TRGP - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Targa Resources Corporation Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Lad. Sanjay you. Thank ahead. Please go

Sanjay Lad

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

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

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

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

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

And will and senior Additionally, Q&A. Logistics McDonie, Matt. President, the following Pryor, call over Muraro, and team Bobby and now Chief that Pat to management President, be for Scott Officer. I Processing; will with Gathering turn Transportation; the available also members Commercial

Matt Meloy

Sanjay. Thanks,

during Before third results, active like proud how gulf say through our I hurricane safely are quarterly of coast season we to we employees an would quarter. who get into navigated the

our to impact efforts While the thank like of we successfully and to of associated diligence continuing would very thoughts employees had and difficult many our personally COVID-XX employees to managing was overall operations incredibly through year. all challenges for financial respond and out to them collective Targa continued am and proud in I the our and an their focus also minimal, with to impacted go heartfelt our their families

the quarter and strong we had benefit continue Turning asset Permian footprint our to our our of to a as position. third strength we integrated results, business from

operating strategy which spending to a growth long-term processing, been believe capital the progress reduce XXXX Based to on execute leverage has operational free strong on flow strategic our reducing at projected cash for to over opportunities spending beyond. our a driving reduce the and position reduced put significant and identifying opportunity of XXX us of strong performance capital and combined and share program we performance our and focusing key an spending, reducing at us repurchase to G&A low the saw in successful high around XXXX on challenging positions on and range, place to with costs end continue efforts reducing with opportunities our are a and integrated million that we still increasing EBITDA capital year, Our gathering leverage expenses undoubtedly be time. our to but and end overtime. continue re-contracting

we on looking We are market we business have profile the and both. dislocations believe strength for financial to opportunities around execute always and

and the the to our are rebounded business well related discuss anticipated now pointing our next plan to across in Let's XXXX volumes Starting track close operational inlet producer us exit as environment prices and a performance. initial strong positioning the Permian our result of systems, and a grow our into than XXXX Permian to year. on going activity quicker

footprint experienced the results. increased volumes this basin-wide while second over overall period. third strength the production when associated the first of to X% gas X% Permian points to overall Our continuing the outperform our overall in volumes quarter quarter compared quarter grew and Permian the our compared basin This in X% to to average decline a

North in processing allowed need recoveries highly incremental are on commenced of and in Our capacity moving addition utilized August in Permian early Texas. system. NGL increasing capacity this midland new from our midland accommodate we continued improved basin. our the managing need across gateway With our we focus plant for already to the of incremental capital additional has for With production plant spending operations and gateway capacity are our Longhorn in

are renaming to Officer the approximately capital begin Mike expected XXXX the Chief fourth is Heim operations to attractive million. during cubic Heim. will XX Targa's expected Operating plant This day Founding Heim quarter after the feet plant per of is plant drive also to plan returns and We XXX result high cost for type The our integrated million Targa mid-stream earned projects as of and platform. with line that returning with significant is focus leverage the combined our a assets. based strategy of forward capital the to fee spending This logistics to in margin allocation savings our on our incremental going transportation

third Badlands during temporarily crude as remain XX% shut we're Badlands, quarter. third the the volumes system the the during to our volume on up were second gas certain volumes over in and Moving quarter. down sequentially quarter our rebounded Across X%

seeing we quarter. incremental in return However, are volumes some the production fourth

Turning gas declined which quarter over third volumes to our to central continues region X% be second in largely the in decline quarter. inlet the

to expect XXXX. We online G&P central our sequentially commodity our continue some margin fees in quarter processing have volumes to by our South across led region. declines increased come exposure Permian Oak third total in field as durability has and adding The and have Despite volumes floors fee strengthened contracts. by our which we regions, back we X gathering our G&P of to segment our reduced shut-in

improvement insulated benefit G&P based Targa. when and fee as well. and perform from opposed our we going direct logistics based transportation and our would commodity XX% in prices we XX% us results now business driven is Grand in is still are rise. pipeline of all fee prices by continue financial Prix XX% and our overall a forward is our environments, segment throughput to XXXX segment, year-to-date The as commodity to now to which around but evidence is about are well fee price fees more performance based Our more lower Shifting G&P to volume continues from serve significant across Permian which approximately will very of

Mont-Bellevue our NGL We basin. customers. Prix by maintenance our fractionation first our completed production XX% additions facilities. our At from upgrades plant new Targa's transport quarter XXX,XXX plants Grand driven complex and increasing fractionation volumes party increasing barrels and Prix scheduled the on at the pump Grand from were per Permian to our third by in station Permian phase volumes including Third on quarter throughput impacted third from approximately capacity of increased day gateway

a flexibility. Frac of providing Mont-Bellevue the increased expect September As operations during work the in fourth result scheduled X maintenance the we we inventory. as commenced with in higher us operational quarter associated volumes off Train

Our central on pipeline. by Grand extension to Williams’s with be the it connect end into Bluestem will of Oklahoma track is where the fourth new quarter operational Prix

we X.X million barrels Targo to quarter. third during business record as per moved a perform export month LPG Our at Park Galena continued well the

LPG of as We expect expansion. in export recently a our from quarter higher contribution the volumes fourth benefit phase completed full our to quarter be we'll

turn ESG annual spend As Permian term. Targa With Jen. are volumes we to that without and Targa's generate growth we financial a look forward This having on advancements strengthen position. capture in fractionation from the Targa areas position and our going strong incremental well debt we available dividends cash now employees facilities. position call Grand of a after to I where in returns free and puts positioned as safety. second our will we forward, to export to Prix, asset or our position the released ability September, CapEx to expect further integrated the over much report in flow have LPG highlights With premier sustainability the talented to longer is our which In the reduce for increasing

Jen Kneale

over increasing EBITDA XX% Thanks third quarter the was second $XXX adjusted Matt. Targa's million the for reported quarter. quarterly

of free During the third to of Targa quarter, or our flow $XXX cash after dividends free preferred common cash and flow generated $XXX shareholders. million million

We and assets in versus continue being in placed despite in new resulting efforts QX focus flat production aggregate to cost on G&A QX our service. OpEx essentially

the managing benefiting while and all more organizational are appreciate continues expect be full the to Looking in and a of will the OpEx and to continued for quarter, also increasing focus from fourth Managing efforts assets we in particularly be are G&A of huge Permian costs our through our towards have the throughput downstream tightly assets costs we we employees. our very our we quarter. higher service we

to transportation floors As fee by matt increasing margin business with for our combined of and hedged continues fee usual balance find progress based increase margin can our you disclosures to year through G&P and assets. fee XXXX year increase We earnings the remain our in our significantly full XXXX and logistics described, moving backed significant presentation. in volumes our and hedge for our supplement

quarter covenant third about to debt around approximately now leverage be XXXX continue with through compliance million spending compliance times million times. net a the $XXX of quarter. be end to ratio X.X On approximately TRP's We the We $XXX of at to X.X $XXX maintenance million. CapEx third estimate net versus growth the XXXX net a basis, CapEx of estimate was

the consolidated we EBITDA reported on growth approximately ratio was XXXX to deleveraging now continue major Our debt are online. path of capital we times our most that expected given projects X.X entering as

senior During were and This the was to as billion due XXXX due exchange providing successfully able and X% the debt net redeem proceeds due quarter our third six a notes for XXXX May $X and out to a savings. we percent and senior use of X% XXXX. issued essentially significant interest three-quarters X% percent debt our five notes to quarter take we notes annual

our of crude have and our assets of on assets available morning condensate we and redemption splitter forma this proceeds five announced $XX for sale the the billion closed includes a notes liquidity. in of also Channelview, of We that quarter $X.X million. sale which the for we Pro about and net Texas Channelview recently the

in discussed, $XXX early a Matt share October program. As repurchase announced we million

million. X% cost As shares total we X.X common common of about a for million shares have repurchased of of Xnd, outstanding November $XX net representing

simplify Our long-term is our repurchase by strategy leverage to reduce capital unchanged program. and share structure our

term we of on leverage basis. are consolidated to times the Over a long four three targeting

If close the repurchase an of the the tranche morning slide received our JVs XXXX, presented is around assume several have base and six case of of the flexibility estimate multiple last of questions to months, be first EBITDA out full the repurchasing the case running that representative scenario is plan structure interests $XXX change we the single our close We for five on XXXX fixed DevCo leverage the repurchase. on of earnings retain and quarter our earnings in fund DevCo hope and timing clarity the $XXX presentation repurchase we and in Repurchasing supplement DevCo tranches have is times repurchase the those at in is double takeout base first quarter X which assets. XXXX available our This the through to asset to ventures our and the take again helpful current the a our the the that which would between assumption to plenty to we leverage we joint takeout assumption the neutral. and/or expect price supplement in and to of full of we would strategy Over million to a in performance slide low provides the assets. liquidity million we QX, DevCo is in but a investor neutral. publish be around the incremental in of is digit to IRR the entirety

Finally, to across our proud is and echo Targa performance so well exceptional year our a performing Matt's comments would I of business of we like the team. very entire are that difficult

position outlook. expect and this call to bright with strong year, our with taken Sanjay. have we in actions performance turn the that a very a to that we I'll the back And exit XXXX Given

Sanjay Lad

ask please kindly you would Q&A you two line re-enter open have the if questions and limit Q&A? questions. additional the lines the we you that for Mitchell Great, up

Operator

Tonet comes a Jeremy question of from ahead. first Your Please Instructions] with line go [Operator JPMorgan.

Unidentified Analyst

speaking you relates is it I and all good guys. well. James to obviously projects outlook start morning hope wanted do going seems good rate maybe gathering doing some benchmark Prix, the I forward? business to the Is can Grand service there it run for for Hey growth XXXX? with XQ XQ with now, just kind you a It good guys a but think your of kind Jeremy. be XQ volumes growth XXXX in are This on is are of largely seems on in normalizing. mostly as

Matt Meloy

look year of back at across we're we morning. the by Good this footprint. the performance as Yes, that we've in think encouraged strong I especially our half seen XXXX, Permian Yes.

into be resilient, us continue and this growth well think I volumes going that to those quarter showing sets So good up XXXX.

So EBITDA February. CapEx we and XXXX anticipate giving in guidance

when you in see look in I I pluses this of across and some think environment price we think the Permian. some the minuses growth still

to going activity declines well. area the us central we set our producer GURs do higher that still with happening on got as strong system You've up is are well, have in but

kind to see minuses. need the out we some how are some, the get and as pluses but planning into process of shake is those we those get through XXXX there So and of

Unidentified Analyst

be Got in terms maybe to over Targa recent it. and anything That's and but helpful. there a I broader the then to if shifting just anything guys the going on point buybacks thoughts here? after deleveraging interested would Targa this just get also going to lot you in obviously at wanted upstream the consider of And if would M&A, with have you that market your on implications there's

Matt Meloy

Sure.

guess that in yes handle So we'll parts. I two

perspective Robert I'm us. our how lot consolidation Muraro seen Chief the have the on kind gives may over who some First that to to of that. a impact Officer on it upstream, Commercial we about going hand of

Robert Muraro

Bob. is This

at we thinking by work look when all doing, all great obviously every on most have are have different that the with party. parties we at the that and consolidators, are tables that transactions occurred the recently the you sides have But, we of of buyers that about day. the happened people relationships day transactions party and those when it's look So both

the great we So a we to we relationships do of well. that those have management that as but see go with we work with teams hate things it's are one where lot ones love, of acquirers

midstream to tend start So as that see more companies and guys the as tendency the sheet then times we those balance there big think integrated through to bigger tough and bigger go on general have don't work a the about side so some guys. Again we rule all the that a come, them or integrations have detriment directionally with platforms so you they what those and and positive those a getting seen of integrations. we've think big from of as for kind that about rollout relationships the start excited with being we acquire us smaller to great comes of guys we're what almost to

Matt Meloy

Yes. Well our our focused growth. on really the on Targa on we're I'd on and said We're that of consolidation a piece not the Bob complete, we're like say lacking looks it have really puzzle and bolt us platform. investment focusing an or side, what the midstream then would looking platform, key make that for we organic on integrated to integrated

strong we multiple assets position position Permian just look so that we're We have. servicing have really customers a and in really good existing a and forward as years the we

focused that on us a be go be growth. organic is to going high pretty we're So would bolt There hurdle to for look something on. at a

Unidentified Analyst

for Thanks leave time Okay, great. color. In Thank interest of there. I'll it the you.

Matt Meloy

Okay. Thank you.

Operator

Your is go Barclays. Please with the question line Christine from Cho of next ahead.

Christine Cho

if Good I that M&A up morning. follow question. on can Maybe

does on been other there Is do just modifying both either pocket where are combinations the it thought initial as of impact where the combinations savings the of there could cost of have or the be spending and would Some the the savings commercial the is and forma customers How to about notable be? relates that enable couple we a Targa opportunities pro acquirer system. or what think the production with your that new ones? to contracts amount more same going existing entity of

Matt Meloy

involved I'd to really where both parties as good customers Bob's we've say relationships all and Yes. had relates to with large of it there. they're point ours

think change a to is looking have to rigs in longer to the many I system point going on longer get what the term. think to to they're it to I near out the capital. is reinvestment big play we like is, going how at, Bobby's don't larger over how be is, It's their how for, allocate impacts acreage how We I overtime we have real to assurance term any there see and being the term term think. over companies going scale, as longer going to beneficial. a think going be connected flow these have out it's they're But, they're plays over

Christine Cho

in to be best see, your slide multiple neutral thinking pieces, we because think mentioned acquisition is, EBITDA about it versus that in to and understand the tranche is like that or the that it is I buy remarks leverage buying in or it have is moving the in this thinking wait one prepared is and do longer I you're a XXXX you buying least factors tranche on case then that desire just Can be just that of function should just that the base better at there XX. you illustrative. And one other all in I you in it about? your one you talk behind in divide as buybacks, tranche But, to are DevCo there okay. is you wanting think like

Jen Kneale

is Sure This Christine. Jen.

a crosses making a tranche single we IRR. That's there I of think factors we assumption multiple capital lot the ultimately are on the of which our in would how repaying take will expectations where that full into given is decision performance take the go one our be it simplifying XXXX, assets versus of out. out it over QX that Peak invested from we're that that in structure which on for we an a is Stone

QX, fixed that prepared XXXX IRR So takeout. would said with paying in the on our takeout assumption, that we remarks be that you

be to IRR. paying it take as take cost If one multiple. a to wait longer, fixed out a we it us. benefit we at So ultimately that's If we earlier out would us lower it's that we

decision think an that making. important I of that's element our So

or additional was disclosures point with certainly essentially I that tranche it's business But, we'll and option. out available sense think those trying for flow assets performs take it in scripted our use of tranches that's that the transaction. we early, cash to given of after to a our out if strong us we XXXX, dividends ultimately could EBITDA in that and makes through some our see an it tranche free first of the with in remarks neutral think were a to single slide take make a quarter how the then I year and performance the next leverage

So it do that again, pieces. wanted have single if what flexibility decision the take becomes really liquidity we the expect horizon out to more in leveraged we us is have which much be But in for and a decision gives flexibility to to to. that to a it also significant able a over liquidity us DevCo we do full tranche, than

flexibility wait have the reasons with that's and to and when so the we of the have into we We the lot one longer Peak. Stone we of structure a liked flexibility much that entered transaction

Unidentified Analyst

you. Got it. Thank That was helpful.

Operator

question of with ahead. Wells is the Blum Your from next Michael Please line go Fargo.

Michael Blum

comments. go Great. Good morning wanted your everyone. I back to to

Your contracted updated flows. based G&P cash fee

clarify, part is wanted fee in all this contracts your fee question existing are to you to floor POP add other Just of then did a Permian is conversions the it actual kind where else? of is somewhere and to the that from POP these or

Matt Meloy

Sure. it's most the having, protect we're largely say customers for the Michael. I'd where the we're say I'd Good G&P It's a successful, investment. so the is for to and our contract, in needing Yes Permian to morning underlying combination. invest continuing

can those things on relationship to and we the on and renewals they protect. it. floors adding for others is putting What in prefer. look others, making really all POPs customer floor in be making of a it's what POP or cases depends we're and as some and to POP, contracts can just and a We forward it So and trying changing flexible of it's fee sure do it where get with fee-based extensions combo and we

we line. underlying customers the wells the so So, up service our and hook investment continue to can in

Michael Blum

point? wanted think great. is other you've around kind could another Obviously you then, of was potential second here one question look meaningful ask do you The that asset done. just to at any are there divestitures that exhausted Okay, question got I at And sales. this asset or you've

Jen Kneale

had crude previously at one The of that what's business. the point-in-time. publicly our successfully announced because There's we business. After spoke we that it you crude divestiture to we considering actively sold the we're nothing Midland this had selling visibility asset Delaware Michael potential about that

selling again we are consider So, reverse be type the to across that, least asset active there that's to at point-in-time. of before. all positions. question the different as we asset table wouldn’t in get there visibility underway but everything has an considering new particular specific selling different But the significant any so Other at look that process extent say that any we than consider I to this would at to assets is would on asset those. portfolio, times that We around an or certainly your us course enquiry

Michael Blum

Great. Thank you, very much.

Jen Kneale

Michael. Thanks,

Matt Meloy

Yes, thanks Michael.

Operator

Please Richardson Your Tristan from go is of next question Truist ahead. with the Securities. line

Tristan Richardson

how Hi, Really comments the appreciate play ventures good on morning. the could joint out.

helpful us. that's for think I all of

on and the Midland thinking next Just your a incremental of growth about quick question. talking some customers just about Thoughts year. slight seeing some

and perhaps extent on you you past if comments thoughts in year in that future see the your the general CapEx. maybe to could of the the Towards CapEx plants made next your the guys ramp relocated highly you exceed Midland, some just have utilized about of remain

Matt Meloy

in Brooke. ramp the Johnson say volume, in Permian the Midland we I'd starting the and out the past plants brought really Joyce Sure. back on and with in of terms when

typically utilized pre-highly we bring incremental quickly. on, it's Now plan is fairly an gateway, and

all expectation utilized. it's we bit to be it pointed to it's for on, year. would our of spending about with million this highly of for going XXXX this going a year with be the I most in We of think next that going be part current little bring that's almost this, $XX plant. CapEx to And to

CapEx. is working even what less to with budgeting, to be and XXXX the meaningfully than compression next going As of year's working that's year Plant to sign the than we expect forward addition still this in the pipeline meaningfully Plant, Even less CapEx our $XXX and be through needs this million pointed that Heim We're Heim with end producers with to I this meaningfully would low year, this the look around through for but XXXX. would year. less. be you the expect XXXX I

Tristan Richardson

we of thinking just between been repurchase And active lately. then, it. longer-term regular Could that really allocation. the flow cash leverage priority the prefund DevCo the appreciate having in term be over any very that'd target. added Whether targeted and programmatic fixture time I scenario medium just free distributions. see a repurchase or the the capital about or Targa's is balancing become I'm to on with

Jen Kneale

Good morning, this is Tristan, Jen.

try And I us, earlier debt. we really be the around that to when deliberate the really we program. we were of to repurchase we year our share liken for that think able prices. what with very being try repurchase saw we to announced And very words used it to opportunity the attractive some saw this

what For perceive program from in to is an view our us opportunity a market benefit dislocation. repurchase this as year, we

so, program view we We'll share in program that at forward don’t our on look look plan shareholders. we beyond the best that to We form. focused ways from any be repurchase to we And return continuing $XXX the shape deleveraging the are capital announced. a way as to and very as the million much departure clearly or

continue will to that we So, deleveraging. path on

I sounded to target that think add cost was the around some deleveraging articulate system. incremental that leverage broad there the of to was that debt important an market story significant concerns trying because like were going part to it

a don’t long-term that So, departure that view provide clarity today, as we deleveraging either we that plan. try that from to around

of term ultimately in of business. lot I a the made in progress adding a based margin we've fee initiatives strategic lot GMP think on of

of all And that rationalizing think lot rationalizing plus just of our strong et with cetera. In flexibility. operational assets capital this costs our spending, I of terms a the year has us performance provided of

we so, realize hopefully path. on deleveraging forward continuing we'll to And that our be as to flexibility while able continue look

Tristan Richardson

very guys, I appreciate Thank it you Jen. much.

Matt Meloy

Okay, thank you.

Operator

of is line Your Bank ahead. from Please America. Ujjwal the go Pradhan with question next of

Ujjwal Pradhan

for Good Thanks morning, everyone. taking my question.

cost potentially to would so merger in you M&A operating recent reasons wanted have of you expand such you midstream of begin to specific if same in good core achieve Have you could to your with year Matt, this profile. commentary from maintaining while call sector. argue that made One maybe consider the that leverage could significant transactions synergies integrated and the opportunities? progress Permian. more you or your further Just the your part little under

Matt Meloy

Yes. for potential long-term. I'd be other sense could asset I say we'll attractive we position. of the feel And position with Permian over in could proud our at when which our think always I to there us look guess pretty opportunities consider make something significant theoretically. look that But and us synergy

if for so, like strong us be TRGP have would attractive very anything in for here our or And to there MLE's Permian was our outlook. given issuing that, position it someone to others, be

the And to on in feel we really those share the any of announcing how our it's things, all I we guess like repurchase time. on good we trying I feel shareholders then smart deliver returns execute business what about And in recently, have we're in us. to strong are our those trend that of So, very doing of just evident be think going off front plan, without good it's over outlook. Look here TRGP not we're business our any just at kind table, things. to about those position like a transaction of And that. focus

Ujjwal Pradhan

profile. talk And all follow-up at some and in Thanks market of and asset non-Permian such assets cons cash potential your declining basins made you sales for very are second around think the helpful. profile Thank systems the that, those moment? the my we about about you. Matt, maybe up Could made to for future, GMP in But is earlier comments as question. systems appreciate your you the the material of with which flow the in

Jen Kneale

think we were a XX% at to when interest I $X.X billion in able pleased did. that start, point-in-time. sell highlighted X) assets least think very that our transaction that for to that we we're And Bakken I

do of consider also volumes through really all bread terms of brining downstream assets us and a we But to what additional think downstream which further up of in assets Permian have of core other willingness benefits our I around to as butter through our also Our our bring sort is well. that we assets. importantly lot

liquidated made earn as in over this and own. for seen just it for the point you've somebody term really at So, are to us view what longer haven’t sense to made our else sense assets

I across the assets very right we that second And have, quarter. flow again we we third better look as the in forward better the are expectations perform we're continuing Bakken we now. think assets profile, assets. for As have Those cash quarter than those to well the the look exposure comfortable that with

the have and job on savings an further it more get done have trying that assets extract our think flow cash attractive to through more wonderful in really a to side, trying et make than I those Midland assets otherwise teams downstream of optimized that would from to be. cetera profile we positions our of volume the

Plant higher the look around the more that's the high of may volumes in could asset footprints an we have moving think engineering looking there moved is is Heim highlights compression certain creativity teams our and example But visibility highly moving. the one version And need I declining at say all where utilized. use be asset time better we're a of a the assets. be to our for utilized they to that to for Permian area less

well. engineering and our that off operations are on focused hats as to teams So, that

whether cash have portfolio flow ultimately that think that we're asset comfortable of assets. our with And the of profile again long-term the we're the but of we those I That's and have. we'll job with at very assets right assets. look continue very ultimately to we we're part the comfortable owner

Ujjwal Pradhan

Got Jen. helpful. Thank you, it, very

Operator

is question with Shneur next ahead. go the Gershuni Please UBS. line from of Your

Shneur Gershuni

Hi, good morning everyone.

how the to as. timing in thought ramp. really the sort to timing as asset? couple today. I'm But slides IRR put reducing to does timing the the that from assets acquiring just need understand was of transparency appreciate when you've these wanted you calculation the of to out understand your want that, how So, kind your I back benefit that go the of Grand that could should so about you a But if wondering sort say as acquire a things. first, of the Does here if ramping DevCo. forth on paid Prix purchase, in walkthrough correctly. fact understand distributions that DevCo. I changed get process think I of let's trying sort is to in timing the you and It's IRR out What to to change the that the be

Jen Kneale

this Jen. Shneur, is

very think considering makes all clearly I and we're when to the assets structure that in barrier generation those take important interest. EBITDA for and out that is sense the a of repurchase

than One, end payment multiple put performance for our that important got lot from this we've us to So, potentially from very were to really liquidity clarity. that well continued more form. I in performance make to performing which more again about us a any thought as Then feel transaction to more visibility take we a the of assets benefiting element the it are to that when on. move those was that to that And think our morning one IRR IRR you're excellent when a need change those provide it going quickly to just thinking that. earlier result makes sort those reduces we continued our that I it's out that are were as key across on not good quickly. we taking case Everything exactly of today out And present its interest. the we the like a to or they leveraging from and But taking is got multiples about distribution it are ultimately right is that more that I base included both of And point-of-view think and good to try is more DevCo that potentially Stonepeak about structure we've we of It's the the to sense of so performance are. flexibility that's definitely shape point assets we quarter-over-quarter for it Targa to calc significantly of the overall anything that a to in considering from helping else. get ultimately the we strong result DevCo. key way a area think assets extent flips more

Shneur Gershuni

perfect makes sense. That

sort guess thought your into also I you that around does buy stock. So, drive when of back your process

the you chunks it to again it of be of way of kind certain about and sort well also? it that As kind Is versus at is of stock that measure DevCo. well thinking price also buying the as like

Jen Kneale

repurchase in again right why on active we put the a is us already. why that's be quickly view now, and market us for share that program program program to a that's think the so clearly dislocation I to need and October early you've under seen

that the flexibility shares us has repurchase we reduce program to capital in performance as already it. to our and repurchasing put forward, that it's share that of successful look So, under given the be spending really assets think I

continuing cash of best be of us be we'll on repurchase to to what's best as we'll what's variables. quarter best a the long-term decisions free on our look or all when and the each side of value creating the down what for use liquidity. those use debt of so, Positions shareholder making our and And to and flow, result the pay

Shneur Gershuni

Okay.

Matt Meloy

just And to to add that too.

debt, earlier, was said the repurchasing our Jen that As liquidity. of more about

of we not expense at one other. it's to need the So, do the

to enough repurchase have liquidity shares. We

We to have enough on liquidity repurchase DevCo's. go to

repurchase neutral, going when leverage but neutral. be DevCo's, to we the slightly leveraging pretty leveraged So, much maybe it's

So, one doesn’t the expense with of other necessarily. go the

Shneur Gershuni

do perfect I of actually this focused makes you And opportunity down and I given kind leverage transaction. finance see it of leverage getting than if on more think that. see That neutral obviously sense. a mean, using you're not you an that Yes. XX%

option would that that time? Just you sort on. you're that of that an trajectory given at Is consider the

Jen Kneale

as profile we flow increasing over free significantly horizon. is out look Our cash the

a lot liquidity. of have also We

would it that using or flow. under to I be all we're So, would drawn whether Shneur. ultimately we free available revolver quarter depend the cash exactly execute expect on on combination, how it's it

Shneur Gershuni

and I color safe Alright, today perfect. wish day. the all a Really appreciate

Matt Meloy

Okay, thank you.

Operator

of from is Pickering, Bean the Please with Holt. question go next Tudor, ahead. Your line Colton

Colton Bean

Good morning.

wanted quickly just the to Matt, So clarify there some on XXXX. of comments

a of time in I to $XXX steered on incremental Can be capital would number if of any just that? you or million fully clarify was think spend. whether range about CapEx processing that had consideration you previously there towards

Matt Meloy

Sure. Yes, good morning Colton.

the For for that. in have the of a side kind downturn case incremental say downside quarter. XXXX, we it base very level low gave a of or $XXX million any And second of very of in case And it number processing. Kind it modest was the I'd did kind assumed would not spending. level that

add budgeting for for incremental to then through I kind that relative between looking of could of to the of Those somewhere XXX and XXX. So, through XXXX, base would think and processing now the and spending to you'd that. XX be what we going expect as on be we're Yes, to right it do going level more are significantly XXX in the be $XX XXX. the We the would less going expect there be be top that. million it's than

number it going I'm than trying all. imply, it's be XXX. more significantly to to It's that at XXX. be think the than going less not would the But So, we be to approaching to I expect

Colton Bean

it, helpful. is which up And the think mid margin you lower business. for then here strongly of levels bit a count that's to maybe unit I Scott. like said a the actually margins looks despite QX It out higher volumes and And question pretty TNF rebounded coming little back close

on So, the any margin to improvement? to drivers specific point

Scott Pryor

that crossed for when volumes at I really the system. our think you us look

contracting entire coming a have good Basin led from our across production own system. Obviously Permian our TNF our by done of from GMP job assets. We

that that's I was to continue. going that think

we've can Train and year added latter X now the they this They up third had You the see part ramp X side. of the had been fractionation earlier the Train quarter. that in of or to

our Now, that We fourth to work in so are quarter as we we'll going believe inventory. do be see across that. up continue the the volumes to

we are customers. well there. our done job So, I can for good flexibility overall, very our of marketing competitive a showing margins on perform and reliable we've got really out our think we've its But still highly assets that system. Then

So, continue our our our but export to think to transportation only the business is as going it to that business, business. well not drive Prix on as Grand on margins to I Frac leads

Colton Bean

it, Got appreciate I the time.

Matt Meloy

Okay, thank you.

Operator

Please is Capital Schultz line next question go with from of RBC Markets. TJ Your ahead. the

TJ Schultz

Hey.

most the a So, my had question follow-up DevCo. just of on

a just five that the may give sense EBITDA the clarification. case reflective or what six that of beginning So, assets base Thanks. maybe rate timing. in to your at If Is does in times assumption ramp run expecting of on one you're period of those reflect? multiple that XXXX

Jen Kneale

at It's reflective rate so of XXXX. EBITDA that timing TJ, assumption repurchase QX run

TJ Schultz

great, Okay thanks Jen.

Operator

from Research. ahead. is Stanley the question Please next go line with Wolfe Keith of Your

Keith Stanley

thanks. Hi,

it higher think the long-term greater tied to expected saw Or Should said QX. better with we short-term some First you taking question And I in in good that partially the quarter. and LPG on as mostly think exports facility on you even the the volumes be opportunities. of you is contracts expansion? to

if a QX LPG for is export. rate curious QX Just good run

Matt Meloy

the new had on the averaging million look our export So, we we inclusive at which be quarter facility. Galena of a our unit at had fourth stronger. even was barrels very quarter Park when phased to refrigeration do per our strong expansion Certainly, at quarter a export We month. X.X a business. partial We expect and

the getting of quarter. a So, fourth benefit full

result expansion and phased of that. up brought on volumes be that we expect We a contracts. the as the to that With of said, new additive also

the demand the still products The on east. globe quarter. focus highly are to has be expect volumes with we contracted, for fourth is market in we continued strong across So, the the stronger a

and cargoes we contracts at that the that say reliable contracted those we're to for every liftings optimize continue look that have But opportunity squeeze have. those. and to and we'll But will highly for every we term we being between between look cargoes to in and so, And opportunity to contracted. we look well in very

Keith Stanley

Thanks. And second question.

It's maturities several don’t think cash you year? would debt free of the the with next couple clarify, for to Just over I repay has years. flow company look debt to any

it be is or option buying, the likely an could that building is eventual DevCo you more for cash thanks. up So,

Jen Kneale

the extent that got maturities callable. we've to Keith, are No that

using overall to of free debt For that notes. potentially reduce series available free by call to example, quantum flow flow cash the we cash use of we have that could different

we that that of spending the system. debt some be extent any the we sort just we'll at as free currently We revolver on amount both continuing available drawn the using expect do of also Then well TRP our we've reduce liquidity do and debt have and again at revolvers overall which small TRC. borrowings in in flow at cash which those reduce would to got

Keith Stanley

Thank you.

Matt Meloy

you. thank Keith,

Operator

the from of Citi. is question line go Please Schneider final ahead. with Your Timm

Timm Schneider

all guys. for thanks Hey, the color,

one the a on export Just side. follow-up real quick LPG

been strong. has mentioned You pretty east that

is driving in XXXX. your this is customer you're as we Europe, as that, on users wondering views the of of what Just kind kind who other trading is or seeing house America get also your into to here end curious side what as South in the

Matt Meloy

plants. PDH as and driven look years at of state by you is its an In Propane Dehydrogenation on people next there lot growth the of the continue by be more a are obviously several the in there still those improve When India, China, to infrastructure, and east, it's China domestic the growth Sure. certainly is expected look to to going the is at India really focused and to plants. still And when several many India really without growth continued appropriate growth of that over a queue. And you of India. continues energy billion source.

lot the of this India where to see growth. we really so, into And place of is ability clean fuel parties the infrastructure other in put to get source burning by a

on products. continue going the So, east. be growth some butane the to also are in more shut movements good and demand we've plants downs Europe, the comes backs source in the petrochemical of that we refinery China seeing in other and need in of We've of seen India some mentioned and you where see to primary that that

So energy clean and material. use demand is a again, propane burning butane, solid need There global better waste a which continues other source of coal than or to the grow. much for is

So, we where from climb. the the looks that and of the demand going growth U.S. continued production lot a continues good to come is for horizon to incremental think very

Timm Schneider

you. Thank it. Got

Matt Meloy

thank you. Okay,

Operator

Lad. Mr. Now turn Sanjay over we'll call to the back

Sanjay Lad

this Thanks we everyone Resources. on Great. call morning. that And to was in interest Targa the your appreciate

question and great a have you, or We available Thank any any follow-up questions will there. is day. be for

Operator

conference And this for does your today's participation. conclude Thank call. you

disconnect. You now may

Targa Resources (TRGP) 5 Nov 202020 Q3 Earnings call transcript