Targa Resources Corp. (NYSE:TRGP) (“TRC” or the “Company”) and
Targa Resources Partners LP (NYSE:NGLS) (“Targa Resources
Partners”, “TRP” or the “Partnership”) (together “Targa”) announced
a preliminary financial outlook for 2016, based on commodity prices
and activity levels outlined below.
TRC is providing the following preliminary
outlook for 2016:
- Dividend growth of 15% over FY2015
- Dividend coverage of approximately 1x
- Effective cash tax rate of 0% to 5%
At the Partnership, the preliminary 2016 outlook includes:
- Commodity price assumptions consistent with current research
expectations of $55.00 per barrel for crude oil, $0.50 per gallon
for the Partnership's typical weighted average NGLs and $3.25 per
MMBtu for natural gas
- Annualized distributions of $3.30 per common unit, flat to
current annualized distributions per common unit
- Distribution coverage of approximately 0.90x to 0.95x
- Compliance Debt/EBITDA ratio in the mid-4x range
- Growth capex of approximately $600 million based on projects
announced currently (including the new Sanchez Energy Corporation
(“Sanchez Energy”) joint venture discussed below)
- Flat to low single digit growth in Field Gathering &
Processing inlet volumes compared to average 2015 inlet
volumes
- Over 5 million barrels per month of LPG export volumes
predominantly under contract
A sensitivity scenario based on recent 2016 commodity strip
prices of $47.00 per barrel for crude oil, $0.45 per gallon for the
Partnership's typical weighted average NGLs and $2.85 per MMBtu for
natural gas, results in approximately 0.05x lower distribution
coverage.
Additional sensitivities for the outlook above include the
following price only EBITDA sensitivities: a $0.05 per gallon
change in the weighted average price for TRP’s NGLs would change
estimated 2016 Adjusted EBITDA by approximately $20 million; a
$0.25 per MMBtu change in natural gas price would change estimated
2016 Adjusted EBITDA by approximately $10 million; and a $5.00 per
barrel change in crude oil price would change estimated 2016
Adjusted EBITDA by approximately $5 million.
TRP also announced that for the third quarter of 2015, TRP
estimates distribution coverage of approximately 1.0x to 1.1x.
“The strength of our asset position and the resiliency of our
diversified business mix are demonstrated in the results that we
have realized to date in 2015 and in the 2016 outlook that we are
providing today,” said Joe Bob Perkins, Chief Executive Officer of
the Partnership and of the Company.
Eagle Ford Shale Natural Gas Processing
Joint Venture
Targa Resources Partners also announced that it
has entered into joint venture agreements with Sanchez Energy
Corporation (NYSE:SN) to construct a new 200 million cubic feet per
day (“MMcf/d”) cryogenic natural gas processing plant in La Salle
County, Texas (“La Salle County Plant”) and approximately 45 miles
of associated pipelines. TRP expects to invest approximately $125
million of growth capex related to the joint ventures, and assuming
full contribution from Sanchez Energy, will have a 50% ownership
interest in the plant and the approximately 45 miles of high
pressure gathering pipelines that will connect SN’s Catarina
gathering system to the plant. Targa will hold all the
transportation capacity on the pipeline, and the gathering joint
venture will receive fees for transportation.
The La Salle County Plant will accommodate the
growing production from Sanchez Energy’s premier Eagle Ford Shale
acreage position in Dimmit, La Salle and Webb Counties, Texas and
from other third party producers. The plant and high pressure
gathering lines are supported by long-term, firm, fee-based
contracts and acreage dedications with Sanchez Energy. TRP will
manage construction and operations of the plant and high pressure
gathering lines, and the plant is expected to begin operations in
early 2017. Prior to the plant being placed in-service, TRP will
benefit from Sanchez Energy natural gas volumes that will be
processed at TRP’s Silver Oak facilities in Bee County, Texas.
“Improving Targa’s presence and performance in
the Eagle Ford has been a focus since we completed our acquisition
and entered the area earlier this year. The joint venture with
Sanchez Energy aligns producer and midstream interests, providing
Targa with a strategic plant on the west side of our system
supported by a significant acreage dedication and a long-term,
fee-based contract with a very successful producer,” said Mr.
Perkins.
Updated Investor
Presentation
Targa will post an updated investor presentation
to the Events and Presentations section of the Partnership’s and of
the Company’s website later today.
About Targa Resources Corp. and Targa
Resources Partners
Targa Resources Corp. is a publicly traded
Delaware corporation that owns a 2% general partner interest (which
the Company holds through its 100% ownership interest in the
general partner of the Partnership), all of the outstanding IDRs
and a portion of the outstanding limited partner interests in Targa
Resources Partners LP.
Targa Resources Partners is a publicly traded
Delaware limited partnership formed in October 2006 by its parent,
Targa Resources Corp., to own, operate, acquire and develop a
diversified portfolio of complementary midstream energy assets. The
Partnership is a leading provider of midstream natural gas and
natural gas liquid services in the United States. In addition, the
Partnership provides crude oil gathering and crude oil and
petroleum product terminaling services. The Partnership is engaged
in the business of gathering, compressing, treating, processing and
selling natural gas; storing, fractionating, treating,
transporting, terminaling and selling NGLs and NGL products;
gathering, storing, and terminaling crude oil; and storing and
terminaling petroleum products. The Partnership reports its
operations in two divisions: (i) Gathering and Processing,
consisting of two reportable segments - (a) Field Gathering and
Processing and (b) Coastal Gathering and Processing; and
(ii) Logistics and Marketing, consisting of two reportable
segments - (a) Logistics Assets and (b) Marketing and
Distribution. The financial results of the Partnership’s commodity
hedging activities are reported in Other.
The principal executive offices of Targa
Resources Corp. and Targa Resources Partners are located at 1000
Louisiana, Suite 4300, Houston, TX 77002 and their telephone number
is 713-584-1000. For more information please go to
www.targaresources.com.
Forward-Looking Statements
Certain statements in this release are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included in this release that
address activities, events or developments that the Partnership and
the Company expect, believe or anticipate will or may occur in the
future are forward-looking statements. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of uncertainties, factors and risks,
many of which are outside the Partnership’s and the Company’s
control, which could cause results to differ materially from those
expected by management of the Partnership and the Company. Such
risks and uncertainties include, but are not limited to, weather,
political, economic and market conditions, including a decline in
the price and market demand for natural gas and natural gas
liquids; the timing and success of business development efforts;
and other uncertainties. These and other applicable uncertainties,
factors and risks are described more fully in the Partnership’s and
the Company’s filings with the Securities and Exchange Commission,
including their Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. Neither the Partnership
nor the Company undertake an obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Contact investor relations by phone at (713) 584-1133.
Jennifer Kneale
Senior Director – Finance
Matthew Meloy
Executive Vice President, Chief Financial Officer and Treasurer