Targa Resources Corp

Let’s take a look at midstream stocks trading at attractive yields. The stocks have a market capitalization of over $5 billion and yields over 7.0%.

As investors, it can be difficult to escape from the lure of high yields. The idea of high and regular income looks attractive.

Cheniere Energy (LNG) rose 3.6% last week on news of a possible deal to supply liquefied natural gas to China Petroleum & Chemical or Sinopec.

Targa Resources (TRGP) was the top midstream underperformer last week. Targa Resources fell 8.0% for the week.

Kinder Morgan (KMI) spent $2.3 billion on growth projects in 2018. The company expects to spend $3.1 billion on capital projects in 2019.

Midstream C corporations have posted impressive gains in 2019. The top stocks in the sector have outperformed the broader market.

On November 19, U.S. Capital Advisors raised its rating for Targa Resources (TRGP) to “overweight” from “hold.”

ONEOK reported its third-quarter results on October 30 after the markets closed. The company’s EPS of $0.75 beat the consensus estimates.

Kinder Morgan expects its 2018 budgeted distributable cash flow to be impacted due to the delayed Elba Liquefaction project.

On October 3, Barclays cut its rating for CVR Refining (CVRR) from “equal weight” to “underweight.” Barclays cut its target price.

Cheniere Energy (LNG) was among the top midstream gainers last week. The stock rose 2.8% during the week.

PointState Capital added 4.2 million Targa Resources shares to its position in Q2 2018—the largest position change in the stock during the quarter.

ONEOK (OKE) reported adjusted EBITDA growth of 30% YoY in the second quarter. The company’s EBITDA growth in the last four quarters averaged 20%.

So far, midstream companies Targa Resources (TRGP) and ONEOK (OKE) have outperformed the broader energy sector in 2018.

Among the analysts surveyed by Reuters, 48% rate Targa Resources stock as a “buy,” while 52% rate it as a “hold.”

ONEOK (OKE) has seen a strong rally from its 2016 lows resulting in strong returns over the past seven years.

In this series, we’ll look at the historical outliers in midstream energy, which have generated massive wealth amid turbulent times.

In terms of analysts ratings, MPLX LP (MPLX), a diversified midstream MLP owned by Marathon Petroleum (MPC), places third among the seven midstream companies we’re looking at.

Capital Research Global Investors added a major position in ONEOK (OKE) during the first quarter.

OKE has the highest forward EV-to-EBITDA multiple of 14.7x among the selected peers.

ONEOK has the lowest distribution yield of 4.8% among selected peers, which could be attributed to the partnership’s strong distribution growth guidance supported by its strong earnings growth potential and impressive distribution coverage.

In this article, we’ll look at the 2018 capital spending plans of the four selected peers.

The Permian region, which is currently the most prolific basin in the US, continues to experience strong drilling activity.

OKE’s strong earnings growth in the first quarter was mainly due to strong throughput volume growth across its Natural Gas Gathering & Processing and Natural Gas Liquids segments.

The number of institutional holders in Enterprise Products Partners fell to 1,063 by the end of the first quarter.

ONEOK (OKE) stock has continued to build upon its gains in 2018.

ONEOK is trading 4% above its 50-day moving average and 8% above its 200-day moving average.

On April 17, 2018, Barclays cut its target price for Kinder Morgan (KMI) from $23 to $20.

Targa Resources (TRGP) has the most “buy” among the four peers we’re analyzing in this series.

MLPs’ distribution yield has risen recently due to the massive correction, and the peers we’re analyzing in this series are no different.

All four of the peers we’re analyzing in this series—DCP Midstream (DCP), Western Gas Partners (WES), OKEOK (OKE), and Targa Resource Corporation (TRGP)—have leverage ratios within or below the industry standard.

The Permian region, which is currently the United States’ most prolific basin, continues to experience strong drilling activity.

In the previous part of this series, we looked at the recent operating performance for the four peers we’re analyzing: DCP Midstream (DCP), ONEOK (OKE), Targa Resources (TRGP), and Western Gas Partners (WES).

ONEOK (OKE) posted the highest YoY EBITDA growth in the fourth quarter among the four peers we’re analyzing in this series.

On March 23, 2018, Morgan Stanley cut its target price for Targa Resources (TRGP) from $53 to $51.

Targa Resources is down nearly 7% year-to-date.

ONEOK (OKE) stock is up nearly 4% so far in 2018.

With a 2.3% fall on Friday, March 23, Kinder Morgan (KMI) was down 8.5% for the week.

In this series, we’ll look at some of the key indicators that impact MLP performance in the long term.

Midstream companies such as Kinder Morgan (KMI), Targa Resource (TRGP), and ONEOK (OKE) are taxed as C-corps, so the revised policy doesn’t apply to them.

About 78.9% of analysts rate MPLX LP as a “buy,” and the remaining 21.1% rate it as a “hold.”

Bank of America Merrill Lynch and Citi Investment Research were the biggest sellers in MLPX LP (MPLX) during the fourth quarter.

The Alerian MLP Index (AMZ), which consists of 50 energy MLPs, lost 2.8% during the fourth quarter despite strong crude oil prices.

75.0% of analysts surveyed by Reuters rate Energy Transfer Partners (ETP) a “buy” as of February 21, 2018, and the remaining 25.0% rate it a “hold.”

Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP) have been very volatile since the start of this year.

Of the analysts surveyed by Reuters, 62% rate Targa Resources (TRGP) as a “buy,” while 38% rate the stock as a “hold.”

Of the analysts surveyed by Reuters, 45% rate Kinder Morgan (KMI) as a “hold,” while 55% rate the stock as a “buy.”

Targa Resources (TRGP) has the highest correlation with crude oil among all of the midstream companies.

Last week, Barclays upgraded Targa Resources (TRGP), a midstream MLP involved in natural gas gathering and processing, NGLs fractionation, and liquids terminalling & storage.

Kinder Morgan rose 0.7% last week. The stock rose 1.7% on Thursday—the day that the FID on the Gulf Coast Express Pipeline project was announced.

Of the analysts surveyed by Reuters, 58% rated Kinder Morgan (KMI) as a “buy,” while 42% rated the stock a “hold.”

Kinder Morgan (KMI) expects a DCF (distributable cash flow) of “less than 1 percent below budget” for 2017 due to the IPO (initial public offering) of its Canadian assets and impacts from Hurricane Harvey.

Among the top institutional holders, 9.33 million positions were added in 3Q17, which indicates a bullish sentiment toward MPLX.

DCP Midstream DCP Midstream (DCP) has the second-highest correlation with crude oil, after EnLink Midstream (ENLC). The one-year correlation between DCP and crude oil was 0.51 on October 6, 2017. DCP Midstream’s high correlation with crude oil reflects its high direct commodity price exposure, mainly through its natural gas processing and NGL (natural gas liquid) business. The […]

On October 4, Targa Resources (TRGP) announced a letter of intent with a Kinder Morgan (KMI) subsidiary and DCP Midstream (DCP) for the joint development of the Gulf Coast Express Pipeline project.

On October 4, Targa Resources (TRGP) announced an agreement to sell a 25% joint venture interest in its Grand Prix NGL (natural gas liquids) pipeline to funds managed by Blackstone Energy Partners.

MPLX’s “buy” rating percentage has risen from 68% at the end of 2016 to 94% as of September 28, 2017.

ONEOK is trading at dividend yield of ~5.3%—higher compared to ~2.6% for Kinder Morgan (KMI) and ~4.9% for Magellan Midstream Partners (MMP).

Targa’s Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products.

2017 capital expenditure Targa Resources (TRGP) revised its 2017 capital expenditure guidance upwards, by 37% to $960 million. Targa’s plans for new projects include two processing plants—one in the Midland Basin and another in the Delaware Basin. Moreover, Targa plans to double its investment in the Williston Basin to $150 million, to expand crude gathering […]

On Wednesday, April 12, 2017, NuStar Energy (NS) announced that it will acquire Permian-focused Navigator Energy Services for ~$1.5 billion.

The median target price for EEP as provided by surveyed analysts is $24, which implies a 37% price return in one year from EEP’s current price of $17.48.

ONEOK’s Natural Gas Gathering and Processing segment’s 4Q16 EBITDA rose 30.0% year-over-year.

ONEOK’s Natural Gas Liquids business earned 60% of its EBITDA (earnings before interest, tax, depreciation, and amortization) for 3Q16.

Targa Resources (TRGP) stock has tripled in the last year, outperforming its peers in the sector. Let’s take a look at the stock’s current valuation.

Targa Resources reported its 4Q16 results on February 15, 2016. Targa’s distributable cash flow rose to $246.2 million in 4Q16, compared to $216.1 million in 4Q15.

Targa Resources has positive momentum. Its stock tripled in the past year. Targa Resources gained more than its peers over the last 12 months.

Targa Resources’ (TRGP) operations are divided into two operating segments—Gathering and Processing and Logistics and Marketing.

Targa Resources will report its 4Q16 earnings on February 15. Analysts expect its EBITDA for 4Q16 to be $294 million—an increase of 25% compared to 3Q16.

On January 17, 2017, ExxonMobil (XOM) announced that it will be acquiring Bass family companies for a staggering $6.6 billion.

Raymond James has upgraded Targa Resources (TRGP) from “market perform” to “outperform,” which is equivalent to a “buy.”

Of the analysts surveyed by Reuters, ~66.7% rated Kinder Morgan (KMI) as a “buy” and ~33.3% rated it as a “hold.” None of the analysts rated it as a “sell.”

Targa Resources (TRGP) is trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of nearly 15x.

Targa Resources (TRGP) plans to drive growth by investment in new projects and limit the impact of changes in commodity prices.

Targa Resources (TRGP) has LPG (liquefied petroleum gas) export facilities on the Gulf Coast at its Galena Park Marine Terminal.

Of the analysts surveyed by Reuters, 60% recommend a “hold” for Targa Resources (TRGP) stock.

Targa Resources has risen 115% in 2016. In comparison, ONEOK Partners has risen 54%, and Kinder Morgan has risen 42% during the same timeframe.

The correlation between TRGP’s stock price and the near-month WTI (West Texas Intermediate) crude oil futures price over the last one year was 0.54.

Analysts expect TRGP’s two-year compounded dividend growth to be 2%. Among TRGP’s peers, SE is expected to provide the highest dividend growth.

Targa Resources (TRGP) is currently trading at a forward dividend yield of ~9%. This is higher than its five-year average dividend yield of 6.5%.

Targa has an effective operational capacity of 6.5–7.0 MMBbl (million barrels) per month of exports. The company expects to export more than 5 MMBbl per month in 2016.

Targa Resources (TRGP) has risen 47% so far in 2016. In comparison, the Alerian MLP ETF (AMLP) is up 3% in 2016.

Of the analysts surveyed by Bloomberg, 47% rate Targa Resources Partners (NGLS) a “buy,” and 53% rate it a “hold.” None of the analysts rate it a “sell.” The consensus target price for NGLS is $37.54.

The merger deal between Targa Resources Partners (NGLS) and Targa Resources (TRGP) will greatly simplify the current complex structure. The merger will create one simplified public C corporation.

The additional cash flow coverage for NGLS is expected to support Targa’s dividend growth outlook and reduce the need for external financing.

On November 3, 2015, Targa Resources (TRGP) and Targa Resources Partners (NGLS) announced that Targa Resources plans to acquire Targa Resources Partners in an all-stock deal.

On February 27, Targa Resources Partners (NGLS) announced that it closed the acquisition of Atlas Pipeline Partners and Atlas Energy.

After Targa Resources Partners (NGLS) announced its 1Q15 earnings on May 5, its stock performance increased marginally, from $45.09 on previous close to $45.32.

Targa Resources Partners’ revenues for 1Q15 declined by 27% to $1.67 billion compared to $2.29 billion for the same quarter of 2014. Targa says it’s a result of lower commodity prices.

Midstream movers last week included top gainer Targa Resources Partners (NGLS), with a ~7.4% increase, and top loser, MarkWest Energy Partners (MWE).

In this article, we’ll discuss Kinder Morgan’s CO2 segment’s operating performance.

Kinder Morgan (KMI) is one of the largest independent operators of liquids terminals in the US. Its terminals are located throughout the US and in some parts of Canada.

FMC obtained global rights for a new herbicide from research companies based in Japan. The herbicide is reportedly effective in controlling broadleaf weeds.

In October 2014, Targa announced its agreement to acquire Atlas Pipeline and Atlas Energy for ~$7.7 billion, expected to close by the end of February 2015.

Micron plans to invest ~$4 billion to expand the company’s Singapore fabrication plant. This expansion will add a significant amount of clean room space

Omega Advisors further added to its position in Atlas Energy LP (ATLS) this month. The fund said it holds 7,029,698 shares via an amended 13G filing.

High yield debt markets saw $6 billion worth of new supply issued across 12 transactions in the week ending October 24.

After spinning off its non-midstream assets, ATLS’ assets will include its general partner and incentive distribution rights in APL, as well as 5.8 million APL units.

The combined company will create a midstream enterprise with more than 22,500 miles of crude oil and natural gas pipelines across the U.S. The $7.7 billion deal is expected to close in the first quarter of 2015.

ETP’s interest in Sunoco Logistics (SXL) gives ETE acccess to SXL’s geographically diverse portfolio of complementary pipeline, terminalling, and acquisition and marketing assets.