TRGP - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Targa Resources First Quarter 2020 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to Sanjay Lad, Senior Director of Finance and Investor Relations. Thank you. Please go ahead.

Sanjay Lad

Bridget. you, Thank welcome for and First XXXX Quarter Good Resources to Corp. Call Targa Earnings morning, the

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

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

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

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

the We Scott and Gathering senior Bobby Muraro, Officer. will McDonie, members Chief and and management Processing; Pat Q&A.: available Transportation; have Commercial following also for President, Pryor, Logistics President, team

call And to with that, over Matt. I will now turn the

Matthew Meloy

you Sanjay. are doing of that families morning, your Thanks, Good we and and you to and staying Targa everyone team, the safe. well On hope behalf joining. for thank

prices. volumes quarter performance last had first volumes, the and well operational with quarter. results versus significantly financial in fractionation growth growth commodity to XX% growth our adjusted show export solid year continue XX% The assets We EBITDA, of in $XXX perform Permian million first XX% in that in lower and volumes despite

performance to commodity G&P us exposure through prices going as operating floors is prices throughput some as to our of forward. well will prices, contracts our margin begin we volume which commodity reduce and fee higher financial benefit allowed direct driven more fee-based adding segment significantly. continued Our generate also rise. to and fees structure, With The of our as fee-floor fell will now our business opposed to by serve efforts across G&P by us fees even

implemented clear sure to the employees, and our that it impacts care their quickly significant our took of our direct with the safety pandemic we the with we that COVID-XX. and now employees our had on virus a became and make risk minimal to I'd pleased that When the all are our facilities was has moved employees moving to customers. our of measures, to Now including we important impact families, currently protective like our employees. of We swiftly providing thank employees. equipment on

field operating other our effectiveness, day. We effectively proud the customers. first-class at who are to are to our and employees every especially our ensure employees high to facilities who a level of service our continued to thanks operate frontline safely remotely of in continue And working

activity low continues their an to through driving price meaningfully to period and reduce of even low result curtail current oil as and demand Our production. navigate COVID-XX. producers a industry unprecedented environments The crude levels

Given this balance the some be decisively outlook and increased as about our an and to volume protect take we long uncertainty quickly to successful actions lower to and moved Targa key term. over business organization position sheet fundamentals,

dividend common direct to we debt. announced a resulting reduce additional provides free market On XX% Targa's This significant in $XXX payout. available annual flow of million March in XX, cash the flow reduction reduction approximately cash

guidance. initial million range estimates. that growth CapEx announced $XXX and net net which to XXXX our to XXXX now million, also further is reductions XXXX growth we XX% a at and the between spending we meaningful midpoint to our have now Additionally, our represents $XXX XXXX capital then, relative reduced estimate reduction Since a

$XXX our aggregate, business lower to administrative least operating now expenses We execute growth we continue best and other to be measures expect versus estimated expected to by and related activity. expectations. prior given over position Targa the term, and lower identify at XXXX long In general and million

taken XX%, have management we in XX% year current that across to measures benefits additional XX% their compared by a cash Targa the reduced including in forecast. include executive salaries our our the based compensation, last resulting expected and to Targa XXXX on reductions of approximately of workforce reduction organization, and Some their compensation total to

XXXX Targa's by our XXXX in our Board of XX%. environment the April. -- Directors X% we reduced cash eliminated reduced late positions by expected new in positions budget. their growth workforce initial compensation We And open further of new

and We are line utilities, lube ad highly taxes, item valorem significantly operating lower G&A expense are every on tightly in managing chemicals, oils currently others. focused also and our and estimating among budgets

the We will through discipline we cost continue to as work focused operating and environment. capital current on be

our business segments. to Turning

processing production across currently the about talk that systems. seeing we're and Let's our gathering

We production, and continue plans term fluid. of very have near discussions a lot our those their with for regarding to remain discussions producers

We have their older newer of wells seen by and wells. interests to their Each outlook. of is driven unique and different producer shut-ins shut-ins economic factors

across a small shut-ins experienced April, the far. each of processing only but to have so We degree and regions of month our gathering for

in the first have For a to were Permian approximately we April in yet. the example, shut-ins seen so from our flat quarter, impact not material volumes

be we volumes gas be will to shut-in shut-ins XX%. in Prix fractionation Belvieu. in lower of in. shut about May. and estimate approximately XX% across more our latest Grand estimating aggregate uncertainty expect And are discussions through May, NGL we shut-in Mont crude In given XX% and approximately on producer volumes And there Permian estimating our and XX% Badlands, region. is for our oil however, to central result in shut volumes the given also These we're to through we what our XX% systems our do, in are supply in of region, beginning of trains significant while today, of We seeing still approximately

one valuable Mont market. and a positions leading to Belvieu. Targa opportunity NGL as This highly position environment economic an the of the potential However, storage us in is allows storage benefit this in dynamics the from NGL has mitigant, in

expansion third We complete our highly facility And of LPG the contracted Park the rest to perform continues year. to the at at business export on for the our of export remain remain we quarter. Galena and track Park Galena well in

and was weak that our fundamentals protracted discussed that months believe reported We changed we a And It shut-ins. well business we've even fundamentals, XXXX have business drastically. only outlook. Targa through quarter navigate discussed this period year strong positioned an record then, of few with fourth already is earnings and ago since a market producer to as full environment in

We have free looking reduce protect a to have to strong liquidity taken generating forward. financial dividends flexibility, and actions preserve flow debt balance position our after and sheet cash our

continues commodities. world to creating significant of this for expectations impacts work the variability for The COVID-XX, demand through around

our XXXX to adjusted morning, full withdrawing environment, XXXX previously our to $X.XX $X.XXX updating year EBITDA our read this billion are disclosed As in given billion in this have operational estimate you press release may year the we and full expectations. uncertainties

see a reasonable and color we expected what around share to like some range detailed downside cases would outcomes internally. as of ran that We we

a months. shut-ins shut-ins XXXX recent the but generate ran which For remainder assumes producer XX% Permian we production duration in a full EBITDA. currently adjusted Based somewhere to scenario, volume rather several billion occur, production amount year for don't dialogue, of of the of around that downside case, Basin, the on negative we lesser year in couple believe a $X.X expect case some of would and for example, that we to we

potential on significant of our driven EBITDA billion, reasonable and producer year an production range duration G&P $X.XX covers estimated shut-ins. around the of are of But our XXXX customers extent believe by results a outcomes. potential there to full we expectation levels, around across adjusted operating of So remains remember, depending regions, our billion and $X.XXX uncertainty

Targa environment, is based when the asset of current despite positioning our longer exceptionally on uncertainty fundamentals well to Lastly, poised for the the benefit integrated premier strength our of and business employees, improve, the term. us position

Targa's for finance-related Jen over matters. the first turn the With discuss will that, results other quarter to I now call to and

Jennifer Kneale

Thanks, quarter $XXX for reported Targa's quarterly Matt. the EBITDA adjusted was million. first

The associated charge. means price impairment across completed first with export remain systems Our by billion $X.X commenced which levels downstream was to gas of strong with Permian in is through impairment remaining market performance when value on LPG Belvieu primarily Frac our new to conditions with services. low benefit capital NGL new asset the and growth our and operations. Peregrine increase. the full current of volumes noncash during an Permian transportation, Badlands track systems on activity operations partial in impairment our we our gathering G&P environment, gas associated driven well fractionation complete be Train our We G&P integrated during Mont commodity facilities the X quarter in coastal operations year, We G&P approximate Delaware. and combined this impairment our of and projects recognized mid-continent performance underway positioned chain first processing recently plant and the Considering will we major our strong quarter,

for range remain Based hedged hedging. current levels, customer activity to Turning on of XXXX. a estimates of we producer substantially

of We approximately and XXX% XX% percentages including our approximately gas, website. of condensate XX% be to disclosures, hedge XXX% supplement natural can found Supplemental to by have in XXXX of hedge hedged XX% commodity, earnings our presentation NGL. on XX% approximately to

our to manage monitor closely We and continue exposure. credit

across large which businesses, and integrated operating We have a base diversified our customers large other customer counterparties. includes investment-grade

investment-grade their anticipate any the largely or provide top do from of or customers required We are revenue not in largely a is which our credit to as from our customers are And material payable downstream to in secure losses our provide XX% are commercial credit XX counterparties arrangements. from G&P protections. Approximately counterparties position our protections currently in contracts. net investment-grade businesses, we either credit otherwise

net has been between $XXX million. $XXX to described, now CapEx million As our XXXX to Matt be estimate reduced growth further

net XXXX million. our reduced CapEx approximately have we estimate $XXX to Additionally, maintenance

to to our levels prices. our lower million facility for extended accounts commitment April size expectations given fees, to we our April, In from million, $XXX XXXX reduced commodity commitment and receivable $XXX activity and minimize facility

interest approximately During of TRP the outstanding savings. as with credit million XXXX. $XXX million market repurchase in earliest billion annual in a senior repurchased portion on no approximately $X.X near-term and approximately $XX early or liquidity paying of notes senior We through which available plus open notes, of maturity quarter had provides XX interest to the March April, accrued have maturities occurring facilities, notes the and first of of approximately $XXX we million

a quarter leverage the compliance compliance end first was basis, X.Xx. a versus of at of On the debt covenant X.Xx TRP's approximately ratio

was ratio approximately debt-to-EBITDA reported consolidated X.Xx. Our

flexibility, our statements, the is have positioned and Matt's strengthen our actions with that long proactively To well we financial for believe echo collective term. the protect Targa sheet earlier taken to balance we

the And for with that, operator, questions. open lineup please

Sanjay Lad

to [Operator Instructions]. open please can please? the you Bridget, line Q&A,

Operator

Instructions]. [Operator

comes the Christine Our line Cho from Barclays. with of first question

Christine Cho

large color. upon that Can just you private us like? are customers the as to curious be are also conversations guys that recognizing would smaller that also are have going. I And and how conversations the those some public, I producers. with give Thank you to some what the all with touch maybe on you're just more color having you for wanted the conversations

Matthew Meloy

were conversation, script, Sure. Yes, producer very going days few said shut or I'd this some of weeks later producers across or to shut-in. shut-in say fluid. systems, maybe then a ago, giving they only, even they I'd up characterize estimates in our small. And few large really And a and back a some the we've I and amount. come as us in seen were for believe even month them what even a weeks to kind our just different ranges

variability we've So do, ready going we've we've producers their plans And here's and we're going they're we're say, they're do among how even about seen execute seen and change. getting to some seen those to shut-in going others what to, even plan. to what

through right producers for quickly say are work makes around very what moving So now as And are prices them. best trying to oil well. I'd sense

out trying and downstream to constant dialogue of make volume. and in needs they're handle sure where they're we trying best obligations with prices, figure current how can best them to kind their So balance the to that versus

Christine Cho

the because Would commitments you are for constraints different conversations or private might be say they're downstream different? the downstream guys

Matthew Meloy

there's is I when system, publics one thing producer the the significant doing here talking different to could the business each I by I'd privates. across say, one of that producer. our really more don't the and just variability just know aggregate leaders really, team versus region. mean, in across segment, if varies are it I management

production multiple acting Some in the basin they're basins be different, is producer how amongst have basin. all versus even another in can one who and might their same very versus acting basin, positions a be one one because acreage producers in way

unique more varies acreage to situation privates and publics the it the economic small as opposed think their or they're I or large. whether or to So their position

Christine Cho

brought you then come this one And helpful. another Very set Okay. and a to year. later frac, on on is

Some your of deferred of timing have their peers the frac.

you year? So you're to plans if the volumes maybe or more scheduled wondering were to plans were third-party frame? that your time that happening next under there year expecting not parties to are expecting this Or over offload third alternatively, into move

Matthew Meloy

Yes. -- our we significant completing X. are when Train progress fracs, I'd on it planning on to say, comes we're

think who are So we canceled of do I or And have their to right, some there slowed plan either complete fracs. you're that. down some others

would So I that begin grow, see if XXXX, don't when opportunity, they could they're opportunity. frac itself. welcome potential. certainly, out, go We at looking need to we would a that is where we opportunity that we're some as would volumes but a capacity, position there present know for lot that of in that What

Operator

of Our next the question UBS. Shneur Gershuni line with comes from

Shneur Gershuni

shutting capacity coming come to of wanted the on by into Frac off just start the system up I and about the fracs? your if inefficient if frac down the volumes kind of sort up your older ownership to partial volumes footprint, end from by I think are the When an a margin being that opportunity X following moving the to conversation. entire there below newer online, optimize it's temporarily limit that of frac perspective? frac opportunities What

Scott Pryor

Shneur, we as as based operate will upon this on look contracts. those volumes our the based volumes fractionation of efficient, We the customer at Scott outbound needed entire as well definitely what fulfill is what side. the whole. economics facility is to most both of side of the a well is as as inflow Again, the inbound But upon outflow Pryor.

an propane at what optimization of As -- a is certainly optimize is there's perspective. and us we analyses, from that flow an we downstream from but of at variety most customers we look factors looking And to benefits volumes it as supply supply perspective. are through from those we certainly efficient economic butane, that, both and export what it

Shneur Gershuni

forth. little the about That side. Or follow-up rate about Permian all gave across it is maybe shut-ins footprint? was And is your what can costly? that just how wells appreciated you you Okay. to decline it that's I so Is footprint. wondering something G&P is on makes underlying color great back? your a I straightforward if of easy bit the definitely to for bring pretty sense. shut-in And it your color and give

Matthew Meloy

Good I'd Good. on conversations the Yes. had, question our there extensive We've say, that. about shut-ins. producers with

as when So when to it should going be we expect there's trying comes back. to we're forecast shut-ins, what

things discussions, rate be there producer part, we'll most can some ready. do shut-in shut-in, and for production part, really think able when be the So volumes to as bring say we'd shut-in when those and could some the the of just don't wells like that without again, we it bring most back to be be there they volumes those But I'd some they of low well most amount for the those I in damaging they vertical feel think back which and back? come Could perform well. reservoir. back. come I expect older,

a growth on been that. mean, answer I the crisp lot decline Permian. there's in that's for as don't system. would a be I by it have Obviously, of tough. far As the rates, you

production have much. of our So newer average been there older haven't growing we vintage systems where on who as some

it be there. So would steeper

Shneur Gershuni

itself, That And i.e. you continue of seen Okay. surprised we repurchase below the been open so question. final in Or if see to makes end the market. one opportunities sale I that? present the much how to to trades Do able have just sense. do to debt was expect par? debt the you've

Jennifer Kneale

Shneur, is this Jen.

ultimately, opportunities to the market on it I think, us. presents that depends

of savings at look our our so we world overall a just the opportunity all to rate very on at reducing that debt interest notes in a it also deep utilize some March we'll terms early sense made that, opportunity started in in attractive execute when leverage. while the to liquidity in get we certainly future, our to continue If depends And of available opportunity. the the market to on ultimately, but the discount trading repurchase saw

Operator

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

Michael Blum

NGL harping it guess, a ask maybe to But questions and and So -- to the for be end at, but the sort everyone pipeline of you're your and your to volumes try may stated, on down, exports contracted get and the also see all of you on as said you fracs differently tail that that. is is that, come little I I so LPG I'll frac. apologize expecting trying you're at the

you export you are capacity everyone's can are just seems you how and when contracted going I to production protected down So like address Because why frac position? so the with figure out it LPG what capacity is contracts? think adding is trying

Matthew Meloy

hit on well, can Sure. as the then you in start and Scott, the fracs fill Yes, thanks, I'll too. Yes, exports then on and Michael.

On side, system, fractionation have we additional significant then lot and we and with. long-term are of processing those coming in of our gathering a which underpinned lot our fractionation our fractionation volumes have number simple, through by dedications And the processing of and contracts transportation just are our business, have fractionation through volumes moving customers, from acreage A third-party agreements. plants. we

So fractionation would in our there significant we in MVCs. growth from anticipating ramp-up our acreage underlying when at dedications, our have our also position, you obviously, commitments a we're, look be but

going to whether commitments So ramp T&F and or over be fractionation, these time. ramping they're they're

Train the what that's to trains, so X X. confidence underwrite gave X And us and

ramping So there. very position our a over we'll MVCs highly large -- and substantial time, have commitments fractionation of for own portion our volumes a majority, for

bit optimizing optimizing, running facilities. along as things on bit lower not We when But are to fracs, to Scott do little by that talked be X savings than ramp cost a had much is it's that. by to better. far earlier, about trying better longer. our can there's cost those a delaying we estimated we little take so going to a Train longer The And on take going we little bit underwrote

for So LEPX. and X. ramp We're that contracted to up right think as it ahead we highly the last bring we continue -- do now. makes significantly have we're have with moving highly contracts then export Train forward we to contracted. sense go contracted We're And us And side, we year.

increase we well. have as as export our capacity So that on we start the side, contracts more

So capacity. the taking even contracted account when year, increased we're this into highly

Michael Blum

ahead. I'm sorry, go Great.

Scott Pryor

I'm Michael, Scott. sorry, is this

longer appreciated that volumes alluded to Matt see were as we But little fractionator fractionation alluded across the Frac bit also at we ramp as adding you add opportunity March later we quarter, that this little our the allows about us said, X. XXXX, the with added to that in capital the we obviously, well fill first exposure capacity strong. we capacity to, for clearly in did to is look they that Just of our during the the into bit. When script, reduce We a capital our rest as a that as Train the talked came which it XXXX the as online year. we're With to very spend. may

So as coming we positioned to we export perspective, the time. are had starts strong From the a well marketplace quarter. back volume nice over growth

And across materials the at early that the on every going there we our stronger really back had to our good look was dock. XXXX, out put volumes you strong if dating can export quarter you see, with quarters, we've pages,

out. a seen, to April, as benefit the Gulf long actually provides with market good markets see world. And perspective, exports well. that volumes are nations of the the OPEC+ U.S. adds more We month from things some that in continue There's East, still just haul. Coast recover strong and in production across to demand benefit up the to you've pull-down just also exports for us some going in And the shaping of over the

a growth. in market the So that fortunate downstream we our position production very we are diverse within feel upstream be very supports to

Michael Blum

just clarification put what Great. that you I you is question is the percentages that period said One out really -- patients, it. there, for specifically? time just The appreciate like different the on something is May? different earlier. X that Or numbers shut-in for

Matthew Meloy

our I relative kind numbers like the was what's in The for and estimate current. Yes. be shut-in for to to Permian gave, of the going XX% May,

kind of Badlands. of those XX% estimate kind to then of XX% take entering of be May, or to the XX% you shut-in, would where in XX% April of the just kind Permian, we if we So in central are volumes and

Operator

the Our next from comes with Holt. and Pickering Tudor, Colton line question of Bean

Colton Bean

NGL I appreciate storage. on the the comments

and just you have or think -- I available degree for guys that's Can to million versus million to XXX XX us you XX in another you leased to parties? around sorry, something million, Louisiana. frame out Belvieu what in third

Matthew Meloy

managing XX portion have with to good of have in to million we lot right, that of capabilities third And optimize lot one our move and we into Y-grade have storage say it in leased a purity Belvieu, and our is as you're is flexibility coming I'd flexibility position. a barrels in, in own there the product amount the Yes. products, purity parties. engine but A a fungibility of we the out, some to significant well. another for and from have wells

So of position, our ability I'd provides a position. it that optimize us to lot say, with just

so And about contango we in good feel market. this that

Colton Bean

the volume me $X.XX Got but or and so I think it. XX% believe some prior gas, assumed so. was correct even to you at Waha natural And on I were spot hedged already here, or around reduction, but still then

update the new can forward on $X-plus in Waha, So range? what's us looking now with assumed like guidance the you curve for just

Jennifer Kneale

as a reflective do, the price updated and a that's commodity certain but It's uncertainty in our guidance to moving wide what et have the market. through single a that's basis a there's shut-ins, a characterize don't We've of difficult cetera. range. Prices I We for range, price as activity prices, got on around on current it's estimates assumption. are running daily based levels, of say new that range they Colton, guidance

Colton Bean

to the that in Or guess, have range? I also still, assumption may moved it that is say Waha is directionally, higher? fair Got it. I guess, that included

Matthew Meloy

position hedged the it's gas, large around in variable that for the not is our a given think moved amount I guidance range. So

We have significant amount hedged for XXXX.

different We right, this driver pricing we going updating around. the as assumptions. large it, that many we cases at one were looked drivers larger for range. range. and pricing But not looked gas price different us variability there's not and but volumes at through of looked Jen the we -- But it's is a in strip was many So that at the in guidance

Operator

And JPMorgan. with our line the from next question Tonet of comes Jeremy

Charles Barber

Charlie still of through I like volumes think competing follow-up lower this and are sounded if we to strong is balance there? about year Jeremy. then are about I export well cost how curious This for naphtha, trends pretty feel How contracted, beyond. just And and that? wanted of on how your how maybe but is was about April kind you the products? It don't on as XXXX low think just that LPG pretty leaks you contracted that XXXX the side. into how And that's you know evolved? I strategy,

Scott Pryor

I is Charlie, again. would say Scott Yes. -- this

at online expansion in that be look by adding is the fact third contracts when off, supported as that are you the in And export we're year, that we well. expansion will script back talked to project. coming quarter that that First this that additional about tied our

So XXXX, that's us second both of make XXXX. of exports. well contracts, flow into as that as half the pieces butane the supportive good about which exports are Those propane obviously, feel very

quarter. feel like the again, And that so the we're good third moving growth. project with forward that about the that online coming perspective, And in from fact we

there's have products, to marketplace. it been the runs that refinery tightness created in the some naphtha-based some As relates

some are And by derivatives of heavy-end that. the that impacted

'XX we'll as into butane, that as for XXXX. strong leading there'll -- guess, exports believe as well the to competition I balance and limited, for that see and of be we 'XX propane So continue

Charles Barber

doing $XXX slim down there's that do. of And That's to reductions, compensation right. just or you million costs know then one you're All other Curious was anything tied can from and cost lot headcount. me. I helpful. kind of if that The operationally to anything a

I so, there. think more you come to $XXX noted don't know this there's that at I if -- million least is that was

Jennifer Kneale

Yes. expected is a significant that I'd million savings OpEx. the of portion $XXX say of

in focused item. rationalize year that then opportunities a chain so identifying include throughout successful reduction for out line are existing operations But headcount, in our groups have on in hiring And expectation lower been supply in costs the every also the to in positions both field. group, very incredibly does some our and and basically

of heard we item Matt purchase really single mentioned So to cost some purchasing, are at we're trying you lubricants, to but Targa. that and every like better a them, lower it's chemicals

operations the has that So has to over continue very supply last a chain our focus been certainly, focus and heightened and year, focus but really recently. will of here group big that be a

Operator

And question Tristan with line our of next comes from the SunTrust. Richardson

Tristan Richardson

appreciate shut-ins and supply the just commentary all seeing Really on side. you're the around what

with side, or that on outcomes, case, price guys as potential went of signal? occurring, supply either do shut-in range through what to a a Just, base that where respect the production resumption you you frame the see general a time

Matthew Meloy

a to months I you for just couple also say certainly does what's few back. people severe don't the year, in It's to when do months? a hard comes demand few come to the case. not more which scenario, likely of we going for qualify, script, rest to would Yes. said if That's going the number, that carry a really the that's say guess, possibility. When driving that long. reasonable want a downside I I'd again? worldwide shut-ins XX% that a say base When think our us to of in that And it's got be a to kind to low I in probably that seems on X.X a months that be end it, much maybe Permian reasonable couple guess. taking, few longer start uncertainty. could -- like with But than to a lot a there's it's of we had call to back? be a demand qualify it couple really

deeper to even have So lasts kind see present a of range what how a of that's does than are in shut-in longer that's downside the something going that to why and best want cuts be Targa And would downside wider scenario But than of why went likely if terms this look? May, we're we we case our did did percentage. wider -- guess and ours that kind range in that. with be would less that and

Tristan Richardson

it. Jen, And commodity appreciate reduce working with Very mentioned customers then, I you to helpful. exposure.

I does those I existing the think just think of up long market discussions? thoughts as any a customer there. term current advance in mean contract initiative. this a but generally we an with it's that difficult But to environment, open understanding

Jennifer Kneale

continue to into, enter We best contracts. focused the amend, trying have be to on possible

focus things other the in a entered always and organization commercial that's like -- across so And our that teams then that. involved for and for are others purchasing

processing quarters fee-based efforts and our gathering the arrangements, more several about side, fee-based to On have last enter talked floors. we've over the into fairly consistently more

we the highlights important think price going environment why I us, if that's to spend capital. are particularly to lower commodity

Now we're capital. rationalizing clearly,

a now. less that the we really continues applicable organization is right ours, of a across improve to that's are contracts big given But be So opportunity. the focus when little trying to

Operator

the And our line Keith with from of last comes question Research. Stanley Wolfe

Keith Stanley

in volume on Just the follow-up a guidance. the assumptions

the what in end to other sounds bottom at it is And the level? What year range just the top shut-ins basins? end for for pretty Permian, the guidance So then assume volumes, ties the the high through does rest of of XX% assumed it conservative. a

Matthew Meloy

Yes.

Grand us most clarity related production, to it impactful that around the and In then the basin, scenario downside to terms through is to Permian fractionation export. we some you because moves which of our give wanted and Prix

to are, basins much. but tied in, not as other The some extent,

are gassy-weighted. conservative on system, wanted and And most those. what give this don't lower Permian. is I'd directionally, the we as pull range other to impactful one and you we percentage the assumed a higher of it did for too our a sense it each regions others we get the operational to a want a percentage the I'd Badlands, there. year in kind was So just more was guidance say in that it's specific say for

other So just kind of directionally for those areas.

Keith Stanley

Okay. Permian you guys top And at just planning? end, the comment all, can were what you

Matthew Meloy

Yes.

mean we at where less. I others So at shut-in looked was there cases. looked We

of low we cases, volume it our and I cases, think on when look the top said, different let's previous at at things end, range number guidance end back. come the price of said a

we $X.X and shake range It in going which a one street a not that out like was number to cases billion. the the feel it's of high. to low mid So billion side, $X.XXX in they're scenarios, case, and those was a the of

So to shut-ins less doing be savings and mid and duration on optimization and percentage other to less it for well or items. higher, get cost the up would

it's case high not tied discrete end, but the yes. -- So to a

Keith Stanley

would Follow-up like a I revised how quickly? just downturn. on the reacting very leverage guess, agencies company's doesn't as get of seem much any Okay. the to thoughts the are target mean, the it there, rating to much with sector what question, the priority is with be? it whole I And

a priority the flow agencies really of expect if on would to So just it allocation, paying cash allocating this down rating you? free And be sheet? the aren't you balance is much forward most just to debt of the pressuring capital year how beyond on looking

Jennifer Kneale

Jen. This is

means it cash through of repayment as the Paramount at would reduction year-plus, have for to I move time, us, was debt consistently result generating think leverage as we the our more have would plus dividend That And a flow forward we'll profile the quickly. we we very free that more previously reduce for we've reducing last a the available dividend talked lower our about growing that our the to leverage of look overall priority. the prior capital lot as spending. reduction and flexibility for of how look priority be than just

feel that So well perspective. from we that positioned very I think

leverage. I think clearly that's higher the through feel months, than of couple last leverage in being for having anybody lived better of would lower position

consolidated Xx that a there there. patient for to going target to was time to be we've of willing some talked it ours, get basis, us sort on get And debt-to-EBITDA but and we're that take so about to a being

patience get have to same reduction we dividend there. get more the think again, potentially to us allows But there that I quickly.

bit, could Now Xx end-up than consolidated seen than to that? Xx. leverage a be does lower I or it that think ratio right it remains potentially being is but to the lower target be little

I financial And we As that you dividend, had to shore to sure rating up that we constructive we very calls have can those imagine, conversations, they with steps the think balance flexibility. of were after have we appreciative make that taken the sheet are agencies. our think reduced I and the

the doesn't for might decisions than So us want that's difficult ideally, that, again, that business being flexibility to to into we've last business in that's an different we make markets. a grow we like pushing catalyst consistently have again, for because would investment-grade feel said certainly, enhances our otherwise like as but to, it year, would we

And so that remains a priority, too.

Operator

I'm not showing any questions. further

So turn call back remarks. the I'll now over Sanjay to for closing

Sanjay Lad

everyone Resources. call We this Targa morning Great. thank the Thank in on your you. and being for interest appreciate

course of have be great day. questions for over follow-up day. you, will any the and available the a Thank We

Operator

program. this Ladies the conclude does gentlemen, and

You may now disconnect.

Targa Resources (TRGP) 7 May 202020 Q1 Earnings call transcript