Targa Resources Corp. (NYSE:TRGP) Q3 2023 Earnings Call Transcript

But the operating leverage that we get with Daytona coming online for our West leg the operating leverage we have on our pipeline moving into Mont Belvieu gives us a lot of runway. That runway will allow us to basically evaluate what it looks like with our volume growth whether or not there’s opportunities to move on other people’s pipes as our volumes grow. So, we’ve got a lot of time to evaluate what that looks like over time.

Michael Blum: Great. Thank you.

Matt Meloy: Thanks Michael.

Operator: Thank you so much. Our next question comes from the line of Brian Reynolds with UBS. Your line is now open.

Matt Meloy: Hey Brian.

Sanjay Lad: We can’t hear anything. I don’t know if anyone else can.

Operator: Hello Mr. Reynolds?

Sanjay Lad: Brittney would you go ahead and to the next person in the Q&A please?

Operator: Yes, we will. Our next line comes — I’m sorry our next question comes from the line of Spiro Dounis with Citi. Your line is now open.

Spiro Dounis: Thanks operator. Good morning guys. Maybe just going back to maybe coming back to NGL pipeline volumes quickly. You guys hit record levels this quarter third-party volumes are coming on to the system. But still a lot of time before Daytona comes online. So, just to between now and Daytona any chance you guys could be offloading volumes? Do you feel like you’re pretty secure on that front?

Scott Pryor: Spiro, this is Scott again. We feel comfortable. I would say that from time to time where we’ve seen maintenance on the pipeline or managing the start-up of our pump stations along Grand Prix on the West side as well as on the south side. We have from time to time taking the availability of industry capacity where necessary to offload. But with the start-up of pump stations those getting fully energized that gives us a long runway going into 2024. We’ll certainly, evaluate what that looks like, but we feel comfortable that with the timing of the ramp-up of the volumes how we can facilitate offloads where it may be necessary that we’ll look forward to Daytona coming online in the fourth quarter of next year.

Matt Meloy: And just to add to that too of the 660 that we moved barrels per day, most of that is from the Permian but there’s still a significant amount of that is coming in from the North — like kind of from the North Texas, Oklahoma segment. We can move call it up to when all the pump stations get on 650-ish maybe low 600s in terms of barrels per day from the West leg. So, we still have some running room between now and when Daytona comes on.

Spiro Dounis: Okay. Yes. So, thanks Matt. That’s helpful color. And switching gears a bit to [indiscernible] seems like a real bright spot once again with the ARB open. Just wonder, if you can just give us a sense of what that looks like today for you guys. You’re passing inspection now. You’ve got the new capacity online. I imagine that’s going pretty well.

Scott Pryor: Yes. Our volumes in the third quarter certainly benefited from increased demand and improved spot opportunities. We were very pleased, with the quarter-to-quarter volume improvement that we saw despite obviously, having to work around the planned outage for required inspections and the completion of our export expansion project. Now, with that expansion project online, we are already seeing benefits of that and we’d expect to see that end in through the fourth quarter. So our volumes in the fourth quarter, we would expect them to be equal to or better than what we saw in the third quarter as the ARB opportunities have improved. First and foremost, we’re going to make sure that we’re performing for our term contracts and taking advantage of spot opportunities that we can squeeze into our lineup relative to the schedule as we optimize around the facility.

We are still learning quite frankly, what the full capabilities will be of this expansion and we will continue to look for ways to optimize in and around that moving forward through the fourth quarter and into 2024.

Spiro Dounis: Helpful color. I’ll leave it there. Thanks, team.

Matt Meloy: Okay. Thank you.

Operator: Thank you so much. Please standby for our next question. Our next question comes from the line of Keith Stanley with Wolfe Research. Your line is now open.

Q – Keith Stanley: Hi. Good morning. First, — Hi Matt. Just are any of the — I want to make sure any of the constraint issues you saw in Q3 expected to have a sustained impact going forward? Or do you view this as a onetime event and we should see a good bounce back in Q4. I just want to make sure there’s an expectation that, this was kind of a onetime thing and there’s no lingering kind of issues that could pop-up in future quarters?

Matt Meloy: And I guess, are you referring to the volumes in the G&P side on the Delaware or?

Q – Keith Stanley: Yes, that’s, right. Just G&P volumes and what you referred to in the quarter.

Matt Meloy: It’s I think part of it goes back to when we made the acquisition last year of Lucid, there was a lot of growth on the system. And we were immediately, offloading a lot of volumes on to Targa. And frankly, it was just kind of behind out in the field laying pipelines and getting compression and it’s about a year, wait time to get more compression. So we were frankly, just a little bit more behind than we want it to be and those volumes are coming in a little bit later in the year. I don’t want to make it sound like come 30 days everything is fixed. We’re adding a lot of compression, but we’re going to be adding a lot of compression next year too. So we are trying to handle and resolve the pressure issues that we’re seeing out in the Delaware, out in the field.

We’re going to be adding a lot of compression not only in this quarter, but next quarter and throughout next year. So part of that was exacerbated because of the heat and operational issues and upsets that we had. So, we’re really trying to address and kind of get ahead of where the producers are going. So Pat, anything you want to add to that?