Targa Resources, Inc. · NYSE:TRGP
Targa Resources — Investor Presentation (November 2023)
31 slides from Targa Resources's investor presentation, November 2023
Slide 1: Investor Presentation
Investor Presentation NOVEMBER 2023 | 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: Targa's Value Proposition
Targa’s Value Proposition Strong total return and exceptionally well positioned for the long-term Strategic Position Strength Growth ▪ Integrated wellhead to water ▪ Fee-based businesses backed by ▪ Industry leading adjusted EBITDA Permian NGL infrastructure footprint long-term contracts growth outl
Slide 4: Significant Track Record of Growth Across Targa's Integrated Assets
Significant Track Record of Growth Across Targa’s Integrated Assets Increasing volume trajectory through Targa’s difficult to replicate integrated natural gas and NGL infrastructure footprint Permian Natural Gas Inlet Volumes(1) NGL Pipeline Transportation(1)(2) +25% CAGR FY 2019 - 2023 +23% CAGR Q4
Slide 5: Underlying Business Growth Drives Higher EBITDA and Return of Capital
Underlying Business Growth Drives Higher EBITDA and 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 $4.0 Annual Common Dividend/Share +150% Adjusted EB
Slide 6: 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 135 3.5%(2) 1.8% Dividend Yield >3%
Slide 7: 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 8: 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; now ~80% fee ~80% 2023E Fee-Based Contract Restructurings and Growth Volumes in G&P ▪ Have increased cash flow stability in G&
Slide 9: 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 Adjusted EBITDA Growth from Organic Growth and M&A; $4.0 New Organic Growth Projects Coming Online Underpin Expectati
Slide 10: 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 ▪ Targa's 35% total return over the LTM 80% LTM Total Return to Equity as a % of CFFO 80% has outperformed the peer average 70% 70% (19%) and
Slide 11: Targa's Infrastructure Supported by Strong Fundamental Outlook
Targa’s Infrastructure Supported by Strong Fundamental Outlook INVESTOR PRESENTATION 11
Slide 12: Targa's System – Integrated NGL Solution
Targa’s System – 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
Slide 13: A Leading Infrastructure Company
A Leading Infrastructure Company Central Region Assets Bakken Assets ▪ 12 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 14: Targa's Premier Permian Asset Footprint
Targa’s Premier Permian Asset Footprint Premier Permian supply aggregation Legend position backed by significant acreage Active Rigs Processing Plant dedications from diverse producer group Processing Plant In Progress Crude Terminal Existing Gathering Pipeline ▪ Multi-plant, multi-system Permian G&
Slide 15: Permian Basin Fundamentals
Permian Basin Fundamentals Targa Outperforming Permian Basin Production Curve Permian Basin is poised for continued 260 240 +128% robust growth, driving increasing demand for 220 Targa’s midstream services Growth Indexed 200 +83% 180 ▪ Strength and resiliency of Targa’s Permian Basin 160 position 14
Slide 16: Targa's Industry Leading Permian G&P System
Targa’s Industry Leading Permian G&P System Permian Basin footprint underpinned by millions of dedicated acres and decades of Permian Natural Gas Inlet Volume Growth core drilling inventory Targa expects continued significant growth in Permian volumes going forward 8.0 8.0 ▪ Targa’s Permian natural
Slide 17: 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 ▪ Adding +1.7 bcf/d of gas processing capacity in the Permian in response
Slide 18: Targa's NGL Pipeline Transportation System
Targa’s NGL Pipeline Transportation System Targa is expanding its NGL takeaway from the Permian to support growth from Targa’s assets and its future plant additions NGL Pipeline Transportation Volumes To complement its Grand Prix NGL Pipeline, Targa is constructing the Daytona NGL Pipeline to suppor
Slide 19: 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 20: 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 21: 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) 4.9 Billion ~70% lower than wood gallons of LPGs from Targa’s facilities
Slide 22: 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 23: 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 24: Strength of Assets and Fundamentals Drives Strong Returns
Strength of Assets and Fundamentals Drives Strong Returns Investing in high-return projects across cycles expected to continue to drive increasing shareholder returns ~26% Return on Invested Capital(1) $7.0 $1.8 ~$6.0 billion of net investment $6.0 ~$1.6 billion of EBITDA growth $1.5 = ~4.0 times in
Slide 25: Key Takeaways: Targa's Compelling Investment Proposition
Key Takeaways: Targa’s Compelling Investment Proposition Valuable infrastructure assets backed by primarily fee-based contracts >> Growing EBITDA Significant adjusted EBITDA growth expected YoY and long-term >> Increasing Dividend Strong, flexible, investment grade balance sheet >> Reducing Share Co
Slide 26: Appendix and Reconciliations
Appendix and Reconciliations INVESTOR PRESENTATION 26
Slide 27: 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 4Q23 2024 Natural Gas 153,803 $2.91 105,377 $3.01 (MMBtu/d; $/MMBtu) Wtd Avg
Slide 28: 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 29: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation (1) Includes the change in estimated redemption value of the mandatorily redeemable preferred interests. Year Ended December 31, (2) Gains or losses on debt repurchases or early debt 2022 2021 2020 2019 2018 2017 extinguishments. (In millions) (3) Includes financial
Slide 30: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Full Year 2023E (in millions) Reconciliation of Estimated Net Income attributable to Targa Resources Corp. to Estimated Adjusted EBITDA Net income attributable to Targa Resources Corp. $ 1,403.0 Interest expense, net 700.0 Income tax expense 400.0 Depreciation and am
Slide 31: 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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