Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. And welcome to the Targa Resources Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Also be advised that today's conference is being recorded. I would now like to hand the conference over to the Vice President of Finance and Investor Relations, Sanjay Lad. Please go ahead.

Sanjay Lad

Carmen. Thanks, welcome Corp. quarter and for earnings the Resources Targa to morning, XXXX fourth call Good quarter release, our fourth the presentation on The earnings website Investors for earnings fourth our Targa supplement section. quarter that targaresources.com accompany at call available along are in with the

website. In an our presentation been posted has addition, also investor to updated

Exchange Actual Statements made should might Section considered could statements forward-looking that of be in from meaning XXE Resources' those of XXXX. Targa forward-looking during include this Act the materially differ statements. Securities within results call predictions expectations of the projected or

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

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

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

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

Matt Meloy

XXXX and and excellent employees good Sanjay. an dedication and year to recognize to was like execution. Targa, everyone. for thank their would focus, Thanks, morning for And our I

since $X.X our of record highlights adjusted utilized from increase total across performance low logistics volumes Major multiyear while over record Permian, of incident XXXX transportation reducing the record a assets, include EBITDA our came on start-up. billion, have and rate, time, highly and been in XX% online also projects on and reportable based count. gathering share our safety record processing on budget XXXX volumes Some

XX% our Gulf share Pipeline redemption, successful of Execution and agencies of through share common grade both DevCo upgrades corporate increased to of the our of acquisition dividend approximately successful offerings year-over-year common our our repurchases. an capital return and EBITDA, simplification to repurchase investment-grade by and and South continued all times higher and Texas successful and XX shareholders completion of two investment rating integration our for equity acquisition, Coast execution our of Basin in Delaware preferred Express interest sale with

is critical reliable support our have to XXXX hydrocarbons processor the Targa's and gas, and world. beyond, domestic events U.S. markets. the around the given expect everyday critical fossil a strength advantage need nature domestically gatherer natural the to underscored fundamentals we come. be link balance and supplier to to largest midstream affordable advantaged basins of of continue safe, like fuels We are will cost momentum decades for a continue There key the life global through like and to continued business to production Permian, where Cost the of Global of assets. and our underpinning for and infrastructure

that funded We XX% are an and early remaining many already within Prix And are and adjusted Grand this floating which months our morning's notable the to across Grand XXXX, operational in and on some NGL interest pipeline, our estimated and reduced EBITDA. revolver. acquisition and of January our offering year-over-year senior fronts, XX-year increase estimates in of the for acquisition our records into XX- financial successful less XX% including rate release, announcements, notes be two expected borrowings including than our negotiation the Prix year closing of had the

an Roadrunner currently common to exceeding a calling dividend our increase is Our expectations. to Mexico acquisition expected where share XXXX are our Texas from year-over-year New Basin, II year. Southern construction which the transfer Delaware annualized XX% around versus we plant and South activity the our of per And last plant,

of transportation, South Texas the export a remaining year Delaware billion. higher our acquisition full escalators, billion higher contribution volumes, we expected in expected year-over-year prices. and Basin and contract contribution in estimate be and adjusted LPG from and gathering will is The our $X.X between export interest volumes, opportunities, and XXXX, higher $X.X that optimization fractionation EBITDA EBITDA XX% from higher Grand our and higher Prix For marketing from driven NGL expected significant increase adjusted hedge by processing fees acquisitions,

to Related investment-grade allocation, be priority a continues to sheet maintaining balance at capital across Targa. cycles a strong

opportunities believe creation will we to we we estimate across in continue and our infrastructure We between utilized attractive the highly to as growth shareholder of invest currently also significant expect over organically, to footprint. of $X.X We billion be have $X.X which continued XXXX time. build billion value support that capital

Permian Train pipeline. new major our are X to and Our business, progress projects plants, fractionator our Daytona in core gas NGL five processing

fractionator expect per partners, Along quarter barrel Mont our be also restarting XXXX. we Gulf of Belvieu, in are Coast in which we first operational the day to in the XXX,XXX with process of the

as Beyond announced, additional over our the evaluating strong growth we gas already Permian, processing lead we will when next in plant. time those for need we opportunities are create the in returns are ordering we demonstrated last over five and We items investors capacity time long projects believe and years. for have and organic our progress, Targa our Midland value

you capital despite several on presentation, over XXXX, can XX% the years. a Slide our supplement invested since an return from commodity As volatile X in attractive last generated see earnings backdrop we price

major assets plants from despite in of very resulted our inflation. recent single-digit have low projects, capital new costs attractive invested utilization For multiple higher EBITDA processing like as a immediate returns of the we high have at build gas

to XXXX first amount shareholders sheet in annualized We a for our cycles. The of increased to quarter this in XXXX dividend investment morning. of share dividend us per balance an to recommended to announced projects May. to to continue shareholders increase payment high-return capital positions be April will Board with in common the our of and across XX% year-over-year strong an expectation A return our prudently continued increasing

cyclical dividend and factors, industries XXX and Our midstream C-Corp including XXX. scale the relative and across and our expected fundamentals fee-based with reflects our increasing lot different sheet within associated positioning increase margin of and business [ph], flexibility scenarios, a long-term near- to XXXX Targa's strength S&P the balance peers size, S&P our

common to bought execute reduce the time. $XXX allow to in to million XXXX back to million expect We $XXX October will over share repurchase also had share about shares We remaining under common our place capital and which put a return $XXX our we increase to program, our further be opportunistically in worth us in shareholders position continue of of program count share XXXX. under repurchase million in and

unique request that growing Our program believe to authorize our current we count. reducing existing will share expectation for value we share is program. offer a Board proposition repurchase shareholders potential will exhaust $X dividend EBITDA, our and approval new We growing and billion shareholders, we a once

February guidance and expect to for financial continue our operational shareholders when of We expectations annual to to our to and announce set time. dividend expect we our to over return continue increase common each capital

also addition, around Targa included our In this to morning, financial describing expectations, price in our disclosures upside standard we investor presentation and downside across our annual scenarios. commodity

volatility on many reducing our focused stability our commodity We have prices. last flow spent cash downward increasing the and to moving years

see EBITDA move can year our in around million. you levels reduce adjusted from XX% a full a higher in would around by commodity by decrease XXXX EBITDA to guidance, while prices $XX increase As our XX $XXX Slide from XX% earnings financial relative adjusted million, presentation our guidance would

of downside to where be continue asymmetric an our maintain across to teams where significantly across other and working to a alignment customers commercial focus really to our well producers risk, to more at continues than This in area are commodity upside Targa we position with invest have be prices cycles.

look As for position continue best-in-class provide that to shareholders. and Targa believe create to is value forward, our excellent we we our to in customers service additional

as discuss Jen to now turn as well full call to and in the will our results XXXX. over I year expectations our for XXXX fourth more detail quarter

Jen Kneale

billion, Matt. across increase XXXX first our $XXX lower prices morning, Winter and opportunities NGL Storm Basin increasing additions full our adjusted adjusted was quarter in Permian benefited of transportation record and Elliott. EBITDA Thanks, Delaware reported by year over systems acquisition, quarter X% volumes fourth despite fractionation. EBITDA optimization $X.X the operational everyone. million, as from driven recent the sequentially Good processing, from impacts XXXX, we commodity quarterly and and Targa's processing for gathering XX% was Full

on the at growth our was the $XX about from was capital million fourth billion, spend of well growth quarter of We ratio within end XXXX the and million year leverage capital full capital in target shifted leverage consolidated $XXX X.Xx $X.XXX growth our Our range. spent year approximately XXXX ratio XXXX. long-term projects into

We and early million our Maintenance million. capital $XXX common pipeline in XXXX program shortly thereafter of million the year-end. fourth XX% repurchased was $XX million at mentioned, $X.XX share acquisition approximately Prix announced NGL in our closed the remaining interest spend billion. as And Grand had approximately Matt about $XXX for shares we our January, of for quarter. approximately $XXX under remaining repurchase In

We our of believe through more we flexibility also offering of of price the acquisition Prix's longer capital of billion have multiple represented a Daytona The and synergies. currently with proceeds incremental we to provides $X.XX ownership our purchase year adjusted Grand and Prix, from which Grand operational revolver. an funded billion benefit borrowings Prix about looking XXX% price. and pipeline flexibility a Grand reduce XXXX significantly used XX acquisition near term of having X.XXx We estimated us including forward. lot successful the expansion, senior EBITDA, which notes attractive an XX $X.X and available on With liquidity, was

per the full his range, $XX assuming very the crude remarks, continued at MMBtu for expectations Turning per $X.XX between gas, are of XXXX for We described weighted barrel to $X.XX EBITDA increase gallon estimate oil billion about momentum Matt Waha a NGL XXXX barrel. of and midpoint year billion, $X.X adjusted on our and based in Targa. average be natural for XXXX, our to XX% $X.X as we per excited our prices over really commodity WTI

and hedged well year-over-year. across are XXXX beyond significant from margin are We fee-based benefiting and additional

margin our LPG in gas opportunities. and gas optimization first quarter added this morning our We presentation marketing commodity on exports, and see changes to benefit additional and we that Please hedges. investor expect NGL disclosures natural the from sensitivities price to increased natural significant the

of and We Operationally, Permian. $X.X capital announced across growth net currently activity and billion the spending our in levels dedicated acreage on high other continue $XXX billion projects spending. capital identified million and of based estimate between maintenance $X.X spending

the plants Legacy year gas quarter XXXX XX% XXXX. reported of in Permian are volumes. our fourth is plants to under the expected in-service to about over change Midway no dates average with XXXX natural of full Our II average service Permian second increase inlet in the projected construction and Basin There estimated quarter inlet volumes

II in quarter Greenwood XXXX quarter the in of late Wildcat the first fourth in service in XXXX. and service of

Matt a Texas XXXX. of our in we transaction Delaware we are to South service and mentioned, are second II plant calling in the quarter which acquired expect Roadrunner Permian also the As moving in

change no Permian Daytona in and is transportation downstream dates NGL to volumes is major to increase fractionation in and Train expected the NGL complete to end expected in-service significant the volumes our with of record XXXX complete second The pipeline projects Basin by X XXXX. the in the of XXXX. expected of in be result quarter There

GCF XXXX. it of will in fractionation much the side, some needed help on fully the and restarted we quarter expect first provide

benefit completion also about from our X facility, project Park our by which capabilities Galena will month. mid-XXXX will loading We million the export LPG our of propane at increase per barrels

across well We and contracted are for Targa LPG export export for are year will that a estimating as our be XXXX well. volumes record facility

through flexibility XXXX common share program the pay return have of opportunistically the continue to to incremental expect We to an shareholders repurchase common use our $X year. share and in dividend capital annualized per to to

with leverage is Targa for balance around we leverage range midpoint to target XXXX our providing ratio Xx, continued Our and the flexibility to strong Xx the of forward. range, end our going expect long-term near of of sheet midpoint

extend and executing thank Lastly, I our customers. would like employees, safety strategic their on continuing while and to best-in-class our our services continued to Matt priorities a provide you focus to echo to on

back Sanjay. And with the will call I that, turn over to

Sanjay Lad

Jen. Thanks,

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

Operator

our first Please question the Jeremy Instructions] JPMorgan. have Tonet of you. with go we ahead. Thank line [Operator from And

Jeremy Tonet

Hi, good morning.

Matt Meloy

Jeremy. morning, Good Hey,

Jen Kneale

morning. Good

Jeremy Tonet

want the could. on if three to it, touch and to XXXX I components to guide, wanted I touch I on

far on the seems growth, strong very volume here. as share exports the the just wondering stepping acreage? faster on see the guess, strong Just there. than as I'm your what the just taking Or market Just then in Do Permian curious color you do wondering, see Permian behind would – base growth growing super yourself you drivers LPG drivers points those marketing are the drivers be I of growth optimization also, up? And helpful. up yourselves stepping on

Matt Meloy

Jeremy. Yes, sure,

don't frankly, in opportunities both we that There And we seeing acquisition do activity. Delaware that so what the there. seeing on of yes, our to our part across the you in relates additional expectations Permian activity give the are the made. growth, for we're Pat, significant lot On I and acreage, want color to it's the of recent exceeding some a is Permian? know, Midland,

Pat McDonie

And year basically outperformed Then Basin, the the growth the performed average average with remainder Sure. when on significantly we Lucid year, you year. in the the versus you than you Basin. had off in about than Delaware look growth performed more Basin, historically year. Midland but how Midland last Delaware obviously, the Targa across what always the outperformed for XX saw of last to well start but have hand, We if year, the other Basin. rigs the start we you what and this February think levelize January a They better last of in

that with on with of Midland Delaware have on assets best-performing the currently the assets side the rigs our we coupled Delaware overall side. acreage. side, asset our best-performing on in running portfolio, So the That Permian the that

We Our very, line with sight volume very and our a good great with in forecast. them. what feel they're group we're doing, and producer very tune about of

Scott Pryor

and this And for Scott, LPG seeing the it it business as to we're relates is relates then growth Jeremy, – XXXX. that export as the

versus third quarter recognize fourth Just quarter.

up. fourth quarter were volumes Our

to first assets, with volumes our in the our opportunities platform, was downstream then feeding be there we're we continued on through We quarter up that seeing, see Pat in obviously, talking growth. production expect there. integrated our XXXX increase about that for will here And what speaking

demand we're is result improvements is because out We’ve certainly VLGCs the growth some shipping side the that PDH deliveries that in seen on liquidity water of Panama demand that the Increased the for Benefiting certainly providing the we’re And that. in seeing on like which as more things across also by improvements reopening of new of global seeing side the complemented and of Chinese marketplaces. Asia is the Canal. a efficiencies on marketplace.

what benefit X So those, expansion additional capacity that also with to the of per all will mid-year. be I of just the think online million combination certainly month her will doing. barrels opening small Jen spoke comments, which in will complement we’re that That

Jen would comfortable presents itself. a as we that the And have to mentioned, feeling be participate in the to highly contracted market while space spot also we about continue market when also available

to also Targa when So that lends to providing firms up our pricing economic while flexibility at to benefit our customers, the customers reliability times.

Matt Meloy

marketing, that, to natural about Yes. on you And asked to saw when just of margin both add know in we quarter increased gas fourth And to and markets lot the had our in Scott, and Jeremy, optimization some markets products. both NGL really make opportunities a I we say and there’s in fourth able move we were of volumes volatility, we I’d good our the optimize which quarter, as there. additional

is pointed to as in we guide. XXXX in why our to start quarter kind we’re the that which well, off a first And strong of

this in of that already that some we’re already occurred has year. of kind So factoring

do we first well. because strong quarter of a that as So optimization some expect of

Jeremy Tonet

there. points Got thoughts three you how Great one all the a wanted want I to the on had you in in question, bit and I XX% and just to capital just across the but nice it. PR, allocation prepared mean, guess, we think dividend hear, touch could. And some a on, to I future? here. in that data gave if step-up I more, strong little remarks the touch about very in last components I

to look more get we to what as like you you level this of determination future – any is make off do give bookend to – be And to color concerned, of see spend do sure could annual rails. an But far forward. how kind years the us closer – as going don’t can is capital the expect Or persist? to on kind how this It’s going peak? you

Matt Meloy

have to capital we invest and on Jeremy, to priority We want capital to spend Sure. organically to and start over within a to capital to shareholders sure time. with continue sheet Yes, want strong we to return shareholders. continue return flexibility and both make allocation, to balance how our

showing our we about can that. is EBITDA, which The while think forecast for we our significantly increasing to year our We do we’re think thing invest this business all we dividend, or which good of we and grow – can what in we anticipate XXXX. the did do

forward. significant go increases I dividend think the future ability have we we for as

EBITDA the growth, sheet, XXXX, have shares. continuing repurchase opportunistic we being pretty look to Just in to were but back We in buying at see us our shares. how have grow shares, we to buy I buy ability to balance I as while ability active some continue back think to strong dividend continue you the back significant shares. we’ll those

see EBITDA, and share So count us dividend that is position, over where our growing we growing our time. reducing our

Jeremy Tonet

Wonderful. Thank you much. so

Matt Meloy

Thanks, Okay. Jeremy.

Operator

Instructions] Thank And proceed. from it with Brian Reynolds of the you. Please [Operator UBS. line comes

Brian Reynolds

the follow-up morning, some Hi, guidance assumptions. just everyone. good to of Maybe on

talked growth, implies just once XX% really Permian growth the again. You about Permian which exit-to-exit strong

You it plants next coming capacity full online during online seems of with like enough XQ, recently over year. come plants and had can’t online half some fast come

volumes volumes forecast? how coming baked that of the those curious into system the is your the effectively system Permian as Lucid growth So Or Thanks. to back volume acquisition coming we Targa should post upside back on assume of those forecast? onto much offloaded

Pat McDonie

the brought right? coming say Delaware got Basin Midland side. in quickly side I have minimal call the plant some do we we’ve that Midland because on the to next, another the it, in a fairly up, eight just And up would and we on offloads weeks six plan

good there on come anything So system. shape that isn’t Midland. to back being currently offloaded in will And we pretty feel in the like we’re

between some there. connections the behind do to capacity, we was was were brought Lucid We the day September. system processing full. available had in the immediately because side, Lucid the Falcon VI plant We which able it Delaware system, and existing had in immediately things million we Hills plants complex capacity. and Peregrine a Red the into On our Far Targa is had Delaware up offload plant West XXX we and Frankly, to

retained case. what third-party performance which II acquisition will capacity our capacity, we We is than Wildcat May. adding contracted some also the had basically better Midway have what got of frankly, assets think you by we in on. had will that I coming can midway offload those And in we’ve be that – see that point, the we’ve announced, plant Midway because, be

Wildcat some II capacity. the at We’ve the beginning Targa we year But that need next which, increased we we’re North because Roadrunner coming anticipated old to growth the end what very year, the behind to Lucid the announcement the into have of and system, done Delaware right frankly, move things gas of on because, meantime. of Far it. going we’ve in available West call our ability plants, our again, the

it, up had the Midway XX bit over months remaining the will X So We next, months, Wildcat. a at capacity. fill let’s call to capacity of little one

of our we to can plants sweet plant. have us us kind a don’t of the XXX swing the and capacity. incremental Wildcat the million Loving nameplate, And II day over a run plant another XXX at the plant give have which to And million get forget, ability our Peregrine We then fill we to that’s offload capacity that in will to Falcon up. utilize

Brian Reynolds

Thanks. Great.

over like a year. of the growth amount the of Delaware Sounds significant in there’s roadway

months, transactions XXX it XX seen last Targa today. integrate simplify S&P company of and a the series is become in just the follow-up, we’ve itself to my As

there opportunities Targa. about, to forward, healthy you Moving growth amount organic talked of be seems within a as

of there some time? Prix the the organic that backlog, M&A Targa this view recent piece And at thus, kind excess portfolio of of Thanks. of growth are use should the simplification missing free that to given Or other we last the pieces as of Grand amount could cash?

Jen Kneale

portfolio. don’t think any missing are pieces Jen. to is I This that there the

and the will help that forward expect. significant opportunities for that I increasing that year-over-year asset see we footprint have very we with EBITDA investment underpin continued think we organic are pleased that going growth

in as and terms operationally NGL right. in invest exactly well. enhanced an Blackstone And just That, was think us assets capital gives a we simplification acquisition, it you’re forward, I acquisition, view, our our going how flexibility. of The around but transportation

see of do as that story. the we So final our simplification of piece sort

the and with Going the back to repurchase. beginning then TRC preferred DevCo

Brian Reynolds

leave of the Great. rest Thanks your I’ll color day. there. enjoy it the Thanks. for and

Jen Kneale

you. Thank

Matt Meloy

Okay. Thank you.

Operator

from And Please of [Operator Citi. Thank Instructions] Dounis the you. Spiro it proceed. line with comes

Spiro Dounis

prices. asymmetry Thanks, guess commodity earlier. is operator. in guess to were Good morning, fee what’s a a sensitivity how that the that the referenced I’m down fee traded team. guidance guys I that down? past. than move how in And I curious, floors wanted XX% just and it’s the go back the commodity calculation to about that is I that commodity know just bit probably that the embedded beyond complex, different could of end curious floors trigger but in low Matt and the you’re that a before you an indication bit thinking I maybe move

Jen Kneale

Spiro, is this Jen.

years many the We’re our different proud businesses. looks the several over additional last to than of and indicates what in to today wanted floors of part processing was Targa fee ago. Targa commercial years efforts across teams really today of that that provide of the very of information gathering the our we put And really

is floors a the fee we reason And for that that in big have place.

the gathering but that into was tried our the XX% logistics all we was in of XXXX we now publish fee-based move then reflective it floors, to only a adjusted to on think the fee-based commodity prices, be, also latest $XX element a acquisition where of processing both have just And margin and and again side, Lucid lot margin that if significant about a move is fee more is had the we which also the million the down impact transportation side, portfolio. and that downward it would fee-based call I brought So on essentially EBITDA. a you margin be not would

a what think of demonstrates by that years. be do assume the would was realistic significantly in in had today Targa’s XX% I But Board what enhanced fee exposure floors versus prices that down previously. commodity we in to than guidance, leg So program reduced in that several last is our a that our I it across the think that’s the it’s all think it’s point. combination downside number changed play really that of hasn’t at hedging that we factors And over a all really

Spiro Dounis

Okay. And for has That’s in-service the dates before all would that, all potentially just I it sounds including know the growth. But this helpful. to go that and Daytona could Got exceeding based of Prix going you just around Jen. it. then Thanks back is expectations Jen, some math a like I lot volume it to maybe It my still And far expansions, plants. guess are been discussions the Daytona, processing online. Grand mentioned discussion, get of seem on for tight to come in is place. pretty like and so on

sooner on there So in phases? if have that of bring ability you do than that solutions Or any to curious, tighter an is I’m or bridging gets just sort expected?

Scott Pryor

this Scott. Spiro, is

obviously, that. continued evident. would success that in First we that feed – that I off, see the into been look of will when Prix, we’ve the Grand Permian is at we’ll growth And say the

that we what half in stations capacity on expediting as West our more call overall day barrel call We half above we can XXXX, enter certainly will that would throughout the of this barrels some heavily year of be we leg quickly back range. will the year. the of versus operate And day as just that, pipeline. pump we’ve the nameplate time we roughly installation during And XXX,XXX the of we push likely that Daytona it, recognize a the to we then in XXX,XXX probably as frame, feel Just our can up a the first alone. that commission additional comfortable got XXXX, into

where XXXX with at is that. Fourth kind of quarter of we’re

situations the are calling we have the hard as do upon not be got and solely a that to of where Prix sure we We’re interim, if as dependent XXXX, working to possible. need number make In pipeline. just multiple to plants we’ve end at of they’re quickly offload online we’ll we pipelines, that some the get capacity, connected but Grand

the got are But that a if feel that flexibility expectations. manage we’ve manage of we on some growth preferred exceeds volumes moving lot it’s want we’ve sure opportunities through volume that got our make through it. We So to that, the certainly if our to to pipelines. necessary,

Spiro Dounis

all the guys. today, Appreciate color Thank Great. you.

Scott Pryor

you. thank Okay,

Operator

you. from And the line go comes Chen Barclays. it Thank Theresa [Operator of ahead. with Instructions] Please

Theresa Chen

Good your morning. expectations product chain evidence tightness outlook, demand What ethane for Coast, outlook for touching take Gulf announcement LPGs? given utilization outlook the the purity are that would and the for we’re your hearing maybe your an I’d demand value of get the recently love at that from on commentary? on customers? most on mind part on of us to from general the in maybe petchem your restart anecdotes general frac the the in and update for some seeing LPG export tightness What you GCF, you are giving

Scott Pryor

Scott. is this Again,

have, agreed look will at the has partnership the when that we restart. start. on we So certainly that fractionation GCF to That complex bringing

alluding and our that our outage have facility across planned it time unplanned made relates and G&P the business. now. Pat as that from commission I seeing that XXXX, growth during and XXXX, at to the We quarter at our in really probably that will we’re did some fourth illustrate be side various to of assets say expect basically over us will our those quarter, growth quarter when first which third don’t the needing that of capacity. volumes look to our volume of fourth on exactly you We quarter the we that comments the behind to had is

at full forward. So complement we of feel as – basically though that we capacity our be our at fractionation should going

at obviously some on impacts outbound We that, of products as as that allows that, the on the we’re impacted manage have to the when storage spec Elliott. you us side, by Y-grade, And whether substantial of influx Winter of of well side. Storm it’s amount inbound look products also the

Train X of pie with second us coming the perspective. quarter feel piece next be we from a But of year that. additive very fractionation for on important an of the So in the comfortable will certainly,

as platform important earlier As of into The inflow spec as of again, additional is have propane the we integral very have it Park at product And relates us. products to piece our the a capacity what we mentioned butanes. of coming LPG the small side, there. today distribution provides Galena certainly, well facility on that with for we of products we us that expansion have export that

so we that comfortable And feel very expectations side. with on our

market We’ve certainly, to ethane, announced recently. on been had expansions number to of ethane the a the pull petchem have continues relates it As that molecule.

of come course New market we’ve done our over petrochemical done years. ethane capacity to expansions that excellent And we fractionation molecule. sure to that that coming two excellent have connectivity team increasing has job the an as team of an expansions job are the have our online, last the make can we clear as has online future the added downstream

the footing we look get relates the So good to view solid really economy more is a petchem it that for industry starting that. that on that global continuation improvements us. as I And is in of forward think to going

Theresa Chen

versus back go And between breakdown wanted you. commodity-based comments your I to fee-based about Thank the to Jen, margin.

forward and more time more general you XX% that evolves? fee-based, skewed see as you as see currently layer with you that over favorably risk And incremental do the contract XX% this asymmetric that within embedded margin? you fee-based you cetera, band, Now floors online for escalators floors, with et going do breakdown bring you fee capacity processing how are that becoming in fee think

Jen Kneale

we do on least and drilling to rate continue But at in capital. have commitment of I to capital protections get infrastructure demonstrated that a think to to need place our in to a their order that we that, minimum support to producers invested we’ll have activities. that invest return

production I come so contracts we put seen And trying we in as in continue and a have areas And a we to expiration up capital as invest fee excellent basins benefit bit it floors commodity that little to catalyst spending a have where to in there’s bring creates commodity that are other or well think prices, but for support from are our good to for for do lower environment. of alignment us price a think renegotiation. higher to I and

assets. to I margin nature to XXX% by just XX% see margin going from think it’s our fee-based difficult the us of fee-based

I can floor with particularly it think that in comfortable a we’re structure have, with very commodity fee the place. we if exposure be also price

commercial that’s do in think that when a continue trend place done And opportunity fee to our putting those I So floors so. the had really for us. will the teams great job have they’ve of

floor terms a where And us, that fee-based expect difficult continue continue believe but big margin future. of to for with means what in to we it’s margin in that that, would fee the goes more that will protected I structure. point be the predict But to of focus so have will I

Theresa Chen

you. Thank

Operator

Thank from & Pickering, Please proceed. you. Holt it with And of Co. Bean comes Instructions] Tudor, [Operator line the Colton

Colton Bean

Good morning.

and contracts then frac OpEx? the unit that moved materially a transport margins and any to relative there shift around the the terms basin lower from weighting was origin drivers So transport Any QX. apart and of frac between any on in margin And were uplift? or up two that in mix

Matt Meloy

things marketing. We couple volumes, marketing fractionation Colton. both Hey, We had What planned there. to and before, were our mentioned marketing really Scott also we gas to as I bringing and that a more and from some optimization had, related in NGL sure. fractionate. maintenance, able our were we in mentioned unplanned is fracs of we Yes, just activities some benefited

opportunity or and first to the either nameplate, So the to here in those have build are closer so some we’ll quarter, operating be inventory to offload. us, behind do we

able our we execute than cheaper So to at overall offload were rates some T&F.

kind the spread up though our us did for it creates margin move of as even volumes much. So

to reported actually volumes was were in that we but we that’s what fracked, some really is than coming So kind offloads more because what we I’d able of have do us. work behind say third-party

now we So more QX. in have capacity

the that frac us, bit looseness overall market. flexibility So in frac market. some terms little with in a we coming see the in creating in And fracs more is, XXXX for of on other XXXX,

was able I all those think, be coming of of But really good and things. Train a GCS combination be to, on. start-up we’ll in position So ahead it X

Colton Bean

Okay.

it And on like relatively side sounds for frac the was stable transport? so it concentrated more and

Matt Meloy

Yes.

right. about that’s think I

Colton Bean

Great. on And then OpEx.

was actually in logistics. G&P relatively for down flat So and QX

had full activity. as expecting think a higher you Lucid increases overall I continued and were then of previously, quarter you

expect of heading more expense QX was a step-up – XXXX? your just still in in So levels shift into structural that should we outlook? Or

Jen Kneale

overestimate this costs to end the up year, Colton, tend What is being tends we is happen may val Jen. generally ad through our we what because conservatively. just to forecast

on throughout fourth that prior down And quarter OpEx steps so as front. year, often a us bit versus come little means the quarters those in that for it costs

operating as in that just And for of fourth a quarter. our also have us So done excellent an job our managing teams expenses benefit well. then was the

to from Storm very fourth up have just did a into team Storm comes related which have a actually Within the Lucid Elliott, OpEx did well bit expected the quarter managing where Winter G&P the managed first Elliott, We’ll OpEx it particularly little on step then it’s we very, a have with through. really great acquisition Winter associated but we and or management, quarter, the step-up the of that job well. side, also our of did

On the ad had Scott also the of in quarter. that in downstream quarter fourth side, benefit we repairs mentioned. and lower And third also the costs valorem we had the maintenance

and was have there because quarter. those maintenance just there Those fourth one-time. the so down did not And we in were step repairs a

Colton Bean

Great. Appreciate time. the

Jen Kneale

you. Thank

Matt Meloy

Colton. Thanks, Okay.

Operator

you. Research. it And line Thank ahead. our go next for Keith Please Wolfe of moment please. from question, comes the Stanley with One

Keith Stanley

Hi. Good morning. Thank you.

start on hedges. to and wanted commodities Just

you XXXX to would prices hedge to guidance? give still? picture this compare billion to now to I for try say, unhedged are curve to for in across additive outlook if the or where hedges for sits, Asking be versus EBITDA the a it where are commodities, the your $X.X forward they better billion the And year? an $X.X of So market so money, just XXXX might below

Jen Kneale

On the natural across we the aggregated hedge everywhere swaps disclosures on we side, hedge. that this that morning that’s gave gas

swaps we where So hedged. those are have say of where say prices than are that XXXX now for would the lower balanced hedges Waha actually Waha I’d that majority

a swaps have it’s So each place the little to bit there. we that of hedge on basis a and we in that depending mixed point bag

On we higher than We’ll the NGL we prices hedge just and how the than prices year, just crude are be we’ll but seen today we’ve in XXXX, where little where time place. that as continuing a I layer through move for prices calendar of bit sitting. hedges really prices where see right are exposure that is prices think, out to little a lower, side, in NGL that isn’t bit to plays have got hedges and have the think beginning to we’ve WTI I our then our since are now significant,

Keith Stanley

Okay.

doesn’t So for above but a and year? on crude, the overall, EBITDA is hedges gas, little change what the materially big you’re market net-net, on below sound NGLs the picture, like it a little outlook

Jen Kneale

fair. that’s call at it, in hedged year. million think said $XXX I of No, that hedged north we’re of higher prices We we’ve losses XXXX, had, this and

was through where to out how that that And have articulated relative then XXXX where little we the tailwind, relative So maybe XXXX. think it today, prices a see hedges bit are a tailwind plays when for of to a we’ll about to year. but sit

Keith Stanley

it. Got

Okay. Thank you.

are spending? a of on on year? XX GCS? related unannounced about the that, into plants just spend future pushed potential frac work CapEx guidance, now the need you or with other that to Second And out baking is question any to thinking was the in end this are you start the how just Or for before likely XXXX

Matt Meloy

sure. Yes,

announced. the plant in five plants items for we Midland. also the ordering are that have – So have we And script, lead the Permian another for long said in time we

of we CapEx into some factored in overall guidance. this So that

we it it. So and that say, on we depends with okay, really forward going when greenlight are

additional if that we So sooner be capital later. some than shift greenlight there could plant of rather

Roadrunner evaluating plant we and evaluating Delaware. the though we’re another are we right And I’d even potentially in say are out now, adding II, Wildcat II

kind going we of of we’re that’s need see to plays now, first and plant how factored go than forward out not part sooner the another year rather with to if this Right So later. in.

We’re evaluating.

and lot II, offload capability. the coming have a we Midway of some on Wildcat Roadrunner, between We have plants

need efficient we’re we So the have plant eye on to another we’re to our trying be going in kind of there, but when capital Delaware.

year of and frac as XX, far let’s this producers I volumes year. next are play out Train kind saying what think As for see again, how

We have Train X coming on.

we talking into kind are when GCF footprint on frac. about have XX-ish we the of growth have, Train coming NGLs to need our when moving moving that We amount XX going percent that significant of through you Grand on. have But we’re Prix

year XX, of So and we’re the that we’re to I’d having need discussions plays kind we’re to when say trying on out. going Train add evaluate as to

Keith Stanley

Thank you.

Matt Meloy

you. Thank Okay.

Operator

of One of Neel from moment please. you. our Bank next Thank proceed. And line with Please it the for question, Mitra America. comes

Neel Mitra

that I then moved you morning. Delaware. to speak the would you moving are plant there? with require Delaware? growth Good to into if Roadrunner associated the would you moving that And a compare could seeing where that to be to of that Hi. new pocket was be wondering the would capital How And plant build? where that

Matt Meloy

Roadrunner where which add we’re fed is footprint, next complex to is part right be when the $XXX-or-so be moving overall to million a Hills capital that so there. about and move. will Lucid acquisition. complex Red will the that the II I our we Yes, There’s Roadrunner, great Roadrunner the the that now of The connected existing sure. plant, it’s What’s about which was for

are relative $XXX-or-so efficient are are, closer $XXX capital builds call to doing a is The $XXX builds million. it the build. So move new give new about Roadrunner it, to new million, The about, or – Those is just say, million. take.

a get able but does timing. on it our help basis, for bit to the you move still better So a being on and the more a per new move capacity unit little little build, timing,

capacity we’re on mentioned, getting tighter out there. Pat As

out a new So than moving it quicker build there. putting is just

Neel Mitra

Okay.

acreage this for would Prix. Is fair? clarify, wouldn’t and So to to Grand just necessarily connect the Lucid be that

Matt Meloy

on – you it’s What’s some When becoming getting what’s the do is out Lucid system, system all Targa that? to all acreage it producers, Targa color a there. interesting Bobby, talk and want one mixed. add Sorry, quickly it’s now really And started is were it’s all to you really

Bobby Muraro

and Yes, of extent I also Bobby. this it. areal of to think Midland is fungibility just when the about scale you the say was Basin the system the across going in

of acreage you across coming we top right on that can plant You the drop see volumes because move a system. don’t entire exactly

also assets spots existing place convenient that the right footprint plant. such top So we’re where to speaking, a All gas loose fungibility the fast as creates with And into growth at can plants, with year Delaware is the it Roadrunner, the lots we that’s place of and in of ago, we generally manner, the integration happen to that but doesn’t a system. see that out the that put build asset of Chevron from we it our to start the to the years same we of the that, different putting did fungibility bought such several big have growth. AMI because of flow

Matt Meloy

also system to building into that Roadrunner connect line We’re that integrate and Grand working we’re now. Prix, so

Neel Mitra

the Or kind back growth? were Got and for of it. issues kind rejection consistent be It XQ, XQ? half see Grand And processing flattish. Prix. lingering up and that’s are in on start know stepping volumes to then any we I other XXXX kind some step-up the up maintenance seems back Grand should follow I a on weather, just of you in relatively of to of like volumes ethane for you, And early second you there the if could recovery, with set had Prix

Matt Meloy

Yes.

is Grand our We seen Oklahoma. the expect Permian Prix start goes between growth West continued on our North volumes leg, year. and which moving higher we see up there here leg. is We’ve to as get you into mix into What

move little much strength as as volumes we’ve seen South have of seen Permian. you’ve We the a bit there kind not in as

seeing So we strong the Frankly, would volumes it. we expect in growth year, there. that’s this higher, we already Grand it’s the looked relatively seeing we’re as through Prix start flat. of pretty move year move what are and But

Bobby Muraro

this half the of Matt, the more add, I of just the contribution got would North second that we've coming leg in year. third-party back contract half that also the we've – year, be will some And got from

up those see Belvieu starting you'll So to as well. volumes deliveries ramp into for

Jen Kneale

touch we have Legacy In available every quarter, the additional Prix. we'll so quarter coming the then at Midway. online Grand second II for just And and on of capacity growth

the those nice be So in catalysts second will quarter.

Matt Meloy

Yes.

Neel Mitra

Got all the you color. for it. Thank

Operator

line Please from go comes And Instructions] Sachs. [Operator Goldman the you. of Thank John ahead. Mackay with

John Mackay

before. half of incremental That's another no through the one right time. adds Thanks comment just sit off that for rate clarify assumes Wanted February? XXXX and part. Permian quarter of now growth is XX% growth what Hey. Were far seen off fourth outlook you second on from first the we've – to the saying so for

other And course, basins, you're seeing about then second, gas-driven I'd the elsewhere. love to how exposure, of thinking less relatively just hear we're but slowdowns

the your what Thanks. curious on and Barnett others So maybe look view like?

Matt Meloy

do rig Pat I'd also then can and one, build haven't bottoms-up in build, expect And and comment and all and or number history. how to some first of a don't do. we the not the but – do one specific hit the a takeaways. say or adding folks what say doing top rig a they then adds I'll were relative down Midland assumes so with a combination we instead more performed those. Yes. We Delaware, producers on it's of both there's It's Yes, bottoms-up of an doing we we kind aggregate really and shifting, it on of to given do second. and we our some less adds

way of forecast a kind the do on we it's So usual that.

hit do basis? to want on Pat, then, And you other

Pat McDonie

of prior years obviously, areas. last We'll it was Oklahoma, our Oklahoma frankly show we contract, that the able in that our a good four includes rolled and Southern were where significant enough Good Sure. and off Frankly, of lot there back able start fill a But chunk both call flat seen, so in Oklahoma. behind. activities activity. we activity Western decline. under relative We've that, in South volume were to to in that we offset and pretty Oklahoma a basically we're to, let's three, frankly to

are seeing there. activity we So some

are we and more it volume to Texas, on prices. continue drilling Certainly, seen gas – Southern have growth sensitive North we activity. we've frankly our Oklahoma and see system, to

on dependent prices out expectations those decisions our There So incremental those see the the drilling producers. get pan at here We'll of year system volumes. the of throughout we and ultimately to how the planned year. beginning we'll are that have upon commodity

good. addition our have there drilling The Our active. and producers originally activity been South underpinned assets level capabilities and gas very some the a Southcross contracts the the that are of added sour of has those activity Texas of assets,

So benefits kind both types those we've from of volumes in seen producers. of of

there, about good [Indiscernible] it's feel drilling. of significant the pace steady things. scheme we in volume thing, So overall same but growth not of a good

that grow good going crude oil to we replacement to basin. going So how gas, in we're of natural are say significantly and

our are growth to Now probably? see and going own we slight some hold

John Mackay

CapEx. Maybe great. last one all That's that. just All for right. me on one Thank for you

curious if of kind forward? plants gathering that's about through, inflation about you're side, directionally how flowing on think could of just talk a kind kind bit the pressure just still compression Just any you or whether anything little that we going can seeing Thanks. on And there? of

Matt Meloy

Yes.

is part seeing assets, for facilities this CapEx, the whether we some are are is X.X, we're buying lead the higher in putting it's too, costs, say compression just place. some on I'd year larger longer time, which us longer with of in compression actually We lead or XXXX. of is pipelines the now, times And X.X the which included some right that

it well. times part lead this there's have year pushing CapEx ready be So growth us getting is more next because I know of extended been year as going because some is future to into

supply inflation, of growth. trying of us it time the it chain lead to some part So of disruptions part ahead of is get of has kind been and

John Mackay

for All comment. Appreciate Thanks the right. it.

Matt Meloy

John. Thanks Okay.

Operator

One Thank moment you. [Operator Instructions] please. Okay.

side. last with a Global. And All right. Please today from have for difficulties proceed. Sunil our be question technical Seaport this Sibal We will on

Sunil Sibal

morning, Hi. everybody. Yes. Good

Matt Meloy

morning. Good

Sunil Sibal

the get to a bit of wanted little on investments. just returns I on clarity

of capital spend. was had few environment? a years back, the in kind I think I processing to X gathering you and multiple for that changed how a current talked curious has Xx about EBITDA

Jen Kneale

an we've to as returns, when utilized, result processing think that a tend capital because they seen I side. think, projects particularly partially efficient online, improvement the be in I we gathering new on well bring of, very actually those being and very

new has our mentioned, seen utilized but prior the actually as to once recent it constructed been utilization overcapacity improve to that online means sometimes Pat we try a just we've tends is as So operate plants a system as history. possible, quickly utilized the plant new of that as third-party the to that be to coming as least returns very have get offloads, result at very online, and/or plant highly or

so on multiples so returns that sorry. – of I side And lower higher the that's think business, business side the that driving of on lower, returns

Matt Meloy

than – X% just to as that. I still forward, able kind to to we going about how X% to articulate better that, we Yes. is execute I'd add of We say returns. think think we think and were would what about

return If back nets you last and GCX. X into and were significant the like, five a a for look multiple good invested example, kind in closer number. us, really capital, We is And of to we of sold also that of for that successful the part times. we years, investments CapEx at over that

planning a good but kind case. X% of like course that good higher. that, drive in some to to think also But helped and is had we'll So I we onetime items a beat X% X% to that case optimizing, X% point try through is which of

Sunil Sibal

Okay. one Thanks for that. clarification. And then

with cost. and plant past, talked builder in spend the think you've compression the pipeline new about I on processing being a the X:X

said So $XXX I is call, new processing costing. plant think the on previously what the is typical in you million a

up capital thumbnail So is the plant? good that still fill [ph] other for to X:X the

Matt Meloy

Yes.

been reasonable time, think efficient a a more that. capital over recently I'd is than now little assumption. seeing what bit I even say we potentially that's have

more bit can from it they're producers vary drilling; with little as where some efficient our a year-to-year. of maybe So less being are so– but

versus that's can an and vary Maybe it's $XXX but So less a not under plant I'll the year-to-year that. I'd from say as take on unreasonable gathering up bit million to compression fill assumption. well. a little Maybe it the

Sunil Sibal

that for on Got it. Thanks congratulations and a print. good

Jen Kneale

Thanks Sunil.

Matt Meloy

Okay. Thank you.

Operator

Sanjay our Ladies to will final this remarks. back and Session. for the Q&A turn you. Thank concludes Lad gentlemen, I call

Sanjay Lad

Have that available you, call day. appreciate interest a The Resources. may everyone, for IR great will the your was any Team questions this Thank be you and have. morning, follow-up in we on Targa

Operator

everybody, for this Thank you and disconnect. call. concludes may conference now participating, you you, and today's Thank

Targa Resources (TRGP) 22 Feb 232022 Q4 Earnings call transcript