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Although Targa Resources Partners LP (NYSE:NGLS) is quite a young company, the business has grown into one of the largest independent "midstream natural gas and NGL services" companies in the United States. According to the company's website, Targa was created by Warburg Pincus in 2003 in order to provide natural gas as well as services such as "gas gathering, processing, treating, fractionation, storage, and transportation to a very large and diverse customer base."

The company's IPO took place in February 2007, making Targa quite a new public company. The company has locations in strategic places such as the Permian Basin, Fort Worth/Bend Arch Basin, the South Louisiana Basin, and in deepwater Gulf of Mexico natural gas reserves.

Targa's "downstream" NGL logistics assets are located in several states including Texas, Louisiana and California, where there is storage, terminalling, transportation and distribution. Targa sells to petrochemical and refining companies, retail distributors or to marketers at market hubs.

Targa has huge upside potential for investors -- the company is still relatively unknown amongst even institutional investors. However, Targa is positioned in these opportune locations and advantageous points throughout the U.S. which gives the company a leg up on margins and expediency.

Goldman Sachs believes that Targa has a 35% stock price upside from the current $35 trading range. The reason for such an optimistic increase lies with the expected acquisitions that Targa resources will make in the future. The interesting part is how these assets will come to be available to Targa LP. The owner of Targa Resources Partners LP is a company called "Targa Resources" and, according to a Goldman Sachs research report dated March 21, the analysts covering the company expect that this owner will "offer the bulk of its energy infrastructure asset base to the LP over the next three to five years." The report further quantifies the impact as "having the potential to increase Targa LP's annual EBITDA to the mid-$300 million range versus $88 million currently."

This represents huge bulk-up potential! Of course, this is definitely a risky play (but one I believe will reward) because Targa is really a play on natural gas and, thus, vulnerable to price fluctuations. The company hedges as best it can, but commodity prices still influence the outcome of Targa's success. I am banking on demand and prices staying high.

Type of Company: An MLP with tremendous upside as the company proceeds to grow through acquisition in combination with natural gas prices remaining strong.

Price Target: If natural gas demand continues to remain strong, Targa could easily be a $50 stock within the next 12 months.

NGLS 3-month chart:

NGLS

Source: Targa Resources: An Energy Play Worth Exploring