Targa Resources Post Soaring Q2 Profit
Targa Resources reported a steep climb in its quarterly and half-year profit. The company reported a net income of $596.4 million in the second quarter and $684.4 for the first half of the year.
The company reported adjusted earnings before interest, income taxes, depreciation and amortization, and other non-cash items (adjusted EBITDA) of $666.4 million for the second quarter of 2022 compared to $460.0 million for the second quarter of 2021.
The 6 percent increase in adjusted EBITDA was primarily attributable to higher realized commodity prices and higher Permian volumes across Targa’s Gathering and Processing and Logistics and Transportation systems, partially offset by lower marketing margin and higher operating expenses.
For full-year 2022, Targa is increasing its estimated adjusted EBITDA range to between $2.85 billion and $2.95 billion to account for a partial year contribution from its recently completed Delaware Basin acquisition. Targa’s updated full-year 2022 adjusted EBITDA outlook assumes NGL composite barrel prices average $1.05 per gallon, crude oil prices average $100 per barrel, and Waha natural gas prices average $6.00 per million British Thermal Units (MMBtu) for the second half of 2022.
Targa now estimates net growth capital expenditures for 2022 to be between $1.0 billion and $1.1 billion to account for today’s announcements of construction of the new Greenwood plant in Permian Midland and Train 9 in Mont Belvieu, coupled with incremental gathering and related infrastructure spend to support growth across the recently acquired Delaware Basin assets. Targa’s estimate for 2022 net maintenance capital expenditures remains unchanged at approximately $150 million.
In July 2022, Targa completed the acquisition of Lucid Energy Delaware for $3.55 billion. Lucid provides natural gas gathering, treating, and processing services in the Delaware Basin, and owns and operates 1,050 miles of natural gas pipelines and approximately 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction primarily in Eddy and Lea counties of New Mexico. Lucid’s Delaware Basin assets are integrated into Targa’s Permian Delaware operations.
Construction continues on Targa’s 275 million cubic feet per day (MMcf/d) Legacy I and Legacy II plants in Permian Midland and its 230 MMcf/d Red Hills VI plant and 275 MMcf/d Midway plant in Permian Delaware. Targa expects to complete Legacy I ahead of schedule and given the plant will be highly utilized when it begins full operations in the late third quarter of 2022, Targa also unveiled its plans to construct a new 275 MMcf/d plant in the Permian Midland (the Greenwood plant), which is expected to begin operations late in the fourth quarter of 2023.
To handle continued supply growth anticipated from Targa’s Permian G&P systems and third parties, Targa also announced today its plans to construct a new 120 thousand barrels per day (MBbl/d) fractionation train in Mont Belvieu, Texas (Train 9). Train 9 is expected to begin operations in the second quarter of 2024.
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