Targa Resources Corp. [TRGP] Filings

10-Q 1 trgp-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-34991

TARGA RESOURCES CORP.

(Exact name of registrant as specified in its charter)


Delaware		20-3701075
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

811 Louisiana Street, Suite 2100, Houston, Texas		77002
(Address of principal executive offices)		(Zip Code)

(713) 584-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock	TRGP	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 26, 2024, there were 219,079,714 shares of the registrant’s common stock, $0.001 par value, outstanding.

TABLE OF CONTENTS


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements		4

Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023		4

Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023		5

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023		6

Consolidated Statements of Changes in Owners’ Equity for the three and six months ended June 30, 2024 and 2023		7

Consolidated Statements of Cash Flows for the three and six months ended June 30, 2024 and 2023		11

Notes to Consolidated Financial Statements		12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

Item 3. Quantitative and Qualitative Disclosures About Market Risk		41

Item 4. Controls and Procedures		43

PART II—OTHER INFORMATION

Item 1. Legal Proceedings		44

Item 1A. Risk Factors		44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44

Item 3. Defaults Upon Senior Securities		45

Item 4. Mine Safety Disclosures		45

Item 5. Other Information		45

Item 6. Exhibits		45

SIGNATURES

Signatures		47

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Targa Resources Corp.’s (together with its subsidiaries, including Targa Resources Partners LP (the “Partnership”), “we,” “us,” “our,” “Targa,” “TRGP,” or the “Company”) reports, filings and other public announcements may from time to time contain statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements.” You can typically identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, by the use of forward-looking statements, such as “may,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast” and other similar words.

All statements that are not statements of historical facts, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.

These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Known risks and uncertainties include, but are not limited to, the following risks and uncertainties:

•

the level and success of crude oil and natural gas drilling around our assets, our success in connecting natural gas supplies to our gathering and processing systems, oil supplies to our gathering systems and natural gas liquid supplies to our logistics and transportation facilities and our success in connecting our facilities to transportation services and markets;

•

actions taken by other countries with significant hydrocarbon production;

•

the timing and extent of changes in natural gas, natural gas liquids, crude oil and other commodity prices, interest rates and demand for our services;

•

our ability to grow through internal growth capital projects or acquisitions and the successful integration and future performance of such assets;

•

the timing and success of business development efforts;

•

our ability to timely obtain and maintain necessary licenses, permits and other approvals;

•

industry changes, including the impact of consolidation, changes in competition and the drive to reduce fossil fuel use and substitute alternative forms of energy for oil and gas;

•

downside commodity price volatility from a variety of potential factors that can result in lower activity in our areas of operation;

•

our success in risk management activities, including the use of derivative instruments to hedge commodity price risks;

•

general economic, market and business conditions;

•

the impact of outbreaks of illnesses, pandemics or any other public health crises;

•

weather and other natural phenomena, and related impacts;

•

our ability to access the capital markets, which will depend on general market conditions, including the impact of increased interest rates, the potential for additional rate increases, associated Federal Reserve policies and potential economic recession, our credit ratings and leverage levels, and demand for our common equity, senior notes and commercial paper;

•

the amount of collateral required to be posted from time to time in our transactions;

•

the level of creditworthiness of counterparties to various transactions with us;

•

the impact of disruptions in the bank and capital markets, and our ability to obtain capital or financing on favorable terms, or at all;

•

changes in laws and regulations, particularly with regard to taxes, safety and the protection of the environment; and

•

the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”) and our reports and registration statements filed from time to time with the United States Securities and Exchange Commission (“SEC”).

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (“Quarterly Report”) will prove to be accurate. Some of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described in our Annual Report. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events or otherwise.

As generally used in the energy industry and in this Quarterly Report, the identified terms have the following meanings:


Bbl		Barrels (equal to 42 U.S. gallons)
BBtu		Billion British thermal units
Bcf		Billion cubic feet
Btu		British thermal units, a measure of heating value
/d		Per day
FERC		Federal Energy Regulatory Commission
GAAP		Accounting principles generally accepted in the United States of America
gal		U.S. gallons
LPG		Liquefied petroleum gas
MBbl		Thousand barrels
MMBbl		Million barrels
MMBtu		Million British thermal units
MMcf		Million cubic feet
MMgal		Million U.S. gallons
NGL(s)		Natural gas liquid(s)
NYMEX		New York Mercantile Exchange
NYSE		New York Stock Exchange
SCOOP		South Central Oklahoma Oil Province
SOFR		Secured Overnight Financing Rate
STACK		Sooner Trend, Anadarko, Canadian and Kingfisher

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TARGA RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS


	June 30, 2024			December 31, 2023
	(Unaudited)
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	166.4		$	141.7
Trade receivables, net of allowances of $2.5 million and $2.5 million at June 30, 2024 and December 31, 2023		1,216.9			1,471.0
Inventories		320.6			371.5
Assets from risk management activities		62.8			111.9
Other current assets		99.9			98.5
Total current assets		1,866.6			2,194.6
Property, plant and equipment, net		16,891.2			15,806.4
Intangible assets, net		2,164.0			2,350.6
Long-term assets from risk management activities		16.9			33.3
Investments in unconsolidated affiliates		159.8			146.3
Other long-term assets		165.7			140.6
Total assets	$	21,264.2		$	20,671.8

LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Accounts payable	$	1,686.8		$	1,574.9
Accrued liabilities		243.0			281.7
Interest payable		247.9			229.6
Liabilities from risk management activities		111.7			54.0
Current debt obligations		601.2			620.7
Total current liabilities		2,890.6			2,760.9
Long-term debt		12,965.8			12,333.2
Long-term liabilities from risk management activities		65.6			16.8
Deferred income taxes, net		684.5			535.8
Other long-term liabilities		308.7			415.1
Contingencies (see Note 12)
Owners’ equity:
Targa Resources Corp. stockholders’ equity:
Common Stock ($0.001 par value, 450,000,000 shares authorized as of June 30, 2024 and December 31, 2023)		0.2			0.2
Issued Outstanding
June 30, 2024 241,267,840 219,170,473
December 31, 2023 240,095,699 222,611,259
Additional paid-in capital		3,088.5			3,058.8
Retained earnings (deficit)		783.9			492.0
Accumulated other comprehensive income (loss)		11.4			85.6
Treasury stock, at cost (22,097,367 shares as of June 30, 2024 and 17,484,440 shares as of December 31, 2023)		(1,416.5	)		(896.9	)
Total Targa Resources Corp. stockholders’ equity		2,467.5			2,739.7
Noncontrolling interests		1,881.5			1,870.3
Total owners’ equity		4,349.0			4,610.0
Total liabilities and owners’ equity	$	21,264.2		$	20,671.8

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(Unaudited)
	(In millions, except per share amounts)
Revenues:
Sales of commodities	$	2,991.1		$	2,914.6		$	6,944.4		$	6,939.7
Fees from midstream services		570.9			489.1			1,180.0			984.5
Total revenues		3,562.0			3,403.7			8,124.4			7,924.2
Costs and expenses:
Product purchases and fuel		2,197.4			2,068.9			5,415.4			5,088.0
Operating expenses		290.7			272.6			568.7			530.7
Depreciation and amortization expense		348.6			332.1			689.1			656.9
General and administrative expense		98.3			81.0			184.8			163.4
Other operating (income) expense		(0.2	)		—			(0.3	)		(0.6	)
Income (loss) from operations		627.2			649.1			1,266.7			1,485.8
Other income (expense):
Interest expense, net		(176.0	)		(166.6	)		(404.6	)		(334.7	)
Equity earnings (loss)		2.9			3.4			5.6			3.2
Gain (loss) from financing activities		(0.8	)		—			(0.8	)		—
Other, net		(0.1	)		(2.0	)		1.8			(4.9	)
Income (loss) before income taxes		453.2			483.9			868.7			1,149.4
Income tax (expense) benefit		(94.3	)		(96.4	)		(177.1	)		(206.7	)
Net income (loss)		358.9			387.5			691.6			942.7
Less: Net income (loss) attributable to noncontrolling interests		60.4			58.2			117.9			116.4
Net income (loss) attributable to Targa Resources Corp.		298.5			329.3			573.7			826.3
Premium on repurchase of noncontrolling interests, net of tax		—			—			—			490.7
Net income (loss) attributable to common shareholders	$	298.5		$	329.3		$	573.7		$	335.6

Net income (loss) per common share - basic	$	1.34		$	1.44		$	2.56		$	1.47
Net income (loss) per common share - diluted	$	1.33		$	1.44		$	2.55		$	1.46
Weighted average shares outstanding - basic		221.0			225.6			221.9			226.0
Weighted average shares outstanding - diluted		221.9			226.8			222.9			227.3

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Three Months Ended June 30,
	2024									2023
	Pre-Tax			Related Income Tax			After Tax			Pre-Tax			Related Income Tax			After Tax
	(Unaudited)
	(In millions)
Net income (loss)							$	358.9								$	387.5
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value	$	3.0		$	(0.7	)		2.3		$	109.6		$	(25.3	)		84.3
Settlements reclassified to revenues		(32.2	)		7.4			(24.8	)		(49.8	)		11.5			(38.3	)
Other comprehensive income (loss)		(29.2	)		6.7			(22.5	)		59.8			(13.8	)		46.0
Comprehensive income (loss)								336.4									433.5
Less: Comprehensive income (loss) attributable to noncontrolling interests								60.4									58.2
Comprehensive income (loss) attributable to Targa Resources Corp.							$	276.0								$	375.3


	Six Months Ended June 30,
	2024								2023
	Pre-Tax			Related Income Tax		After Tax			Pre-Tax			Related Income Tax			After Tax
	(Unaudited)
	(In millions)

Net income (loss)						$	691.6								$	942.7
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value	$	(67.2	)	$	15.4		(51.8	)	$	193.5		$	(43.9	)		149.6
Settlements reclassified to revenues		(29.0	)		6.6		(22.4	)		(95.0	)		21.5			(73.5	)
Other comprehensive income (loss)		(96.2	)		22.0		(74.2	)		98.5			(22.4	)		76.1
Comprehensive income (loss)							617.4									1,018.8
Less: Comprehensive income (loss) attributable to noncontrolling interests							117.9									116.4
Comprehensive income (loss) attributable to Targa Resources Corp.						$	499.5								$	902.4

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY


								Retained			Accumulated
						Additional		Earnings			Other			Treasury								Total
	Common Stock					Paid in		(Accumulated			Comprehensive			Shares					Noncontrolling			Owners’
	Shares			Amount		Capital		Deficit)			Income (Loss)			Shares		Amount			Interests			Equity
	(Unaudited)
	(In millions, except shares in thousands)
Balance, March 31, 2024		222,150		$	0.2	$	3,073.4	$	654.1		$	33.9			19,110	$	(1,057.7	)	$	1,873.7		$	4,577.6
Compensation on equity grants		—			—		15.1		—			—			—		—			—			15.1
Dividend equivalent rights		—			—		—		(1.1	)		—			—		—			—			(1.1	)
Shares issued under compensation program		7			—		—		—			—			—		—			—			—
Shares tendered for tax withholding obligations		(1	)		—		—		—			—			1		(0.2	)		—			(0.2	)
Repurchases of common stock		(2,986	)		—		—		—			—			2,986		(355.1	)		—			(355.1	)
Excise tax on repurchases of common stock		—			—		—		—			—			—		(3.5	)		—			(3.5	)
Common stock dividends
Dividends - $0.75 per share		—			—		—		(167.6	)		—			—		—			—			(167.6	)
Distributions to noncontrolling interests		—			—		—		—			—			—		—			(56.8	)		(56.8	)
Contributions from noncontrolling interests		—			—		—		—			—			—		—			4.2			4.2
Other comprehensive income (loss)		—			—		—		—			(22.5	)		—		—			—			(22.5	)
Net income (loss)		—			—		—		298.5			—			—		—			60.4			358.9
Balance, June 30, 2024		219,170		$	0.2	$	3,088.5	$	783.9		$	11.4			22,097	$	(1,416.5	)	$	1,881.5		$	4,349.0

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY


									Retained			Accumulated
						Additional			Earnings			Other		Treasury							Total
	Common Stock					Paid in			(Accumulated			Comprehensive		Shares					Noncontrolling		Owners’
	Shares			Amount		Capital			Deficit)			Income (Loss)		Shares		Amount			Interests		Equity
	(Unaudited)
	(In millions, except shares in thousands)
Balance, March 31, 2023		226,136		$	0.2	$	3,146.0		$	(129.8	)	$	84.8		13,070	$	(550.5	)	$	1,861.5	$	4,412.2
Compensation on equity grants		—			—		15.0			—			—		—		—			—		15.0
Dividend equivalent rights		—			—		(1.0	)		—			—		—		—			—		(1.0	)
Shares issued under compensation program		6			—		—			—			—		—		—			—		—
Shares tendered for tax withholding obligations		(2	)		—		—			—			—		2		(0.1	)		—		(0.1	)
Repurchases of common stock