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Targa Resources Partners LP Message Board

  • usenatgas usenatgas May 18, 2012 3:17 PM Flag

    The price is now STUPID! Solid dividend

    with increasing earnings!

    Someone has to clean the low priced NG that we are using more of everyday!

    TGP (shipper) is also getting hammered!

    When to buy more?

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    • Credit Suisse Trimming Outlook for Select Processor MLPs - Adjusting Ests and TPs to Reflect Lower Commodity
      Prices:
      We are reducing our DCF/unit, EBITDA and distribution/dividend growth outlook for Targa Resources Partners (NGLS), Targa Resources Corp (TRGP) and DCP Midstream Partners (DPM) due to what we believe may be sustained weakness in NGL prices and gross natural gas processing margins. However, even with our reduced forecast, all three names remain attractive for purchase given their current valuations.
      Ethane Oversupply Likely to Emerge at End of 2012: - We believe an NGL oversupply situation could emerge by the end of 2012 that could result in sustained weakness in NGL prices and natural gas processing margins. With natural gas prices remaining low, producers have shifted rigs from dry gas areas to wet gas areas to take advantage of what had been premium pricing for NGLs. However, we believe this emphasis on wet gas production could produce an NGL oversupply situation as early at the end of 2012. We project that a weak NGL pricing environment could continue through 2016 at which time previously announced steam cracker expansions would be completed. Due to the difficulty to effectively hedge NGLs more than 18 months out, we believe it is prudent to bring down our FY2013 and FY2014 numbers for NGLS, TRGP, and DPM.
      Reducing Target Prices but All Three Are Still Attractive: We are reducing our TP of NGLS by $5 to $46, TRGP by $2 to $57 and DPM by $5 to $49 but all three names remain Outperform rated given their still robust dividend/distribution growth outlooks.
      Estimate Revisions: We are revising our F2012/F2013/F2014 EPS estimates for NGLS to $1.50/$1.89/$1.28 (from
      $2.02/$2.31/$2.53), for TRGP to $0.81/$0.98/$0.81 (from $0.98/$1.12/$1.27) and for DPM to $ 0.94/$2.41/$3.14 (from $1.24/$2.94/$3.49) respectively.

    • i appreciate a contraian out look gives us all something to do and talk about while were watching our investments. lisa how do you feel about the thesis of private investors not coming back after all bs that has gone on the last year or so with not as much money coming back in the market. you cant say come on in the water is fine. sold a bunch of high yeild bonds last month and been buying divys with much higher yeild. not fun to watche the flucations but am in to double my holdings with 8 and 9 percent payouts over the long haul.

    • I like it too, not trying to knock it.

    • Lisa,

      I would add to your discussion of NGLS commodity price exposure, reading the recent presentations on the NGLS website, which indicate a steady increase in fee based contracts in the future, including a sharp increase in 2011-2013. I also like NGLS and it is a major holding for me.

    • Yes, it is hedged, but many MLPs were hedged in 2008-9 and the prices went down a lot more than this. Those kind of arguments don't matter when larger holders decide to lighten up.

      The main risk is credit markets freezing up due to dominoes falling in Europe. If that doesn't happen then these MLPs will rebound at some point.

    • i guess mlps are the only companys that a europe good outcome doesnt help bought some more ndro,ngls and look at hun possible private by out

    • But why the magnitude of the drop? Isn't NGLS well hedged?

    • it basically boil down to this, when some big co like goldman or sp or just some big rattings co say its time to jump back into the mlps all the lemmings, chasers and cockroaches will come back in and drive the prices back up 30 or 40 percent until the next great manufactured problem comes along and sell off starts again. ive been in these for 12 years and have never had a co lower its divy and price has gone up cosistantly except 08 and 09 which created a great divy opportunity.

    • reformatting the table to make clearer that only 3% of their throughput is fee based - the rest (97%) has commodity price exposure (which they attempt to mitigate via hedges).

      Percent of
      Throughput Contract Type
      Impact of Commodity Prices

      Percent-of-Proceeds/Percent-of-Liquids 40%
      Decreases in natural gas and/or NGL prices generate decreases in operating margins.

      Fee-Based 3%
      No direct impact from commodity price movements.

      Wellhead Purchases/Keep-whole 21%
      Increases in natural gas prices relative to NGL prices generate decreases in operating margin.

      Hybrid 36%
      In periods of favorable processing economics (1), similar to percent-of-liquids or to wellhead purchases/keep-whole in some circumstances, if economically advantageous to the processor. In periods of unfavorable processing economics, similar to fee-based."

    • more...

      "Contract Terms, Contract Mix and the Impact of Commodity Prices. Because of the significant volatility of natural gas and NGL prices, the contract mix of our natural gas gathering and processing segment can have a significant impact on our profitability, especially those that create exposure to changes in energy prices (“equity volumes”). Set forth below is a table summarizing the mix of our natural gas gathering and processing contracts for 2011 and the potential impacts of commodity prices on operating margins:


      Percent of
      Throughput

      Contract Type

      Impact of Commodity Prices
      Percent-of-Proceeds/Percent-of-Liquids

      40%

      Decreases in natural gas and/or NGL prices generate decreases in operating margins.
      Fee-Based

      3%

      No direct impact from commodity price movements.
      Wellhead Purchases/Keep-whole

      21%

      Increases in natural gas prices relative to NGL prices generate decreases in operating margin.
      Hybrid

      36%

      In periods of favorable processing economics (1), similar to percent-of-liquids or to wellhead purchases/keep-whole in some circumstances, if economically advantageous to the processor. In periods of unfavorable processing economics, similar to fee-based."

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NGLS
45.32+0.23(+0.51%)4:05 PMEDT