further XXXX Whistler the mix XX million with availability and on is month XX which Express be time and cost this propane fourth XXXX, provide year, or

to interest capital or support requirement we for project, continue meaningful have to we project. any don't the ownership expect this While

of in splitter its Our at contracts terminated contract last third-party our working commercialization are December Channelview Vitol in start-up, and Terminal on of year. we asset is splitter after crude and condensate the

be over financial our With a results discuss Jen and Targa. to the and this outlook. the performing expect for We turn will asset present now to that, operational well quarter for Targa's fourth XXXX I to call

Jennifer Kneale

the fourth Badlands the Targa's EBITDA for Fourth recognition, $XXX X% recognition adjusted splitter a of coverage reported EBITDA million. the fourth everyone. cash and the quarterly Normalizing for X.XXx. quarter sequentially higher million adjusted fourth Dividend terminated volumes. lower splitter for and remaining offset the Thanks, to for include decreased by partially prices was Permian morning, $XX was with Matt. quarter Good deferred quarter associated margin, quarter the revenue fractionation payment lower due EBITDA commodity agreement.

Fourth our During quarter, only the disruption inlet in were million million our volumes non-cash X% acquisition. Permian Permian quarter on quarter third basin. our prices. volumes impairment and to the the The by than when increase The relates quarter compared Operating in Permian the Gathering remaining we impacted Processing segment, along the margin the a fourth decreased third in the on quarter to financials and quarter. a Delaware pipeline with Badlands and lower volumes our recognized exiting systems. higher Midland charge. more growth fee-based of $XXX a inlet partially commodity fourth margin increased third-party balance sequential temporary higher Permian business Permian goodwill each during over from offset operational XXXX by in volumes In goodwill was $X.X Permian NGL

X% were operating decreased LPG margin partially higher lower the driven quarter facilities. in fourth volumes the segment, our over driven and to marketing margin. fourth million in fourth to higher divestiture in X% primarily our Our disruptions and across terminals, gathered storage oil third-party third crude margin throughput, our the terminaling marketing the predominantly quarter, quarter, and and growth quarter In the due to margin down the by third compared of $XX due Logistics Permian production and quarter gains, lower lower temporary increased gathered export domestic Marketing the quarter volumes by offset continued dedicated Badlands over fractionation of Tacoma Baltimore strong acreage. by third when

At Galena highly fourth the from strong third-party remained previously-mentioned despite day barrels as As facilities NGL curtailment in our Mont of per NGL LPG Y-grade facility, operational averaging Matt averaged pipe. to fourth volumes barrels month. quarter, quarter fractionation mentioned, exports that about Park on XXX,XXX during disruption the X.X utilized, a the we our Belvieu remained supply temporary per million

and respectively, operational pleased are over We previously-disclosed Downstream XX%, year XXXX in and EBITDA performance. and our guidance. very year exceeded XXXX, we with adjusted Full Gathering year XXXX Processing our our margin segments XX% XXXX financial operating increased full and full and

million, finance-related driven shorter value currently the payable partially of the Moving May in payment be estimate the is the consideration quarter was The $XX with our $XXX by contingent estimated payment a volumes, a of discount lower by XXXX. fair million for decrease acquisition to compared to matters. offset forecast to period. other earn-out in The Permian third

gas year additional for volumes and NGLs for natural of the and Gathering approximately quarter, hedges NGLs, executed equity condensate, position. volumes condensate, Targa's we of Processing, of and XXXX. During XX% commodity estimate XX% of XXXX, of XX% we of fourth have our current approximately on of XX% full gas natural XX% estimate XX% percent we've equity that of for Field and proceeds Based we hedged from hedged

Bob aggregate offering and $X.X January proceeds billion fixed-income under XXXX, January, and we mentioned, maturity, due senior TRP we XXXX appreciate to XXXX and of support used notes Joe successfully from and the were our substantially borrowings in our As notes redeem July in tremendous November Net X.X% senior our the issued revolver. reduce X.XX% an from investors.

versus at As was May positioned, maturity the given we is a XXXX. On stack, end our quarter very X.Xx. of fourth feel of meaningful maturity at TRP's ratio the next compliance leverage X.Xx our well a debt covenant approximately in compliance look we basis,

was CapEx X.Xx. billion, in higher debt-to-EBITDA was Spending quarter year than Our $XXX the and growth fourth million. net approximately Full November. XXXX estimated ratio maintenance was consolidated reported in we $X.X was CapEx net

in of in of and that typically Capital capital entity Partners definitive Tactical managed that Yesterday, for holds it Badlands Dakota billion. expected. in a were than agreements Blackstone around that sell of quarter have to the Blackstone, is be, collectively and all number will completed into $X.X interest funds the GSO assets we fourth Opportunities, under Targa's to we we than timing entered the difficult projects announced Targa spend Given way, more North LLC, precision projects more by XX%

This Blackstone's close funded the a to investments, based on approvals conditions. closing the agreements, Badlands. operator Targa growth to to quarterly for expect be the the their our will substantial provides and the XXXX with will the We majority regulatory needs to redemption governance will hold forward. to Future sale, November a minority have our rights. consolidated $X.X expected preference second approximately Under terms subject anticipated minimum offering, a funding Blackstone and is capital the and Pro liquidation fourth transaction will XXXX contributions the of interest end basis. satisfying growth flexibility at of and rata forma is pro upon us our portion Targa sale the of was and to of customary metrics estimated year-end Badlands reported a in distribution on of the initial significant be senior billion. proceeds of sale Badlands from X.Xx pay the and looking of executed continue a for XXXX in a and quarter sale, maturity of liquidity capital X.Xx, notes Pro and forma debt-to-EBITDA Badlands consolidated compliance quarter. respectively, the as our was

average to the assume Gathering per crude billion we segment, Beginning the turn inlet to range over average with average expectations composite XXXX our NGL inlet total per gas day, which the for volumes and cubic XXXX, XXXX XXXX per barrel billion a our to in Processing natural between XX% MMbtu natural now to midpoint $XX average of per increase volumes X.XX Permian Let's year. X.XX gallon, barrel Permian representing for expect average. gas feet for with to average and the $X $X.XX prices prices prices oil to

ramp as expect plants new to XXXX inlet sequentially We processing online. throughout our come Permian volumes

total be inlet. per representing XXXX volumes XX% the Collectively, between with range inlet natural SouthOK to XXXX. than billion gas we to the X.XX average day, the volumes over G&P to increase average to approximate expect expect Field midpoint and X.XX in average XXXX feet XXXX average higher for We billion inlet Badlands an cubic of

G&P and largely average in and of Badlands in to expect we between $X.X expect in again Downstream, increase volumes in the growth XX% the adjusted to billion full driven We expected the expect the year by our billion. for to Permian than on interest to volumes XXXX Pro XXXX total forma which crude Train EBITDA addition we volumes both in X. Badlands year-over-year, XXXX. be to be gathered higher the also fractionation close is average second sale quarter, Permian $X.X

second our quarterly We as half X to expect projects, year. Badlands the Permian expansion, operations XXXX including processing EBITDA and Prix begin Train ramp and benefit adjusted and the Grand of growth through

price Our Targa the lower XXXX EBITDA quarterly that November a is price revised rapidly impact Blackstone on largest in our one, outlook mid-November, of activity XX% two, in we plan sale lower minimum which given, lower the a three, commodity than for of preliminary did in that includes deck; the growing ahead the business; from Badlands, range deck. published the forecast lower volumes a decrease a board price reduced given lower at we item for prices and in of using the distribution

quarter result First our quarter begin year-over-year to of coming and the the increase EBITDA Badlands a the for expected is and second of are will quarter expected increase second to the in the lower forma adjusted XXXX. expected as online online. meaningfully quarter come expenses XXXX, year lowest of be G&A be EBITDA assets EBITDA is pro growth than additional corporate sequentially to and Operating half ramp. projects to expenses fourth as

second We of significantly X.Xx, the XXXX flat to about expect dividend coverage dividend a year full half half. higher assuming coverage first than in be XXXX with $X.XX the annual

the Badlands is at in CapEx XXXX inclusive Our current interest the approximately versus Full what projects reduced is and published in expansion from estimate the Park Williams approximately million. XXXX maintenance forecasted to back the sale. pumps November, the associated also CapEx be transaction net year we minority spending and billion, of for $XXX Grand additional with Galena growth the announced CapEx for Prix, $X.X

will EBITDA strategic our flow. Targa compelling result for on coverage focus free of in significantly ramping remains on and in The increase XXXX sheet, back long-term and line our and executing cash dividend outlook a balance to is priorities half shareholder Our sight additional to value. long-term the beyond, increasing of stronger XXXX,

that, Tom, line for open So questions. the with please

Operator

Instructions]. [Operator

line first Fargo. Your question comes Michael Wells of from from Blum the

Michael Blum

bit A things here you frac the the questions I couple And talk I'll couple Blackstone then, Anything liquidation a Badlands. guess, can wants guess, queue. Blackstone? sell, is jump further of on to to happens if just in sell? I about you back the on you what then trends, little expand of Can a if, can that. to or what you if elaborate just upon want MQD

Jennifer Kneale

typically if five year-plus investors to in interest also sort period. liquidation Badlands Blackstone Obviously, that, a of we've Sure. in a years there their received. we've of minimum quarterly the is of to well the preference, of a growing first. the got that larger than whereby horizon implies said to preference Targa, liquidation and options we there But maximize And $X.X the this business is billion of that of Blackstone distribution. and that planned in share about, capital given sale, upfront, well rapidly assets get was XXX% MQD of investment proceeds it's the ahead are the are would sale an and to after is than proceeds us the that in derisk for a upfront that important the repurchase us to receive a to their back options share allow and there regards distributions outside With couple think our was there investment for the outside distributions first that

Michael Blum

if a on then, Is think taxes sale payer? your like paid? with be be there when taxes? a would how will does gain not, tax Okay. you cash there here you this impact And And NOL? And

Jennifer Kneale

a this of the of there have that to legislation benefits of Michael. to the us longer-term the don't of that in some on because relative of from we terms near when The will have tax changes benefit become we versus this, isn't really change outlook way that transaction. in some a later a means We impact much the years tax in taxpayer related

to cash years we be so a change guidance, expect taxpayer So on some the for no don't now.

Michael Blum

then me now. great. question And last Okay, for for

that the think you assume on you've to make So or unchanged didn't comment we the way about 'XX? there is in kind that EBITDA. for that of Should any is guidance change that in longer-term a light of provided

Jennifer Kneale

I intact. transaction. XX% announced the outlook, but our the that think is detractor Williams a We've sold from long-term outlook perspective, which absolutely we've in also now remains interest the the from Badlands, longer-term

to when outlook as that tell expect to I put excited think we quarterly ever our on basis. it. XXXX, June the semi-annual can for monthly outlook in is strong isn't of similar business remarks or you we about this from that out very But long-term as first update long-term the even our So a much that we're something been it's or and

Operator

Your Gershuni next question comes from UBS. the line Shneur of from

Shneur Gershuni

from which canceled if you where versus they was we I Obviously, an a the I payment of the But as there's for wondering sort some of upfront. revision, of splitter, can you mean, the sense. off, wondering if it compare a can adjustment talk commodity if is start specifics, can sort about there was in was I talk November gave you for guess makes apples-to-apples to of I wondering about now? XXXX guide today. sort was I

What's some that have see apples-to-apples Badlands? we for something So that amount Should it lower? of adjusted frac the at on you for assuming spreads? basis. for effectively you're us the look to Just an details

Jennifer Kneale

under you're also a worked November typically as prices plan. seeing related redo basically that to we early that, delta look fall, in hit result is with that redo at board what a our key December, the what on. in Badlands commodity decided of a we And to we biggest that was What we November, was We when think head sale interest in you color preliminary scripted we XXXX, which we components which XXXX. plan The lower try that at a then then price lower of new lower out the some remarks, saw plus Shneur, and lower partial do so the volumes today as the to you plan. versus lot put our to do and deck to in give prices I described look the

Our perspective the will manage we generate is to the able margin and Targa we able for be splitter will splitter. to be that for

on some And of benefit is EBITDA so based for XXXX included can in contract. view manage there without our terminated our or our the margin embedded that how asset we

Shneur Gershuni

enough. Okay. Fair

growth. turning in CapEx within starts now minute. quarters XXXX about least strong But come CapEx Do year big creep likelihood was and see you call due It flattened. projects cash that to by it's some, to won't there upwards and of $XXX CapEx? next Is further a have Just the a that step recounts million. XXXX? there some last to it, revised see recognize has over I at flows into any over of CapEx XXXX after creep that a of down place. been growth for EMPs we for slowing the We couple kind living CapEx

Joe Perkins

this Shneur, remarks, is opening trying address that head to Back I on. my on Joe was Bob.

project We've us which they like coming highly are we strategic at in investor As had I coming with we the of comments cash capital to what cash investments in, under which they're return you tremendous us that's And calculation have think every on a make. simplified what opportunities, the terrific at you make the Those capital are like benefited that from have that, what's as flow It's coming utilized, blessings. the covers you're time investments. I and shows to got that's multiples most with top-down from modeling in knowing visibility it when they're being generated. you whether want the investors it more going described those Much looking of described bottom-up or that progress. $X.X on, as on that creep, flow of would to online analysts wanted looking the capital and outside comes and half billion. work your one they're of team, from it, say in conservative be when at created or second our the high

the natural of in in using the of the footprint. also projects, have discipline We quality we to will of so. return that slug only strategic of assets, quality It's we continue prioritization, we described and up high because basis footprint been do and that that a Permian have our the the doing

building fractionators begins We at you to the catch up. that time up plants you Permian two multiple building have once catches in "caught the some," same up,

a comments to we feel about our and lower I EBITDA. even a position. that as that It's percent expected as think ratio that position. I good CapEx XXXX very lower says terrific or in a

a cash they're because longer growth. they about want to And understand they've in that how for that little waiting they're we comparing going may the Did now, be the extent, little did we slowing you're passionate, should down opportunity see But so a the experience meantime, the talk fact the improvement free and experienced it. EMP -- every to opportunities. them talk If I'm many it we we to with them companies address the the that slower deleveraging we investors the time some overly had and because have that than peers, rapid feel the Mostly, to about set headlines, coverage. in I do more sound to flow. question? other and

Shneur Gershuni

forth? all, infusion? I so in one your flow response Based statement investing forth. to And is first Badlands the cash MQDs as It sale. about it be in final, did flow does proceeds up asset of we given it and show up cash or a from it question. tax agency to to we the the completely secondly, accounting-related I it definitely perspective, will so cash the flow an is think show think with on Mike, When there financing type guess, and structure When seem doesn't about of going treat kind does. have any equity

Jennifer Kneale

work we obviously through transaction, potential different we structures. rating worked as we the the agencies potential as informed through So

-- Moody's our S&P will both view treat that treatment. and give it equity will it as so is And

Shneur Gershuni

show it it investing financing up will will as And as cash cash flow? or flow up show

Matthew Meloy

cutbacks. Well, kind minority Shneur, control, operate Since but we other minority a then our going with a how cutback it's consolidated it's going be with to consolidated. entity be of to still handle consolidated in we entities interest

Jennifer Kneale

The NGL cutback. usual

Operator

comes the line question Morgan. Tonet of from next Jeremy from Your JP

Jeremy Tonet

this I want expand bit a you I as XX% Just the see kind was if of the this number? as at was on why if just point? that in Badlands small wondering or bigger could right to for issuance against how a go deal touch last transaction opposed ATM to could. And time, up to number level you a far stacking as one more

Jennifer Kneale

you've think the that seen visibility the that we of is everything reflective look outlook. outlook equity the think long-term undervalued, over years, to is that of our do at us our long-term that couple last I Jeremy, we we fact when particularly, strength and have the of

minority the receive to we always of help interest derisk goals key going that's Targa, been contemplated our that on everything company. So first in Badlands, potential has sale proceeds one upfront to a at for our the else maximize when we

And valuation have to sell so if willing like or been willing that's We number. we less why great we up would XX% a would to been get XX% didn't sell those to right But structure to with. seem a have do structure. comfortable proceeds help we're right very was us to able maximize us that or a was Blackstone a upfront in what for

Jeremy Tonet

into industry And returns helpful. That's in integrated wellhead new different growth is projects from you really you the you times And Targa that to growing others to of couple like there. capture be give enables things seems touched midstream and in of kind call a do. player it can exports win a better the than fully in may guys this on

think do how just type I you with here? wondering these how going forward? industry in progressing was consolidation see the industry can't So guys evolving project, of others compete midstream you you If winning about

Joe Perkins

way interesting of question. That's really the asking a

win We I only by all win Williams competition, only compete guess few can they had win the there consider scale, our one. blessing, That share, to transaction the list I what, The think very with did of can and like them. me, that of we're I reputation, we folks and like opportunities. customer what win probably all going are I than a you that okay? us that And said who prioritizing is that, a competitive. but the that shortlist don't for presence pipeline, with large Delaware, fit of a think, them, processing then that integrated beating in that and some a gas But, player our quite investment-grade Belvieu, one. we players at share, example, have we look liquids did player Mont get who footprint, energy natural that's that maybe gathering look and more

is course we've that the a smaller we how now do this we on team year integration year. the of get it's buck a and But do function on How focused terrific the reputation larger place of with more projects terrific Our biggest that less projects. very customers. footprint put and and over next in bang the and our work for

Operator

Your Tudor, line Holt. next question of Pickering, comes the from from Colton Bean

Colton Bean

billion, that The I XXXX just XXXX up and preliminary follow guide to levels? lower to the around referenced wanted capital is a XXXX on commentary $X.X reference to spend expectation the spend. of there or the more of

Joe Perkins

level, our believe we in but We capital expenditures, prioritized prioritizing particularly had pretty actually to and than and I at capital can I relative trying than if time. EBITDA mean that's natural. I came in don't I that's didn't, to capital that that. lower do believe we're meant. I we 'XX that 'XX, expenditures XXXX went been have We I already We've capital. believe, XXXX described Colton, 'XX, what the I 'XX, Yes, XXXX. further a high think

more at and XXXX. Now coming into we've EBITDA the news is additional end got XXXX on lot a of good the

even a current flow. free the than opportunities. was like We on peer current our level organization level, level that a as We reduced many that slightly do have to a quickly EBITDA. at that very being get as to that's can't less or the would strain space flat cash We of doesn't a have of at

Jennifer Kneale

XXXX changed what has CapEx much we see think really based either, for that you about we changing have out on that Colton, I number don't looking November our $X.X think that put that aggregate we that plus view preliminary much when that billion forward. a XXXX

So some transaction Prix fractionation all already that plants a then And an bring horizon, Belvieu. the thought transport and you that in of the hasn't frac. incremental in when small at the that in particularly will terms at that included changed $X.X that also Grand of the incrementally incremental think near-term add structure on other it deal processing on about what amount, Williams will were we to to billion and and view projects Targa

Colton Bean

Got it.

the that $X.X no seen given on budget, we've And far change the thus billion? to upstream that so impact

Jennifer Kneale

No.

Colton Bean

Yes.

that's to higher. possibility And substantially just mentioned think Scott's QX, XX on commentary Park, million expansion an the month. to circling It of Okay. I a Galena million barrels like you as had XX of maybe back to sounds

or get commentary to allowing to bit you can guess that barrels to you a XX a So XX month? million what's million provide of to

Matthew Meloy

Yes.

a long Park talked doing as about and adding was refrigeration between to about going additional capacity, us allow we adding The Galena as to time Belvieu is some today as flow those there basically pipeline first as Mont work. utilize more allows we expansion effectively well expanding This -- to butane dock which talked XX-inch us pipelines. is to

and So there it's butane demand really ultimate demand is. on much a customer how depends

demand, we'd range. pretty XX month we'd less next be low leg that to real be million really at that of more a demand, it's extent the there's XX million To of expansion. the range. get step barrels wide end the the there's butane There's extent to So significant to at range of that to of us a the butane end high next

think the So to a piece key I refrigeration us. was

Colton Bean

the X is just of that And that we've on capital X.X? Okay. to seen that part the refrigeration, increase from

Matthew Meloy

It is, yes.

Colton Bean

Got it.

Jennifer Kneale

included that also And $X.X was the for billion and in XXXX. 'XX

into So XXXX. that accelerated

been it So obviously when XXXX number what the that have may had staged. on changes we depending

Operator

Our line comes the Cho from next Barclays. Christine of from question

Christine Cho

beginning mostly Williams the some volumes? Or plants the is set legacy opportunities tied What If that Williams new I aside plants prepared could with the stack of lateral over yet be that are you're Is in decade next dedicated their there contracts it project from there remarks in about, that game? due talk that you the start fair third-party that? volumes? that haven't coming the have opportunity is the to with could into extending

Matthew Meloy

new Yes. up some the and a their discussions I'd with about volumes we're plants new or there both. customers are say, from There area. in, plants potential it's of having dedication going

various have region course, that over there rolling up parties. or and that contracts both off in a we're And plants will So those there that time, of is that. discussions may portfolio then some with we're, so of having be of of there's

Christine Cho

initial capacity per the XXX,XXX well, can be day, that And ballpark of wise? to barrels expanded

Matthew Meloy

lie what there pumps really up guess, we kind and it what we I it. line Well, on depends ultimately of on put

we're So still that. finalizing

but a expect not depends but downstream of to initial also on that only capacity, XXX,XXX ultimately good it We be pipeline as well. the pipelines, that

Christine Cho

Do Okay. you find stake your their How you you guys processing exit? in to fine plants the for interest if someone the in think given interest you the Permian of sell it to multiple own the an sold Badlands? else interest about whole are the And the partner in this? has an then to that Or JV. get letting some just to indicated sold do necessary wants thing partner

Joe Perkins

Our partner in the Permian is partnership. terrific a

the different. of about think about on We the say strategic believe We how Pioneer, communications. to unless be I how might about think side just on monetized calls a different could equation. in like have partnership selling that force The And well comments questions Targa than either similar occur. it. most It's it their these worked Targa response work might and about I monetized potentially up that interest playing excellent relationship. be well. of We another is don't to to it's that they driving Those offense in discussions their player. of very have things us. to strategically for with both Permian

Christine Cho

just Fair in payment, enough. that is Last me the question. is that incremental growth CapEx? Outrigger or CapEx, remind included growth Can you to

Jennifer Kneale

incremental. It's

Operator

Our Richardson question of SunTrust. next the line comes Tristan from from

Tristan Richardson

XXXX, think about a general 'XX is thinking corporate to cost. in we the up Just to year-over-year new Should expenses projects sequential costs? about contribute how corporate step appreciate will the representation of think higher G&A fully XQ about overall

Jennifer Kneale

a expect up both that those many should G&A, fair year-over-year for you think into service. be just projects will OpEx are and how put amount, costs given being I

third go-forward to QX fourth actually was on in ramp and QX to the I XXXX. think have in we in a quarter an quarter, which at when there the perspective. I flat basis of OpEx you a from a look rate, fairly continue On somewhat where would were

Tristan Richardson

ahead, Go I'm sorry. Helpful.

Matthew Meloy

sequentially. and things one to one on, movement look volumes, look any for a at a one quarter, trend one total then tend total on better come you're as it at quarter, than There's or any a way -- at it's versus I any segment, -- new a to year look year, new referencing quarter and

Tristan Richardson

ATM Sure. compared think sort you on you market just, of I folks guys asset take implied proceeds expect with and multiple of magnitude the for the the CapEx. sales a out the the for proceeds And your given of surprised you outlook effectively of XXXX? just lot then the Do anticipate

Jennifer Kneale

able I think that fact very the the And Badlands transaction did done. we to get to was that for timeline was were we important also it us incredibly done get important. on the

minimize So that we desire levels. have I'd undervalued internally. is a To I have much that everybody demonstrated this issue it think our at how opportunity we've reiterate to a that that that to strong like thank these equity equity to earlier, worked I shown and we take on what view said Tristan,

well diminish a we for wait significant to funding to need in forward, incredibly that the As we as EBITDA, proactively we'll we're and we leverage. positioned continue to approach ramp look extent

Operator

next from Spiro from Our of line question Crédit Suisse. comes Dounis the

Spiro Dounis

new that assets where Bakken? what degree allows offer to to new the fund develop more more get out on asset what to opportunities Just assets those that growth on hopefully to trying long-haul the to, one And constrained sense to does egress-type of and prior Just you grow guess, Badlands, a this JV? faster. actually just JV of I degree Badlands you

Joe Perkins

up help? in the is in JV in the which we to Badlands Does the was JV. entire to additional This that would plant. that we to and we're is first today Hess funding, constructed extent providing that how with building are building is the by We're not prior Blackstone constrained. available. recently to it running clarify. JV probably the plant to did high-growth the because and construction. and It being current pursue ought investment Badlands currently were recall, said you constrained they Badlands you of another relationship twice, still Since it And changing We is my that attractive view, opportunities the going that wish We're corporation. that's a as JV

Spiro Dounis

there. I clarification Yes. the appreciate

by Second selling proceeds an do a get had through you equity but from numbers, like looks Tristan's, guys largely I Or follow-up way little at bit are one our I reasons? this 'XX opportunistic guess, think of their standpoint. could from one, done Badlands, more it maybe point? the maybe kind but assets see And a all I on you we

Jennifer Kneale

capital particularly transparent, when We've to as to we're our tell it. thinking tried you has be increased what thinking, program we're very

It's time, no, us fiduciary important process very of we active I look if all of to any take right other think underway been a our has investors. wants but Spiro. in At of this transparency responsibly, don't not have selling any any we for at are the processes assets. anybody our consider now, it, and to that assets our calls

Joe Perkins

rapidly that And the part what flow. hope also of is as transparency, Spiro, I hear increasing you us say cash

concern lot Second half That's funding. of about best this year and XXXX, there's into source. a whole the to remove

Okay?

Operator

question Markets. Capital the next of Juvane BMO comes Danilo from Our line from

Danilo Juvane

mostly questions. follow-up I had

this with that splitter be do splitter into will on Jen, guidance, running see you merchant basis? potentially the guidance you a the to year? fully any contract Firstly, embedding respect Or visibility are to

Jennifer Kneale

working I comments in both. that our on we're we scripted believe, said

So we're both the looking and us at with of commercialization asset, for third-party agreements.

combination. -- may will it a be So

Danilo Juvane

merchant you contracted? it's what fully guidance, within But are or that assuming,

Joe Perkins

time. modest merchant a at It's this assumption

Matthew Meloy

than we getting economics below was, a up, of, actually bread imply ramped was for would it just we And and assumption payment the put below the it timing modest put in previously receive would that below, kind But put and that. amount. in basis. contracted the the lower we all-in and there that We start-up conservative expect of a than higher in, be a part to economics contracted assumption. on Current current

Danilo Juvane

is for JV. again you relates MQD with second as XXXX? explain for the respect to Matt. guidance My it impact is Can that the EBITDA the to what Bakken Thanks question guidance

Jennifer Kneale

What significant as imply the because what are. that a investor said they're minimum that their that's given couple share ahead which incorporated first And move we is and of than distributions the because they earlier guidance. quarterly distribution, into received in time upfront that we our is of they the think thereafter. larger with of receive to I payment their receive through Blackstone would type of they is what that they that basis percentage derisk from fully trying us, a XXXX years would investment on

Operator

line Our next Becca Advisors. Followill comes Capital question the U.S. of from from

Rebecca Followill

change this First an a expect talk stake, you all, at think, you have that for that I for it's point? the rationale equity can don't to about

Matthew Meloy

the as Permian. the project, Clearly, residue so That continue takeaway we Yes. get out all to aligned to et we money Prix, Permian, side, a us to Grand done the that gas we're the said takeaway a strategic project. more to Midland, along, plants is underwritten project for ways with good G&P connectivity our in and There are make of support can on cetera. fractionation and other from

working and the line. other still to are over with we the owners So that and customers support potential get equity

support required that with to capital then You project. don't the bring equity have to have which an will interest

in we're with be 'XX working expect have -- any over get for it. still to pushed don't meaningful we But clear, and So them equity the to hope ownership that funding just do expect to we line. no and

Rebecca Followill

no be that the that But the you pipe, originally is were of operator going to longer case?

Matthew Meloy

when discussions, and what changes out. deal, in have come come I'd say, our initial announced partners been we the for in there's

such items forth out. Those details So were those construction. operating and being on ironed there's as been some back

coming So to the we're answer that. still negotiating right those in for

way. working all the along we So those were on

relating we projects any for because CapEx to project. need this here is what concern to And is that don't wanted you on so a CapEx say investors to anticipate

Rebecca Followill

we've on expected Super. then And been I one cycles. Badlands. they're assets and these grow, on good the know many -- through way too but to more are all

you and what don't and precipitously second? does drop happens the in first, oil these event to So Targa perform, are assets then obligated that pay Blackstone

Jennifer Kneale

first. the Becca, helped that we've part we get minimum fee-based potential were experienced Badlands, accrue. The to most then The to Blackstone there. aren't least, partners then there even demonstrate those of that to be at will is of a our asset paid to able the distribution are extent attractiveness the that extent be that the and out will recent the out there like available funds with profile the growth during, paid quarterly comfortable system cycles that To

Rebecca Followill

covers equity. coming treated But And is talked going and the of bit, the agency on 'XX things treatment down better? how the thinking a about about to you they rating and be comment then bridge one CapEx you that. as Are thoughts on Super. higher you last light in for estimates EBITDA rating If just can I when to on the budget think willing agencies Any looking can fairly XXXX look are low. this? maturely

Jennifer Kneale

to try we developments them than the tried incredibly agencies We couple be history. informed in more have with transparent moved years. to rating through. visited over We've the We last them keep of we've any and also of as appraised prior

half that any enterprise. We means more at 'XX see overall So rapid frankly discussing point, what and back that EBITDA growth we difference. the lot think with don't and that XXXX, into this I them see a we in time for spend XXXX

Joe Perkins

forecasts time go could looks and for we even the that -- with of problem. thanks agency that. with probably rating are go credibility the good better, we them, appreciate forecast, just are then everyone, they even you pretty which we we've conservative the not the and are say remind on time the I'll when agencies, That they got great, are get the you they better, at remember least sometimes again, and part And and our when into our range. walk forecast dialogue rating And in, assume into say, forecasts next among next credibility

Operator

from line comes the last of question Shere Brothers. Craig Our Tuohy from

Craig Shere

bridge on the to guidance. clear to want EBITDA get prior just So relative

a on significant the So with the XX% part total splitter to lower the quarterly lower combined commodity EBITDA that of bridge payments because us accruing would deck? guidance of minimum disproportionate versus net backing the out of the is guide Blackstone there's to interest

Joe Perkins

you and to what We the December do price doing thing could customers implied also commodity to we customers bottom-up the the may new gone had were think we left the really that back, have try is in drop. understand said best producer out after is November late downstream only I to environment and

meeting. an that's it do we for to little middle that were started when the board February effort a we Now preparing of until January past our able

done new in activity Just that on conservative I doing our as with thing, And baked that job been associated the customers that. we best think, producer in price same were the change a levels we've can. has reasonably the commodity

Craig Shere

Right.

volumetric issue. that left So the

So would you...

Joe Perkins

No.

estimate Delta Delta V. a our best had of in but issue, P volumetric the With

Craig Shere

Right.

proportionality, that is in piece in of Now so my splitter? terms you the it say the the on is area the question would volumetric downdraft perhaps of of

Jennifer Kneale

to minority for P. on After want being Delta clearly, more I and individual key that, frame tried pieces, sale. Craig, you we've the deltas. the give interest one, the Number color the Delta XX% to we've V got the Badlands

XXXX. an earlier Matt I the also assuming there. answered that's Frankly, we splitter, think are potentially versus depending margin on modest outperform made assumption that think, As on in that but we underperform in we for asset can that's market conditions,

Matthew Meloy

yet and running either. it completely And don't have we up

Joe Perkins

Correct.

Craig Shere

the of even all, eventually, skews EBITDA something more the in the versus get an will going be On to done basis out next -- obviously, 'XX, to of Understood. with years EBITDA Badlands, growth this from ongoing more terms your proportional you're splitter. couple

ramp that expect much would that than to we harder As proportional be previously?

Matthew Meloy

Yes.

I deal. right the items going that's as up show to plus think That's that's with those with you additional Williams outlined margin later well.

Craig Shere

-- up? there were Centrahoma SouthOK basis, on in basis, to looked sequentially a wrong. on It Okay. we though the net volumes had I'm reading a was drop But a shift JV? apologize a big And like and tables I now if gross volumes

Joe Perkins

rejection too. some numbers on With in there ethane going

Matthew Meloy

brought Hills QX. Hickory Yes, on there mean, we is. Yes, in I

that that. but I'll into bit little with related takeaway and some on in be recovery look there. start-up that could we're more noise of there Hickory increased a the issues being Hills rejection inspect volumes So for around

Joe Perkins

moving Oklahoma and around sequential some are say if the Hills at of start-up me, look Hickory together. because pieces, that at seeing noise often it that I numbers. bit. didn't was There things, the interesting changes a may rejection two you're out but have those in It I jump particular moving would

Jennifer Kneale

Craig, follow-up you, -- you think anything different than that's if but I the there's with that, answer. we'll But

Craig Shere

filling Great. at initial And you on XXX,XXX XXXX my third up late longer-term XXXX just a Do on today Prix volume last question, of perspective some on least the quarter. clarity or versus table? see still a Grand still the day

Matthew Meloy

was point said some we XXX,XXX barrels in What XXXX. at Yes.

we think I So feel...

Joe Perkins

Good about and better that.

Matthew Meloy

Even the is and better about This talked capacity. potentially to time that. of, we've getting up second, kind XXX,XXX-barrel about adding pumps that

think better I say that about to it. we So feel guidance, that we we feel updated just haven't although, better about

Operator

would over that And our I concludes Sanjay conference like to session. Lad. turn to the question-and-answer

Sanjay Lad

available was you that on Thanks morning, you. after interest questions call will for Thank we day. a in any the I be to great Have appreciate Resources. everyone the Targa and call this your have. may

Operator

our And this your participation. call. Thank for you conference concludes

may disconnect. You now

Targa Resources (TRGP) 20 Feb 192018 Q4 Earnings call transcript