Targa Resources company overview and 4Q13 earnings review

Part 4
Targa Resources company overview and 4Q13 earnings review (Part 4 of 5)

Targa Resources increased its 2014 capex and EBITDA guidance

2014 capex and EBITDA guidance

Targa also increased its 2014 growth capex guidance from $590 million to $650 million, indicating that it has identified and approved several development projects that it will undertake, including the construction of a new pipeline in the Permian Basin in West Texas, along with associated natural gas compression, dehydration, and treating facilities. Also recently approved was a new plant in North Dakota in the active Bakken play. Generally, the more capex projects that a midstream company has lined up, the better, as these projects represent a path towards growing revenues and the ultimate worth of the company. For the year, Targa expects maintenance capex of $90 million.

Targa Resources Planned CapexEnlarge Graph

Targa also provided 2014E EBITDA guidance of $750+ million, which was revised from an estimated range of $740 million to $760 million. Management noted that the EBITDA guidance didn’t include any potential earnings from exports of propane or butane on a spot basis. Targa exports most of its propane and butane on a contracted basis, although it provides some of these services as “spot” or on-demand. Given that guidance doesn’t include the benefit of spot exports, EBITDA is likely to be higher for this fiscal year.

Targa Resources Historical DistributionsEnlarge Graph

The company also guided to distribution growth of 7% to 9% at the partnership level in 2014. The above graph shows Targa Resources’ historical distributions.

The Realist Discussions