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Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp.

Targa Resources Corp. · Nov 5, 2013 · 73 slides

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Slides

  1. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 1
    Targa Resources Third Quarter 2013 Reported Results & 2013 Investor & Analyst Conference November 5, 2013
  2. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 2
    Agenda Third Quarter 2013 Introduction Third Quarter 2013 Commentary Guidance Investor & Analyst Presentation Company Overview Current Industry Dynamics Business Summary Gathering & Processing Division Highlights…
  3. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 3
    Third Quarter 2013 Commentary Matt Meloy, SVP, CFO & Treasurer
  4. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 4
    TRP Q3 2013 Reported EBITDA and Operating Margin US NGL Adjusted SupplyEBITDA by Product Q3 2013 Adjusted EBITDA was 156 million 200 versus 116 million in Q3 2012 160 Record quarter highest Adjusted EBITDA in Millions 120…
  5. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 5
    TRP Q3 2013 Reported Gathering and Processing Division US Operating NGL SupplyStatistics by Product Q3 2013 Field G&P plant natural gas inlet volumes were 800 MMcf/d versus 686 MMcf/d in Q3 2012 Q3 2012 Gross NGL Production Q3 2013…
  6. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 6
    TRP Q3 2013 Reported Logistics & Marketing Division US Operating NGL SupplyStatistics by Product Q3 2013 fractionation volumes were 316 MBbl/d Q3 2012 Q3 2013 Q3 2012 Q3 2013 versus 293 MBbl/d in Q3 2012 350 2,500 8% increase was…
  7. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 7
    TRP Q3 2013 Reported DCF and Distribution Coverage US Distributable NGL SupplyCash by Product Flow Q3 2013 Distributable Cash Flow was 111 120 million versus 77 million in Q3 2012 100 44% increase resulted in Distribution 80…
  8. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 8
    TRP Q3 2013 Reported Cap Ex US NGL Growth Supply Cap byEx Product Q3 2013 Growth Cap Ex were 267 million 300 versus 145 million in Q3 2012 250 84% increase was driven by: 200 in Millions Capital spending related to high…
  9. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 9
    TRC Q3 2013 Reported DCF and Dividend Coverage US Distributable NGL SupplyCash by Product Flow Q3 2013 Distributable Cash Flow of 36 40 million versus 22 million in Q3 2012 35 30 62% increase resulted in Q3 2013 Dividend…
  10. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 10
    Guidance
  11. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 11
    Targa 2013 and 2014 Guidance EBITDA and Cap Ex US NGL Adjusted SupplyEBITDA by Product 2013E Guidance Range 2014E Guidance Range Adjusted EBITDA for the 9 months ended 900 595-655 Million 740-760 Million 9/30/13 was 415 million…
  12. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 12
    Targa 2013 and 2014 Guidance Distribution and Dividend Growth Guidance for TRP 2013 distribution growth TRP Distribution Per LP Unit was 10% to 12% 3.50 7-9% Based on the Q3 2013 declared LP distribution 10-12% Growth Annualized…
  13. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 13
    Targa 2013 and 2014 Guidance EBITDA and Commodity Prices Adjusted EBITDA(1) vs. Commodity Prices TRP benefits from multiple factors that help Adjusted EBITDA - Actual Adjusted EBITDA - Guidance mitigate commodity price volatility,…
  14. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 14
    Targa 2013 and 2014 Guidance Fee-Based Margin Increasing Fee-Based Margin Provides Additional Stability to Our Business ( in millions) Fee-based operating 113 margin expected to continue to increase to 60%-65%+ in 2014 92 88 80…
  15. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 15
    Targa 2013 and 2014 Guidance Leverage and Liquidity Liquidity(1) 1,200 1,000 TRP is well positioned with 824 million of Total Liquidity available in Millions 800 600 In Q3 2013, issued an additional 118 million gross under…
  16. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 16
    Targa 2014 Annual Guidance Summary Financial FY 2014 Comments 2014 EBITDA ( in millions) 740 - 760 2014 run-rate increases as growth projects placed in service Fee-Based Margin % 60% - 65% Growth Cap Ex - Announced Projects Only 590…
  17. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 17
    Company Overview
  18. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 18
    Targa Corporate Structure Targa Resources Corp. (NYSE: TRGP) (TRC or the Company)(1) 100% Indirect Ownership 11.9% LP Interest (12,945,659 LP Units) Public Unitholders Targa Resources GP LLC 88.1% LP Interest 2.0% General…
  19. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 19
    Targa Resources Two Public Companies Targa Resources Partners LP Targa Resources Corp. (NYSE: NGLS; TRP or the Partnership) (NYSE: TRGP; TRC or the Company) IPO February 2007 IPO December 2010 MLP C-Corp Owner/Operator of all assets…
  20. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 20
    TRP and TRC Performance TRP Total Return Since IPO TRP Distributions NGLS Out/(Under) 2.93 16% 3% 2% 21% 3.00 2.86 Performance vs. AMZ 2.79 60% 2.72 Annualized Distributions per LP Unit 2.75 2.65 2.57 2.49 50% 2.50 2.41…
  21. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 21
    Current Industry Dynamics
  22. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 22
    Domestic Rig Count U.S. Rig USCount Horizontal NGL Supply by Product vs. Vertical Directional Horizontal Vertical % Horizontal 2,000 70% There has been a dramatic shift in rig 1,750 60% activity over the last decade %…
  23. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 23
    Shale Production Expected to Continue to Increase U.S. Crude Supply by Source(1) U.S. crude production has been on a EIA Base Case EIA High Case significant upswing as producers starting realizing success in deploying the techniques…
  24. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 24
    Targas G&P Assets are Well Positioned Targas G&P assets are located in and around some of the most active shale / resource plays, which is driving continued growth and expansion Field G&P Field G&P assets are located Permian…
  25. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 25
    Producer Activity Drives NGL Flows to Mont Belvieu NGL flows to Mont Belvieu expected to increase Recent pipeline conversion announcements will bring additional NGL volumes from the Utica/ Marcellus to the Gulf Coast…
  26. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 26
    Well Positioned for 2014 and Beyond Investment Highlights Increasing scale and diversity Increasing fee-based A Strong Footprint in And a Leading Position at Drive Targas margin Active Basins Mont Belvieu Long-Term Growth…
  27. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 27
    Business Summary Joe Bob Perkins, CEO
  28. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 28
    Value Creation Since TRPs 2007 IPO Capital Spending(1)(2) TRP Enterprise Value Drop Down Phase Growth Cap Ex / Acquisition Phase 1,800 10,000 1.1B in total cash 1,600 distributions to LPs 1,400 8,000 2.2B in Enterprise Value above…
  29. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 29
    2013 A Transformative Year for Targa Continue to invest in our current gathering and processing businesses in active and growth oriented oil and gas producing basins Continue to invest in our leading fractionation and export presence…
  30. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 30
    2007 to 2013 Diversifying Operating Margin Contributions TRP Operating Margin by Division In 2007 when TRP completed its Feb 2007 IPO YTD Q3 2013 IPO, 100% of operating margin was only one Gathering & Processing System(1) YTD…
  31. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 31
    Major Announced Capital Projects Approximately 1.9 billion of announced projects online in 2013 and 2014 Approximately 1 billion of projects completed in 2013 and 900 million in 2014 Additional high quality growth projects under…
  32. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 32
    Major Capital Projects Under Development Over 1.5 billion of additional opportunities are in various stages of development Opportunities include additional infrastructure in both G&P and Downstream Increasing NGL supplies across the…
  33. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 33
    Projects Recently Placed in Service Cedar Bayou Fractionators Train 4 Total 2013 CAP EX CAP EX Completed 385MM 120MM Q3 2013 International Export Expansion Total 2013 Phase I Actual / CAP EX CAP EX Phase II Exp. Q3 2013…
  34. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 34
    Responsible Growth - Safety and Environmental Summary Targa approaches regulatory compliance in a proactive manner by hiring and retaining excellent people, by providing them with training and resources to be successful, and by holding…
  35. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 35
    Gathering & Processing Division Highlights
  36. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 36
    Permian Basin Growth Overview Growth Drivers Permian Basin Horizontal Drilling Rigs(2) Permian Spraberry/Wolfcamp is the second largest oil Total Permian Rig Count Total Permian Horizontal Rigs field in the world with total…
  37. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 37
    Permian Basin Production Growth Forecast Permian Basin Production Growth Forecast through 2017(1) Producer activity and resulting production in the Permian (2) Basin is expected to increase in 2014 and beyond Targa is well…
  38. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 38
    Targas Permian Basin Systems Across Broad Active Plays Permian Growth Continues 2013 inlet volumes are expected to be meaningfully higher than 2012 at SAOU and Sand Hills Versado Versado volumes were expected to approximate 2012…
  39. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 39
    Activity Around SAOU SAOU Overview Rig Activity Around SAOU(1) Activity around SAOU is robust, with producers increasing their horizontal drilling activity Current system footprint includes 1,690 miles of pipeline and 169 MMcf/d…
  40. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 40
    Activity Around Sand Hills Rig Activity Around Sand Hills(1) Overview Sand Hills footprint includes 1,445 miles of pipeline and 180 MMcf/d gross processing capacity Completed a 30 MMcf/d processing expansion in Q4 2012…
  41. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 41
    Activity Around Versado Overview Rig Activity Around the Versado System(1) Versado footprint includes 3,260 miles of pipeline and 280 MMcf/d gross processing capacity(2) Re-development in the Central Basin and unconventional Bone…
  42. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 42
    North Texas Growth Overview Highlights Selected North Texas Well Permits(1) 1,200 4,200 miles of gathering pipeline reaching 13 counties; two processing plants with capacity of 278 MMcf/d; fractionation capacity of 15 MBbl/d 1,000…
  43. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 43
    North Texas Well Positioned for Growth Rig Activity in North Texas(1) Liquids-Rich Barnett Shale and Marble Falls Driving Growth Targas assets are well positioned to access the active liquids-rich portion of the Barnett Shale…
  44. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 44
    Williston Basin Growth Overview Growth Drivers Williston Rig Activity(1) Current estimates of recoverable Bakken/Three Forks Total Williston Rig Count Williston Horizontal Rigs oil range up to 24 BBOE 250 Producer learning curve…
  45. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 45
    Bakken/Three Forks Production Growth Forecast Bakken/Three Forks Production Growth Forecast through 2017(1) There has been a pronounced increase in production from the Bakken/Three Forks over the last 7 years Oil production…
  46. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 46
    Badlands High-Quality, Fee-Based Assets System currently consists of oil gathering pipeline and terminal system, and natural gas gathering and processing operations, in McKenzie, Dunn and Mountrail Counties, System Map North…
  47. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 47
    Badlands The First 9 Months Continue to build-out gathering system for existing dedicated acreage to grow Targa system volumes Improve the quality of acquired assets and operations Provide producers with multiple interconnect options…
  48. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 48
    Logistics & Marketing Division Highlights
  49. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 49
    NGL Supply Flows to Gulf Coast Continue to Increase United US NGL States Supply NGL bySupply(1) Product 45-55% increase 2012-2017 4,900 NGL supply projected to increase between 45- 5,000 4,500 4,500 55% from 2012 through 2017…
  50. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 50
    Logistics Assets Extensive Gulf Coast Footprint Fractionators Gross Net Capacity Capacity (MBbl/d) (MBbl/d)(1) CBF - Mont Belvieu Trains 1-3 253 223 Backend Capacity 40 35 Train 4 100 88 GCF - Mont Belvieu 120 47 Total - Mont…
  51. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 51
    NGL Supply to Mont Belvieu & Fractionation Capacity Industry NGL Supply and Y-Grade Pipeline Capacity(1) Targas Mont Belvieu Position 3,000 TRP is the second largest owner and operator of 2,500 fractionation capacity in Mont Belvieu…
  52. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 52
    Worldwide LPG Export Supply & Demand What Regions are Exporting LPGs(1) YTD 2013 Largest Propane Exporters(1) 100% Propane Exports (MBbls) 70,000 90% 60,000 80% 50,000 70% Other 40,000 60% 6% 8% 14% West Africa 30,000 50%…
  53. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 53
    Targas Export Capabilities at Galena Park Export Volumes Export Capacity 4,500 Phase I expansion 4,000 commissioning and testing 3,500 3,000 MBbl/Month 2,500 2,000 1,500 1,000 500 0 Q3 Q4 Q1 Q2 Q3 2012 2012 2013 2013…
  54. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 54
    Targa Investment Highlights Diversified Midstream Platform Well positioned in U.S. shale / resource plays Leadership position at Mont Belvieu Increasing scale, diversity and fee-based margin Badla nds 1.9 billion announced…
  55. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 55
    Q&A
  56. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 56
    Additional Information
  57. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 57
    Targas Diversified Midstream Platform Badlands LTM as of 9/30/2013 Segment Operating Margin Marketing and Distribution 18% Field G&P 38% Logistics Assets 32% Coastal G&P 12% 58
  58. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 58
    Propane Supply/Demand Fundamentals Propane Supply Growth(1) Propane Discussion 1,450 Total supply increase of over 300 MBbl/d driven by 25-40% increase 2012-2017 1,350 growth in field production partially offset by lower imports…
  59. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 59
    Ethane Supply/Demand Fundamentals Supply increase of over 700 MBbl/d driven by field production Over 70-90% increase 2012-2017 Forecast assumes 92% steam cracker operating rate Probable demand increase of over 700 MBbl/d could…
  60. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 60
    Butane and Natural Gasoline Fundamentals US Butane NGL Supply Supply by Growth (1) Product Butane Discussion Total supply increase of 225 MBbl/d driven by growth in 50-65% increase 2012-2017 660 field production (135 MBbl/d NC4…
  61. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 61
    Demand for Exports Continues to Increase U.S. Propane(1) 80 0.80 U.S. Gulf Coast propane and butane are 70 0.70 0.60 favorably priced compared to world markets 60 0.50 MMBbls Gulf Coast import/export expansions /gal…
  62. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 62
    Coastal Gathering and Processing Segment Overview LOU (Louisiana Operating Unit) Processing Plants: Gillis (180 MMcf/d), Acadia (80 MMcf/d) and Big Lake (200 MMcf/d) Fractionation interconnected to LCF Traditional wellhead…
  63. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 63
    Petroleum Logistics - Current Capabilities and Projects Announced 105 million of growth capital related to three terminals acquired in 2011 Completed 35 million expansion of Targa Sound in Q1 2013 to connect with a local products…
  64. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 64
    Marketing and Distribution Segment Marketing and Distribution Highlights NGL and Natural Gas Marketing Manage physical distribution of mixed NGLs and specification products using owned and third party facilities Manage inventories…
  65. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 65
    TRP Quarterly Update 180 Q3 2011 Q3 2012 Q3 2013 600 FY 2011 FY 2012 LTM Q3 2013 545 160 156 515 491 500 140 116 398 in milions 120 109 111 in milions 107 400 337 354 362 100 310 77 77 300 80 65 238 59 60 200 40…
  66. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 66
    TRP Capitalization and Liquidity ( in millions) June 30, September 30, Cash and Debt Maturity Coupon 2013 Adjustments 2013 Cash and Cash Equivalents 72.7 1.4 74.1 Accounts Receivable Securitization Jan-14 125.3 42.7 168.0 Senior…
  67. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 67
    Non-GAAP Measures Reconciliation Adjusted EBITDA The Partnership and Targa define Adjusted EBITDA as net income before: interest; income taxes; depreciation and amortization; gains or losses on debt repurchases and redemptions; early…
  68. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 68
    Non-GAAP Reconciliation 2013 EBITDA and Gross Margin The following table presents a reconciliation of Adjusted EBITDA and operating margin to net income (loss) for the periods shown for TRP: Three Months Ended Nine Months Ended…
  69. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 69
    Non-GAAP Reconciliation 2014 EBITDA The following table presents a reconciliation of 2014 projected Adjusted EBITDA to net income for NGLS: Twelve Months Ended December 31, 2014 Low Range High Range ( in millions) Reconciliation…
  70. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 70
    Non-GAAP Reconciliation DCF The following table presents a reconciliation of reported distributable cash flow to net income (loss) for the periods shown for TRP: Three Months Ended ( in millions) 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar…
  71. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 71
    Non-GAAP Reconciliation 2010 - 2011 Fee-Based Margin The following table presents a reconciliation of operating margin to net income (loss) for the periods shown for TRP: Three Months Ended 3/31/2010 6/30/2010 9/30/2010 12/31/2010…
  72. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 72
    Non-GAAP Reconciliation 2012 - YTD 2013 Fee-Based Margin The following table presents a reconciliation of operating margin to net income (loss) for the periods shown for TRP: Three Months Ended 3/31/2012 6/30/2012 9/30/2012…
  73. Q3 2013 INVESTOR AND ANALYST CONFERENCE – Targa Resources Corp. – slide 73
    1000 Louisiana Suite 4300 Houston, TX 77002 Phone: (713) 584-1000 Email: InvestorRelationstargaresources.com Website: www.targaresources.com 75

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