Targa(TRGP) - 2022 Q2 - Quarterly Report

Construction and Expansion Projects - Targa Resources Corp. announced the construction of a new 275 MMcf/d cryogenic natural gas processing plant in Permian Midland, expected to begin operations in late Q3 2022[144]. - The company plans to construct another 275 MMcf/d cryogenic natural gas processing plant in Permian Delaware, with operations expected to start in Q3 2023[147]. - A new 120 MBbl/d fractionation train (Train 9) is set to begin operations in Mont Belvieu, Texas, in Q2 2024[148]. - Targa completed the acquisition of Lucid Energy Delaware, LLC for approximately $3.55 billion, enhancing its natural gas gathering and processing capabilities in the Delaware Basin[152]. - The company closed on the acquisition of Southcross Energy Operating LLC for $201.9 million, integrating its assets into SouthTX Gathering and Processing operations[150]. Financial Performance - Net income attributable to Targa Resources Corp. for the three months ended June 30, 2022, was $596.4 million, compared to $56.2 million for the same period in 2021[186]. - Adjusted EBITDA for the six months ended June 30, 2022, was $1,292.1 million, up from $975.7 million in the same period of 2021, reflecting a significant increase in operational performance[186]. - Distributable Cash Flow for the three months ended June 30, 2022, was $533.4 million, compared to $339.5 million for the same period in 2021, indicating improved cash generation capabilities[186]. - Adjusted Free Cash Flow for the six months ended June 30, 2022, was $707.5 million, an increase from $592.6 million in the same period of 2021, showcasing strong financial health[186]. - Total revenues for the three months ended June 30, 2022, were $6,055.8 million, an increase of 77% compared to $3,415.9 million in the same period of 2021[1]. Capital Expenditures and Investments - Targa's capital investments included a $926.3 million purchase of interests in development company joint ventures, resulting in a 75% interest in Grand Prix Pipeline LLC[149]. - Capital expenditures for growth projects reached $326.3 million for the six months ended June 30, 2022, compared to $151.8 million in 2021, indicating a significant increase in investment[266]. - The company expects to invest between $1.0 to $1.1 billion in net growth capital expenditures for announced projects in 2022[268]. - Maintenance capital expenditures for 2022 are expected to be approximately $150 million, net of noncontrolling interests[268]. Debt and Liquidity - Targa raised $1.5 billion through a public offering of senior notes, with proceeds used to fund the Lucid Acquisition and repay outstanding borrowings[159]. - Targa's TRGP Revolver provides a revolving credit facility of up to $2.75 billion, maturing on February 17, 2027[156]. - Total liquidity as of July 29, 2022, was $1,267.1 million, after accounting for outstanding borrowings[231]. - The company established a Commercial Paper Program with a maximum aggregate face amount of $2.75 billion, with no amounts outstanding as of July 29, 2022[234]. - The company redeemed all issued and outstanding shares of Series A Preferred at a redemption price of $1,050.00 per share, resulting in a total consideration paid of $973.4 million, with a deemed dividend of $215.5 million recorded in Q2 2022[265]. Operational Metrics - Operating expenses remain stable and are primarily driven by labor, contract services, and maintenance, with fluctuations based on system expansions[176]. - The company aims to enhance adjusted operating margin by limiting volume losses and increasing efficiency through remote monitoring capabilities[174]. - Natural gas inlet volumes in the Permian increased by 10% to 2,132.0 MMcf/d in Q2 2022 compared to 1,929.7 MMcf/d in Q2 2021[1]. - Total NGL production rose by 12% to 623.3 MBbl/d in Q2 2022 from 556.6 MBbl/d in Q2 2021[1]. - Operating expenses for Q2 2022 were $474.7 million, a 58% increase from $301.2 million in Q2 2021[1]. Commodity Prices and Sales - Sales of commodities increased by 82% to $5,624.2 million, driven by higher NGL, natural gas, and condensate prices, as well as increased volumes[1][2]. - Average realized price for natural gas increased by 150% to $6.12/MMBtu in Q2 2022 from $2.45/MMBtu in Q2 2021[1]. - The increase in product purchases and fuel was attributed to higher prices and volumes of NGL and natural gas, totaling $5,047.3 million, an 86% increase from $2,709.0 million in 2021[1][3]. Shareholder Returns - The company paid $30.0 million in dividends to preferred shareholders during the three months ended June 30, 2022[264]. - The Series A Preferred shares were fully redeemed in May 2022 for a total consideration of $973.4 million, including unpaid dividends[265].