Scott Pryor: Okay. Thank you.
Matt Meloy: Thank you.
Operator: All right. Thank you so much. Please standby for our next question everyone. Our next question comes from the line of Neel Mitra or Mitra — I apologize, with Bank of America. Your line is now open.
Neel Mitra: Hey. Good morning. Thanks for taking my question. Matt, I think, you alluded to 200 million cubic feet rolling off in the New Mexico, Delaware. I know there’s another probably smaller contract roll off in 2024. Can you speak to the dynamics in that area just because it’s so competitive are competitors kind of undercutting you on price to try to win some acreage dedications? Or is kind of the Red Hills complex just so big that some producers want to diversify away and have a few players versus a very big concentrated player in the area?
Matt Meloy: Yes, sure. Good question. Let me just clarify. I think I did say roll off. It’s really contracted volumes that we have coming to us that it was really contracted for it to move. And we’re not losing to third-party midstream. That’s not where that went. So Bobby do you want to?
Bobby Muraro: Yes, this is Bobby. For clarity a producer own plant came online and that 200 million a day move to that producer own plan. And when that plant goes up we get more debt. So it’s part of our planning all along. And it’s — contracts didn’t change, contracts didn’t expire, contracts didn’t roll off producer plant that takes no third-party gas came online.
Matt Meloy: And so — and the reason we’re highlighting the 200 million is just because we were down 75 million quarter-to-quarter. So there was an underlying 125 million of growth from the quarter kind of why we see strength. We see growth in that business. It was just contractually as Bobby said it moved off the system.
Pat McDonie: And frankly we’re backfilling high-pressure low-margin gas with low-pressure higher-margin gas which is kind of what our bread and butter, right?
Neel Mitra: Yes. Perfect. And then maybe just a follow-up on potential Apex opportunities. Could you maybe book end the spend you would look at just in terms of 2025 being a lower CapEx year than 2024. And kind of the maximum you would be willing to undertake in that investment for Apex if needed would you be the operator, would you take a small equity interest? How would you go about looking about that to keep the capital down?
Matt Meloy: Yeah, sure. I’ll — let me kind of start here and then if others want to jump in. Yeah, I think Apex or I’d say the next pipe out of the Permian is going to likely be a joint venture between either multiple midstreams, midstream and producers. So there will be a partial ownership so if we participate in something we could have an ownership interest in the JV or we could move volumes on it, and frankly not have an ownership interest if it gets a pipe done. So I’d say, the book-end and the low end, if we could be putting no capital into the next pipeline. I think we’d like to have our options open where we could have an ownership interest. We’ve seen that that creates value for Targa. GCX is a good example. We own 25% we invested in it and then ultimately monetize it.
So I think we’re trying to be open to opportunities like that that give us the ability to invest in that project and whether we end up holding it, whether we operate it, what percentage level, those are all discussions and it depends on which pipe ends up going whether it is Apex or it is another pipe led by someone else. As Bobby said, our primary focus is getting a pipe build where our ownership is, and what — and how we would finance that, if we project finance it, it would be very little capital out the door right? So we have all those options to us. I think as we look forward on our capital spend as Jen has mentioned in the past is, we see 2024 in being kind of in a similar area and we see 2025 spending coming down. I think the trajectory of our capital should be kind of down once we get past 2024, and we’ll look to kind of optimize how much spending and how that all works in that framework.
Neel Mitra: Okay. Perfect. Thanks for the answer.
Matt Meloy: Okay. Thank you.
Operator: Thank you so much. Please standby for our next question. All right. Our next question comes from the line of Jeremy Tonet with JPMorgan Securities LLC. Your line is now open.
Jeremy Tonet: Hi. Good morning.
Matt Meloy: Hey, good morning, Jeremy.
Jeremy Tonet: So with the caveat upfront granted you’re not giving 2024 guidance here and you’ve talked about a number of moving pieces talked about, I think some volume trends and maybe the LPG outlook. But just wondering, if there’s any other big moving pieces that we should think about when we’re shaping our 2024 thoughts from where we sit. And maybe just at a high level how you see Targa’s EBITDA growth being able to trend organically from where you are — would Targa largely track kind of Permian growth trends in general? Or are there other kind of pieces to the puzzle we should think about?
Matt Meloy: Hey, Jeremy good question. As we look out into 2024, I think we’re optimistic that not only 2024 is going to be — have good EBITDA growth of 2025 and beyond. And it’s really just kind of the timing as you mentioned what’s that shaping going to look like. I think, it does for us start in the Permian G&P business. What volumes are moving through both the Delaware and the Midland that’s going to provide the more volumes into NGL transport fractionation and available for export. So, I think, it’s kind of starts with what is overall Permian look like. And I think we see a pretty strong outlook for 2024, 2025 and really five-plus years, I’d say 5 to 10 years and even longer on the gas side. So I think short term it looks good and longer term it looks good.
I’d say the only other thing to think about is we do have a lot of fractionation coming on in 2024. We have GCF coming on at the end of the quarter. We’ll have Train 9 and then Train 10. So that’s an outsized amount of fractionation relative to just kind of normal volume growth that we’re seeing. We have the export expansion just done. I think we’re set up well for exports in 2024. But ultimately, it kind of comes back to Permian gathering and processing growth will be the primary driver.
Jeremy Tonet: Got it. That makes sense there. And you talked about upstream consolidation earlier in the call and just want to shift the focus towards midstream. We have seen a bit of an uptick in consolidation in the industry. And just wondering, from where Targa sits right now do you feel comfortable with, I guess, how the business is right now? Or do you see — how do you see Targa’s rule I guess in industry consolidation going forward at this point?
