HOUSTON, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Targa Resources Corp. (NYSE: TRGP) today reported third quarter 2020 results.

Third Quarter 2020 Financial Results

Third quarter 2020 net income (loss) attributable to Targa Resources Corp. was $69.3 million compared to a net loss of $(47.3) million for the third quarter of 2019.

The Company reported quarterly earnings before interest, income taxes, depreciation and amortization, and other non-cash items (“Adjusted EBITDA”) of $419.1 million for the third quarter of 2020 compared to $349.6 million for the third quarter of 2019 (see the section of this release entitled “Targa Resources Corp. ? Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA, distributable cash flow, free cash flow, gross margin and operating margin, and reconciliations of such measures to their most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”)).

On October 15, 2020, TRC declared a quarterly dividend of $0.10 per share of its common stock for the three months ended September 30, 2020, or $0.40 per share on an annualized basis. Total cash dividends of approximately $23.3 million will be paid on November 16, 2020 on all outstanding shares of common stock to holders of record as of the close of business on October 30, 2020. Also, on October 15, 2020, TRC declared a quarterly cash dividend of $23.75 per share of its Series A Preferred Stock. Total cash dividends of approximately $22.9 million will be paid on November 13, 2020 on all outstanding shares of Series A Preferred Stock to holders of record as of the close of business on October 30, 2020.

The Company reported distributable cash flow and free cash flow before dividends for the third quarter of 2020 of $294.7 million and $189.3 million.

Third Quarter 2020 - Sequential Quarter over Quarter Commentary

Targa reported third quarter 2020 Adjusted EBITDA of $419.1 million, representing a 19 percent increase over the second quarter. The sequential increase in Adjusted EBITDA was attributable to an improved commodity price environment and the resumption of production from temporary curtailments and producer activity, predominantly across Targa’s Permian gathering and processing systems, which drove increasing volumes through Targa’s Logistics and Transportation (“L&T”) systems. Targa also benefited from partial quarter contributions from new assets placed in-service during the quarter, including its 250 million cubic feet per day (“MMcf/d”) Gateway Plant in Permian Midland, the phased expansion of its liquefied petroleum gas (“LPG”) export facilities in Galena Park, and its 110 thousand barrel per day (“MBbl/d”) fractionation Train 8 in Mont Belvieu. In the Gathering and Processing (“G&P”) segment, the sequential increase in segment gross margin was predominantly attributable to higher Permian natural gas inlet volumes, which increased 9 percent in the third quarter over the second quarter, and higher Permian fee-based margin. In the L&T segment, the sequential increase in gross margin was primarily attributable to strong Grand Prix Pipeline (“Grand Prix”) transportation throughput and higher LPG export volumes, combined with higher fractionation volumes and higher marketing margin. Third quarter Grand Prix volumes increased 18 percent sequentially, while Targa’s LPG export volumes achieved a record 9.5 million barrels per month during the quarter, increasing 22 percent over the second quarter. Third quarter fractionation volumes were impacted by scheduled maintenance, which resulted in Targa building inventory, shifting the timing of incremental volumes to be fractionated to the fourth quarter. Operating expenses were flat sequentially, despite the addition of new assets beginning operations during the third quarter across both the G&P and L&T segments.

2020 Outlook

As previously disclosed, Targa estimates its full year 2020 Adjusted EBITDA to be at or around the high end of its previously provided outlook of $1.5 billion to $1.625 billion. Targa also estimates that its 2020 net growth capital spending to be around $700 million, and now estimates that its full year 2020 net maintenance capital to be approximately $110 million.

Third Quarter 2020 - Capitalization and Liquidity

The Company’s total consolidated debt as of September 30, 2020 was $7,914.1 million including $435.0 million outstanding under TRC’s $670.0 million senior secured revolving credit facility. The consolidated debt included $7,479.1 million of Targa Resources Partners LP’s (“TRP” or the “Partnership”) debt, net of $48.5 million of debt issuance costs, with $100.0 million outstanding under TRP’s $2.2 billion senior secured revolving credit facility, $250.0 million outstanding under TRP’s accounts receivable securitization facility, $7,145.0 million of outstanding TRP senior notes, net of unamortized premiums, and $32.6 million of finance lease liabilities.

Total consolidated liquidity of the Company as of September 30, 2020, including $275.0 million of cash, was approximately $2.6 billion. As of September 30, 2020, TRC had available borrowing capacity under its senior secured revolving credit facility of $235.0 million. TRP had $100.0 million of borrowings and $35.3 million in letters of credit outstanding under its $2.2 billion senior secured revolving credit facility, resulting in available senior secured revolving credit facility capacity of $2,064.7 million.

Growth Projects Update

Since the beginning of 2020, the Company has completed substantially all of its major growth capital projects underway either on- or under-budget. Targa has commenced operations on its:

• 110 MBbl/d Train 7 fractionator in Mont Belvieu,
• 250 MMcf/d Peregrine Plant in Permian Delaware,
• Phased expansion at its LPG export facility in Galena Park,
• 250 MMcf/d Gateway Plant in Permian Midland, and
• 110 MBbl/d Train 8 fractionator in Mont Belvieu.

Targa’s Grand Prix extension into Central Oklahoma is expected to be operational by the end of the fourth quarter of 2020. Targa announced today that it is relocating its existing 200 MMcf/d Longhorn cryogenic natural gas processing plant from North Texas to Permian Midland, where it will be renamed the Heim Plant, to accommodate anticipated production growth across its Permian Midland system. Relocating the plant will provide the Company with significant capital savings. The 200 MMcf/d Heim Plant is expected to begin operations in the fourth quarter of 2021, with a total estimated capital cost of approximately $90 million.

Financing and Asset Sales

In August 2020, the Partnership issued $1.0 billion aggregate principal amount of 4?% Senior Notes due 2031, resulting in net proceeds of approximately $991 million. A portion of the net proceeds from the issuance were used to fund the concurrent cash tender offer and redemption payments for the Partnership’s $580 million principal outstanding amount of 6¾% Senior Notes due 2024 (the “6¾% Notes”), with the remainder used for repayment of borrowings under the Partnership’s senior secured revolving credit facility. The Company accepted for purchase all the notes that were validly tendered as of the early tender date and redeemed the remaining aggregate principal amount of the 6¾% Notes.

On November 2, 2020, the Partnership redeemed the $559.6 million remaining balance of its 5¼% Senior Notes due 2023.

Targa continues to evaluate and execute asset sales to reduce leverage and focus on its core operations. In October 2020, the Company closed on the sale of its assets in Channelview, Texas for approximately $58 million.

Share Repurchase Update

In October 2020, the Company’s Board of Directors approved a share repurchase program (the “Share Repurchase Program”) for the repurchase of up to $500 million of its outstanding common stock. As of November 2, 2020, the Company has repurchased 4,505,507 shares at a weighted average price of $16.33 for a total net cost of approximately $74 million. There is approximately $426 million remaining under the authorized Share Repurchase Program.

About Targa Resources Corp.

Targa Resources Corp. is a leading provider of midstream services and is one of the largest independent midstream infrastructure companies in North America. The Company owns, operates, acquires and develops a diversified portfolio of complementary midstream infrastructure assets. The Company is primarily engaged in the business of: gathering, compressing, treating, processing, transporting and purchasing and selling natural gas; transporting, storing, fractionating, treating and purchasing and selling NGLs and NGL products, including services to LPG exporters; and gathering, storing, terminaling and purchasing and selling crude oil.

For more information, please visit the Company’s website at www.targaresources.com.