Targa(TRGP)2023-02-22 21:41Financial Data and Key Metrics Changes - Targa Resources reported a record adjusted EBITDA of 840 million, a 9% sequential increase [4][15] - The consolidated leverage ratio at the end of 2022 was 3.7x, well within the long-term target range [15] - The company expects 2023 adjusted EBITDA to be between 3.7 billion, indicating a 24% year-over-year increase based on the midpoint of the range [8][18] Business Line Data and Key Metrics Changes - Record gathering and processing volumes were achieved in the Permian Basin, contributing to the overall growth in adjusted EBITDA [4][15] - The company anticipates significant increases in NGL transportation, fractionation, and export volumes in 2023, driven by higher expected gathering and processing volumes [8][20] Market Data and Key Metrics Changes - The average Permian Basin natural gas inlet volumes for 2023 are projected to increase by about 10% over the average Q4 2022 volumes [19] - The company expects record LPG export volumes in 2023, supported by the completion of projects that enhance propane loading capabilities [20] Company Strategy and Development Direction - Targa Resources aims to maintain a strong investment-grade balance sheet while pursuing organic growth opportunities to create shareholder value [9][11] - The company is focused on expanding its midstream infrastructure to connect U.S. production to domestic and global markets, particularly in cost-advantaged basins like the Permian [6][10] - Targa plans to continue increasing its common dividend, with a projected 43% year-over-year increase for 2023 [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum continuing through 2023, citing strong business fundamentals and the critical need for midstream infrastructure [6][8] - The management team highlighted the importance of fee-based margins and the implementation of fee floors to reduce downside exposure to commodity price fluctuations [41][50] Other Important Information - Targa completed the acquisition of the remaining 25% interest in the Grand Prix NGL pipeline for approximately 2.5 billion of available liquidity, providing flexibility for future investments [17] Q&A Session Summary Question: Insights on 2023 guidance and Permian volume growth - Management noted significant activity across their acreage, with expectations of outperforming average growth in the Permian Basin due to recent acquisitions and increased rig activity [25][26] Question: Capital allocation and future dividend increases - Management emphasized a strong balance sheet and the ability to grow EBITDA while increasing dividends, indicating potential for future significant dividend increases [30][31] Question: Commodity sensitivity and fee floors - Management highlighted the implementation of fee floors across gathering and processing businesses, which significantly reduces downside exposure to commodity price declines [40][41] Question: Outlook on fractionation and demand for LPGs - Management expressed confidence in the fractionation capacity and demand for LPGs, citing upcoming expansions and strong market conditions [46][48] Question: CapEx guidance and future plant needs - Management indicated that while current CapEx guidance includes announced projects, they are evaluating the need for additional plants based on market conditions and volume growth [63][64]