10-KPeriod: FY2014

Targa Resources Corp. Annual Report, Year Ended Dec 31, 2014

Filed February 17, 2015For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) operates primarily through its ownership of Targa Resources Partners LP (NGLS), a provider of midstream natural gas and NGL services. The company's strategy revolves around supporting the Partnership's growth, with TRGP's cash flows derived entirely from distributions received from the Partnership. Key areas of the Partnership's business include gathering, processing, and marketing natural gas and NGLs, as well as crude oil gathering and terminaling. Significant developments during the reporting period include substantial capital investments in organic growth projects across various basins and divisions, such as the expansion of the Logistics and Marketing segment, particularly international NGL exports, and advancements in the Field Gathering and Processing segment in the Permian and Williston Basins. The company also announced pending merger transactions with Atlas Pipeline Partners, L.P. and Atlas Energy, L.P., which are expected to create a larger, more diversified midstream franchise. Investors should note the company's dependency on Partnership distributions for its own dividends and the associated risks related to commodity price volatility, operational execution, and financing activities.

Financial Highlights

50 data points
Beta

Net Income

$102.30M

EPS (Diluted)

$2.43

Total Assets

$6.42B

Cash & Equivalents

$81.00M

Free Cash Flow

-$400K

Financial Statements
Beta
Gross Profit$1.57B
Operating Income$640.50M
Net Income$102.30M
EPS (Basic)$2.44
EPS (Diluted)$2.43
Shares Outstanding (Basic)42.00M
Shares Outstanding (Diluted)42.10M

Key Highlights

  • 1Targa Resources Corp. (TRGP) is primarily a holding company whose cash flows are derived from its ownership interests in Targa Resources Partners LP (NGLS).
  • 2The Partnership is a significant midstream provider with operations in natural gas and NGL gathering, processing, and marketing, as well as crude oil gathering and terminaling.
  • 3Significant investments were made in organic growth projects, including expansions in the Logistics and Marketing (especially NGL exports) and Field Gathering and Processing segments.
  • 4The company announced its intention to merge with Atlas Pipeline Partners, L.P. and acquire Atlas Energy, L.P. to enhance scale, geographic diversity, and market position.
  • 5TRGP's financial performance and dividend capacity are directly tied to the cash distributions made by the Partnership.
  • 6The report details various risks, including commodity price volatility, operational challenges, regulatory changes, and the successful integration of the announced mergers.
  • 7Executive compensation is tied to company performance and shareholder value creation, with a significant portion delivered through long-term equity incentives.

Frequently Asked Questions

Targa Resources Corp. (TRGP) does not directly own operating assets. Its primary business is holding interests, including general partner interests, incentive distribution rights (IDRs), and common units, in Targa Resources Partners LP (NGLS). TRGP's cash flow is generated from distributions received from the Partnership.

Targa Resources Partners LP (NGLS) operates in two main divisions: Gathering and Processing, which includes Field Gathering and Processing and Coastal Gathering and Processing segments, and Logistics and Marketing, which includes Logistics Assets and Marketing and Distribution segments. The Partnership also deals with crude oil gathering and petroleum terminaling.

The Partnership's growth is driven by significant organic growth investments in its existing businesses, potential third-party acquisitions, and the integration of its combined businesses following the pending Atlas Mergers. Strategic locations in active producing basins and proximity to key markets and logistics centers are also key drivers.

The proposed mergers with Atlas Pipeline Partners, L.P. and Atlas Energy, L.P. are expected to create a premier midstream franchise with increased scale and geographic diversity. The rationale includes adding complementary assets, enhancing capabilities in key basins like the Permian, and improving the credit profile with a higher pro forma fee-based margin, ultimately driving distribution and dividend growth.

Targa Resources Corp.'s dividends are funded by the cash distributions it receives from its ownership interests in Targa Resources Partners LP. These distributions are subject to the Partnership's ability to generate sufficient cash flow and its own distribution policies.