TRGP - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Targa Resources Corporated Third Quarter 2021 Earnings Conference Call. At this time, all attendees are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today’s call is being recorded. Thank you.

to like would I welcome Mr. Now Vice Lad, President, Finance Relations. Investor and Sanjay please ahead. Sir, go

Sanjay Lad

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

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

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

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

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

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

Matt Meloy

moving Strategically, the of lower. is years are as trend several range everyone. expect target our and of business to while Thanks, and focus midpoint continuing our of positioning our contract spending guidance release and fully successful managing is we culmination our and with expectations prices continue over standpoint. the expectations looking to me confidence results areas allows the returns. focus to integrating to from Operationally, NGL are and capital of sheet the on to to balance this us and water, our drive our to downside and be Targa integrated our at from This NGL we highlighted it the want a say forward; last all from morning projects participate good time commodity in protect that that morning. a strong gives platform structure of of as strategic been, strong our very we earnings well higher to G&P perform to year. Financially, continue that to Targa, execution a it's driving are The as leverage our exceed Sanjay, leverage now wellhead the where for to strategy now key financial exciting by for ever to volume strength several

to capital balance years, business the believe company in midstream outsized long-term capital to we liked, position sheet of position our would of we we Over and those have but us to a a those are and value, investments. relative footprint invested investments than are seeing fully stretched now the more our the These significant benefits we decisions customers. we previous strategic where would our size shareholder create best-in-class generate integrate our for

We are do target and comfortably we in that position utilized unwind to to while leverage now able growth, the range. to financings our in will also be a structured our we our some finance maintaining so of

ever been. high have attractive by Our thereafter we our exceed growth top of they growth balance the And that see organic for strong and guidance are opportunities end cash projects. underpinned EBITDA, EBITDA and expect are flow as now XXXX sheet free integrated continued as to adjusted return

additional to February level XXX. amount, to be S&P in or a annual increase shareholders. capital our cycles. XXXX. our the us on All This going of significant dividend fourth annual per while across We plan expect and to to share quarter year cash flexibility competitive yield XXX this additional shareholders the equates of modest an XX% would forward returns approximately for the dividend capital This board a financial of We payable us to common return quarter our in basis. flow $X.XX and S&P to this $X.XX to provides to XXXX per in able providing puts effective position members recommend free and of dividend, common to

is toward joint direct venture our the free flow to our current after DevCo of dividends cash repurchase For interest. expectation XXXX,

balance While believe preferred the continuing to we and $XXX closely redeem repurchase manage sheet, shares have stock repurchase to program. under the our flexibility we will opportunistically share common million

acknowledge have well pandemic, of performance, their Before we I discuss I efforts. hurricanes, are and employees. issues, our so Throughout storms to continued employees outstanding move and our the Targa performed operational exceptionally want of efforts other proud to our

to optimistic during inlet and Let beyond, next us Permian next early system the expected now and now levels our Permian, to sequentially, million production, Belvieu our and our seeing Legacy through volumes inlet our to Legacy our turn continue Transportation around we in of our to items. to record downstream and price third now Central the Logistics Throughput increased are operations NGL our Permian third-parties. Prix activity on accommodate and new third growth. X% by footprint long And evaluating the and and Prix Basin Plant ramp is Legacy in the sequentially from volumes XXXX drive expect operational we and business our September, ordering quarter capacity running Targa's processing of next full, and plant, Starting volumes timing exceed driven quarter. of Mont anticipated uptick continue increased Plant currently transported region, will In Grand into to activity outlook. incremental decline the an and Plant production outlook robust With increasing performance In X% are our of operations quarter to we XX% per our in day we Permian medium stronger business. end million Grand track currently The Midland, offsetting barrels Plant, fourth are continue XXX environment to lead during near including Delaware, given Heim volumes feet Permian have XXXX. to over Permian to continue growth begin commodity adequate near in our a previously segment, which across higher levels levels the Shifting cubic remains full XXXX. after many on X% term activity on systems. feet and to per year increase Midland XXX completions day per new to day range our began our we XXX,XXX Heim NGL top remained higher average cubic disclosed

sequential our the achieved also at during fractionation We a volumes per increase. record day about XXX,XXX quarter, averaging Belvieu barrels Mont X% third representing complex

during Targa perform volumes Services of an barrels Park and overall Galena number demonstrated month. volatile weaker LPG was business, quarter, while it Export complete to expectations exceptionally third of were maintenance chose couple challenges facility for across years and LPG adjusted record sequential Our EBITDA. our The think record well global last we record volumes current to X per have averaged general with markets XXXX presented Lower XXXX attributable we at have a to EBITDA million XXXX market. quarter EBITDA the ability a adjusted for and adjusted for the we expectation that export

to So I finish with another thank to will over will with employees. the I you call that, turn our all now Jen. of And

Jen Kneale

increasing free transportation sequentially across EBITDA has across and would reduce logistics $XXX million, flow adjusted of our allowed integrated for a also Thanks, all million, XX% significantly commodity we big Targa's adjusted prices you has as systems. Year-to-date from us was to to leverage $XXX Matt. quarterly processing benefited volumes employees. the reported give Permian higher upside and like third from volumes higher quarter thank our our year. Targa XXXX generated floor and to of I including cash which fee the gathering,

beyond, and unhedged We fee for are highly higher still equity hedged across from and and continue XXXX for XXXX prices while exposure prices add above to benefiting volume hedges floors. our

and XX% of natural condensate. about XX% For NGLs XXXX, now XX% we of have hedged of gas,

continuing are hedge to have hedge added weighted at hedges strength XXXX higher and We into prices. price average

across we are commodities. XXXX, all hedged around For XX%

in our our You earnings quarterly can find supplement presentation. disclosures usual hedge

toward items be now Increasing Basin the systems high estimate growth of of range we our we Matt visibility to end levels XXXX, $X $XXX our year long Midland net estimated to across for million to end activity our plan. billion. million additional be as our the ordering top As are of mentioned, full XXXX now EBITDA range lead $XXX next XXXX we CapEx above our and billion to to adjusted Permian $X.X expect

is additional pump plant, around think we capital, will it on XXXX compression plus well with largely station about growth Prix. expectation be additional the our that connect capital for side higher As Grand spending and than continued XXXX G&P capital

maintenance estimate $XXX net unchanged year million. full Our at remains approximately CapEx

we to our with expect consolidated maturities. leverage of with X.X strong pro to forma within about we ratio around have X repurchase a leverage $XXX now be sheet times. range near-term balance DevCo debt January with liquidity consolidated of our and target in XXXX, XXXX for end no expect X is significant million times to times We comfortably X.XX Our and

and capital returning to and In sheet simplifying balance year-to-date and recommend returning and strength outperformance Our incremental XXXX, capital our on sheet, by integrated high share increase meaningful growth around that continue we'll to Complemented our early common system. in in dividend common a opportunistic focused to begin capital flexibility our structure repurchases, more XXXX, us attractive balance our shifts to returning will shareholders. our plans to shareholders. the preferred our opportunities remain XXXX, to to leverage. position our continue with In invest reducing leverage of we focus to we

annualized the with comparable to at scenario return culmination recommendation We common attractive to Our of to that the believe cycles. industry of shareholders company will Targa that share a share analysis. a as dividend offers $X.XX an and common stable cash of per our flow per across analysis for provide increase well as lot dividend $X.XX,

for level of fourth dividend of maintain the Our will XXXX. expect common quarter initial the XXXX that of the fourth and to dividend we effective quarter be through increase

we per next February to currently our the our annual articulate providing Beyond increases annual in modest concurrent guidance change common to expect provide expect dividend to share with XXXX. our to dividend XXXX, and

sheet X We leverage hard times over our very we improve balance worked consolidated of remain to the maintaining X our and focused strong longer have preserving and sheet on balance to term.

achieving dialogue to agencies priority are focus We our is Targa. for rating a toward week, upgraded with which continuing BaX. This us rating, a the investment-grade Moody's with

various sustainability environmental, a source against now are sustainability Concho annual one We we entered from industry. published into Permian And providing topics all continue to Targa's days announced review with Basin. important to So and renewable Solar at advance to the G&P the to and we to provide social our ESG. to investment-grade report third in Also, a that our sustainability couple as Valley three recently ago, of our agencies. performance report. of notch infrastructure we disclosures from agreements governance our electricity are power Shifting

very proud that opportunities and economic advance and we sustainability review our competencies our other closing, to so team. of pursue infrastructure core to continue In We our objectives Targa are footprint. complement

Our employees call efforts. that, well have continued I are we continued for will turn with done the very to safety, and back and our with for have customers on exceptionally so their a perform Sanjay. focus to over thankful And

Sanjay Lad

Thanks, Jen.

session, have additional one you For reenter open limit kindly Q&A. you line. to the for questions. the Ruel, would please Q&A ask the that follow-up open the you lines one and question you Ruel, if please and line-up we would

Operator

I'm sorry.

is now question the Morgan. first will question-and-answer the from We J.P. Tonet of begin line session. Jeremy Instructions] Your [Operator from

line Your open. now is

Jeremy Tonet

Hi, good morning.

Matt Meloy

good Jeremy. morning, Hey,

Jen Kneale

Jeremy. morning, Good

Jeremy Tonet

And activity as to want the bifurcation Great kind aggressive. concerned. if provide there kind to the you've the far Do so. continuing talked color think wondering with more outlook XXXX us current of I XXXX improving XX of every your more the more Is producer that we've anything on still on like starting just that months agencies or But private seeing of could versus metrics pay year to see trends and I This into privates you is being expectation? as the attention footprint here. here, a is about you there? publics similar what rating processing see to plant in different seen you're focus or

Matt Meloy

integrated. guys just in last had I ranges is and see some lot more I'd Hey, with adding there. call the online, our really then say, we about Yes. we uptick us less They for to that And times E&Ps sticking sticking talked us, a publics across have or big are kind their the processing seeing they of larger happening really Jeremy. private larger a long the of and what but and activity more adding plants, of ordering Plant, of they have come from give less terms lead Legacy probably the and or in still smaller are are systems. now the the Midland. from for Plant it next don't change told in our have. Heim Permian the And They forecast in us. more we they plans we're plant really same

so our, I'd be when of think in really So in. after customers can we're as need phase, long capital still XXXX, plant ready. be ordering want not for for comes but working budgeting kind when and we're we sure through the say, in next times there exactly we we're evaluation Legacy, to that we'll we lead ready planning so We're it

guess, we When stay that plant think would timing specifics come on in, I likely next earnings tuned. announce around next will the more So call. we

Jeremy Tonet

to once, comes think going or how And It the just on wondering ahead the or helpful. of it see how Thanks. a solely prioritize? to we just of us of what side to able you if you the seems be early some capital do at just buybacks, But but up That's looking it. is little curious here. to touching it? allocation, dividend Got there just could through great waterfall if when it maybe be maybe things and And programmatic about that's just opportunistic kind for. walk you're like it priorities multiple just you were bit to show could

Matt Meloy

I'll some and over I'll it hand to provide to then details start there. Sure. Jen more

As the some performance overall going just we year, of we and saw strength with our look well business commodity very this tailwinds. price volumes through

of continuing very through our As be to looked even we kind – outlook strong.

necessarily leverage need midpoint we next said, range wait capital position more ourselves specific shareholders. here, to to to don't quarter think of a be we're till found we in I around returning we where in our the

to And in to the on. it the of to really end to end from focused leverage forecasting bit is shift signaling toward of of now which range shareholders. we've We're get so middle a kind that capital year is repayment, return of wanting and a by been our debt now lower what

repurchasing a at that that So the first an reasonable at XXX the more We We moving XXX. was share appropriate amount to through that opportunity financial in us level. does which capital step that felt providing looked the dividend shareholders give allowed S&P looked simplifying us the the to return across while peers and And flexibility and to preferred to opportunistic to our flexibility. repurchases. grow continue our was financial space and

way. just kind of felt good think a along Jen, color about any you like we other was start the So that how opportunistic?

Jen Kneale

as strong think increasing And an allow ways. the but to DevCo we from forward return capital then drive where us starts XXXX that's the largely this our flexibility variety going will But taking take through part got us And the what's out is be clearly go count. expect January we balance we're and and think what we for from I'd a share that the both important assets. we'll we as then to in excellent EBITDA, EBITDA, with we'll The the And and say, us now benefit focused again, little the time, focused that have go out about having move increasing rest shareholders to on XXXX. of of which decreasing a increasing thereafter preferred. now Jeremy, assuming potentially the we've simplification to DevCos though, in to on through leverage company's that's is the flexibility do in and to I in dividends in allows return forward be also to of continued what still that, more business. we really sheet. near-term that lot only when come that's us position capital a of to a priority in not see down will but leverage bit we higher a

Jeremy Tonet

That's it. Thank you. Got helpful.

Jen Kneale

Jeremy. Thanks,

Operator

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

Your line is now open.

Shneur Gershuni

Good morning, picture not my perspective, big lot everyone. of a From questions.

smaller answered I think type very capital, some the you today, dividend just really questions. have timing simplification. of on of on much questions Maybe return increases appreciated. Congratulations guys that,

in of on the and of or conversations the forth, more Are going to respect with you publics. color Just is work activity the that forth? in wondering and or if so anything any to version can has changed activity just Permian terms in Wondering Any you ramp it all, around privates talk sense the kind of how First you geographically. increased there gave, appreciate about ramp shifts kind producer of some seeing the if Delaware? that. so

Matt Meloy

Yeah, sure.

So Pat elaborate G&P McDonie, our of President there.

Pat McDonie

side side growth levels seeing look I kind seeing basin And there's guys. rig is the parties fashion. you We're crazy to, think and Delaware Delaware of it's more form the But ramping both thoughtful in we're up, certainly, of csonsistent count side those at of the but smaller our across basin. the when the they're pretty up and from activity probably and the publics, the indicates the Delaware steady in Midland more in adds, the Matt as of basin a Midland from capital. with of large both or etc., basin. ramp the there the contracted in it of the in good, Not we some definitely investment lag than Midland the side with, that little certainly, conversations alluded

we're what that's right now. So seeing

Shneur Gershuni

obviously, peers they whether then curious on that CPI Thank now. a haul contracts, if style of on long their whether and there's of in from players receipts Many can forth. perspective it's have where you the pipes update lot right Great. in so follow-up as of have us that. it's and an PPI vast G&P, Kind your majority about respect. for fact talked that a inflation or And going you question, the

those types have We the in inflators in your as there. adjuster inflator Do have in too? well general Permian an contracts

Jen Kneale

Jen. is this Shneur,

our Logistics Transportation. and we our similar both contracts think also to of and in lot have peers, G&P across a escalators I in

of in beneficiary going that So we're inflation. forward expect we that would

so of part next forward us And and go a then after year for be potential what that's the that. tailwind would

Shneur Gershuni

the time Taking today.

Jen Kneale

Thank you.

Matt Meloy

Okay, thanks.

Operator

the next Barclays. Christine is line from Cho Your from of question

now is open. line Your

Mark Devries

your about below Mark it give on leverage seems Christine. like to then your how with like it part a for us with I the results, discussions you're year. is next long-term This strong the agencies. way thinking second for And Obviously, IG. you rating wondering curious could as was seem you're to forward? an trending well target update just that, your if the path would you're just on on continued But

could So share we or that? how think that about up should open capacity for repurchases

Jen Kneale

is Mark, this Jen.

we excellent with dialogue agencies. in an that think rating are the I

I have think metrics. from our perspective, we investment-grade already strong

And understand now with time so Moody's, lot what they have continued and that with upgrades understand spent get and S&P with where time their we've of a of what the the we spent our and are think short, sure headed going in. that strategies long-term the really I lot Fitch make. agencies from direction us that to progress we're rating, the to make then with initial with And I forward. they're was recent comfortable think And a are to recognizing the vision and medium

in is been us us has So position our the that articulated is three. step for minds an in to we're all in I What important good simplification. think a with DevCo their repurchase

XXXX. higher thereafter. move expect do then we'd to of So it come to Leverage down that now a end just and in we result and a leverage expect it where be little January where we'll is as at year bit of will

we XXXX And appropriate well can is that question, think control to that positioned. out event then with then part what just to the timing in we’ll And your me investment-grade. is obviously, timing second be will be of I remind to you us. become And but related figure for the really continue was? So we it our dialogue the don't a what agencies hope the that, we're that of

Mark Devries

your year. trending you’re leverage that Just target long-term next for below

or So we does repurchases any think capacity up that how open about just share for should that?

Jen Kneale

we’re our there today reducing leverage about our from think, capital affords is the you’ve is us we’re in think able that things shareholders. go, heard increases to Targa where shift shareholders continue the on minds return flexibility we And a that XXXX able the time. expect where more our to you’ve it us manage already different we’re value the a move that are really that I heard morning We and we increase And leverage where to we of return and it positioned that hopefully, what this will I extent in that lot this to of where do as going our focused to forward. of is improve to flexibility year. to to capital excited through and

Mark Devries

G&P And point. you fee are that going How much should Appreciate then how strong there came at to in? pretty forward quarter. XXXX? volumes looks can Great. implied a this cap these It should looks we the in levels we this participate your that. fees again think above floor like upside contracts like the about on into think is And

Matt Meloy

Yes.

So in $X.XX in now, is you correct that fee to our average NGL are year. much put right and higher last they the gas protect place our were prices than are were around floors downside. And

fee the So floors above contract. on our are POP we

way the is in percentage-of-proceeds, a generally POP they’re still those has just floor contracts, them. work fee So

to So will as like it a regular prices contract. up, will POP look move continue

Mark Devries

Great. Thanks time. the for

Matt Meloy

you. Thank Okay.

Jen Kneale

Mark. Thanks,

Operator

next question Colton Tudor the from Pickering. is Your line Bean of from

open. Your now line is

Colton Bean

Great.

theme with I’ll So leverage stick there. the

low it with free mentioned end, be near the cash. to you XXXX able you’ll seems DevCo that fund likely Jen, So buying exiting the

seems tick certainly a you’ll of likely Xx you So move if year through Xx XXXX of even that balance bit parts higher that to the in is XXXX, the early be little it there below and range. as a to of

thoughts can Should So there. think debt you appropriate expect about we of over updated interested just in target just leverage business? an kind time? how the you conceptually, Really the update on broader level of us

Jen Kneale

to something I Xx would not updating. be we’ll is and expect Xx, Colton, that target that that’s long-term Our

that That we that. we’re the even lower than We’re higher range. within comfortable couldn’t or doesn’t very quarters quarters have Xx Xx or where to mean

below, extent the I more end that think code. we’re that gives comfortable the flexibility. very existing we’re lower To even us in or anywhere zip around

be again, we comfortable manage very and continuing expect business. to to manage the Xx go time. to we over just range that’s through as Xx within But the sheet long-term balance really the we’ll where our So

Colton Bean

as Got the A, it. to expect Series XXXX cadence should thoughts we the And course of then over any just the on there?

Jen Kneale

plan we’ll will it steps down really that we is in quarter have second out XXX, ratably until, to that base right that call continue beginning it, the time. obviously be when it point we end to we flexibility. out have in of that to take XXXX redeemed fully will at and that it The the extent take the now But that after some sooner, want

So we’ll that’s the for be the to pull on XXXX depending of a business able that just performance move lever the the through outlook as we and business.

Colton Bean

Great. I the time. appreciate

Jen Kneale

Thank you.

Matt Meloy

Okay. Thank you.

Operator

Your question from Goldman Mackay the next line of is from John Sachs.

open. now is line Your

John Mackay

the at Hey, comment, signaled me on little good CapEx investment. allocation touch Wanted dividend the well on higher Congrats the morning. capital and to from as year-over-year. XXXX

you inflation also if from of much there increasing pumps, how that Midland Prix any activity? the is curious Just that Grand plants of Thanks. is about coming of You could side? any talk from on kind but the and sourcing mentioned

Matt Meloy

the we think I look to in CapEx, really related more activity for No, XXXX – this Yes. in out as our it’s Permian. increase really

exceed compression the for also, looking then more more it’s as long more looks like you volumes into guidance XXXX, going year, and get on pipelines We’re times, have lead our plant gathering ordering capital to it like. we’re to this volumes, just and

related that. So I’d it’s say more to

job that, good are higher best be or activity steel QX next just we’re to and inflation. kind trying in getting to We are the costs but more pressures of even than seeing really for The it’s other Legacy I’d can. a whether for plant some on it’s manage done will There we related say primarily team this as that some things. has

John Mackay

on the Thank you. your downtime this just quarter. All right. And export then around That’s following-up helpful. comments maybe

Just the the macro? one, lower of kind on can curious volumes the then give just shifts maybe us where how in quarter-over-quarter frame-up much snapshot And Thanks. you downtime overall versus if, could of kind of kind now? a sit maybe of exports right was you lower margin,

Matt Meloy

that handle Pryor can Scott Sure. one.

Scott Pryor

quarter. of the it quarter, as relates on to third opted Hey, all, less John. our at backdrop opportunity. result do of But with that softer market as a working during first against to the our And customers. of the term-related arb Yes, performed it that of facility our the we globally fact doing the the that maintenance term there really really all and we to relates contracts was

cargos well across quarter you across if teases very the East seen will, our areas. as up dock. in foregoed, to into sell other market spot domestically. Far we we fourth the kind arb stabilized move have increases opportunity That and opportunities the here. the to Prices additional the the So We’ve some and of

to opportunity move good think position taking fourth well but So it contracts, for I puts us dock. in the obviously term-related perform across additional very advantage the our not in only the quarter, spots of to

I So we’re in there. think good position

John Mackay

appreciate I that. Thank you.

Matt Meloy

Okay. Thanks, John.

Operator

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

now is open. line Your

Unidentified Analyst

to just talks the one frac This Hey, peers quarter margins, on T&F more becoming start on for a Doug on Maybe few Permian. good this is have morning, in Spiro. about everyone. competitive

scale what kind back if Just if seeing of pressure midstream? wondering margins? And it so, to you’re on similar takes toward

Matt Meloy

competitive. T&F assessment is is Right very Yes, would now, the There that excess capacity. agree I with sure. market that

are thing deals barrel there’s by marginal long-term there. And new say if very we coming, agreement. lot I’d it’s and a to for are T&F get competitive, so it’s have, the underpinned that we a either competition Targa the contracts of good is

are them XX-plus our contracts the Gathering we side. of our And have lot on and longer a long-terms, term long-term then G&P years, have in contracts. We Processing business, T&F

are are for volumes volumes the of to the coming and underpinning of most most multiple are growth our So already years come. contracted that that

next So because of I’d say, structure. while several for we our contract are in that positioned same very market, years we’re well the still

Unidentified Analyst

follow-up to the little increase. of the you. then referenced dividend flow away, just maybe XX% Okay. kind dividend, you And that cash Got this helpful. quarter next ways it. a but decision around free That’s realized Thank is of on the

could As of we like, the in Are looking of determining big look to you look you’re see how next towards next terms an is reference could good increase point time? that increase at about? a metrics what other think there

Jen Kneale

XXXX, right? primary repurchase. about be cash there is Doug, of this simplification, for free continue in the little to to DevCo we When us still the to through related corporate use bit think XXXX will So is Jen. work a flow

XXXX think are As through much of flow beyond to how $X.XX to cash give with move at year’s point and I comfortable dividend free setting about reference dividend time, we But to flow. at the a that call free represented of the as that that this we’ll the articulate that, looking fourth cash it for wait said our we plans. that think approximates that more change. quarter we We were about tried XX% could very

say that’s something that so we will evaluate. And continue to I’d that

have said in to that through more that we we as capital return move shareholders to time. position We will we think be

flow year And free forward go for we given how any will as our dependent year that much comfortable performance out the be on for on well. and our means that are so paying cash then expectations

Unidentified Analyst

All That all right, Thank great. me. you. is from

Jen Kneale

Thank you.

Matt Meloy

thanks. Okay,

Operator

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

Your line is now open.

Michael Blum

morning, Good Thanks. everyone.

move change to for perspective. the acreage and acreage. know was there just think to I I to your that the includes will contracts announced just and wanted I just answer transaction assume tied the be from but I your no this, really assume Pioneer the confirm will that assets

confirm that. to wanted Just

Pat McDonie

dedicated Yeah, that a Continental it acquisition existing acreage, of is The the lot move us dedication. and just it of with Pioneer correct. is will to over

Michael Blum

your no proposal but potentially on for positive see to get longer your to or Perfect, a permitted Thanks. business natural regulate methane And wanted Just thoughts example, of for to EPA’s are I a upside, I it this emissions. want your is the any gas? to flare costs potential it’s know get you there. producers then as Do kind Great. early, read thanks.

Matt Meloy

proposed do, they’re overall trying additional that’s those, we the EPA, what regulations in makes we’re look from which with say, agreement Yes, as I’d Sure. trying methane to the the with keep through sense. to facilities, and in

already a in lot We’re with of operating best these practices areas.

this. lot we’re recommendations the changes areas, the making are we’ve already of doing retrofitting for they So putting in doing and forth and been a years

this speed already So along doing. that we’re perhaps that some work may

find along and pipelines We’re to already leaks and looking our trying facilities.

our flying kind and ESG leaks them. in outlined above looking third-parties hiring of going and facilities for As fly, fixing our we’re and report, beyond to

we’ll good more we’ve some So provide for being customers for follow. performance I doing. to puts us, good as very have there, I E&Ps who there as overall, perform I’d we the think be which overall and kind as see beneficial And are our really have service and an then this in metrics on were It place, larger this is it’s That an some is could opportunity, already continue parameters of things focused say, don’t But issue we some to our yes, can of that become to already in we done. potential leading there. well. opportunity things

Michael Blum

you. Thank

Matt Meloy

Thanks, Okay. Mike.

Operator

Your of next question is from the Stanley Wolfe Research. Keith line from

now line is Your open.

Keith Stanley

Good Thanks. morning.

looking leverage it’s I over $X.X just big for So that increase disclosures, involved in of kind last Is at EBITDA like year-end pretty am for would rounding debt versus but the thinking implies and was the I math be If possibility time. of on X.XX it look appreciating that at in rounding the that year, I there’s a XXXX. your expectation involved? or billion X.XX a outstanding, based

Jen Kneale

now numbers right we’re what our mean, is on adjusted year expectation I exactly specific full for giving EBITDA. clearly, not

extent the really good think are we’re quarter. and so about fourth quarter I yes, pretty materialize. how the that have we’ll the into a But ultimately, feel do out it. year. next good do strong. prices to are this months up quarter, of the I month how the we that strong, now fundamentals finish have couple mean, But across we a We expect increasing business those for to outlook shake see And fourth the volumes

it pretty good EBITDA the a a nice year overall company. for very up XXXX Targa drive that will for I and being end adjusted quarter should think

Keith Stanley

mean, second of assume question. up meet, just already until on limited are Midland you’re or and plants Legacy above they QX, The still in look I thanks. higher Great, And nameplate I growth Should we like kind Midland facilities with can flex guess, demand? Heim. even you starts they running somewhat those

Pat McDonie

Yes.

building our XX% capacity incremental plate out above about some nameplate, we’re continue to go least capacity to of plant that of just size answer and that we’ve place. say, the – that and producers’ that out you let’s When in get pretty to then your us of ahead allows substantial Does and a plants at number we incremental the got amount nameplate. above volumes, Midland of plants our incremental question? it’s while capability ability the capacity and that have of have, system our all We handle above next putting think

Keith Stanley

So XX% you think get above can nameplate you to needed? if

Pat McDonie

I our way, that have facilities some that think that’s of very put it capabilities comfortable, I’ll XX%. and beyond

Keith Stanley

Thank it. answer does you. That great. Okay,

Matt Meloy

you. Thank Okay.

Operator

from Bank Your of from Chase line America. question the of is Mulvehill next

open. Your line is now

Chase Mulvehill

Keith’s Hey, for here. follow-up guess, quick one me in thanks, Thanks everyone. I question. to squeezing

before Legacy you squeeze If of out in the there? and gas of know over you could for to kind nameplate, process and is you kind Midland to wet any run move to said I gas were the on, out Delaware you comes of possible above it capacity more

Pat McDonie

to do capability have so. frankly, And Delaware gas We at of the moving from to improve Yes. capability Midland doing some site looking our of the ways site.

we to the So some offload available ability capacity. have that looking to grow having certainly, that. marketplace in And the to incremental peers

about handle growth our fleet our that we just we before some the up have. good volumes pretty next ability So other feel have comes certainly we of plant to the But plants on based flexibility. currently in

Chase Mulvehill

sounds point, preferreds, on follow-up. and we’ve of great. a some about you’re this cash know buybacks. about lot call to but to Okay, DevCo buy-in going of is to the some kind go I at at it and excess far talked capital allocation, like the going so look free retiring Unrelated the

it quarter approaching Is be sensitive? on question So kind of it program of price can measured a are or buybacks? I will buybacks? planned how more opportunistic and Like, ask more each you and a

Jen Kneale

opportunistic, it Chase. characterized as We’ve

our outlook So that. outlook what’s happening a going it’s depend quarter beyond our year, really for what’s and the to in given what’s on

be look number from that at we is of us we’ll with what And a now under market. to decision sheet flexibility clarity the so we’ll going we hearing under in – But balance provide shareholders. have, feel we’re that of not hopefully But not return the or part that look under think I we we’re will frameworks. you’re different to can to how capital going it will certainly the frameworks participate which under

Chase Mulvehill

or noticeably special potential absent special the of was table? that mention Is Okay. And off dividend. a any

Jen Kneale

XXXX. the always initially to on table. for the XXXX, it’s It think the think with about being in and what is to continuing be corporate DevCo of talking We’ve And preferred, I higher through engage everything paying then that more everything a managing to then not and also in repurchases. From we and dividend that’s some capital in we’re the which really for table, each makes simplification today, something that terms Board opportunistic to about perspective, shareholders, while that lower. decisions. sense make able able to potentially also return change but future. leverage common base doesn’t we think being as perspective, for always that’s articulated clearly us has work our our on quarter our that But couldn’t our and every mean was that our with from priorities the I

Chase Mulvehill

Okay, it back Jen. perfect. I’ll Thanks, turn over.

Jen Kneale

Thank you.

Operator

Global Instructions] question Securities. Seaport the line from Sibal from next Your is [Operator of Sunil

now open. is line Your

Sunil Sibal

the for morning, Good color. and everybody, all hi. Yes, thanks

M&A. my So first to is related the question

the in continue in also bit away midstream not obviously, space side we from footprint. fair So your far to some and the has of also started too upstream M&A see

to was, forward? longer how it you term, question of where in now midstream my kind the that at do you’ve be look the want M&A company got the you over So to going space

Matt Meloy

Yeah, sure. morning. Good

be it’s more us, been really really going for of think – it’s to the I same.

have continue to us. hurdle going for we’re think high to a I

to have continue projects a that. We to outlook organic growth good grow really

we’re we like are So where story short in any we of position our something get have in complete falling really area. integrated to a feel to we or that need go not

So we’ll to look at continue assets.

liquids, assets well synergies, it G&P the that’s there and complementary the We it fits something is business good have side liquid looked a existing on so If years. it’s over has to last G&P that several and to our we we’ve want to target our anything also as we staying within at some to look with continued do but if at there, will leverage. sure Xx Xx we it, look make we’re

of right kind it’s got So us. be for to just

to it because going that’s to able grow So EBITDA be we to look. continues – really we but growth. high we’ll found continue we’re anything that, through fit just a have haven’t bar our organic think to we But

Sunil Sibal

second related Got the question for to it. that. Thanks initiatives. And my ESG

you’ve just as obviously, for kind of up to there should you you think kind at look the PPAs. signed or meaningful as initiatives power about intend I could be was take we ESG there? curious, So line through of that more participation solar your

Matt Meloy

Yeah.

a in about power. we’re of about quite opportunities purchasing the and thinking talked have bit terms investments how we So

been excited Bobby, to working other Robert to to supporting I’m or able team whether to So evaluate that about you has the to would capture. want just renewables power Muraro it be announce some opportunities? with try project. talk a carbon bit opportunities additional little be

Bobby Muraro

Yes.

this that profile I think as look projects third-party think the or our it, fit we Bobby, way all about we is at either capital these profile. capital

else extent will we sheet, our willing or projects. is else on sheet to on carbon power or to can balance capture look carbon to supply we to the that do assets balance So to someone something their that or those we’re our projects go low willing fund to fund

put I evaluation of or that’s goes how projects analysis internally. that will to first one return us But their like part that. was and to the wouldn’t there the that low standpoint which to fund within a that we example in build were the willing extent we parameters, we set solar do to hit is parameters our the of money a the see project this where forward. wouldn’t ones won’t to do, but think of what is start from I a be didn’t someone probably want standard do, It going carbon return why fit parameters. kind that you the would

Sunil Sibal

for on good the Thanks it. all the color, update. and Got congratulations

Jen Kneale

Sunil. Thanks,

Matt Meloy

you. Thank Okay.

Bobby Muraro

Thanks, Sunil.

Operator

There please continue. Presenters, are no questions. further

Sanjay Lad

day. Thank Well, Resources. in we thanks was everyone your have appreciate this you, interest Targa that call great on morning, the and a and

Operator

concludes Thank attending. call. this you that, with today’s for conference And

may You now disconnect.

Targa Resources (TRGP) 4 Nov 212021 Q3 Earnings call transcript