Driven by rising demand for LPG and NGL exports, Targa Resources (TRGP) expects an 8% increase in profits from 2023 to 2024 with EBITDA ranging between $3.7 billion and $3.9 billion.
“While our volume ramp materialized later than we forecasted for 2023, we are pleased that we ended the year with December actuals in line with our original guidance expectations for the Permian, providing us with strong momentum in 2024,” said Matt Meloy, Targa CEO, during the company’s Feb. 15 fourth-quarter earnings call. “We expect another year of record financial and operational metrics.”
For the final quarter of 2023, Targa reported revenue at $4.24 billion, which slipped year-over-year from the 2022 fourth-quarter result of $4.55 billion—but still beat market expectations by $390 million. Results were driven by surging shipments of NGL and LPG in the quarter.
NGL pipeline volumes increased by 44% over the same period in 2022 to 722,000 bbl/d. LPG exports hit a record at the end of 2023, averaging 13.3 MMbbl per month.
Targa’s export business through the Houston Ship Channel saw an appreciable increase at the end of the year thanks to the port authority testing an allowance of nighttime transits for larger vessels, Meloy said.
“We think that probably provided us about a 5% to 10% benefit,” said Scott Pryor, Targa president of logistics and transportation.
Pryor took time to thank the Houston port authority and the ship pilots organization that made the change possible, saying nighttime passages will benefit not just Targa but the local and Texas economy as well.
For all of 2023, Targa reported that about $800 million in capital had been returned to shareholders through quarterly dividends and share repurchases. The company intends to increase returns in 2024.
“We announced in November an expectation of a 50% year-over-year increase to our annualized 2024 common dividend per share,” Meloy said. Shareholders should expect a payment in May.
The company’s optimism is driven by the production value of its assets. Targa has the largest Permian Basin gathering and processing footprint in the industry and an integrated NGL system that puts the company in a good position, the CEO said. The projected revenues should allow the company to invest around $1.7 billion annually over the next few years while bringing in about $300 million in annual EBITDA growth.
During the earnings call, executives also gave an update on plans for the Apex project, a natural gas pipeline that would stretch southeast across Texas connecting Midland and Jefferson counties. The line, with a projected completion in 2026, would support projects in the Sabine River area.
Targa received a permit from the Texas Railroad Commission to build the line in March 2023, but has yet to decide if the project will go forward.
“We've said it before and we'll say it again, our number one priority is that gas continues to flow out of the basin so that NGLs can come out of our plants and go down Grand Prix and go across our docks,” said Targa CCO Bobby Muraro, who added that several other pipeline proposals could serve for the company’s needs.
“Every month that passes, I get more encouraged by the work we're doing to make sure that a pipe gets built and comes online ’26-ish,” Muraro said.
Recommended Reading
EIA: E&P Dealmaking Activity Soars to $234 Billion in ‘23
2024-03-19 - Oil and gas E&Ps spent a collective $234 billion on corporate M&A and asset acquisitions in 2023, the most in more than a decade, the U.S. Energy Information Administration reported.
Exxon Shale Exec Details Plans for Pioneer’s Acreage, 4-mile Laterals
2024-05-03 - Exxon Mobil plans to drill longer, more capital efficient wells in the Midland Basin after a major boost from the $60 billion Pioneer Natural Resources acquisition. Data shows that Exxon is a leading operator drilling 4-mile laterals in the Permian’s Delaware Basin.
ONEOK CEO: ‘Huge Competitive Advantage’ to Upping Permian NGL Capacity
2024-03-27 - ONEOK is getting deeper into refined products and adding new crude pipelines through an $18.8 billion acquisition of Magellan Midstream. But the Tulsa company aims to capitalize on NGL output growth with expansion projects in the Permian and Rockies.
Permian M&A: Oxy Shops Delaware Assets, Family Oil Cos. Stand Out
2024-05-10 - As operators scour the Permian Basin for M&A opportunities, they’re keeping an eye on a tepid divestiture market. Family-owned oil companies also stand out among the pack of private inventory holders remaining in the Permian, according to Enverus Intelligence Research.
Williston Warriors: Enerplus’ Long Bakken Run Ends in $4B Chord Deal
2024-02-22 - Chord Energy and Enerplus are combining to create an $11 billion Williston Basin operator. The deal ends a long run in the Bakken for Enerplus, which bet on the emerging horizontal shale play in Montana nearly two decades ago.