Targa Resources, Inc. · NYSE:TRGP
Targa Resources — Citi Midstream & New Energy Infrastructure Conference 2024
36 slides from Targa Resources's conference presentation, Aug 13, 2024
Slide 1: Investor Presentation
Investor Presentation Citi Midstream & New Energy Infrastructure Conference August 13-14, 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: 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 4: 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) +24% CAGR FY 2019 – 1H 2024 800 +26% CAGR Q4 2019 – 1H 2024 6,400 700 5,600 Inlet Volumes (MMcf/d)
Slide 5: 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 +179% Adjusted EBITDA(1) Growth +50% YoY Dividend
Slide 6: Targa's Premier Permian Asset Footprint
Targa’s Premier Permian Asset Footprint ▪ Best-in-class producer customers Legend Active Rigs ▪ Several million dedicated acres Processing Plant Processing Plant In Progress ▪ Decades of core drilling inventory Crude Terminal Existing Gathering Pipeline NGL Pipelines ▪ Largest multi-plant, multi-sys
Slide 7: Permian Basin Fundamentals
Permian Basin Fundamentals Permian Basin is poised for continued growth, driving increasing demand for Targa’s midstream services Associated Gas Production Growth Outlook(1) Targa Outperforming Permian Basin Production 280 +164% ▪ Best in-class Permian G&P assets 260 ▪ Millions of dedicated acres 24
Slide 8: 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 19x ▪ 2,750 footprints are largely supported by low- 2,500 press
Slide 9: 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 10: 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 900 ▪ Grand Prix and Daytona NGL pipelines connect su
Slide 11: 2024 Updated Financial Outlook
2024 Updated Financial Outlook Increasing FY 2024 adjusted EBITDA estimate +5%, driven by higher anticipated Permian and integrated system volumes Updated 2024 Estimates +13%(1) YoY growth in Adjusted EBITDA driven by: ✓ Higher volume growth across Targa’s Permian footprint Adjusted EBITDA(1) $3,950
Slide 12: Integrated Growth Opportunities Generate Strong ROIC
Integrated Growth Opportunities Generate Strong ROIC Higher volume growth on Targa’s Permian systems necessitating acceleration of capital spending at attractive returns 2024E Net Growth Capex Estimate 2025E Net Growth Capex Estimate ~$2.7B $2.5B(1) ~$1.7B ~$1.4B Feb-24 Acceleration Acceleration Oth
Slide 13: Illustrative Capital Spending Summary
Illustrative Capital Spending Summary Illustrative $1.7B of average annual 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 Maintain Volumes ~$250MM ~$250MM ▪ G
Slide 14: 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 profile in 2025 Continued adjusted EBITDA(1) growth + meaningful step down in capex = Significant adjusted FCF(1) ▪ Permian growth drives increasing system vo
Slide 15: 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 16: 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 17: 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 18: Leading Return of Capital Outlook
3. 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 Adjusted Cash Flow from Operations YoY increase to quarterly cash dividend for 2024 Opportunistic com
Slide 19: Targa's Infrastructure Supported by Strong Fundamental Outlook
Targa’s Infrastructure Supported by Strong Fundamental Outlook INVESTOR PRESENTATION 19
Slide 20: 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 21: 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 Fitch / Moody’s / S&P: 387 --- Grade(1) BBB / Baa3 / BBB 2024E 196 2.2%(2) 2.0% Dividend Yield >2.
Slide 22: 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 8,000 35,000 7,000 30,000 6,000 25,000 5,000 20,000 MMcf/d Mb/d 4,000 15,0
Slide 23: Natural Gas Demand Growth Outlook
Natural Gas Demand Growth Outlook Incremental production from the Permian and other shale basins will be needed to support increasing natural gas demand ▪ Lower 48 natural gas demand is expected to grow by ~20% through 2030 (~25% including projected data center demand) Total Lower 48 Natural Gas Dem
Slide 24: 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 +1.6 Bcf/d of gas processing capacity in the Permian in
Slide 25: Blackcomb Pipeline
Blackcomb Pipeline Blackcomb Pipeline reaches FID to transport growing natural gas production from the Permian Basin to the Gulf Coast region ▪ Strategic Merits Blackcomb Pipeline 〉 Provides much needed incremental natural gas takeaway capacity to support continued Permian Basin natural gas producti
Slide 26: 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 14.0 ▪ Increasing global demand for propane and 12.0 butane driven by broad application for +3% Growth residential a
Slide 27: 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 28: 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 29: 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 30: Compelling Investment Proposition
Compelling Investment Proposition Growing EBITDA, Growing Dividend, Reducing Share Count, Strong Balance Sheet Accretive Growth ▪ Anticipate significant EBITDA growth underpinned by system volume growth 〉 New infrastructure coming online in 2024 and 2025 〉 Significant ramp in 2025 FCF as capital spe
Slide 31: Appendix and Reconciliations
Appendix and Reconciliations INVESTOR PRESENTATION 31
Slide 32: Hedge Disclosures
Hedge Disclosures Hedges provide cash flow stability and reduce exposure to commodity prices on non-fee-based G&P contract exposure; Non-fee G&P margin now hedged ~90% through 2026 FIXED PRICE SWAPS Volumes Hedged Wtd. Avg. Hedge Price Volumes Hedged Wtd. Avg. Hedge Price Aug – Dec 2024(2) 2025(2) N
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes the Company’s non-GAAP financial measures: adjusted EBITDA, adjusted cash flow from operations, and adjusted free cash flow. The following tables provide reconciliations of these non-GAAP financial measures to their most directly comparable GAAP
Slide 34: 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. (1) Includes the change in estimated redemption value of the mandatorily redeemable preferred interests. to Adjusted EBITDA (2) Ga
Slide 35: 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. $ 1,355.0 (1) Interest expense, net 790.0 Income tax expense 360.0 Depreciation an
Slide 36: 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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