HOUSTON, Aug. 04, 2022 (GLOBE NEWSWIRE) — Targa Resources Corp. (NYSE: TRGP) today reported second quarter 2022 results.
Second Quarter 2022 Financial Results
Second quarter 2022 net income attributable to Targa Resources Corp. was $596.4 million (including a $435.9 million gain on the sale of an equity method investment attributable to the sale of Targa GCX Pipeline LLC) compared to $56.2 million for the second quarter of 2021.
The Company reported adjusted earnings before interest, income taxes, depreciation and amortization, and other non-cash items (“adjusted EBITDA”) of $666.4 million for the second quarter of 2022 compared to $460.0 million for the second quarter of 2021.
On July 14, 2022, Targa declared a quarterly dividend of $0.35 per share of its common stock for the second quarter of 2022, or $1.40 per share on an annualized basis. Total cash dividends of approximately $79 million will be paid on August 15, 2022 on all outstanding shares of common stock to holders of record as of the close of business on July 29, 2022.
The Company reported distributable cash flow and adjusted free cash flow for the second quarter of 2022 of $533.4 million and $334.1 million, respectively.
Second Quarter 2022 – Sequential Quarter over Quarter Commentary
Targa reported second quarter 2022 adjusted EBITDA of $666.4 million, representing a 6 percent increase when compared to the first quarter of 2022. The sequential increase in adjusted EBITDA was primarily attributable to higher realized commodity prices and higher Permian volumes across Targa’s Gathering and Processing (“G&P”) and Logistics and Transportation (“L&T”) systems, partially offset by lower marketing margin and higher operating expenses. Higher sequential adjusted operating margin in the G&P segment was driven by higher realized commodity prices and natural gas inlet volumes across Permian and Central. Permian natural gas inlet volumes averaged a record 3.1 billion cubic feet per day (“Bcf/d”) in the second quarter. In the L&T segment, the sequential decrease in segment adjusted operating margin was attributable to lower marketing and LPG export margin, offset by higher pipeline transportation and fractionation volumes. Marketing margin was lower due to fewer optimization opportunities and seasonality in the Company’s wholesale propane business while the decrease in LPG export margin was driven by higher fuel and power costs. NGL pipeline transportation and fractionation volumes achieved record levels during the second quarter primarily due to higher supply volumes from Targa’s Permian G&P systems and third parties. Higher operating expenses were attributable to increased activity levels and the acquisition of certain assets in South Texas in the second quarter, which resulted in increased labor costs, materials and chemicals.
Capitalization and Liquidity
The Company’s total consolidated debt as of June 30, 2022 was $7,460.8 million, net of $51.4 million of debt issuance costs and $6.4 million of unamortized discount, with $5,034.4 million of outstanding Targa Resources Partners LP’s (the “Partnership”) senior notes, $1.5 billion of outstanding TRGP senior notes, $550.0 million outstanding under the Company’s $2.75 billion senior revolving credit facility (the “TRGP Revolver”), $400.0 million outstanding under the Partnership’s accounts receivable securitization facility (the “Securitization Facility”), and $34.2 million of finance lease liabilities.
Total consolidated liquidity as of June 30, 2022 was approximately $2.3 billion, including $2.2 billion available under the TRGP Revolver and $154.0 million of cash.
Acquisition and Financing Update
In July 2022, Targa completed the acquisition of Lucid Energy Delaware, LLC (“Lucid”) for $3.55 billion. Lucid provides natural gas gathering, treating, and processing services in the Delaware Basin, and owns and operates 1,050 miles of natural gas pipelines and approximately 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction located primarily in Eddy and Lea counties of New Mexico. Lucid’s Delaware Basin assets are integrated into Targa’s Permian Delaware operations.
Targa funded the acquisition with i) $1.5 billion in proceeds drawn under its 3-year term loan facility; ii) $1.25 billion from the Company’s underwritten public offering of senior notes that closed in July 2022; and iii) $800 million drawn on its $2.75 billion revolving credit facility.
In July 2022, the Company established an unsecured commercial paper note program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, Targa may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to time, with the maximum aggregate face or principal amount outstanding at any one time not to exceed $2.75 billion.
Common Share Repurchases
During the second quarter of 2022, Targa repurchased 1,121,925 shares of its common stock at a weighted average price of $66.07 for a total net cost of $74.1 million. From July 1 through July 29, 2022, Targa repurchased 512,336 shares of its common stock at a weighted average price of $58.57 for a total net cost of $30.0 million. There was $214.7 million remaining under the Company’s $500 million common share repurchase program as of July 29, 2022.
Growth Projects Update
Construction continues on Targa’s 275 million cubic feet per day (“MMcf/d”) Legacy I and Legacy II plants in Permian Midland and its 230 MMcf/d Red Hills VI plant and 275 MMcf/d Midway plant in Permian Delaware. Targa expects to complete Legacy I ahead of schedule and given the plant will be highly utilized when it begins full operations in late third quarter 2022, Targa announced today its plans to construct a new 275 MMcf/d plant in the Permian Midland (the “Greenwood plant”), which is expected to begin operations late in the fourth quarter of 2023.
To handle continued supply growth anticipated from Targa’s Permian G&P systems and third parties, Targa also announced today its plans to construct a new 120 thousand barrels per day (“MBbl/d”) fractionation train in Mont Belvieu, Texas (“Train 9”). Train 9 is expected to begin operations in the second quarter of 2024.
2022 Updated Financial Estimates
For full year 2022, Targa is increasing its estimated adjusted EBITDA range to between $2.85 billion and $2.95 billion to account for a partial year contribution from its recently completed Delaware Basin acquisition. Targa’s updated full year 2022 adjusted EBITDA outlook assumes NGL composite barrel prices average $1.05 per gallon, crude oil prices average $100 per barrel, and Waha natural gas prices average $6.00 per million British Thermal Units (“MMBtu”) for the second half of 2022.
Targa now estimates net growth capital expenditures for 2022 to be between $1.0 billion and $1.1 billion to account for today’s announcements of construction of the new Greenwood plant in Permian Midland and Train 9 in Mont Belvieu, coupled with incremental gathering and related infrastructure spend to support growth across the recently acquired Delaware Basin assets. Targa’s estimate for 2022 net maintenance capital expenditures remains unchanged at approximately $150 million.
An earnings supplement presentation and an updated investor presentation are available under Events and Presentations in the Investors section of the Company’s website at www.targaresources.com/
About Targa Resources Corp.
Targa Resources Corp. is a leading provider of midstream services and is one of the largest independent midstream infrastructure companies in North America. The Company owns, operates, acquires and develops a diversified portfolio of complementary domestic midstream infrastructure assets and its operations are critical to the efficient, safe and reliable delivery of energy across the United States and increasingly to the world. The Company’s assets connect natural gas and NGLs to domestic and international markets with growing demand for cleaner fuels and feedstocks. The Company is primarily engaged in the business of: gathering, compressing, treating, processing, transporting, and purchasing and selling natural gas; transporting, storing, fractionating, treating, and purchasing and selling NGLs and NGL products, including services to LPG exporters; and gathering, storing, terminaling, and purchasing and selling crude oil.
Targa is a FORTUNE 500 company and is included in the S&P 400.
For more information, please visit the Company’s website at www.targaresources.com
