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Released May 08, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--While midstream company Targa Resources Corporation (NYSE:TRGP) (Houston, Texas) started off first-quarter 2020 strong, with growth across its delivery and fractionation volumes, like other companies involved in the crude oil and natural gas liquids (NGL) sector, things took a nosedive toward the end of March, as the COVID-19 pandemic became more widespread and crude oil prices fell because of a price war led by Saudi Arabia and Russia and lower demand. Targa reported a first-quarter 2020 net loss of $1.74 billion, compared with a loss of $38.9 million in the prior-year quarter. The widening loss was primarily due to non-cash impairment charges on assets in the company's Gathering and Processing segment.
In Thursday's earnings conference call, executives including Chief Executive Officer Matt Meloy spoke of the impact of COVID-19 on the company, its recent accomplishments and future growth projects. Meloy said, "Our industry continues to navigate through an unprecedented period as a result of COVID-19. The low-demand and low-crude oil price environments are driving producers to meaningfully reduce their activity level and even curtail current production."
While curtailments have had minimal significance on Targa so far, the outlook moving forward appears bleaker.
Meloy said, "We have experienced shut-ins across each of our gathering and processing regions for the month of April, but only to a small degree so far. For example, our volumes in the Permian in April were approximately flat to the first quarter, so we have not seen a material impact from shut-ins yet." But Meloy said that beginning in May, Targa was estimating shut-in volumes of approximately 10% across its aggregate Permian region. The shut-ins will result in less throughput on the company's Grand Prix natural gas liquids (NGL) pipeline and at its fractionation trains in Mont Belvieu, Texas.
To help mitigate the expected lower volumes and decline in income, Targa has lowered its planned 2020 growth capital spending to between $700 million and $800 million, a 40% reduction from the midpoint of its original 2020 estimate. The company also reduced planned maintenance spending to an estimated $130 million.
Chief Financial Officer Jennifer Kneale spoke of the company's growth projects. She said, "We recently commenced operations on our new Frac Train 7 in Mont Belvieu and completed our new Peregrine gas plant in Permian Delaware. We remain on track to complete our major growth capital projects underway this year, which means we will be well-positioned to benefit when activity levels increase." Frac Train 7 will produce will produce 110,000 barrels per day (BBL/d).
Among the company's growth projects underway that will be completed at Mont Belvieu is an eighth fractionator that also will add 110,000 BBL/d of capacity, bringing the site's total fractionation capacity to 820,000 BBL/d. Optimized Process Designs LLC (Katy, Texas) is the engineering, procurement and construction (EPC) contractor for both projects. For more information, see Industrial Info's project reports on Frac 7 and Frac 8.
Construction on the Peregrine natural gas processing plant began in the first half of 2019 and was completed about mid-way through first-quarter 2020, with Select Engineering (Tulsa, Oklahoma) providing EPC services. The plant has a processing capacity of 250 million cubic feet per day. For more information, see Industrial Info's project report.
Among Targa's other projects that remain on track is the expansion of its liquefied petroleum gas (LPG) export facility at Galena Park on the Texas Gulf Coast. The project entails constructing new refrigeration units to add 2 million barrels per month of loading and is on track to be completed in the third quarter. For more information, see Industrial Info's project report.
Also planned for completion later this year is Targa's grassroot Gateway natural gas processing plant in the Permian Basin, near Big Lake, Texas. The facility will have a processing capacity of 250 million cubic feet per day and is planned to be completed this summer. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In Thursday's earnings conference call, executives including Chief Executive Officer Matt Meloy spoke of the impact of COVID-19 on the company, its recent accomplishments and future growth projects. Meloy said, "Our industry continues to navigate through an unprecedented period as a result of COVID-19. The low-demand and low-crude oil price environments are driving producers to meaningfully reduce their activity level and even curtail current production."
While curtailments have had minimal significance on Targa so far, the outlook moving forward appears bleaker.
Meloy said, "We have experienced shut-ins across each of our gathering and processing regions for the month of April, but only to a small degree so far. For example, our volumes in the Permian in April were approximately flat to the first quarter, so we have not seen a material impact from shut-ins yet." But Meloy said that beginning in May, Targa was estimating shut-in volumes of approximately 10% across its aggregate Permian region. The shut-ins will result in less throughput on the company's Grand Prix natural gas liquids (NGL) pipeline and at its fractionation trains in Mont Belvieu, Texas.
To help mitigate the expected lower volumes and decline in income, Targa has lowered its planned 2020 growth capital spending to between $700 million and $800 million, a 40% reduction from the midpoint of its original 2020 estimate. The company also reduced planned maintenance spending to an estimated $130 million.
Chief Financial Officer Jennifer Kneale spoke of the company's growth projects. She said, "We recently commenced operations on our new Frac Train 7 in Mont Belvieu and completed our new Peregrine gas plant in Permian Delaware. We remain on track to complete our major growth capital projects underway this year, which means we will be well-positioned to benefit when activity levels increase." Frac Train 7 will produce will produce 110,000 barrels per day (BBL/d).
Among the company's growth projects underway that will be completed at Mont Belvieu is an eighth fractionator that also will add 110,000 BBL/d of capacity, bringing the site's total fractionation capacity to 820,000 BBL/d. Optimized Process Designs LLC (Katy, Texas) is the engineering, procurement and construction (EPC) contractor for both projects. For more information, see Industrial Info's project reports on Frac 7 and Frac 8.
Construction on the Peregrine natural gas processing plant began in the first half of 2019 and was completed about mid-way through first-quarter 2020, with Select Engineering (Tulsa, Oklahoma) providing EPC services. The plant has a processing capacity of 250 million cubic feet per day. For more information, see Industrial Info's project report.
Among Targa's other projects that remain on track is the expansion of its liquefied petroleum gas (LPG) export facility at Galena Park on the Texas Gulf Coast. The project entails constructing new refrigeration units to add 2 million barrels per month of loading and is on track to be completed in the third quarter. For more information, see Industrial Info's project report.
Also planned for completion later this year is Targa's grassroot Gateway natural gas processing plant in the Permian Basin, near Big Lake, Texas. The facility will have a processing capacity of 250 million cubic feet per day and is planned to be completed this summer. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
