TRGP - Earnings call transcript Q3 2019

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Operator

Good afternoon, ladies and gentlemen and welcome to the Targa Resources Corporation Third Quarter 2019 Earnings Webcast and Presentation Conference Call. At this time, all participants are in listen only mode. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Sanjay Lad, Senior Director of investor relations. Sir, please go ahead.

Sanjay Lad

to Corp. quarter welcome for earnings and Resources Targa morning, the XXXX third call Good

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

addition, might has been Section include be expectations predictions our investor Targa posted from made during considered presentation that Securities in Exchange Actual the those XXXX. differ should within of of A Resources' XXE reminder statements updated the forward-looking this an to statements. In of also projected website. call meaning forward-looking could statements that or Act results materially

that our For factors could discussion to actual please latest results of to filings. refer differ, SEC cause

and Joe Meloy, We'll team Officer; Processing; Bob Perkins, Our President McDonie, Bobby provide for an senior the Officer. Q&A. few speakers Chief Patrick And by President; your Financial results will Gathering who and Officer. Jennifer before President be Matthew call third Joe Matt discuss strategic on Kneale, also highlights, we Chief have available Logistics business a will today's for begin management following and the Muraro, questions. then call update outlook. members with Marketing; quarter will Pryor, will followed Bob and Executive Scott today Commercial Jim take Chief

With that, I'll now turn the call Bob. over to Joe

Joe Bob Perkins

on call. to the Good Sanjay. everybody thank and Thanks, you morning,

Targa thank Jeff continues from be a commenced and years into early transformed tremendous of On time beginning Jeff behalf of from we organization completed began years. very of of Jeff company. It also with entire Projects into leading remarks, most Targa. recently, administration. This acknowledge help which in an Consistent benefit of CFO. cash our well. ago. These which team, major recent financial worth positions leadership Targa the and operations over to I'd McParland. billion get we on X retirement was at have his now numerous projects Targa's projects long we to projects. $X Jeff year, online, Before and President We're planning. Targa's Targa for to exciting projects integrated term like shaping approximately our flow successfully as served the Most midstream these our succession the completed first

our day. company's long a Our continued spin. and in capture personal balance the employees, facilities Targa will improved downstream flow is expected cash operating as our for most thanks move focus platform gathering on every premier are benefiting term in With integrated executing Targa I infrastructure strengthen assets exceptional forward. capital, these with at business our and well express to leadership reputation and commitment, from sheet on meaningfully premier NGL want very their and future. business my team those and priorities we on our by lower complemented to reputation our both profile safely for capital our returns importantly, and and we positioned And processing assets to and talented the and strategic projects, and

over call discuss outlook. our the to turn now Matt I'll that, With to business

Matthew Meloy

rebuild our at Falcon new and plant the is benefit million in of to second good our are X Dock Park. we LPG XXX ramp investment associated from Joe the Galena Permian certainly Since quarter flow strong morning. with and Bob, an a as our Delaware, at cubic cycle. per Thanks, was our time QX beginning It conference facilities in export cash feet Targa. we completed exciting call significant quarter day

last improve to in in about earnings February. we call, expectations Bellevue into XXX,XXX to guidance formal about we XXXX Grand in day. exceeded continue will expected pipeline On continues per Our to operations of barrels provide financial said those forward very volumes perform early volume and August. well going expectations barrels And Prix averaging per since XXX,XXX commencing deliveries our we information we of operational when day We give and September. on more volumes anticipate our

about points in summary, positioning some well. I going think are will touch on forward, on to key As there like I expand our and we as then

First, growing and performance production and processing our moderation if have even expected to growth. business we to gathering is continue strong of a experience

from price percentage higher driving Second, and sensitivity. our commodity primarily a growth is less fee-based margin coming assets of fee-based

improving business from are leading improve from moderate core our forward our more and on forth, platform GMT and integrated growing to discipline, fractionation expected going Third, forward. metrics better along as returns. focus lower continued molecules to transport largely export CapEx And financial organization-wide capital capital of benefit our is and our moving going EBITDA, spend we

increased talk quickly ramped above our initial Pembroke about expectations. both our business. volumes Midland our up X% highly processing in systems as Permian, in volumes quarter gathering tracking plant basins Beginning third the utilized the as Delaware Let's and remain our Permian in have sequentially and across been September. the Midland In

is Midland Permian to quarter Delaware is in customers plant In new third operations our quarter remain second to on We our in end ramp. complete continue plan quarter. XXXX. in to Delaware, increased XXXX. schedule ahead our the volumes begin of Permian commenced Peregrine quickly next production the the next of ramping Our Falcon and of quarter plant operations from the track on completed Permian the gateway at sequentially of and Falcon track fourth third XX% as we

production our largely Prix dialogue large underpinned in recently complex. independents With XXXX. We growth majors is are NGL continued plants and plants begin that Targa the Delaware to with increasing Permian the integrated operations continued volumes down from and completed plants year expect will our in into our across increase customer from from our XXXX growth collectively growth. in Permian processing new from transported full in our production Midland our by customers remain regular XXXX will base, diverse producer and be systems and who We Grand system, forecasting fractionation our contributions our

and full incremental September gas late commenced premium needed residue Express operations provided in Coast markets. into much Gulf The pipeline

balance Moving capacity recent gathered base comes year take incremental available little as the fee-based resulting processing The third result downstream the online. full the through our ramp of including the this of to completion and will our of mix has But more volume gas new many the completion incremental downstream from towards the to margin. of increase Missouri business Prix, capacity our from NGO, plant. away volumes quarter Badlands, in increasing expansions a in Grand continue system shifted as

initiative across business. have also strategic margin underway, We which gathering key and increasing our processing fee based a our includes

estimate current operating pursue and and added arrangements to with certain to continue and fee in margin and to elements. have We also forecasted increase of to have recent percentage success commercial had opportunities We margin. our fee-based prospective XXXX, to proceeds based converting arrangements of review be our arrangements our now about incremental customers fee-based XX%

Belvieu downstream fundamentals in Mont to overall business, to robust. Turning business our continue remain

we we online the continues third higher XXXX X, operate continues barrels in volumes which approximately a fractionation complex utilization During are to expected the would late per Mont are Without turnaround have scheduled and now of and quarter be been at first Construction respectively. quarter rates. completed turnaround high our with third turnaround train and quarter In late related on Belvieu. at maintenance very to the X complex expected fractionation by day. XX,XXX complete,

be expectation on to growing We from utilized third frack based contracted NGO of highly and Grand both trains at our party expect startup arrangements. volumes Prix

loading barrels factors. increases In X enhances our XXXX, product of of export our we other LPG can dock load fourth end LPG and the depending which the month business, size, our per the flexibility our million completed beginning now up we capabilities, the quarter, XX of vessel at in rebuild third to mix, on among quarter where

the our barrels as export third well at next remains will expansion Galena of XX and our track month to facility effective quarter per of XXXX. phase million capacity Park Our increase up on in

Grand several downstream of and gathering projects moderate. capital and completion our of the For is that processing in Prix XXXX, substantially trajectory spend and expansion

continue based continue assumptions, this outlook on discipline our estimate focused billion net managing XXXX to X.X preliminary approximately current approximately highly CapEx X.X X.X our net on CapEx to with growth for is be and year, growth We billion and for to billion.

includes spend additional our from current currently for planning infrastructure GMP estimate downstream our the assumptions on businesses, projects best remaining projects. plus preliminary new and across underway Our

moving on our capital forward predicated Permian Bellevue gas for whether volume timing we're outlook or our range. with of net new plant The processing growth and is estimated among expansion activity and lower at growth higher fractionation would of estimated impact additional end the which levels,

timing a of of the result that spend. As capital

new continue focus highly our on and a over to time. scrutinize capital strategy balance improvement sheet projects, future thoroughly We all continued with around evaluate investments core future prioritizing

quarter. to call the that With Targa's Jen the now turn I results discuss for third over will to

Jennifer Kneale

to offset of contribution of GMP Targa's GMP crude was operating sequentially offset gains Net in Prix. everyone. adjusted oil million predominantly third about higher region $XXX was impact In operating one approximately morning, by early fractionation the our volumes logistics a $XX partially by was Permian hedge turnaround Midland second higher our from GCX. times. our third good than margin dividend with Matt, margin Thanks during lower NGL segment due quarterly quarter. inlet Grand startup the facilities quarter operating The and our prices. realized impact and third Delaware quarter the sequential quarter increased the from for was coverage and Permian EBITDA of margin the of our marking and quarter million partial reported contribution schedule In led segment by

the primarily operations increase the the Operating to lower of expenses in a our GMP transfix quarter segment Prix to over sequential downstream due into was quarter second a estimates, deliveries full decreased operating Mount partial Grand quarter third property tax while of in Belleview. expenses, quarter, and attributable in

percent commodity increase as our to flow additional continue hedging to cash we are to positions Turning equity hedges well execute stability. proceeds hedge

fourth We hedged all for than hedged the more are XXXX. quarter across commodities for commodities more and across than XX% XX% all

found disclosures hedge investor presentation. be Additional in our updated can

unrealized be future. transportation gains third non-cash offset by million the and associated we of agreement, gas transportation will underlying Mark natural which our During $XXX hedging law recognize to market with quarter loss in and

net $X.X As unchanged million. full for and remains billion at at forecast the XXXX approximately we $X.X maintenance through year Matt $XXX the mentioned quarter, our third approximately CapEx billion estimates growth announced remains end have projects CapEx about our spent XXXX of

approximately was times the quarter at covenant On a leverage of times. compliance end basis debt of a compliance X.X versus X.X ratio TRPs third the

EBITDA calculate given was Our consolidated to we EBITDA trajectory ramping think our using expectation our our to reflective reported third X.X X.X which times leverage was times, debt ratio ratio EBITDA. of consolidated EBITDA annualized more from to leverage approximately benefit debt our quarter to is

catalyst continue sales execute evaluate We asset to also as to reduce a and leverage.

potential of equity During an both and release, for which basin, on the are the we of the in includes in of million. $XX assets Delaware we the gathering method crude divestiture third sale closed and press that quarter, crude Permian, press midstream our that and an investment expected subject million, now In Midland the to works I'm our evaluating Permian announced announce business of for to gathering to we to to sell XXXX. release update we is in pleased very our submissions. fourth quarter approvals, $XXX the executed Delaware have we agreements The customary crude to sale business earlier our approximately have [ph] including close regulatory storage

and to we as their is momentum leverage our from I would adjusted night on been multiple also issued publicly were remaining thank with Combined projects now as XXXX, has future assets during to the the gathering attractive common entering sales that worked we and in lower need any in market Permian an XXXX. year-to-date we into Midland Consistent the Targa basin. No in team evaluating from expectations fourth like morning are tirelessly expectation based the early We're issue potential agreement. service. that for flow the double-digit expected with and do crude to sales executed dividend these our conditions, our in and equity quarter, benefit execute cash increase storage to be current the of exit asset through coverage the highest equity foreseeable points EBITDA providing and year our at not EBITDA. significant

turn comments. it for back With would like that, to I closing a few to Matt

Matthew Meloy

and like focused and continuing I'd to attention areas your practices, also progress governance. our our social performance. areas policies, bring to these in We Jen. disclosures highlighting environmental, which systems framework we published and Thanks, remain in safety, enhance in our to inaugural sustainability to in of August report, our of

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

Operator

the line from from [Operator Instructions] Your question first comes Shneur UBS. Gershuni of

Your line is open.

Shneur Gershuni

But you component Hi, start there's definitely some online, also know, We of contracts, down off if - of your you of expect with, thinking a little Do have good further. that's successes? others converting is exposure this? of increasing. earnings on bit can more Prix your had be bring Have commercials the you should talk a coming morning, fee-based percentage have a about and you in about some about everyone. Can it to sort you - we go-forward coming had you online, been proceed lot some and fee-based successes, Grand so, and basis? that some talk

Matthew Meloy

Sure.

we're sensitive capital So as hook to areas, going producers. additional in our wells spend growth commodity to up facilitate and out and for our continuing

history Given current on commodity relatively you compared to look know, commodity those points you the at when prices prices. of in some returns are, low recent

So want them overall what have to to show have it's are. our to have for to to not a continue invest difficult too you we And discussion, our margins producers.

adding contracts. those to we're some instances. fee fee-based So floors and components adding We're

completely preferences. not - as it like meaningful - see or majority the forward. we would - to so base go to investment we fee to protect to moving on we're But fee, just if of plus producer our depends a Sometimes

Shneur Gershuni

All as sales Really And the you more right. see asset road? see for would asset the the when selling about comes remarks. down a that Like, Perfect. you talked prepared you sales consider any just follow-up your in Do pleased in plus to opportunities house? presumably DevCo GCX question.

Matthew Meloy

morning that the other release was in press this asset crude the in we business So Midland. the named our

the and engaged to monetize So that's process to we're now. that another going we're that. one We've look in Jefferies,

doc. the right We're the export in asset if really business discussion But to not to what have what Midland gas look core, we're hard the down our base it's think - take complimentary, and now, only one down going that and a going it. value I gathering the a would of to strategic to that's all side. chains look be and the crude on way see processing might our and at continue across be

Shneur Gershuni

your final for One the towards lower Great. How range of much to be do end XXXX? flex question. you have CapEx growth

Matthew Meloy

Well, they processes internal of I look as to and our you a for projects what we're what going budget's give sort like that know, to up for think, narrow XXXX. relatively want ramping we include range,

get of XXXX. long That's we projects processing things? train X.X, end be added. to XXXX X.X, that going that's I spending fill and to when to and then the in we think to or comfortable a does is a major it's getting we timing pretty feel processing it's with X light, add move we And Permian. then I already to other X majority We're X to of the ordering think range. relatively there's plant the the when why X.X in then when green really really you just another some going And going it pushed our X.X times of for know, have frac of completion underway, Are and train lead it's that. up. tight So what's

Shneur Gershuni

the Thank you much. All time today. Appreciate Perfect. right? very

Matthew Meloy

you. Thank Okay.

Operator

from comes Suisse. line from question Credit the Dounis next Your of Spiro

line open. is Your

Spiro Dounis

you CapEx, coming to XXXX down great everyone. starting morning, growth with Good could, if see. off significantly, Maybe

Just maybe backlog $X.X of guys bind we is excess to have curious see instead the projects? use got beyond implies change new about $XXX the I could billion you XXXX. capacity it XXXX, which of or way what Or XXXX one aggregate it spending that of million right and to over much time? interest that think think CapEx about XXXX? You the kind How of sort figure to guess point between any DevCo at maybe about million $XXX in you

Matthew Meloy

us. think look step Yes, a I at is for capital XXXX spending I big we our think as trajectory,

You year. what last it's it was half of about know,

seeing that you're CapEx So moderate.

back of significantly. the gave last we to is point when that forward, that year, that to of guidance moderating was I in show the November CapEx going think going be

plan you I guidance. fractionation, So, a in know, annual to two we amount think but have, is on even be fractionation right? that, higher spending shows than for give trains, XXXX XXXX, which spending of normal we would

So we'll for Then, in the move guidance moderated right year, CapEx. significantly give know, XXXX as shows through we direction, annual a XXXX. step you the

Jennifer Kneale

So levels. in utilized that know, pretty quickly. this you Train will Spiro? expectation activity largely point, use, relatively the coming we very X, could today. quickly the we at when think they be is Right, highly about online much will XXXX, predicated assets It on be

flex And plant as they Permian, we activity that I Bellevue. then levels through levels think consistent so site, either where additional I are go when the with Delaware be in activity would stay If for a that with think to time of next then the if when our obviously that. as more delay we've our result the or fractionation expectations have today of CapEx near got Midland term, would decrease, the we the in we need and timing higher

Spiro Dounis

on how circling just sales. the Congrats using that so Maybe sense. deal you quickly. Okay, the done about And back on asset makes just about proceeds. getting talk think

Maybe assets needs, slower, a about hurdle there assets, sell outside as are at this look Permian, is free those little cash imagine, sort growth outside they're do or of maybe positive CapEx How you at where you valuation I the lower. much where I of to of which the bit think point? basins flow presume -

Jennifer Kneale

rightly this lot sale we'll interest reverse evaluating of the assets. We're we've relatively squeezing incredibly areas little potential out every point a system think our now the inquiry in assets. a around But were reducing that, side, agreements Good we're last capital, for be right out, we've that possibly where I you with our part able dime assets been on crude to successful Permian, and the of and really gotten and spending Delaware question. That's assets execute different We've morning of the in pleased very costs there for where Midland lot successfully that portfolio, that we the you across the price. everything within beyond some across is announcement are Permian sale portfolio When we the got as look jobs. of crude can. and of

just cash makes sell getting versus to always our open difficult portfolio. evaluating so in harvest anything flow us that's we're but to the with those that for be evaluation assets And that sense continuing a can decision,

Matthew Meloy

on and just in been buyer, a to you know see Jen, to we a where add as active And have to that as seller. market now, you - as that

for GNP, it's market the selling that. in For not a great assets

So we're monetize. opportunities or we what looking around that potential could not could and

for on gas processing the great and not You know, it's that a gathering market side.

Spiro Dounis

all Appreciate Thanks, it. everyone. Got that color.

Matthew Meloy

Okay. Thank you.

Operator

Your comes next from Tristan Richardson from question SunTrust.

Your line is open.

Tristan Richardson

Good morning, guys.

on to X.X X.X. Just the

Sounds is got give between, of projects sanctioned like aren't high project us a there number. projects that new assumption of and kind of lit in you've Could buckets that to sense some then potential necessarily green today? potential wedge of visibility the that you

Matthew Meloy

Yes.

of Export most Train is So are underway, X, spending to Peregrine train Facility. X, related that that projects Gateway, right? already

think Permian. reason announcing is be relatively we I out to in it's another the range likely highly do plant tight expect the

So spending be And gave we there will why a range. for some that's that.

see when we X then that going light any depending modest have XXXX. range Y-grade and we spending plant. spending it amount production And some million on about or activity. increasing green we're know, If is when of for $XXX result as train a for You on volumes are of to

two, drivers that to the kind range. low are of, of the be at high end those or end So

Jennifer Kneale

we the our in producers in systems, expecting on Matt the from are his particularly Permian. prepared remarks, As growth mentioned

to will there of and facilitate place their they successful. as growth to spending take is drill we're so continue assuming And that be a lot

Joe Perkins

pipeline Williams add into would Grand North I backed extension and highly is Matt, by project that the of that our is Stach Prix contract. other that to one

Matthew Meloy

another that's Agreed, project, large thanks.

Jennifer Kneale

in there. is That

Tristan Richardson

any delevering or for and just debt cycle then target particular prospects market updating And know, think XXXX, year the you. kicks as either leverage beyond of on multiyear to long-term because a as the thank follow-up thoughts we the post into we is XX of out? that sort here you Helpful, about consolidating end think

Jennifer Kneale

to goal EBITDA move consistently And it really is cash were leverage reasons from is to executing us. ours had last hearing the let we've one that visibility that you're say on coming and over we been to Christian couple saying us the years big reduce quickly given of now more ramp leverage; a the of to the been of the think online. we our higher and a project and as flow I successful our that for we exploring on focus so some that asset that's area that sales

a take our our where to as I EBITDA it's consolidated leverage is because time reasonable ramps. are four where is of goal think to it a but that today today get we times is given over even just there, some assumption, time going

at And it our that from quarter looking and of so we move got structure We years to leverage repurchases flexibility be having four great terms essentially we debt co terms take time. will through and repurchase the in out. as those the of fourth in

I additional as we as it feel have like lot we So options flow cash our to a of think use generated.

Tristan Richardson

Thank you, guys, very much.

Operator

comes Christine The from question Barclays. next from Cho

Your line open. is now

Christine Cho

wanted about start with I your to everyone. comments flows. increasing fee-based Morning the cash

just outright So that say component talking the for existing volumes or for you're it you place just that is renew primarily about to of it fair you're in just fee-based is and say new taking there's for would contracting volumes nothing is when be this if volume Permian. all the, and off and adding

Joe Perkins

mix volumes would new of existing. it's a and I say

volumes do that. So in you the to But in other well. growth sensitivity short areas as also would go are of it's Permian. term Permian be it is some have and us but there will life, elsewhere, and some less I price is POP and that stages say some We're primarily most but we are term, and we less in different those corrected activity, there's going to commodity opportunities I have volumes our in multiple producers and there longer some of think mix existing contracts other that for relatively a the place taking of with it, a be

Christine Cho

won't tariff is that Grand your say just on back exposed for in could capacity realization wanted share you out to capacity. I the to you're Okay about great the paying though talk I think we be service. faces pipeline less Prix you your price the to and just confirm basis even think should that line then the Waha And and is

Patrick McDonie

is that just ways gas obviously McDonie. a of or assets firm obviously one have to moving have those I from we basis. we Patrick This the is transportation different on mean in our variety [indiscernible]. that Permian move we GCX of pipeline gas

also at out We the we on really mix pipelines. portfolio Waha firm sales have people with have capabilities basin other to firm have of where We a firm transportation take away.

our coming own going etcetera. firm going have into We transport west back Mexico, east,

So with Waha. the good look of we out our but feel price our of that of a other some about basin it across most moving Waha out when some and the based sales on realized of we locations gas capabilities portfolio, of lot very of it

Christine Cho

expect in being volume this of is XXXX, And been bit your and or volumes and this still to XXX, one it Prix a question, of the could like was just so more you're is hit or at on barrels then better party barrels be XXX,XXX the plan. just September system to tracking side acceleration XXX,XXX sometime great. you it third function timing better on Okay, right last processing now be Grand hit per conservative the day looks on

Joe Bob Perkins

going our be to that conservative was It wanted to when we estimate. exceed we $XXX,XXX, that able gave month I'd was we say I'd so Yes, it full a felt and in we're service original gave. to number say make sure first we the

in our some Delaware, on that helped outperformance. the Midland increase sequentially of volumes Permian the both in of drive system saw You which

across it's I a board think volumes it our well. as the - it's it's across volumes is Permian, the really third and party

or we'll we some you give updated Prairie. giving think include in will get anticipate guidance XXXX, I volume Grand volume I guidance as which think some into - updated XXXX, we

feel I point - able we think that that at our XXXX. We'll exceed February. good bringing some be we we'll be good really in in to feel being about But updating about that. really $XXX,XXX previous yes,

Christine Cho

Great, thank you.

Joe Bob Perkins

you. Thank Okay.

Operator

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

is line Your open.

Michael Blum

everyone. Good Thanks. morning,

you're anticipate for this feel your slowdown or I'm get early from broadly to in because could you about of referenced not seeing little but just comments, in producer it are you a to kind side. talk do kind operate, mixed that basins be if seem more customers from messages just of what you So your various overall of a you directly you the we much really hearing a how midstream wondering hearing

Patrick McDonie

last XX% smaller look we're Delaware what some the substantial a increase. year Yes. months Pat we but expect our biggest but and and Basin. with capital in now This the address Permian increase biggest in done several spends a growth guys roughly I'll has our the not we've the Probably impacted XX% Permian Obviously, that. is nine rigs been over that may past Basin slowdown, on years and a large be in we've contracts increase year look. year? obviously, a on by in And year employed the by recent level and activity on you past, in more down Would have generally, if of XX% those lot is that nine-month Certainly, at large and capital underpinned a the do and the there the Permian, majors the XX% independents. we increase,

you've growth committed being to are; robust expect who the that expect we've The commitment seen the releases. our drilling there. Our drill side, and of coming know growth producers have their base. basin, of Midland producers line a see you bit are the those level public activity and continued would there. got on we smaller side Midland we obviously activity off of them Delaware on We high. sight volumes a is The level - They good

about and really Belleview it's Not It's into our through We coming all is of plants our see some growth a growth. materially stream. part So to lot Grand there and slow going impacting And hits Prairie integrated the down down good at us? on Yes. areas? stuff that all. that's to of it is Is all some robust our terminal. to get export GMP fully and it

So for it. for now when we us look at XXXX it right looks fantastic

Joe Bob Perkins

independents large our increasing And Pat, that, point too. to from just is one share to an and of majors growth add the

tied bit a Delaware ramps ramp growth, rigs independents slower the it major the increasingly of our who As guys. as move large and than some little is we to smaller the

Michael Blum

it. got Okay,

steady? and are rates Second LPG trend question frack you capacity to here hold new you can seeing is seeing amount mean your there? you of in expanding you're as a any rate adding I are just fair export speak of us dock, Thank global Down? to a updated could as dock. you get to And going that. your feel wanted on Are for they give kind you're views if demand up? then just around LPG that, Just related you.

Scott Pryor

secured the on only and by look the have our And expansion basis, Scott. larger on are good fractionation. talk not it's fractionation on we that to in Grand that upstream highly to inventories larger as our we and by highly her is you side, online for the that the is on our have forward we've well. the frack in those the And we've that highly months. again, and we upstream; are Jen are ultimately that the to we seen is that of integrated dock. to looking Train some as that on have not frack. frack on spot and that the independents you late it is coming platform. the When the will some around into Pat at some related our in comments, we year. that to all frenzy our increase it seen in frack in got feeding supported a in our business referred Prairie those rates same X recognizing I to it's at through our spot because look frack supported down time we increases And forward side side, seeing side been performing companies, that basis operating when though fractionation say on This last contracts again, There's producers pipeline the Even business, It's focused would managing contracts station the in market feeding that transparency the in quarter. be utilized we way said first saw and this

dock quarter, of our benefit seeing on butane benefit of is side the market our see refurbishment - Dock there. On The we'll de-bottle again, primarily already business. to said which was that side strong. out that the seeing and business, that us of necks in relative announced We're the we're from completed, we we've fourth that will opportunities our the export the across X of that benefits we

in We to business way to well are what forward. think and highly as going I links fractionation what as across back our tied third from a today GMP. contracted forget that sometime barrels up into got we'll to the today that'll be million year. we another continue relative XX how roughly highly which up barrels of us next benefit And also adding XX again, all dock is don't from which that completed looks our growth as in our quarter refrigeration, million steps us of to quarter expansion the the And it tied to like export third additional is we've year, month next

Michael Blum

you. thank Great,

Joe Bob Perkins

you. thank Okay,

Operator

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

open. is line Your

Jeremy Tonet

morning. good Hi,

pick keep that average or the progress kind getting to wondering is ability change kind of versus a to years, there any to earlier for higher, the where about was being like been nudging big an mean XX% for wanted has and up or Just year did it expectation de-based I you just XXXX, historically. that's that pretty TRGP seems continue was your over the if kind number to that of comments the of step up? rates are said

there. start to wanted just So

Joe Bob Perkins

a but line, and to we up Yes, maybe an average, the that it straight XX% is see in continuing right. continuing but not

percentage continue So just to increase that fee-based time. should over

half fee-based but percentage that of would is than average. higher back year So earlier, an expect be to annual the I the

Jeremy Tonet

point, And I'm guys hedging? I you've about much you think if of not do how this guess touched on you locked now. And open at sure XXXX exposure how the for for in as

Jennifer Kneale

We're we're I on hedged much that work focused our across for as commodities higher stability begins Jeremy, over cash leverage and very is XXXX, XX% and all think down. to flow

back the this that half significant would I And year, and of really of a would us add so you've seen number continue. that expect in hedges

Jeremy Tonet

kind That's standings been kind of the business changing if of of time. how agencies helpful, and the was over thanks. just taken And has given this notice impacts had there, curious this how your

Jennifer Kneale

sure are a very dialogue no to agencies, there. active surprises make continue the We try with to there have

asset on on just So that sales the delivering we delivering sure that to on them making tell them, that the all show have, fronts. we're delivering we forecast expect we

and of And growth margin, our asset so of help terms we diversity, in continued that's expect fee-based an ongoing only dialogue, the that will business cetera those et us dialogues. in

Jeremy Tonet

from That's it Thanks. me. That's helpful.

Jennifer Kneale

Thanks, Jeremy.

Operator

comes The Stanley Wolfe Research. from from Keith next question

is line Your open.

Keith Stanley

budget early on the next any for the year. CapEx Hi. wanted funding clarify I just plan thoughts to

or debt remarks, in execute CapEx? the equity. think consider the no said think sales asset Should I of to Would on? you equity preferred mainly mainly common financing I you prepared

Jennifer Kneale

and to We cash flow debt plus generated additional good benefit provides cash and from with EBITDA flow. capacity that, more us increasing very so have that internally visibility

seen you've us over our quarter more think has as that through we XXXX have strongly future. the message to just foreseeable I any expectations the to performed need equity each deliver issue not do So business

of point. executed As Permian sales. the the got this asset in morning we've with Delaware sale that other crude stages, And expecting Permian Matt potential that sale we the business. that the asset said, active only one at the already really which this that assets is terms underway, is early got all we're the crude side we've business, announced of in and Midland that's a We've that's the than of

Keith Stanley

asset of clarify, is the the the to just or that financing? some or And project any number Okay. to gross billion $X.X $X.X of net net: the same the of that is sales

Jennifer Kneale

XXXX. spending relative partnerships our net all the to to projects of visibility of Targa's is That's so we what that's all growth for expected have that

Keith Stanley

ahead. then sorry, Okay. go And -

Jennifer Kneale

potential that capital sales that doesn't It's like for growth any visibility to just was projects include spending to. I the on or Sorry. that. going have we asset it pure add anything

Keith Stanley

Okay, great. one. last one And small

I the of said think Midland the crude the million. to the relative remind You sold just on business gathering size for crude? gathering Delaware you Delaware it was Can you $XXX me

Jennifer Kneale

than to off on side, kicking So, on the the of really we're not but the the Delaware assets. potential Midland we're size the point, going at of this is is it current sale crude higher margin business Midland the given operating of provide crude evaluation any just detail more

Keith Stanley

you. Great. That's for me. it Thank

Jennifer Kneale

Thank you.

Operator

Jeffries. from [indiscernible] from question next Our

Your open. is line

Unidentified Analyst

modeling, my sizable to a for sustainability of everyone. Hey, operating nice our Jen, GMP additional decline from and any morning, of that this we I a good quarter. the saw guess questions. sequential improvement relative color curious Thanks guess I quarter, just improvement. I'm last in taking the costs the drivers

Jennifer Kneale

summer, going and mentioned I assets, them spending were very we've call and bringing quarter in as applaud operating this reducing reduce expenses, has help been our the a chemical of cost. We well to I think lot on team, that for we the focused second and much efforts. putting service particularly our Permian where capital those lot our a well AGI which is on of an service that been we've operating been into

So is OpEx this part for with of is organization. seeing third G&A, a area across big capital our costs along us, a of the managing big discipline, and well the quarter as that but what focus you're in Chris, focus point is

than second QX being is And with our quarter. so consistent lower the in of terms this expectation

per and are OpEx this, that had one-timey in will also of businesses volumes as continue is also expect the on we G&A quarter, reclass as more well, continuing focused would much mostly second some The we that our what to we're across GMP focused on reduced And of very having nature. I business. downstream and to sort costs so our was unit remain into ramp

Unidentified Analyst

sale are And recent banking meaningful mentioned side. expect on Any speaks quick both those activity, on with activities the how you've it future. assets of pending the the I'm toggle then asset curious: should front? luck anticipated producer some the Delaware. that team more and And much Great. suppose impacts back that involved. perhaps pull Midland maintenance in the the on - the those and in good we quality to congrats that on and I

Jennifer Kneale

I in that wouldn't toggle there big our assets new to spending. down. meaningful no, a wouldn't up of assets a maintenance. of also a require We've maintenance that's don't expect new lot expect placed about I or change a but of But occur step terms in lot service, there's

Unidentified Analyst

commodity one have on of it's point the the about Okay. stream. business And - mix questions a fee more earlier. I and then of And to final and fee just Christine had the grow efforts asked clarification

internal think certain a Could a to of any response the open you at you your for XX% you're I targets or cash commodity hurdles to said year. hedged in you next percentage planning stability that just flow to remind have stuff certain hedge Jeremy, that exposure ensure be in still hedge me time? to

Jennifer Kneale

the committee XX with board months risk next the we work XX% for that, of the for months to targets, out, hedge directors for as after is XX% of general XX Our the appropriate are that. the we're for the then hedges XX guidelines general Those within general basis And guidelines. tolerance risk months on after within out committee quarterly a the to working with those figure Targa. the XX%

Unidentified Analyst

Okay. unlikely think But to to those a still for the assume? business target as fee, you at good more is at are least point that's still that your point this us change become even

Jennifer Kneale

I that's target for think now. fine a

opportunity hedged making. also have the has something us more market has been in driven there those been seen those left when higher in we've when that of at You've given hedge time than same decision thresholds sort levels the or the that

I term. near are see the to So changing flexible, continue and don't be targets but we'll in our those those

Unidentified Analyst

Great. All morning. right. time the Thanks for a this lot

Operator

last question [indiscernible] Global from And open. is from your Seaport Securities, the line

Unidentified Analyst

my was side? Hi, you with kind of Targa? this on is of talk question. Can talk contracts about good to about leveling transition ones morning the could and your of Couple from me. prices you POP commodity any if total commodity kind there from thanks - taking is for level of transitioning fee-based those wondering I

Joe Bob Perkins

on it capital when getting in we really When capital. we're all with discussing producers, put return the out at we're looking

more want the least agreeing hybrid all we piece them return or adequate price and protection some flexible start. where that things, a what it So we're commodity to do return need on an we're less the or we make if over with or spend they more and on gathering capital targeting fee-based capital. floor about to those range and we the contracted to to of that's at start at POP an we things, if we revenue earn where with us a speed done neutral of and get understanding that processing need of And have scenarios we've appropriate price, into

Unidentified Analyst

I Jen some I Okay evaluation property wondering which is down, taxes and that think OpEx of second that lowering of the mentioned take related QX helps valuation QX, the versus property to question was I the frequently had how the in on taxes, done.

Jennifer Kneale

numbers what we through the move Well numbers that or we that the beginning estimate make, of better and at we an visibility expect we estimate. realized, year happens year change to taxes on we and as the our be have to

So as size becomes visibility high estimate or we again gathering to and come the year that start our and move streaming and on tends the estimate even more it we down realize then be through down. year with every to it's generally processing more what going to have

in that's that we really for and year pattern year So [indiscernible] taxes. just generally have the out

Unidentified Analyst

exports beauty between Okay currently? just propane then one side, got the it seeing and the indicate could me you the last you're export export breakdown what's for and rough on the that

Patrick McDonie

been not kind it back been Scott, number a years of of or even given we go on We to butane moving over its to that butane. closer is or XXXX so more historically have you need more I really XX% towards or have

Joe Bob Perkins

debottleneck increase We've again that bolt seen have around the that we projects butane projects to side. back have that focused on pointed overtime the on in type

more think I we also that with focus volume on that across how butane will gradually the the us increase would optimize over upside, see on time helps dock. and much see So you actually

Jennifer Kneale

in presentations, what facility. been the propane, see provide loaded mix of of our investor already can a we You at breakdown the butane

Unidentified Analyst

congrats and quarter. Okay, on guys got it. good a Thanks

Operator

like at now I'm would time. conference to turn showing to questions back no I Sanjay further Lad. the this

Sanjay Lad

the available Thank morning, Targa you be we and this will may have your was that questions any day. follow-up Resources. Please on interest in that everyone for note the appreciate to you you. throughout Thank call

Operator

have for Thank participation wonderful day. a Ladies you and and your gentlemen, concludes conference. this today's

now disconnect. may You

Targa Resources (TRGP) 7 Nov 192019 Q3 Earnings call transcript