8-KOther Events

Targa Resources Corp. 8-K Report, Corporate Update (Dec 29, 2016)

Filed December 29, 2016For Securities:TRGP

Summary

Targa Resources Corp. (TRGP) filed an 8-K on December 29, 2016, to disclose a revision to its supplementary information regarding notional volumes of NGL futures contracts on the Intercontinental Exchange (ICE). The company identified an error in the reporting for its Form 10-Q for the quarter ended September 30, 2016, related to these hedging instruments used in its Logistics and Marketing segment. The revisions, which involved a significant reduction in the reported notional volumes for NGL futures for 2016 through 2019, were deemed immaterial to the company's financial statements. This filing primarily serves to correct and clarify the extent of these specific derivative positions. The report also provides a detailed breakdown of Targa's extensive hedging activities as of September 30, 2016, across various commodity derivative instruments (swaps, collars, options, futures) for natural gas, NGLs, and condensate. These hedges are designed to mitigate commodity price risk. The filing highlights the fair values of these instruments and discusses the company's management of commodity price, interest rate, and counterparty credit risks, reassuring investors about the collateralization and netting agreements in place for derivative counterparties.

Key Highlights

  • 1Targa Resources Corp. corrected previously reported notional volumes for NGL futures contracts on ICE as of September 30, 2016.
  • 2The revisions, detailed in the filing, significantly reduced the previously reported notional volumes for NGL futures.
  • 3The company stated that these revisions were not material to its financial statements.
  • 4The 8-K provides a comprehensive overview of Targa's commodity derivative hedging activities as of September 30, 2016, including natural gas, NGLs, and condensate.
  • 5The filing details the fair values and notional volumes of various hedging instruments, such as swaps, collars, and options.
  • 6Targa Resources also discussed its management of commodity price risk, interest rate risk, and counterparty credit risk.
  • 7The company has implemented risk mitigation strategies, including collateralization and master netting agreements with derivative counterparties.

Frequently Asked Questions

The primary purpose of this 8-K filing is to correct and clarify supplementary information regarding the notional volumes of NGL futures contracts that Targa Resources Corp. had previously reported in its Form 10-Q for the quarter ended September 30, 2016. The company identified an error in its reporting of these specific derivative positions.

No, Targa Resources Corp. stated that these revisions to the notional volumes of NGL futures positions were not material and had no effect on its Consolidated Balance Sheet, Statement of Operations, Statement of Cash Flows, or other financial statements.

Targa Resources engages in a variety of hedging activities to mitigate commodity price risk. As of September 30, 2016, the company utilized derivative instruments such as swaps, collars, options, and futures contracts for natural gas, NGLs (including ethane, propane, and butane), and condensate.

Targa manages counterparty credit risk through master netting provisions in its agreements with derivative counterparties, which allow for netting of asset and liability positions. Additionally, for many derivative transactions, the company has secured its obligations with a first priority lien on collateral. Futures contracts are cleared through an exchange and settled daily, limiting their credit risk.