Targa Resources, Inc. · NYSE:TRGP
Targa Resources — Investor Presentation (February 2024)
37 slides from Targa Resources's investor presentation, February 2024
Slide 1: Investor Presentation
Investor Presentation February 2024 | TARGA RESOURCES CORP.
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation 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 fac
Slide 3: 2023 in Review – Continuing to Execute Across Strategic Priorities
2023 in Review – Continuing to Execute Across Strategic Priorities Integrated NGL business and strong business fundamentals continue to drive increasing cash flow outlook RECORD RECORD ~$800MM Volumes Adjusted EBITDA Capital Returned ▪ Permian volumes averaged ~5.3 ▪ Adjusted EBITDA(2) +22% ▪ Increa
Slide 4: Targa’s Value Proposition
Targa’s Value Proposition Growing EBITDA, Growing Dividend, Reducing Share Count, Strong Balance Sheet Premier Leading EBITDA Accelerating Integrated Growth + Return of Capital Wellhead to Water Investment Grade to Shareholders Position Balance Sheet ▪ Largest gatherer and processor ▪ Industry leadi
Slide 5: Track Record of Growth
Track Record of Growth Increasing volume trajectory through Targa’s difficult to replicate integrated NGL infrastructure footprint Permian Natural Gas Inlet Volumes(1) NGL Pipeline Transportation(1)(2) +25% CAGR FY 2019 - 2023 +24% CAGR Q4 2019 - 2023 6,400 700 5,600 600 Inlet Volumes (MMcf/d) 4,800
Slide 6: Driving Increasing Return of Capital
…Driving Increasing Return of Capital Integrated NGL business and strong business fundamentals drive increasing cash flow outlook and return of capital Industry Leading Growth $4.00 Growing Annual Dividends per Share $4.5 Annual Common Dividend/Share +165% Adjusted EBITDA(1) Growth +50% YoY Dividend
Slide 7: Targa’s Premier Permian Asset Footprint
Targa’s Premier Permian Asset Footprint Legend ▪ Best-in-class producer customers Active Rigs Processing Plant ▪ Several million dedicated acres Processing Plant In Progress Crude Terminal Existing Gathering Pipeline ▪ Decades of core drilling inventory NGL Pipelines High Pressure Rich Gas Gathering
Slide 8: Permian Basin Fundamentals
Permian Basin Fundamentals Permian Basin is poised for continued growth, driving increasing demand for Targa’s midstream services Gross Natural Gas Production Forecast(1) Targa Outperforming Permian Basin Production Curve 260 40 ▪ Robust gas-to-oil ratios (GORs) +141% CAGRs 240 35 2015-2023: 17% ▪ E
Slide 9: Targa's Differentiated Permian Position
Targa's Differentiated Permian Position ▪ Targa’s Midland Basin system exhibits Targa’s Midland Basin Natural Gas Inlet Volumes(1) best-in-class track record of growth in the 3,250 United States 3,000 Targa’s Midland and Delaware Basin ▪ 17x 2,750 footprints are largely supported by low- 2,500 press
Slide 10: Targa’s Integrated NGL Solution
Targa’s Integrated NGL Solution Our assets and operations connect natural gas and NGLs to markets with growing demand for cleaner fuels and feedstocks NGL Pipeline Transportation Largest Permian Premier NGL Fractionation Connected to Domestic Connects Key Supply to NGL Natural Gas Processor Footprin
Slide 11: NGL Production Feeds Logistics & Transportation Assets
NGL Production Feeds Logistics & Transportation Assets Targa’s wellhead to water NGL strategy adds significant barrels into its system that are available for export Significant NGLs from Targa’s Permian Plants Targa’s NGL Transportation Pipelines 800 ▪ Grand Prix and Daytona NGL pipelines connect su
Slide 12: 2024 Outlook
2024 Outlook Increasing system volumes drive strong projected growth in Adjusted EBITDA +8% YoY growth in Adjusted EBITDA driven by: 2024 ESTIMATES ✓ Continued Permian volume growth ✓ Higher G&P and L&T system volumes Adjusted EBITDA(1) $3,700 - $3,900 million ✓ FY contributions from system expansio
Slide 13: Illustrative Capital Spending Summary
Illustrative Capital Spending Summary Capital spending at ~5.5x multiple drives ~$300MM+ of YoY increasing EBITDA Estimated Growth Capex to Estimated Growth Capex to Support Continued Maintain Current Volumes(1) Permian Growth(2) Maintain Volumes ~$250MM ~$250MM ▪ Gathering, compression, treating Ga
Slide 14: EBITDA Growth Outlook and Ramping FCF Profile
EBITDA Growth Outlook and Ramping FCF Profile Permian volume growth outlook and the completion of integrated NGL projects drive compelling adjusted FCF (1) outlook Industry Leading Adjusted EBITDA Growth(1) Capex Meaningfully Steps Down in 2025 $5.0 $5.0 $4.0 $4.0 Adjusted EBITDA (1) Net Growth Cape
Slide 15: Strong Growth Supports Increasing Return of Capital
Strong Growth Supports Increasing Return of Capital Completion of announced growth projects expected to drive meaningful ramp in adjusted FCF(1) profile Continued Adjusted EBITDA(1) growth + meaningful step down in capex = Significant FCF ▪ Permian growth drives increasing system volumes, driving st
Slide 16: Targa’s “All of the Above” Approach to Maximize Long-Term Shareholder Value
Targa’s “All of the Above” Approach to Maximize Long-Term Shareholder Value Balance sheet flexibility supports Targa’s ability to invest in core projects while delivering meaningful shareholder returns 1. Strong Investment Grade Balance Sheet Supported by Increasing Earnings Stability 2. Continue to
Slide 17: Strong IG Balance Sheet Supported by Increasing G&P Fee Margin
1. Strong IG Balance Sheet Supported by Increasing G&P Fee Margin Targa’s G&P business has undergone a significant transformation in adding fees and fee floors to contracts 2019 2020 Total G&P Contract Mix (Based on Volume) 2021 2022 2023 2024 ~90% 100% $140 2024E Fee-Based Volumes in G&P 90% $120 8
Slide 18: Attractive Growth Opportunities Drive Increasing EBITDA
2. Attractive Growth Opportunities Drive Increasing EBITDA Organic investments across Targa’s integrated business expected to drive continued strong return on invested capital Strong Track-Record of Adjusted EBITDA Growth through Organic Growth and M&A; New Organic Growth Projects Coming Online Unde
Slide 19: Targa is Returning an Increasing Amount of Capital
3. Targa is Returning an Increasing Amount of Capital Targa’s return of capital framework informed by large-cap midstream, S&P Energy and S&P 500 comparables 2023 Total Return to Equity as a % of CFFO 70% ▪ Targa’s 21% total return in 2023 outperformed the peer average 60% ▪ Midstream peers have his
Slide 20: Leading Return of Capital Outlook
Leading Return of Capital Outlook Integrated NGL business and strong business fundamentals to drive increasing cash flow outlook and return of capital Share Strong 40-50% +50% Repurchases Balance Cash Flow from Operations expected to be returned across YoY increase to quarterly cash dividend for 202
Slide 21: Targa’s Infrastructure Supported by Strong Fundamental Outlook
Targa’s Infrastructure Supported by Strong Fundamental Outlook INVESTOR PRESENTATION 21
Slide 22: A Leading Infrastructure Company
A Leading Infrastructure Company Central Region Assets Bakken Assets ▪ 11 natural gas processing plants ▪ ~2.0 Bcf/d gross processing capacity ▪ 2 natural gas processing plants ▪ ~290 MMcf/d gross processing capacity ▪ Crude oil gathering and storage Permian Basin Assets NGL Fractionation ▪ Largest
Slide 23: Targa vs. S&P 500
Targa vs. S&P 500 Targa is uniquely positioned across the S&P 500 given balance sheet strength, return of capital, EBITDA growth and performance S&P 500 Companies TRGP Metrics S&P 500 Median Investment Moody / S&P / Fitch: 361 --- Grade(1) Baa3 / BBB- / BBB- 2024E 116 3.5%(2) 2.1% Dividend Yield >3%
Slide 24: Permian Oil and Gas Volumes: Positioned for Continued Growth
Permian Oil and Gas Volumes: Positioned for Continued Growth Permian Basin is a world-class resource and one of the most economic producing basins in the world Permian Crude Oil Production Permian Gross Natural Gas Production 35,000 8,000 7,000 30,000 6,000 25,000 5,000 20,000 MMcf/d Mb/d 4,000 15,0
Slide 25: Permian Basin is Critical for Long-Term U.S. LNG Supply Growth
Permian Basin is Critical for Long-Term U.S. LNG Supply Growth A “call” on the Permian Basin to help fill the natural gas supply wedge ▪ Permian and Haynesville are expected to provide the U.S. LNG Supply & Demand largest supply increase to support the next wave of U.S. 30.0 30.0 LNG growth 〉 Attrac
Slide 26: Investing in Attractive Projects Driven by Permian Volume Growth
Investing in Attractive Projects Driven by Permian Volume Growth Organic investments across Targa’s integrated NGL business expected to drive strong return on invested capital Gathering & Processing Logistics & Transportation ▪ Currently adding +780 MMcf/d of gas processing capacity (+935 MMcf/d ▪ E
Slide 27: Strong LPG Fundamentals Supportive of Increased Exports
Strong LPG Fundamentals Supportive of Increased Exports Targa’s wellhead to water NGL strategy adds significant barrels into its system that Global LPG Demand are available for export 12.0 ▪ Increasing global demand for propane and butane driven by broad application for 10.0 residential and commerci
Slide 28: Targa is Well-Positioned to Support Global Energy Needs
Targa is Well-Positioned to Support Global Energy Needs LPG exports provide critical source of cleaner fuels for developing nations and help reduce global CO2 emissions Use of LPGs Provides Emission Reductions CO2 Emissions(1) 5.6 Billion ~70% lower than wood gallons of LPGs from Targa’s facilities
Slide 29: Sustainability Highlights
Sustainability Highlights Our 2025 Goals 2022 Sustainability Report Highlights¹ 42% 16% reduction in absolute methane emissions Reduction in Scope 1 + Scope 2 0.08% (as reported to the EPA)² GHG emissions intensity since 2020 Reduce our methane intensity to 0.08% for our gathering and boosting segme
Slide 30: ESG Approach
ESG Approach Board of Directors ESG responsibilities are integrated across ▪ Board of Directors oversees our approach to ESG and our Enterprise Risk Management (ERM) process all levels of our business structure, guided › Hold the Executive team accountable for implementing our sustainability objecti
Slide 31: Compelling Investment Proposition
Compelling Investment Proposition Growing EBITDA, Growing Dividend, Reducing Share Count, Strong Balance Sheet Accretive Growth ▪ Anticipate significant YoY EBITDA growth + significant ramp in 2025 FCF › FY contributions from expansions completed in 2023 › New infrastructure coming online in 2024 an
Slide 32: Appendix and Reconciliations
Appendix and Reconciliations INVESTOR PRESENTATION 32
Slide 33: Hedge Disclosures
Hedge Disclosures Hedges provide cash flow stability and reduce exposure to commodity prices on non fee-based G&P contract exposure FIXED PRICE SWAPS Volumes Hedged Wtd. Avg. Hedge Price Volumes Hedged Wtd. Avg. Hedge Price 2024 2025 Natural Gas 105,377 $3.01 58,179 $3.55 (MMBtu/d; $/MMBtu) Wtd Avg
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes the Company’s non-GAAP financial measures: adjusted EBITDA, distributable cash flow, and adjusted free cash flow. The following tables provide reconciliations of these non- GAAP financial measures to their most directly comparable GAAP measures.
Slide 35: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Year Ended December 31, 2023 2022 2021 2020 2019 (In millions) Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Net income (loss) attributable to Targa Resources Corp. $ 1,345
Slide 36: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Full Year 2024E (in millions) Reconciliation of Estimated Net Income attributable to Targa Resources Corp. to Estimated Adjusted EBITDA Net income attributable to Targa Resources Corp. $ 1,185.0 Interest expense, net 730.0 Income tax expense 475.0 Depreciation and am
Slide 37: General Inquiries/Corporate Headquarters
GENERAL INQUIRIES/CORPORATE HEADQUARTERS 811 LOUISIANA STREET, SUITE 2100 HOUSTON, TX 77002 Targa is a leading provider of midstream services and is one of the largest independent midstream PHONE: 713.584.1133 infrastructure companies in North America. Our operations are critical to the efficient, s
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