Targa Resources, Inc.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Targa Resources Corporation fourth quarter 2018 earnings webcast and presentation. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star, then zero on your touchstone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Sanjay Lad, Director of Investor Relations. Sir, you may begin.

Thank you, Tom. Good morning and welcome to the fourth quarter 2018 earnings call for Targa Resources Corp. The fourth quarter earnings release for Targa Resources Corp., Targa, TRC, or the company is along with a fourth quarter earnings supplement presentation are available on the investor section of our website at targoresources.com. In addition, an updated investor presentation has also been posted to our website. Any statements made during this call that might include the company's expectations or predictions should be considered forward-looking statements and are covered by the safe harbor provision of the Securities Act of 1933 and 1934. Please note that actual results could differ materially from those projected in any forward-looking statements. For discussion of factors that could cause actual results to differ, please refer to our recent SEC filings, including the company's annual report on Form 10-K for the year ended December 31st, 2017, and subsequently filed reports with the SEC. Our speakers for the call today will be Joe Bob Perkins, Chief Executive Officer, Matt Malloy, President, and Jen Neal, Chief Financial Officer. We will also have the following senior management team members available for Q&A. Pat McDonough, President, Gathering and Processing, Scott Pryor, President, Logistics and Marketing, and Bobby Mararo, Chief Commercial Officer. Joe Bob will begin today's call with a few strategic highlights, followed by Matt, who will provide an update on commercial development and business outlook, And then Jen will discuss fourth quarter 2018 results and present our operational and financial expectations for 2019 before we take your questions. With that, I'll now turn the call over to Joe Bob.

Thanks, Sanjay. Thank you to everyone for joining our fourth quarter and year-end 2018 call. It's a pleasure to be with you again this morning. 2018 was one of the busiest years ever at Target. in what should be viewed as another transformational year for the company. Over the course of 2018, including only the major headlines, Targa added approximately 860 million cubic feet today of incremental natural gas processing capacity, announced the significant Delaware Basin GMP expansion supported by long-term agreements with a large investment-grade energy company, approved and began construction on another 1.2 billion cubic feet per day of incremental processing capacity, announced and began construction on the Grand Prix extension into southern Oklahoma, announced and began construction on two new 110,000 barrel per day fractionators at our Mont Bellevue complex, created innovative development company joint ventures, or so-called DEVCOs, that provided $190 million of capital reimbursement at closing and total potential capital savings of up to $960 million on projects already in process, raised approximately $684 million of common equity, and issued $1 billion of senior notes over the course of the year. generated approximately $230 million in proceeds from asset sales. And TARGA exceeded our previously disclosed full-year 2018 adjusted EBITDA guidance. That is a new TARGA record with annual EBITDA of $1,366,000,000. Most importantly, those TARGA execution highlights are complemented by the continued safe operations of our existing infrastructure facilities and our projects under construction, with safety focus as job number one for our talented and dedicated employees across the company. Now, we're only one and a half months into 2019, and we've not slowed down. So far in this new year, we closed on an aggregate $1.5 billion of eight-and-a-half-year and 10-year senior notes at attractive rates, demonstrating tremendous bondholder support for the target story. We announced the further extension of Grand Prix into the STAC region of central Oklahoma, executed definitive supporting agreements with Williams, and secured significant additional long-term NGL volume commitments for transportation on Grand Prix and fractionation at our Montbellevue complex. And we very recently executed definitive agreements for the sale of a 45% interest in our Badlands business, generating proceeds of approximately $1.6 billion. These proceeds will substantially meet our estimated equity needs for 2019 for announced net growth CapEx and the Permian acquisition earn-out. It was a very important deal. We were happy to announce it earlier this week. Those of you who follow us closely know that many of our major projects underway will be completed over the next few months, including our Grand Prix NGL pipeline project. We've been saying this for some time now, and we'll say it again. Grand Prix really is a strategic, competitive game changer for TARGA. It seems like every quarter we announce another exciting new development that leverages Grand Prix in our integrated asset base. And the Williams deal does that again. Our growth projects underway position us for significant EBITDA growth. The strength of our integrated asset footprint and growth projects, complemented by our continued commercial success, drive increasing largely fee-based cash flows, an attractive long-term outlook, and substantially increased target size, scale, and customer reputation as a large-cap infrastructure operator. Fundamentally, the robust long-term outlook for domestic production volumes and what that means for Targa will lead to the high utilization of our infrastructure expansions, recently completed and underway, providing the line of sight to significantly increasing free cash flow at Targa. Targa is in a special, unique position. An investor recently made some observations that I believe will soon become more widely appreciated, and I'd like to share those with you. Number one, Target has a franchise Permian GMP position and diversity from other strong GMP positions. Number two, he said, Target is one of only a very few integrated companies with the combination of strong gathering and processing, plus NGL transportation, plus Mont Bellevue fractionation, plus NGL exports and other premium downstream markets. Number three, Target has an unmatched growth picture among significantly sized midstream companies and has a growing amount of fee-based business. And to summarize, Target is clearly on path to join a short list of high-performing, scaled, investment-grade midstream companies. And on that path, we'll experience above-peer group growth, rapid deleveraging, and dividend coverage improvement. That path is highly visible to me. It was highly visible to him from our projects coming online and accompanying our commercial success. So as I wrap up my introductory comments, I'd like to directly address statements and likely questions about where Targa should be with respect to its capital expenditures and free cash flow. As a long-term Targa investor privileged to work closely with the Targa team, the Targa assets, the Targa customers, and the Targa opportunities, I believe we are in a very good spot. Our profile and timing will be different than peer companies simply because Targa has been blessed with an abundance of high return strategic projects relative to our size over the last few years. We have creatively partnered, prioritized, and funded those high-return strategic opportunities. Pursuing them, we certainly should not have ignored them. Now, with high visibility beginning the second half of 2019, such projects are coming online, highly utilized, and creating a rapid increase in our cash flow situation. And we will continue to prioritize capital expenditures, resulting in lower levels of CapEx and even lower levels relative to our EBITDA. Target is clearly on a path to join a short list of high-performing, scaled, investment-grade, midstream companies. And on that path, we'll experience above-peer growth, rapid deleveraging, and dividend coverage improvement. With that, I'll now turn it over to Matt.