Matt Meloy: Yeah, sure. I’d say where — I think we said is our internal business prospects look very good. We have a very good case just to continue to operate in our core business. Gathering and Processing in the Permian largest G&P footprint in the Permian Basin is going to afford us multiple years of growth. So I think we just sit in a very fortunate position to just focus on Targa. We’re going to invest in G&P. We’re going to invest in transport like we are with Daytona, invest in fractionation. We’re being in three fractionators on and continue to invest in export. So in terms of us looking at bolt-ons or tack-ons, I think that’s really kind of far down our capital priority list. I think we want to execute on the organic growth projects we have in front of us and then increase and then distribute an increasing amount of that to our shareholders as Jen talked about and up 40% to 50% over time.
It’s not in any one exact year, but we see being able to do all of those things distribute 40% to 50% lower our leverage invest in our business. So I think we’re focused on Targa right now and just executing our plan in front of us.
Jeremy Tonet: Got it. Makes sense. That’s helpful. I’ll leave it there.
Matt Meloy: Okay. Thank you.
Operator: All right. Thank you so much. One moment for our next question please. Our next question comes from the line of Sunil Sibal with Seaport Global. Your line is now open.
Sunil Sibal: Yeah. Hi. Good morning, everybody, and thanks for taking my question. So my first question related to some of the operational issues et cetera in the third quarter that you talked about. In addition to I think the weather and compression some of the operators have also talked about higher CO2 concentration in the gas streams. I believe that’s an issue Targa is pretty familiar with. So I was curious, how do you handle that going forward? And also, does it kind of accelerate your CO2 sequestration solution?
Pat McDonie: This is Pat. CO2 wasn’t really a major contributor to operational issues for us in the third quarter. We have a lot of capabilities and are adding capabilities to handle CO2 and frankly H2S sour gas. We do see CO2 production growing in the Delaware Basin specifically. There are a lot of producers that do things at the wellhead that are capital inefficient and expensive for them to do. So as we move forward, we are putting infrastructure in place that allows us to handle handling high CO2 volumes, sequestering CO2, dealing with sour gas H2S and other components, but as far as the operational issues I mean, you hit it. It’s weather a little late on compression, residue gas pipeline issues which is more felt in the Delaware because we don’t quite have the system fungibility in the Delaware that we do in Midland.
We’re building that infrastructure, as you can see from our capital spend. We’ve gotten a lot of benefit from integrating our Northern Delaware or Lucid system with our other two Delaware systems. But over time, when we have issues on specific plant sites and/or compressor sites will have that fungibility where we can move gas around and keep production flowing. It’s a little more exacerbated right now. And as we move forward that will get better. So that’s kind of where we’re at right now and it looks better forward.
Bobby Muraro: And then this is Bobby. On the CO2 sequestration side, we’ve been pushing a bunch of projects forward. I think people have seen public filings relative to MRP plans that are already in place and wells that we have permitted out there. And that continues to move forward. That — those businesses are not predicated on an increasing amount of CO2 being in the stream. But to your point and/or question, if the concentrations do come up over time, that would be additive to the CO2 business. We expect to start getting 45Q this coming year. And again, over time composition starts to go up in the CO2 stream and we’ve already got those assets and wells and injection capability in place that will just up the 45Q credits and profitability of that business that were put together.
Sunil Sibal: Okay. Thanks for that. And then on the capital allocation front, thanks for providing that clarity. I was just curious now that you put some guardrails around that does that impact also your targeted returns on investments? I know previously we talked about 5x to 7x kind of multiples. Does that range change in any way with the guardrails that you’re putting around?
Jen Kneale: I think that we have a lot of organic growth capital investment opportunities at higher returns as we look out across our footprint. That’s part of why the fee floor structure has been so important allowing us to continue to invest to support our producers’ activities even in lower and across lower commodity price environment. So as we look forward, I wouldn’t say that, anything that we’ve described today around return of capital is changing how we think about investments or investment opportunities. We’ve described it as a multiyear approach, where we believe we can distribute call it 40% to 50% of cash flow from operations. But ultimately, we’ll be assessing everything across the business including balance sheet, stability, organic growth opportunities, everything that is involved in a Targa forecast and then sensitivities of those forecasts to ultimately drive the return of capital decisions each year.
But that’s one of the ways that we’re certainly thinking about it.
Sunil Sibal: Got it. Thanks for the time.
Matt Meloy: Thank you.
Jen Kneale: Thank you.
Operator: Thank you so much. Please standby for our next question. Our next question comes from the line of Neal Dingmann with Truist Securities.
Jake Nivasch: This is Jake Nivasch on for Neal. Thanks for the question. I just had one quick one here. Just strategically, I know given how all these fee-based contracts have been ramping up for you guys over the past several years. Just at a high level, I’m just curious do you feel now that you’re in a good state as a percent of your contracts being fee-based? Or should we expect a little bit more of a ramp going forward? Have you – if you can quantify that that would be great. But really just thinking strategically, where are we at with that kind of transition here. Thank you.
Matt Meloy: Yes, so this is Matt. And then Jen, if you want to add on. Yes we’ve made a lot of progress at adding or really having fee-based growth in both our G&P business and our downstream business but also putting in fee-based floors and components into our G&P business as contracts come up. Yes, as you look at really through this year, where we’ve had fee floors and those hybrid contracts we are kind of at or below the floors. So as you think about just kind of earnings power going forward, most of those are at or below. And so as we get some tailwind, if we get some tailwinds from commodity prices that would just be upside. But on those fee floor contracts there’s not a lot of downside from here. So we think we’re in a good spot.
