- Development JVs demonstrate Targa's access to private capital at an attractive cost
- Significantly reduces Targa's equity financing requirements for 2018 and 2019
- Targa retains option to acquire Stonepeak's interests at predetermined fixed return
- Structure retains upside associated with projects for Targa
- No dilution to existing Targa shareholders and benefits coverage ratio during construction period
The DevCo JVs significantly reduce Targa's equity funding needs for 2018 and 2019, and proceeds from Stonepeak's initial contribution will be used to reduce Targa's current debt.Under the terms of the DevCo JV agreements, Targa has an option to acquire all or part (in $100 million increments) of Stonepeak's interests for a four-year period beginning on the earlier of the date that all three projects have commenced commercial operations or January 1, 2020. The purchase price payable for such partial or full interests is based on a predetermined fixed return or multiple on invested capital, including distributions received by Stonepeak from the DevCo JVs. Targa will control the management of the DevCo JVs unless and until Targa declines to exercise its option to acquire Stonepeak's interests. There will be no dilution associated with the DevCo JVs for Targa's existing shareholders during the construction period, and if Targa elects to exercise its option to acquire all or part of the DevCo JV interests, significant upside associated with the three included DevCo JV projects will be for the benefit of Targa and its shareholders. Additional Natural Gas Processing and Fractionation Expansions Targa also announced today that it plans to construct two new 250 million cubic feet per day ("MMcf/d") cryogenic natural gas processing plants to support increasing production in the Midland Basin. The first plant is expected to begin operations in the first quarter of 2019 and the second plant is expected to begin operations in the third quarter of 2019. Targa also announced today that it plans to construct a new 100 thousand barrel per day fractionation train in Mont Belvieu, which is expected to begin operations in the first quarter of 2019. The DevCo JV will own and fund the fractionation train, and Targa will fund 100% of the required brine, storage and other infrastructure that will support the fractionation train's operations. The fractionation expansion and related infrastructure is expected to cost approximately $350 million.
Updated 2018 Estimated Net Growth Capex and Financing OverviewPro forma for the DevCo JVs and inclusive of the two new Midland Basin plants and the additional fractionation assets in Mont Belvieu, Targa's 2018 estimated net growth capex for announced projects is now approximately $1.6 billion. Through its DevCo JVs and other announced joint ventures year-to-date in 2018, Targa has been reimbursed for significant capital previously spent on contributed projects. Targa's remaining equity funding needs for 2018 are very manageable (see posted Investor Presentation for additional information). The Company will also continue to evaluate a combination of potential asset sales and other asset and/or development joint ventures, which could supplement or replace equity needs. "This is a transformational investment cycle for Targa, as we expand our G&P footprint further with new gas processing plants underway in the Permian, Bakken and Arkoma Woodford, announce additional fractionation in Mont Belvieu, and link our upstream assets further downstream with the Grand Prix and GCX pipelines," said Joe Bob Perkins. "Execution of the DevCo JVs , a strong balance sheet with capacity for additional debt, and visibility to significantly increasing EBITDA in 2019 and beyond, means that we have very manageable remaining 2018 equity needs and are well positioned looking forward." A copy of the presentation slides to accompany these announcements can be accessed on the Company's website in the Investor section under Events and Presentations at www.targaresources.com, or by going directly to http://ir.targaresources.com/trc/events.cfm. Timing of 2017 Fourth Quarter Earnings Conference Call and Webcast Targa will report its fourth quarter 2017 financial results before the market opens for trading on Thursday, February 15, 2018. The Company will host a conference call at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss its 2017 fourth quarter financial results. The conference call will be webcast live over the internet and may be accessed either through webcast or telephone dial-in.
Event InformationEvent: Q4 2017 Targa Resources Corp. Earnings CallDate: Thursday, February 15, 2018Time: 11:00 a.m. Eastern TimeWebcast: www.targaresources.com under "Events and Presentations" or directly at http://ir.targaresources.com/events.cfmDial-in Information (audio only - please dial in 10 minutes ahead):
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About Targa Resources Corp.Targa Resources Corp. is a leading provider of midstream services and is one of the largest independent midstream energy companies in North America. Targa owns, operates, acquires, and develops a diversified portfolio of complementary midstream energy assets. The Company is primarily engaged in the business of: gathering, compressing, treating, processing, and selling natural gas; storing, fractionating, treating, transporting, and selling NGLs and NGL products, including services to LPG exporters; gathering, storing, and terminaling crude oil; storing, terminaling, and selling refined petroleum products. About Stonepeak Stonepeak is an independent infrastructure investment manager focusing on the midstream energy, power, renewables & utilities, transportation, water and communications sectors. The firm has offices in New York City and Houston and currently manages $13.5 billion of capital on behalf of its partners. Stonepeak invests in long-lived, hard-asset infrastructure businesses and projects that provide essential services to customers, and partners with strong management teams in supporting major growth initiatives and realizing operational improvements. For more information, please visit our website at www.targaresources.com. Contact investor relations by phone at (713) 584-1133. Sanjay LadDirector - Investor Relations Jennifer KnealeVice President - Finance