Targa Resources Sticks With Plan to Keep Capex Lower in 2020

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Researched by Industrial Info Resources (Sugar Land, Texas)--Having placed more than $4 billion worth of capital projects into service in 2019, Targa Resources Corporation (NYSE:TRGP) (Houston, Texas) is sticking to its guns when it comes to keeping capital expenditures down this year.

Industrial Info is tracking $4.26 billion worth of active capital projects by the midstream provider of natural gas and natural gas liquids (NGLs).

Click on the image at right for a graph showing Targa's project activity by industry sector.

In November, Targa said it would keep its net growth capital expenditures for 2020 between $1.2 billion and $1.3 billion. For related information, see November 8, 2020, article - Targa Resources to Ratchet Down Capex in 2020 to $1.2 Billion.

During the company's fourth-quarter and full-year 2019 earnings conference call on Thursday with industry analysts, executives indicated they will stick with that guidance for this year. Growth capital expenditures for 2019 totaled $2.28 billion, down from Targa's original guidance of $2.4 billion.

During 2019, the company achieved an additional 750 million cubic feet per day (MMcfd) of incremental gas processing capacity in the Permian Basin, an additional 200 MMcfd at its Badlands, North Dakota, operations and the opening of the Grand Prix Y-grade natural gas liquids (NGL) pipeline. The pipeline has origination points in Texas, New Mexico and Oklahoma, and will carry as much as 300,000 barrels per day (BBL/d) of NGL to Targa's facility in Mont Belvieu, Texas. Click here for the Grand Prix projects.

Targa also started operations at its 100,000-BBL/d NGL Fractionator Train 6 in Mont Belvieu, and phase one of its liquefied petroleum gas export operation in Galena Park, Texas.

The company still has a lot on its plate when it comes to project completions this year, including 500 MMcfd incremental Permian processing capacity, and 220,000 BBL/d incremental fractionation capacity in Mont Belvieu.

Projects planned for completion in 2020 include the 110,000-BBL/d NGL fractionator trains #7 and #8 in Mont Belvieu; as well as the Peregrine natural gas-processing plant near Carlsbad, Texas, and the Gateway L1 natural gas-processing plant near Big Lake, Texas. Each natural gas-processing plant will be able to process 250 million cubic feet per day. For more information, see Industrial Info's project reports on Train #7, Train #8, the Peregrine plant and the Gateway L1 plant.

For 2019, Targa reported a net loss of more than $209 million, while revenues dipped 17% to $8.67 billion.

The decrease in commodity sales revenue reflected lower NGL and natural gas prices and lower petroleum products volumes due to the sale of certain petroleum logistics terminals in 2018, the company said.

However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 11% to $1.44 billion.

Targa President Matt Meloy, who will take the reins as chief executive officer in March, said during the earnings conference call that 2019 "was a pivotal year for Targa, as we began to benefit from the cash flow ramp associated with our significant investment cycle. Even with NGL and natural gas prices at historic lows, throughout much of 2019, we posted record full-year adjusted EBITDA results..."

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.