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Targa Resources Partners LP Message Board

  • moneyonomics moneyonomics Feb 14, 2013 7:25 PM Flag

    CC-2013 distribution coverage and distribution growth projections and capital projections

    "...For the first half of 2013, we expect our distribution coverage to be around 0.9 times given the impact of the Badlands acquisition on 2013. We expect distribution coverage to improve in the second half of 2013 averaging about one times for full year. We are excited about the long-term growth outlook for our businesses and expect to soon return to our long-term target coverage ratio of 1.2 times.

    With high visibility and confidence on the 2014 performance and our strong balance sheet and liquidity we believer we are on right path. We also increase the Partnership’ full year 2012 distribution 13% over 2011, consistent with our original 2012 full year distribution guidance, given in the fall of 2011 as a 10% to 15% increase, a little past the midpoint.

    At the TRC level, our full year 2012 dividends of $1.64 represented 36% growth over 2011. Also just past the midpoint of our original 30% to 40% growth guidance given for 2012. We continue to expect to deliver full year 2013 distribution growth of 10% to 12% at the Partnership and expect to exceed 30% TRC dividend growth for 2013.,,,"

    "These dynamics have allowed us to announce over $1.7 billion of growth investments to be placed in service in 2013 and 2014. $1.3 billion of that total $1.7 billion growth investments over the next few years will be providing primarily fee-based margin, which further insulate us from commodity price volatility.

    So here is a quick status update on some of the growth projects currently underway that I know you are following. Our 100,000 barrel per day CBF Train 4 expansion will be placed into service in the second quarter of this year as expected.

    During the course of construction, we have strategically increased selected scope to accommodate future growth, raising the total budget to $385 million from $360 million announced previously. This minor increase in expenditures significantly advantages future projects.

    Our expanded international export project remains on time and on budget. We expect the project which will enable us to load in excess of 3 million barrels per month, to be in service during the third quarter of this year. When completed, we will be able to load in excess of 5 million barrels per month during the third quarter of 2014.

    We have already entered into multi-year take-or-pay contracts for the majority of the capacity of the project and are seeing longer-terms for the most recent contracts. Our $200 million cubic feet a day Longhorn Plant in North Texas is expected to be placed in service in the third quarter of 2013, assuming a near-term approval of its greenhouse permit.

    We believe that everything is complete on the permit and expected soon, but have been disappointed with the speed of final federal approval. We will let you know when we get to permit.

    The $200 million cubic feet a day, High Plains Plant at SAOU announced in the fourth quarter of 2012 is still on track to be finished on time in mid 2014 and has all required permits. Given the level of producer activity and future focus in the Permian Basin, we're very excited about this project and the recent completions of 300 million cubic feet a day expansions to 30 million cubic feet a day expansion in SAOU and Sand Hills.

    Sometimes, I can talk better than I can read. As I mentioned in my opening remarks, we are busy at work, integrating Badlands into Targa. Badlands is also an early stage growth project. In addition to our integration and commercialization efforts, we expect to spend approximately $250 million in 2013 to expand the system, and to provide additional activity to both rail and pipeline takeaway options for our producer customers and to secure further acreage dedications.

    We recently completed a $35 million expansion of our sound terminal in Tacoma to greatly enhance our ability to serve the local and regional markets. The project connected the terminal to an important local products pipeline, added 225,000 barrels of storage and added ethanol and gasoline blending to the truck loading rack to increase the clean fuels available to the future sound market. At sound, we are also handling railcars of Bakken crude to Washington State in West Coast Refineries.

    In addition to these announced projects, we continue to develop other projects that have not yet been officially approved by our Board, some of which are known in the industry and have been referenced in our investor materials. Those ongoing projects with some visibility include CBF Train 5, a unit train facility and others. We're still optimistic about these projects.

    We expect the impact from these highly visible growth projects and others like them to provide the margin, scale and diversity that will support continued distribution growth in 2013 and beyond. Even with the acquisition of the Badlands, we continued to have substantial liquidity to fund our current announced slate of growth projects and to provide us flexibility to further expand our diversified midstream platform for even longer-term growth.

    2013 will be a transformational year for Targa. We have approximately $1.1 billion in growth capital that will be placed in service and be up and running by the fourth quarter. The majority of these new projects and service will contribute the base margin.

    These projects are expected to be completed at attractive EBITDA multiples, meaning that our run rate EBITDA in the fourth quarter of 2013 will be a step change from where we ended 2012 and where we are today. And this enhanced end of year 2013 EBITDA performance should result in a 2014 EBITDA growth in excess of 25% over 2013.

    As I mentioned earlier in the call, we continue to expect to deliver full-year 2013 distribution growth of 10% to 12% at the Partnership and expect to exceed 30% TRC dividend growth for 2013."

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