Targa Resources, Inc.

Good day, and thank you for standing by. Welcome to the Target Resources Corp. Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded, and if you require any further assistance, please press star 0. I want to hand the conference over to your speaker today, Mr. Sanjay Ladd, Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Victor. Good morning and welcome to the second quarter 2021 earnings call for Tarver Resources Corp. The second quarter earnings release along with the second quarter earnings supplement presentation for Tarver Resources that accompany our call are available on our website at tarverresources.com in the investor section. In addition, an updated investor presentation has also been posted to our website. Statements made during this call that might include target resources, expectations, or predictions should be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in forward-looking statements. Discussion of factors that could cause actual results to differ please refer to our latest FPC file. Our speakers for the call today will be Matt Malloy, Chief Executive Officer, and Jen Neal, Chief Financial Officer. Additionally, the following senior management team members will be available for Q&A. Pat McDonough, President, Gathering and Processing, Scott Pryor, President, Logistics and Transportation, and Bobby Mararo, Chief Commercial Officer.

And with that, I'll now turn the call over to Matt. Thanks, Sanjay, and good morning, everyone. We're excited to announce another great quarter at Targa as our overall business continued to perform well, led by our position in the Permian Basin and our integrated NGL business. As we continue to execute on our key strategic priorities, we are very pleased with our positioning. Taking into consideration our first half performance and the strength in our business outlook for the second half of this year, coupled with stronger commodity price fundamentals, we are increasing our estimated 2021 EBITDA to be between 1.9 and 2 billion. 2021 EBITDA is now estimated to be 19 percent higher than last year based on the midpoint of our new guidance range. Our prioritization of free cash flow for debt reductions mean we reduced our debt balance by 780 million in the first half of the year, and our consolidated leverage was 3.8 times at the end of the second quarter. within our target range of three to four times and well ahead of schedule due to our strong performance. This provides us greater flexibility and bolsters Targa's financial position. We now expect to end the year at about 3.5 times leverage with a strong balance sheet and well positioned to repurchase the DEBCO interest in the first quarter of next year. We are also very proud of the efforts of our target employees over a difficult last year and a half. Our employees have continued to perform exceptionally well for our customers and have done so with a continued focus on safety, and we are very thankful for their efforts. Let's now turn to our operational performance and business outlook. Starting in the Permian, second quarter system volumes rebounded quickly following the major winter storm During the first quarter, our system inlet volumes increased 15 percent sequentially. We now expect our 2021 Permian inlet volumes to increase to the high end of our previously disclosed 5 to 10 percent growth over 2020. Our Permian Midland system ran above nameplate capacity for much of the second quarter, and we're pleased to announce our new 200 million cubic feet per day high plant is mechanically complete and expected to begin full operations in early September. A special thanks to our operations and engineering teams for safely bringing online Heim well over a month ahead of schedule and under budget. We expect Heim to commence operations highly utilized, and given our outlook for continued production growth, we announced this morning our plans to move forward with the construction of our new 250 million cubic feet per day legacy plant, which is expected to begin operations during the fourth quarter of 2022. Even with the addition of legacy, there is no change to our 2021 net growth capital spending estimate of between $350 million to $450 million. Our current year spend on legacy is estimated to be about $70 million. In Permian, Delaware, completions and activity levels have continued to ramp, and we currently have adequate processing capacity to accommodate our anticipated near to medium-term growth. The stronger outlook across our Permian Basin footprint coupled with our new plant announcement will continue to drive incremental volumes through our downstream businesses. Moving on to the Badlands, we saw sequential increases to our gas and crude volumes during the second quarter. Producers are completing wells and we continue to have positive producer dialogue. Turning to our central region, gas inlet volumes during the second quarter also rebounded from the winter storm and increased 8% sequentially. While the system continues to largely be in decline, we are currently seeing a modest uptick in completions and activity, which could mitigate some of the decline. Shifting to our logistics and transportation segment, overall system volumes during the second quarter meaningfully rebounded from the effects of prior quarter's major winter storm. Our Grand Prix pipeline continues to perform very well, with total deliveries into Mont Bellevue increasing 14% sequentially. During the second quarter, we transported a record 392,000 barrels per day, and we expect volumes to ramp through the balance of the year. We also achieved record fractionation volumes at our Montmelville complex, averaging about 644,000 barrels per day during the second quarter, representing an 18% sequential increase. In our LPG export services business at Galena Park, second quarter volumes sequentially increased 20%, averaging 10.3 million barrels per month. While we remain highly contracted, the current higher NGL prices are causing reduced short-term demand for spot opportunities. However, overall, the long-term fundamentals remain strong for LPG exports and the current strength in propane prices is still a net positive for Target. Looking ahead, With our leverage already in the target range and on track to be even lower by year end, we expect to be in a position to return incremental capital to our shareholders in 2022 after re-purchasing the DevCo joint venture interest. We have the ability to return capital to shareholders in a number of different ways through additional dividends, share repurchases, repayment of preferred equity, and or continuing to reduce debt. We are currently evaluating, along with our board, the best way to deliver value to shareholders while maintaining our long-term financial flexibility. We will prioritize a strong balance sheet that keeps Target in strong financial position across downside scenarios. We expect to articulate more details in February with our 2022 outlook and capital plan for the year. Target continues to benefit from the strength of our business and our talented employees, and we remain very well positioned for the long term. With that, I will now turn the call over to Jen.