Targa Resources Corp - Bonds Still Look Attractive One Year Later
Downtown Investment Advisory
Downtown Investment Advisory
Targa Resources For Supercharged MLP Dividend Growth And No Tax Headaches
Tim Plaehn • 15 Comments
Tim Plaehn • 15 Comments
Wed, Jun. 8, 1:57 PM
- Targa Resources (TRGP -3.7%) is downgraded to Hold from Buy with a $45 price target at Jefferies, which cites valuation and the potential for further pressure on margins.
- Jefferies says TRGP's Q1 EBITDA of $265M easily beat its estimate of $222M and Wall Street expectations of $255M, and distributable cash flow of $178M also came in well above the firm's estimate of $124M.
- The firm expects TRGP to keep its quarterly cash dividend unchanged at $0.91/share through 2018 with ~5% annual growth resuming in 2019.
- TRGP has surged 72% YTD, including a 91% rip higher since its February lows.
Wed, Mar. 2, 2:28 PM
- While energy supply and demand dynamics may be about to start improving, the benefits are not yet evident in the profit picture for midstream MLPs, Wunderlich's Jeff Birnbaum writes, as declining onshore crude production will continue to challenge midstream operators.
- E&P guidance and more recent EIA data indicates more significant declines may come in 2016 than expected several months ago, according to Birnbaum.
- Among individual MLPs, the analyst expects Plains All American (PAA +2.3%) to use its scale, downstream operations and lack of 2016 financing needs as weapons to take share from smaller competitors, and sees a rebound in Gulf of Mexico production as a positive for Genesis Energy (GEL +5.8%).
- With additional liquified petroleum gas export capacity online in 2016 and the prospect for a more normalized 2016-17 winter, the propane market should tighten relative to a sloppy 2015, which Birnbaum believes will benefit Enterprise Products Partners (EPD +3.5%), Targa Resources (TRGP +1.1%), DCP Midstream Partners (DPM +6.8%) and NGL Energy Partners (NGL -0.1%).
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Fri, Feb. 26, 2:58 PM
- Targa Resources (TRGP +5.2%) is upgraded to Neutral from Underperform with a $33 price target at Credit Suisse.
- The firm says TRGP's issuance of $500M of preferred units takes pro-forma leverage for bank covenant purposes to 3.6x and total pro-forma for year-end 2015 to 4.3x, as well as projected distribution coverage to 1.0x for 2016 1.2x in 2017 and 1.3x in 2018 assuming a flat outlook.
- TRGP shares have jumped 15% since releasing its Q4 results, which included a 24% Y/Y EBITDA increase to $324.7M, and FY 2015 EBITDA of $1.19B compared to $970M for 2014.
Thu, Jan. 14, 3:44 PM
- Targa Resources (TRGP +6.9%) is upgraded to Buy from Hold with a $26 price target at Jefferies, which sees a more constructive risk/reward profile since the NGLS merger will permit TRGP to reduce its total cash outlay by $175M in dividend savings on current annualized payouts.
- The firm thinks TRGP can sustain its current $3.64/share annualized dividend through 2017 under current commodity strips without the need for equity capital or breaching TRP debt covenants, and the Targa entities have no debt maturities before 2018.
- Jefferies also raises Targa Resources Partners (NGLS +7%) to Buy from Hold on valuation.
Dec. 31, 2015, 5:42 PM
Dec. 21, 2015, 10:06 AM
- Targa Resources (TRGP -7.8%) and Targa Resources Partners (NGLS -8.9%) are downgraded (I, II) to Underperform from Outperform at Credit Suisse, citing dividend cut pressures.
- On TRGP, Credit Suisse says it sees distribution coverage below 1x and leverage above 6x and sees "no way out of the woods" without a "substantial" dividend cut; the firm models an 80% dividend cut in 2016 with zero growth until 2020, when leverage finally drops below 3.5x.
- The firm cuts its stock price targets to $36 from $79 on TRGP and to $22 from $49 for NGLS.
Nov. 3, 2015, 3:27 PM
- Targa Resources (TRGP -13.6%) plunges after announcing the acquisition of its Targa Resources Partners (NGLS -2.1%) infrastructure MLP at an 18% premium.
- According to Amey Stone of Barron's, some investors say the parent company stands to lose the valuable incentive distribution payments it garnered from its MLP, whose units have turned lower heading into the close.
- For TRGP, the general partner, "it’s silly to give up the incentive distribution rights,” portfolio manager Jay Hatfield tells Barron’s, “but this is a way for them to fix the problem that NGLS was growth-challenged.”
- TRGP CEO Joe Bob Perkins says that by simplifying its structure, lowering its cost of capital, and increasing its retained cash flow, the company "will be better positioned to continue to invest in high-return growth projects that will drive dividend growth beyond 2016."
- The sale is a taxable event for NGLS unitholders, who must vote to approve the deal.
Oct. 5, 2015, 12:18 PM
- Sanchez Energy (SN +7%) and Targa Resources Partners (NGLS +2.2%) enter a 50-50 joint venture agreement to construct a cryogenic natural gas processing plant and associated high pressure gathering pipelines near SN's Catarina asset in Texas' Eagle Ford shale.
- The plant is expected to be operational in early 2017 and will have initial capacity of 200M cf/day; NGLS says it will design, build and operate the plant and contribute $125M to the project, while SN will contribute $115M.
- The deal is expected to help SN lower the gathering and transportation fees it pays for the Catarina plant, and will allow NGLS to grow its presence in the Eagle Ford Shale.
- Separately, NGLS projects 15% Y/Y dividend growth in 2016 and dividend coverage of ~$1x.
- TRGP +8.3%.
Jun. 22, 2015, 3:30 PM
- Williams Cos. (WMB +23.8%) must either show its ability to stand on its own merit or accept a better takeout offer, analysts say after the company rejected a $48B buyout bid from Energy Transfer Equity (ETE -3.8%).
- Analysts suggest that given the limited number of potential buyers, ETE stands a good chance of eventual success, perhaps after raising its offer; Raymond James analyst Darren Horowitz, for one, expects a higher offer to come in, since pipelines remain a coveted, high-value infrastructure that is attractive to own even though oil and gas prices have plunged.
- Jefferies' Christopher Sighinolfi says disclosing the bid was a "defensive move" by WMB, and says he is waiting to learn of WMB's timetable for completing its strategic review.
- Argus says WMB management has demonstrated its ability to create shareholder value through both acquisitions and divestitures; the firm believes that the rejection of ETE's all-stock offer is prudent, and that ETE will need to raise its offer if it wishes to pursue the deal (Briefing.com).
- While WMB surges, Williams Partners (WPZ -6.9%) is sharply lower, since ETE's offer was contingent on the termination of WMB's pending absorption of WPZ.
- Analysts say other companies that run big pipelines may be merger candidates, including Oneok (OKE, OKS) and regional specialists such as Targa Resources (TRGP, NGLS).
May 13, 2015, 3:49 PM
- Energy MLPs are trading with mixed results, which is not in line with an analyst's expectation that several names in the space may be outperformers today after Williams Cos. (WMB +6.2%) agreed to buy Williams Partners (WPZ +22.7%).
- In an earlier note to investors, Credit Suisse named Plains GP Holdings (PAGP +1%), Targa Resources (TRGP +1.1%), NuStar GP Holdings (NSH -0.1%) and Western Gas Equity (WGP -0.7%) as MLPs that could climb on the news.
- Meanwhile, Wells Fargo says the deal is positive, since it reduces the WMB's cost of capital, will immediately increase its profits, and enhances its dividend growth outlook.
- Among major energy MLPs: EPD -1.5%, ETP +0.9%, PAA +0.2%, EEP -0.2%, MWE +2.2%, MMP -0.3%.
Mar. 11, 2015, 4:57 PM
- Targa Resources (NYSE:TRGP) -3.1% AH after announcing a public offering of 3.25M common shares, with an underwriters option to purchase up to an additional 487.5K shares.
- TRGP plans to use the proceeds to repay a portion of the outstanding borrowings under its credit facility, to make a $53M capital contribution to Targa Resources Partners (NYSE:NGLS) to maintain its 2% general partnership interest and for general corporate purposes.
Feb. 2, 2015, 5:35 PM
Nov. 28, 2014, 7:48 AM
- The oil market will need to balance via slower U.S. shale growth and OPEC cuts at some later date (their next meeting is on June 5), says Goldman's Brian Singer, maintaining his team's WTI oil price outlook of $70-$75 per barrel for next year.
- Among the energy sub-sectors, refiners and pipelines continue as favorites, and five of Goldman's eleven energy and utilities stocks on the Americas Conviction Buy list are from midstream/refining: KMI, MWE, PAGP, TRGP, TSO (all are lower premarket on oil's tumble).
- Not buyers of oil services and E&P names, Goldman nevertheless does have favorites in these areas: CRR, BAS, RIG.
Oct. 13, 2014, 7:58 AM
- Targa Resources Partners (NYSE:NGLS) and Targa Resources (NYSE:TRGP) agree to acquire Atlas Pipeline Partners (NYSE:APL) and Atlas Energy (NYSE:ATLS) for $5.8B, including $1.8B of debt.
- Prior to Targa's acquisition of ATLS, ATLS will spin off its non-midstream assets; after giving effect to the spinoff, ATLS assets will solely comprise its general partner and incentive distribution rights interests in APL and 5.8M APL common units.
- The combination creates one of the largest diversified MLPs on an enterprise value basis, bringing Atlas' positions in the Woodford/SCOOP, Mississippi Lime and Eagle Ford and additional Permian assets to Targa's existing Permian, Bakken, Barnett and Louisiana Gulf coast operations.
- ATLS +14.1%, APL +12.8% premarket.
Jun. 20, 2014, 9:14 AM
Jun. 20, 2014, 7:20 AM
- Targa Resources (TRGP) confirmed high-level preliminary discussions on a sale to Energy Transfer Partners (ETP), but says the talks ended without any deal. There are no assurances talks could resume.
- TRGP -13.7%, NGLS -9.1%, RGP +1%, ETE +0.5% premarket.
- Previously: Bloomberg: Energy Transfer near deal to buy Targa Resources
Pro-Targa Resources Corp. provides midstream natural gas and natural gas liquids services. The company engaged in the business of gathering, compressing, treating, processing, and selling natural gas and storing, fractionating, treating, transporting, and selling NGLs and NGL products. It also... More
Industry: Gas Utilities
Country: United States
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