The paragraph is an introduction to Targa Resources Corp.'s Fourth Quarter 2024 Earnings Conference Call. The call begins with the operator explaining the procedure for asking questions during the call. Tristan Richardson, Vice President of Investor Relations and Fundamentals, welcomes participants and mentions the availability of the earnings release, supplement presentation, and updated investor presentation on their website. He notes that statements made during the call may include forward-looking information that could differ from actual results, advising attendees to refer to their SEC filings for more information. Matt Meloy, Chief Executive Officer, then takes over, expressing optimism about the company's performance in 2024. Additionally, several senior management team members are introduced and will be available for the Q&A session.

The paragraph discusses the company's strong performance in 2024, highlighting record-breaking NGL transportation, fractionation, and export volumes. It outlines upcoming projects for 2025 and beyond, including infrastructure expansions in the Delaware Basin, Mont Belvieu, and Galena Park, intended to support increased NGL volumes from new Permian processing plants. The company emphasizes its capability to deliver significant shareholder returns and notes accelerated project timelines due to higher-than-expected organic growth and new commercial deals. In 2024, the company's Permian GMP volumes increased by 14%, surpassing previous growth estimates.

The paragraph discusses the company's success in increasing volume and financial performance due to their strategies in the Permian basins. They anticipate continued growth in 2025 and 2026, driven by new plant operations and commercial successes. In 2024, they achieved a record adjusted EBITDA of $4.1 billion, expecting further growth in 2025 and beyond. The company is committed to returning capital to shareholders, with plans to increase dividends and repurchase shares. Their strong balance sheet supports continued investment in growth and shareholder returns.

The paragraph begins with Matt expressing gratitude to Targa employees for their focus on safety, execution, and customer service, highlighting the company’s accomplishment of providing the ninth highest total return in the S&P 500. Matt announces Jen Kneale's promotion to president, beginning March 1, 2025, where she will focus on commercial engineering and operations. Jen then takes over, discussing activities in the Permian, specifically in the Delaware Basin, where the Bull Moose plant is fully operational, and new projects have increased Targa's treating capacity. She mentions further progress on new plants, Bull Moose 2 and Falcon 2, expected online in early and mid-2026. In the Midland Basin, the Greenwood 2 plant became operational and is fully utilized.

The paragraph discusses the construction of three new plants expected to be operational between late 2025 and 2026, as well as plans to evaluate future plants in the Permian region to support growth. Targa's logistics and transportation segment set records in NGL pipeline and fractionation volumes due to new infrastructure developments, such as the Daytona NGL pipeline and Train 10 fractionator. They announced a new intra-Delaware Basin pipeline expansion to manage increasing volumes and are considering repurposing existing lines for enhanced flow assurance. The company's outlook remains strong for NGL supply growth, and expansions, including Train 11 and Train 12 fractionators, are crucial to support this anticipated demand.

In the fourth quarter, Targa's LPG export business at Galena Park achieved a record average loading of 14 million barrels per month. The company plans a 650,000-barrel-per-month expansion by Q4 2025 to meet growing global demand for US-sourced LPGs, with a new pipeline and refrigeration unit set to boost capacity by Q3 2027. Targa acquired BP's 12% interest in Cedar Bayou Fractionators for $111 million, gaining full ownership and simplifying operations. Additionally, Targa plans to repurchase all outstanding preferred equity in Targa Badlands LLC for $1.8 billion, removing previous creative financing and its associated costs to strengthen its financial structure.

The company plans to refinance its debt at a lower cost, resulting in significant annual cash savings and allowing them to own 100% of the Badlands, a profitable asset, starting January 1, 2025. This will contribute approximately $180 million in incremental EBITDA. Due to unexpected volume growth in 2024 and projected continued growth, significant capital spending has been accelerated into 2025. The company experienced a 21% return on invested capital over the past five years despite major projects contributing only partially in 2024. A multiyear growth capital plan, initially set at $1.7 billion to support growth in Permian volumes, will likely require increased spending due to higher-than-expected growth and additional downstream projects. Four new plants will go online in 2026, and increased processing capacity will be needed in 2027 and beyond.

The paragraph discusses Targa's financial and operational performance, highlighting core projects that leverage its existing footprint to drive increased EBITDA and free cash flow. In 2024, Targa repurchased $755 million in common shares, significantly up from 2023's $347 million, and returned 42% of adjusted cash flow from operations to shareholders, exceeding expectations. Targa aims to maintain this level of capital return in the future while investing in organic growth. The company's strong performance is supported by growing EBITDA, dividends, and a reduced share count. The paragraph also mentions a strong fourth-quarter performance in 2024, with a 5% increase in adjusted EBITDA due to higher Permian volumes.

In 2024, the company achieved a record adjusted EBITDA of $4.1 billion, marking a 17% increase from 2023, despite weak natural gas and NGL prices. This was aided by $100 million in unanticipated marketing opportunities. The company spent $3 billion on growth capital, mainly driven by successes in the Permian Basin, and maintained a strong financial position with a net maintenance capital of $232 million and a leverage ratio within its target range. With a stable mid-triple B investment-grade rating, the company is optimistic about 2025, projecting an adjusted EBITDA increase of 15% to $4.65-$4.85 billion. The growth will be supported by continued Permian Basin volume growth and the full utilization of new logistics and transportation assets. They anticipate cash flows to remain over 90% fee-based and have hedged most of the non-fee margin through 2026.

The paragraph discusses the company's financial outlook, highlighting the stability provided by its fee-based margins and its ability to invest despite fluctuating commodity prices. A 30% change in commodity prices impacts adjusted EBITDA significantly, and the company anticipates a growth capital expenditure of $2.6 to $2.8 billion in 2025, including new projects and expansions. Net maintenance capital spending is estimated at $250 million, and they aim to maintain a leverage ratio within their target range. A new five-year $3.5 billion revolving credit facility has been secured, boosting liquidity and flexibility for strategic initiatives, with approximately $1.5 billion available liquidity at the end of the fourth quarter.

The paragraph discusses the company's anticipation of being subject to the federal minimum tax in 2026 and becoming a full cash taxpayer by 2027. Any policy changes by the new administration could positively impact their tax situation. Will expresses gratitude to the company's 3,400 employees for their role in its success. The call is then handed over to Tristan Richardson, who outlines the Q&A session, asking participants to limit themselves to one question and one follow-up. Jeremy Tonet from JPMorgan asks about the company's outlook and growth trajectory, suggesting that activity and CapEx are ahead of expectations. Matt Meloy responds, noting the strong growth outlook compared to the previous year, with significant growth expected in the latter half of the year.

The paragraph discusses a company's outlook and forecast for the coming years. Last year saw strong volumes continuing throughout the year. This year, forecasts suggest growth is more weighted towards the second half, with expected commercial success in 2024 impacting results in 2025 and 2026. The first quarter was affected by freezing weather, impacting Permian and NGL volumes. However, the outlook for the current year remains strong, with 2026 potentially stronger than 2025. Additionally, four new plants are expected to come online in 2026, contributing to a multi-year growth outlook. The company remains conservative in its EBITDA guidance and does not strongly factor in optimization opportunities, preferring to let such opportunities arise naturally.

In the paragraph, Jen Kneale explains that the decision to buy back a preferred interest in the Badlands from Blackstone was opportunistic, driven by the company's strong balance sheet and desire to capture $80 million in annual cash savings. This move involves refinancing a higher-cost preferred interest with lower-cost debt. While Blackstone had eventual options to exit the investment, there was no immediate pressure to make a decision. The buyback was facilitated by the company's strong financial position at the end of 2024, allowing it to take on a small amount of leverage to regain full ownership of a profitable, fee-based asset generating significant free cash flow.

In the paragraph, Keith Stanley asks about how the company prioritizes capital allocation, given its strong growth potential. Jen Kneale responds by explaining the company's "all-of-the-above" approach to capital allocation, which includes investing in organic growth opportunities, executing record repurchases, and increasing dividends. Kneale highlights the opportunistic nature of their repurchase program, leveraging their strong balance sheet to step in when market value differs from their own valuation of the company. In 2024, they executed significant repurchases due to expected and realized volume growth, supporting a positive growth outlook for the coming years.

The paragraph discusses the organization's strong confidence and pride in its employees' performance across various departments, leading to a positive outlook for future growth. Financial flexibility allows them to make opportunistic repurchases. In a conversation involving Tristan Richardson, Keith Stanley, and Jackie Gallettis from Goldman Sachs, the organization's success in commercial ventures is highlighted, particularly in the Midland and Delaware areas. Matt Meloy notes significant deals in the Delaware area, indicating ongoing activity and available acreage, contributing to growth. Success is noted in both sweet and sour gas opportunities.

The paragraph discusses the company's strategic approach to handling CO2 and H2S treatment, which enhances customer service despite plant maintenance. Pat McDonie highlights ongoing and future transactions leading to increased acreage under contract and anticipated growth in the Permian Basin for 2025 and 2026. Jackie Gallettis inquires about the implications of rapid growth in the Permian Basin on future infrastructure expansion beyond 2026. Matt Meloy explains the company's efforts to balance capacity and outlines plans for new plant developments, with four plants scheduled for 2026, and indicates ongoing evaluations for 2027 and 2028.

The paragraph discusses plans for new processing plants in the Delaware and Midland areas, with the company budgeting around $1.7 billion for two plants annually. They anticipate higher capital expenditures in the near term due to accelerated downstream spending. The company is planning two plants in 2025 and four in 2026, with continued growth expected through 2028. Additionally, they are involved with a Permian gas egress pipeline project in partnership with Water and Plaquemines, set to be operational in 2026. This pipeline aims to meet the increasing demand for natural gas driven by LNG, coal-to-gas switching, and data centers. Another pipeline has been announced to help with Permian gas egress. The company is actively discussing further investments in this area.

The paragraph discusses the company's ongoing efforts to address infrastructure needs in the Permian Basin, focusing on gas takeaway solutions and the development of new pipelines. They have a 17.5% stake in the Blackcomb project, expected to be crucial by 2026, and are considering further investments in long-haul pipelines. The company is evaluating whether existing lines, such as the Delaware Express NGL line and the Grand Prix pipeline, should be converted to support natural gas residue aggregation for additional takeaway capacity. Additionally, they are exploring the potential for bolt-on acquisitions due to market pressures affecting competitors.

The paragraph discusses the company's focus on organic growth opportunities rather than mergers and acquisitions (M&A), emphasizing that their strategy has not significantly changed. They are considering additional investments in residue gas if appropriate. Despite looking at some bolt-on acquisitions, none have been pursued due to a high investment threshold. Instead, the focus remains on organic growth, seeking strong returns on announced projects. The company maintains a framework of achieving better than a five and a half times build multiple for project returns and sees potential for higher returns if commodity prices rise, despite recent weaker prices.

The paragraph discusses the business strategy of utilizing assets to drive higher returns, noting a successful start for new assets, with Daytona being an exception expected to ramp up over time. The company has quickly commercialized volume growth, aided by their commercial team. AJ O'Donnell asks about the increase in frac volumes versus NGL production in Q4, questioning any third-party involvement. Scott Pryor explains that frac train nine was launched in Q3 and frac train ten in Q4, which reduced reliance on third parties and supported volume growth and inventory management, resulting in a 29% volume increase from Q4 2023 to Q4 2024.

The paragraph discusses the benefits achieved from production during the fourth quarter, highlighting the addition of new plants on both the Delaware and Midland sides. Each plant is expected to contribute 35 to 40 thousand barrels per day, enhancing pipeline and fractionator operations—prompting the announcement of trains eleven and twelve, slated to come online in the third quarter of 2026 and first quarter of 2027, respectively. AJ O'Donnell acknowledges the explanation, passing the floor to Michael Bloom from Wells Fargo, who asks about two aspects of volume: the modest quarter-to-quarter increase in Permian volumes despite new plants coming online, and future volume growth expectations, noting a 14% increase in 2024 and inquiring about 2025 guidance.

The paragraph discusses the growth trajectory of Permian volumes over various quarters, highlighting significant increases each quarter. It mentions a low-margin contract that affected fourth-quarter growth figures but emphasizes strong overall growth, particularly looking ahead to 2026 with the opening of new plants. The Bull Moose plant has begun operations, and another plant is expected online later in the year, contributing to anticipated high growth. The company projects strong growth in both 2025 and 2026, driven by commercial agreements and arrangements that will ramp up in the latter half of 2025. The conversation then transitions to questions from Neal Dingmann of Truist Securities, signaling a shift in topic perhaps towards a financial deal related to the Badlands.

The paragraph discusses Targa's strategy and assets related to natural gas liquids (NGLs). Matt Meloy mentions the strategic importance of the Badlands for processing and exporting NGLs and notes the flexibility and benefits of owning 100% of it. Neal Dingmann asks about the North Texas Mountain Valley NGL pipeline, to which Scott Pryor responds by discussing the Delaware Express line, a thirty-inch pipeline aimed at handling increased NGL production from the Delaware Basin. He highlights the incremental growth with new plants—Bull Moose 1, Bull Moose 2, and Falcon 2—expected to be operational by the second quarter of 2026.

The paragraph discusses the operational performance and future projections of a company involved in oil transport. It highlights that their Delaware Express and Grand Prix operations are significant, with a capacity of 1.1 million barrels per day, though current transport on Grand Prix was 872,000 barrels daily in the fourth quarter. They are considering expanding their infrastructure and studying market needs carefully. Neal Dingmann acknowledges their proactive approach. Theresa Chen from Barclays inquires about medium-term growth and potential for reverting to normal growth rates after a period of accelerated growth and high capital expenditure. Matt Meloy responds, noting the difficulty in providing multi-year volume guidance due to variables like unexpected increases in producer activity and better-than-expected well performances, as they experienced in 2024.

The paragraph discusses expectations for growth and capital expenditures in the energy sector through 2025 and 2026. It highlights that while 2025 will see strong growth, it will not match the levels of 2024. The latter half of 2025 is anticipated to be particularly promising for 2026. The company is in a phase of building significant downstream projects, which could result in lower capital expenditures once completed. The conversation shifts to the international demand for LPG, noting the significant growth in LPG volumes exported from the US in the past decade.

The paragraph discusses the growth in the U.S. market share for LPG exports, which has increased from 29% to 46% over a certain period, mainly driven by rising demand in Asian markets for clean-burning and efficient fuels like propane and butane. The speaker expects this trend to continue due to ongoing demand. The company is planning an export expansion project costing under $400 million, which includes a pipeline and refrigeration unit, to capitalize on this demand and ensure that export volumes remain on their system. Following this discussion, there is a transition to a question from Brandon Bingham of Scotiabank about strong activity in the Permian Basin and potential future developments. Pat McDonie responds, noting that questions about the Permian are complex, specifically mentioning the Wolfcamp as a primary bench.

The paragraph discusses interest in exploring deeper horizons in the Woodford Barnett area, particularly on the Delaware side compared to the Midland side, due to the potential for good economics despite the challenges like sour components. Additionally, the conversation shifts to shareholder returns and buyback strategies. Jen Kneale responds to a question about buybacks, explaining that the company is following a consistent approach since launching its share repurchase program in the third quarter of 2020. With a strong balance sheet, they've maintained flexibility and have been purchasing shares each quarter at increasing prices, while considering the payout target and exploring options like special dividends without raising the base dividend too high.

The paragraph discusses a company's financial strategy, emphasizing its strong short, medium, and long-term outlook and its commitment to providing increasing returns to shareholders through a share repurchase program. The company prefers not to give quarterly or yearly forecasts but maintains a 40% to 50% framework that includes dividends and opportunistic repurchases. It values flexibility, balance sheet strength, and the ability to invest in high-return organic growth projects, aiming to return more capital to shareholders over time. The approach, which combines various strategies, has been successful, and there is no plan to change it. Harry Mateer from Barclays then asks about the company's consistent narrative on maintaining leverage within a 3.0 to 4.0 range, with a preference for the lower half of that range.

In the article, Jen Kneale discusses Targa's financial strategy, stating that while the company prefers to maintain leverage in the lower half of their target range (3 to 3.5 times), they are comfortable with their current position. Although recent activities like the Badlands repurchase have temporarily increased leverage, they anticipate that upcoming projects and increased EBITDA will naturally reduce leverage over time. Additionally, Targa is considering addressing high-cost debt, including callable notes, as part of their broader strategy to optimize the cost of capital and improve financial efficiency.

In the paragraph, Jen Kneale and Matt Meloy discuss managing financial strategies amid inflation and potential tariffs in the U.S., which are affecting capital program costs, especially related to steel prices. Matt Meloy explains that while rising steel prices increase capital expenditures (CapEx) for projects like processing plants and NGL pipelines, the impact is manageable due to steel's modest contribution to overall costs. The company is taking steps to mitigate these impacts by working with U.S. steel suppliers to avoid tariffs, and the procurement team is actively managing the situation to ensure good returns on investments.

The paragraph discusses the competitive landscape of the NGL (Natural Gas Liquids) LPG (Liquefied Petroleum Gas) export market, where multiple players are active. The speakers, Matt Meloy and Scott Pryor, explain their company's strategy to remain competitive despite new facilities being constructed. They highlight a significant expansion project, which involves building a pipeline from Mont Belvieu to Galena Park and a new refrigeration unit, costing less than $400 million. The project is expected to be operational in the third quarter of 2027, aligning with their plans to manage plants, pipelines, and fractionation needs. The company focuses on securing both long-term and short-term contracts, with some contracts featuring volume increases over time, ensuring their market share remains strong.

The paragraph summarizes the closing remarks of a conference call involving Targa Resources. It mentions that the U.S. continues to lead in the export market and is expected to grow. Sunil Sibal and Matt Meloy express gratitude, and Tristan Richardson thanks participants for their interest in the company before the operator ends the call.

This summary was generated with AI and may contain some inaccuracies.