Targa Resources, Inc.

Ladies and gentlemen, thank you for standing by. And welcome to Targa Resources Corporated Third Quarter 2021 Earnings Conference Call. At this time, all attendees are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. And please be advised that today's call is being recorded. Thank you. Now, I would like to welcome Mr. Sanjay Lad, Vice President, Finance and Investor Relations. Sir, please go ahead.

Thanks, Ruel. Good morning and welcome to the third quarter 2021 earnings call for Targa Resources Corp. The third quarter earnings release, along with a third quarter earnings supplement presentation for Targa Resources, that accompany our call are available on our website at targoresources.com in the Investors section. In addition, an updated investor presentation has also been posted to our website. Statements made during this call that might include Targo 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. For discussion of factors that could cause actual results to differ, please refer to our latest SEC filings. Our speakers for the call today will be Matt Molloy, 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 will now turn the call over to Matt.

Thanks, Sanjay, and good morning to everyone. This is a very exciting time at Targa, as highlighted by our earnings release this morning. Operationally, we continue to perform well and now expect to exceed all our volume guidance expectations for the year. Financially, our balance sheet is as strong as it's ever been, with our leverage in the midpoint of our target range and expectations for it to continue to trend lower. Strategically, several of our key areas of focus over the last several years are driving the strength of our results and our positioning looking forward. Fully integrating our NGL business from wellhead to water, moving to a GMP contract structure that allows us to protect downside while continuing to participate from strong commodity prices, and managing capital spending to focus on projects that leverage our integrated NGL platform and drive higher returns. The culmination of the successful execution of the TARCA strategy gives me confidence to say that we are now where we want to be from a strategic and financial standpoint. Over the years, we invested outsized capital relative to the size of our company to fully integrate our business and create a best-in-class midstream footprint for our customers. These capital investments stretched our balance sheet more than we would have liked, but we believe those decisions would position us to generate significant long-term shareholder value, and we are now in a position where we are seeing the benefits of those previous strategic investments. We are also now in a position to unwind some of the structured financings that we utilize to finance our growth, and we will be able to do so while maintaining our leverage comfortably in our target range. Our EBITDA, free cash flow, and balance sheet are as strong as they've ever been, and we now expect to exceed the top end of our adjusted EBITDA guidance for 2021 and see continued growth thereafter underpinned by attractive organic growth opportunities that are integrated high return projects. All of this puts us in position to return additional capital to our shareholders. We plan to recommend to our board a $1.40 per common share annual dividend, or 35 cents per quarter, effective for the fourth quarter of this year and payable in February 2022. This equates to approximately 30% of our 2021 free cash flow and provides a yield competitive to members in the S&P 400 and S&P 500. We would expect to be able to increase the dividend a modest amount going forward on an annual basis. This level of common dividend returns additional capital to shareholders while providing us significant financial flexibility across cycles. For 2022, our current expectation is to direct free cash flow after dividends towards the repurchase of our DEVCO joint venture interests. While continuing to closely manage our balance sheet, we believe we will have the flexibility to redeem preferred stock and opportunistically repurchase common shares under the the 500 million share repurchase program. Before I move to discuss our operational performance, I want to acknowledge the continued outstanding efforts of our target employees. Through a pandemic, hurricanes, storms, and other issues, our employees have performed exceptionally well, and we are so proud of their efforts. Let us now turn to our operational performance and business outlook. Starting in the Permian, third quarter system inlet volumes increased 7% sequentially And we now expect our average 2021 Permian inlet to exceed the top end of our previously discussed 5% to 10% growth range over 2020. In Permian Midland, our new 200 million cubic feet per day heim plant, which began full operations in early September, is currently running near full. And our next 250 million cubic feet per day legacy plant remains on track to begin operations during the fourth quarter of 2022. With robust activity levels expected to continue into next year and beyond, we are evaluating the timing of our next Midland plant after Legacy and are now ordering long-list items. In Permian, Delaware, completions and activity levels continue 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 will continue to drive incremental volumes through our NGL downstream business. And in our central region, we are seeing an uptick in activity levels given the higher commodity price environment and remain optimistic around higher production offsetting legacy decline on many of our systems. Shifting to our logistics and transportation segment, Grand Prix volumes continue to increase, and we transported a record 417,000 barrels per day to Mont Bellevue during the third quarter. Throughput volumes on Grand Prix sequentially increased 6%, driven by increasing NGL production from Targa's Permian plant, including our new Heim plant and third parties. We also achieved record fractionation volumes at our Mont Bellevue complex, averaging about 662,000 barrels per day during the third quarter, representing a 3% sequential increase. Our LPG export services business, third quarter volumes averaged 9 million barrels per month, Lower sequential volumes were attributable to general maintenance. We chose to complete at our Galena Park export facility during the quarter, while it was an overall weaker global LPG market. The last couple of years have presented a number of challenges, and we think that we have demonstrated the ability for Target to perform exceptionally well across volatile markets. With record 2020 adjusted EBITDA and expectation for record 2021 adjusted EBITDA, and current expectations for record 2022 adjusted EBITDA. So I will finish with another thank you to all of our employees. And with that, I will now turn the call over to Jen.