Targa Resources, Inc. (TRGP)

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Targa Resources Corp (TRGP)

Barclays CEO Energy-Power Conference (Transcript)

September 11, 2013 03:45 PM ET

Executives

Joe Bob Perkins - Chief Executive Officer

Analyst

Rick Gross - Barclays

Presentation

Rick Gross - Barclays

We're getting towards the end of the roundup here today and next on the agenda for our group is Targa Resources. You can own it in basically two forms. You can own the C-Corp, levered way to play underlying or you could own the underlying LP. Targa is a company that started with rather small footprint like in many of these MLPs, and through a lot of very, very astute positioning, little bit of being in the right place and the right time I said earlier that when they ask Willie Sutton, why he rob banks, he says that’s where the money is. And when you look at the footprint of these folks, you will see exactly why they’ve done well, why they have a large inventory of things and why they have a growing opportunities set. I am very happy to have Joe Bob Perkins here to talk about the company. He is the CEO of Resources and there is also Jennifer Kneale here from the IR Department to help answer all the questions.

So with further adieu, Joe Bob can give us an update.

Joe Bob Perkins

Thanks, Rick. Pleasure to be here. Just popped in my head as Rick said small footprint, we've got a great one on one room. It's a corner to corner room with windows on both sides and reminds me of the corner office we started the company and where several of my partners and myself had desk against the walls and round table in the center and we turn to the middle to have the meeting.

Our footprint has expanded considerably since then and I am very pleased about that. We are proud of what we’ve done and I am going to try to tell you a little bit about it. We expect the two ways to be an investor and this is investor conference call start with the two ways to be an investor.

Left hand side is the partnership, the MLP, Targa Resources Partners often say NGLS the ticker symbol. It [IPOed] in February of 2007, now is an enterprise value of about $8 billion. If you are an investor there, you’re clipping the yield of about 5.8% right now on $2.86 a year and you get K1, those of you with MLPs know what that’s all about. You look at the performance and here we’ve started since December 10, 2010 when the parent went public.

And that charts it against the (inaudible), some other industries and you are a happy MLP investor if you started then or if you started at the IPO in 2007 and I would like to thank we outperform all along the way.

The other way to own it is down to C-Corp, there you had an opportunity be in since December 2010. We have a enterprise value there of about $3 billion and there you have a yield of about 3% and because it is the [key P] of the MLP, that’s leveraged to grow and it has been even better than the MLP since December of 2010.

And you can see its relative performance there on a total return basis, a very interactive investment. This structure shows a lot of things, but I will just focused on the couple. One why the C-Corp has that benefit, it has 12.3% of LP units, but has all of the IDR ownership of Targa Resources Partners LP. Targa Resources Partners LP has all of the businesses, owns and operates all of the businesses. Here on this chart you can also its four segments as reported publicly. The largest segment is our Field Gathering and Processing segment and we will be talking about all of these more. Coastal segment is our smallest at 12% of operating margin and then on the downstream side of the business Logistics segment at about 31% and the rest is in our Marketing and Distribution segment.

This is a really good idea when we started trying to put the entire story on one page and I could stay on this page and tell you the whole story, but it’s gotten a little crowded. The left hand side is about a very attractive gathering and processing footprint that is driven by shale and resources E&P development, I know there are a lot of companies talking about that today. The middle column says and a lot of those NGLs end up in Mont Belvieu and we got a great footprint there and I will spend more time talking about it. And that drives our long-term growth potential, the third column.

Interestingly enough the right hand column is essentially our guidance and that guidance has been unchanged since before the end of 2012. There have been big changes in liquids prices. Some surprises in our operations. Good things commercially. Different things happening but that guidance has been resilient.

I am going to take that framework and give you gathering and processing picture summary, our logistics asset summary and then talk some more about the growth. Our satellite view of the gathering and processing footprint, I think it’s pretty impressive. We always start with the shale and resource map right. While Targa is not everywhere we don’t aspire to be everywhere but we really like where we are.

Read the rest of this transcript for free on seekingalpha.com