Targa Resources tops Q3 EBITDA estimates, plans $650M Permian NGL pipeline

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Targa Resources (NYSE:TRGP) +5% in Thursday's trading after reporting Q3 adjusted EBITDA of $768.6M, beating analyst expectations, and unveiling plans to build the Daytona NGL Pipeline as an addition to the company's existing common carrier Grand Prix NGL Pipeline system.

The Daytona NGL Pipeline will transport natural gas liquids from the Permian Basin and connect to Targa's (TRGP) Grand Prix NGL Pipeline in north Texas, where volumes will be transported to the company's fractionation and storage complex in Mont Belvieu; the pipeline is expected to be in service by the end of 2024, at an estimated $650M cost.

The new pipeline will be controlled by a joint venture 75% owned by Targa (TRGP) and 25% owned by Blackstone Energy Partners.

Targa's (TRGP) Q3 adjusted EBITDA rose to $768.6 compared to $505.9M for the year-ago quarter, primarily due to the company's gathering and processing and logistics and transportation systems.

The company reported Q3 distributable cash flow and adjusted free cash flow of $594.9M and $290.8M, respectively.

While Q3 commodity prices were significantly lower than the assumptions underlying Targa's (TRGP) previous financial estimates for 2022, the company said it is not changing its guidance of full-year adjusted EBITDA of $2.85B-$2.95B.

Targa Resources' (TRGP) stock price return shows a 32% YTD gain and a 27% increase during the past year.