Targa Resources Corp. executives said the midstream company plans to expand its fee-based footprint in order to support a wellhead-to-water natural gas liquids strategy.
"Where we're spending dollars on additional infrastructure, we're going to need some fee-based protection for us to continue to spend capital at gas prices between $0 and $1 at Waha and low NGL prices ... and we've had good success with our producers who understand that and want us to continue to move their volumes," President and incoming CEO Matthew Meloy said during a Feb. 20 fourth-quarter earnings conference call.
Targa aims to start up the seventh and eighth fractionation trains at its Mont Belvieu, Texas, facility in 2020 and placed its Grand Prix pipeline from the Permian Basin to Mont Belvieu into service in 2019. The company anticipates building another fractionation train, but Meloy said Targa "[feels] pretty good about being able to move Train 9 a little bit further out" given that "fracs are running even better than anticipated."
When it comes to exports, D. Scott Pryor, president of logistics and marketing, said during the call that Targa's Galena Park terminal on the Houston Ship Channel should see volumes grow as an expansion project due to come online in the third quarter increases capacity to up to 15 million barrels of liquid petroleum gas per month.
"We're going to benefit from increased volumes flowing through our systems all the way from our upstream through Grand Prix through our downstream assets as a whole, which will dictate opportunities to put more barrels across our dock," he said.
Targa on Feb. 20 reported 2019 fourth-quarter adjusted EBITDA of $465.2 million, an increase from $332.8 million in the same year-ago quarter and exceeding the S&P Global Market Intelligence consensus estimate of $369.4 million.
The company's distributable cash flow in the fourth quarter of 2019 was $327.8 million, up from $214.0 million in the prior-year period.