trgp-8k_20180630.htm

  

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

August 9, 2018

TARGA RESOURCES CORP.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

 

 

Delaware

(State or other jurisdiction

of incorporation or organization)

 

001-34991

(Commission

File Number)

 

20-3701075

(IRS Employer

Identification No.)

 

811 Louisiana, Suite 2100

Houston, TX 77002

(Address of principal executive office and Zip Code)

 

(713) 584-1000

(Registrants’ telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging Growth Company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

   

 

Item 2.02

 

Results of Operations and Financial Condition.

 

On August 9, 2018, Targa Resources Corp. (the “Company”) issued a press release regarding its financial results for the three months ended June 30, 2018. A conference call to discuss these results is scheduled for 11:00 a.m. Eastern time (10:00 a.m. Central time) on Thursday, August 9, 2018. The conference call will be webcast live and a replay of the webcast will be available through the Investors section of the Company’s web site


(http://www.targaresources.com). A copy of the earnings press release is furnished as Exhibit 99.1 to this report, which is hereby incorporated by reference into this Item 2.02.

 

The press release and accompanying schedules and/or the conference call discussions include the non-generally accepted accounting principles (“non-GAAP”) financial measures of distributable cash flow, gross margin, operating margin and adjusted EBITDA. The press release provides reconciliations of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net cash provided by operating activities, net income (loss) or any other GAAP measure of liquidity or financial performance.

 

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

 

 

Item 9.01

 

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit

 

 

Number

 

Description

Exhibit 99.1

 

Targa Resources Corp. Press Release dated August 9, 2018.

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Targa Resources Corp.

 

 

Date: August 9, 2018

By:

/s/ Jennifer R. Kneale

 

 

Jennifer R. Kneale

 

 

Chief Financial Officer

(Principal Financial Officer)

 

trgp-ex991_9.htm

 


Exhibit 99.1

 

 

811 Louisiana, Suite 2100

Houston, TX 77002

713.584.1000

 

Targa Resources Corp. Reports

Second Quarter 2018 Financial Results

 

HOUSTON – August 9, 2018 - Targa Resources Corp. (NYSE: TRGP) (“TRC”, the “Company” or “Targa”) today reported second quarter 2018 results.

 

Second Quarter 2018 Financial Results  

 

Second quarter 2018 net income attributable to Targa Resources Corp. was $109.1 million compared to $57.6 million for the second quarter of 2017.

 

The Company reported earnings before interest, income taxes, depreciation and amortization, and other non-cash items (“Adjusted EBITDA”) of $326.0 million for the second quarter of 2018 compared to $257.9 million for the second quarter of 2017 (see the section of this release entitled “Targa Resources Corp. - Non-GAAP Financial Measures” for a discussion of Adjusted EBITDA, distributable cash flow, gross margin and operating margin, and reconciliations of such measures to their most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”)).

 

“Our second quarter performance has us on track to meet or exceed our full year 2018 operational and financial guidance. With continued strong business fundamentals and clear visibility to new project contributions, our Gathering and Processing and Downstream businesses are expected to continue to perform well,” said Joe Bob Perkins, Chief Executive Officer of the Company.

 

On July 18, 2018, TRC declared a quarterly dividend of $0.91 per share of its common stock for the three months ended June 30, 2018, or $3.64 per share on an annualized basis. Total cash dividends of approximately $205.2 million will be paid on August 15, 2018 on all outstanding shares of common stock to holders of record as of the close of business on August 1, 2018. Also on July 18, 2018, TRC declared a quarterly cash dividend of $23.75 per share of its Series A Preferred Stock.  Total cash dividends of approximately $22.9 million will be paid on August 14, 2018 on all outstanding shares of Series A Preferred Stock to holders of record as of the close of business on August 1, 2018.

 

The Company reported distributable cash flow for the second quarter of 2018 of $225.1 million compared to total common dividends to be paid of $205.2 million and total Series A Preferred Stock dividends to be paid of $22.9 million.

 

Second quarter 2018 - Capitalization, Liquidity and Financing

 

The Company’s total consolidated debt as of June 30, 2018 was $5,572.5 million including $150.0 million outstanding under TRC’s $670.0 million senior secured revolving credit facility due 2023. The consolidated debt included $5,422.5 million of Targa Resources Partners LP (“TRP” or the “Partnership”) debt, net of $35.5 million of debt issuance costs. TRP had $5,278.0 million of outstanding unsecured notes and $180.0 million outstanding under TRP’s accounts receivable securitization facility and no borrowings outstanding under TRP’s $2.2 billion senior secured revolving credit facility due 2023.  

 

Total consolidated liquidity of the Company as of June 30, 2018, including $281.6 million of cash, was approximately $3.1 billion. As of June 30, 2018, TRC had available borrowing capacity under its senior secured revolving credit facility of $520.0 million. TRP had $71.5 million in letters of credit outstanding under its $2.2 billion senior secured revolving credit facility, resulting in available senior secured revolving credit facility capacity of $2,128.5 million. In addition to the availability under its senior secured revolving credit facility, the Partnership also had $166.2 million of availability under its accounts receivable securitization facility.

 

During the three months ended June 30, 2018, the Company issued 6,517,032 shares of common stock under its Equity Distribution Agreements (“EDA”), resulting in total net proceeds of $311.9 million. For the six months ended June 30, 2018, TRC has issued a total of 7,679,995 shares of common stock under its EDAs, resulting in total net proceeds of $369.6 million.

 

 


 

In April 2018, the Partnership issued $1.0 billion aggregate principal amount of 5⅞% senior notes due April 2026. The Partnership used the net proceeds of $991.9 million after costs from this offering to repay borrowings under its credit facilities and for general partnership purposes.

 

TRC and TRP Revolving Credit Facilities Amendments

 

In June 2018, TRC entered into an agreement to amend and restate its senior secured revolving credit facility which extended the maturity date from February 2020 to June 2023. The available commitments of $670.0 million and the Company’s ability to request additional commitments of $200.0 million remained unchanged.  The facility continues to bear interest costs that are dependent on the Company’s ratio of non-Partnership consolidated funded indebtedness to consolidated Adjusted EBITDA and the covenants remained substantially the same.

 

In June 2018, the Partnership entered into an agreement to amend and restate its senior secured revolving credit facility which extended the maturity date from October 2020 to June 2023, increased available commitments from $1.6 billion to $2.2 billion and lowered the applicable margin range and commitment fee ranged used in the calculation of interest. The Partnership’s ability to request additional commitments of $500.0 million remained unchanged and the facility’s covenants remained substantially the same.

 

Conference Call

 

The Company will host a conference call for the investment community at 11:00 a.m. Eastern time (10:00 a.m. Central time) on August 9, 2018 to discuss second quarter 2018 results. The conference call can be accessed via webcast through the Events and Presentations section of Targa’s website at www.targaresources.com, by going directly to https://edge.media-server.com/m6/p/uue78ojs  or by dialing 877-881-2598. The conference ID number for the dial-in is 4739715. Please dial in ten minutes prior to the scheduled start time. A replay will be available approximately two hours following the completion of the webcast through the Investors section of the Company’s website. Presentation slides will also be available in the Events and Presentations section of the Company’s website, or directly at http://ir.targaresources.com/trc/events.cfm.

 


 


 

Targa Resources Corp. – Consolidated Financial Results of Operations

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

2017

 

 

 

2018 vs. 2017

 

 

2018

 

 

 

2017

 

 

 

2018 vs. 2017

 

 

 

 

 

(In millions, except operating statistics and price amounts)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of commodities

$

 

2,154.1

 

 

$

 

1,623.8

 

 

$

 

530.3

 

 

 

33

%

$

 

4,327.4

 

 

$

 

3,481.7

 

 

$

 

845.7

 

 

 

24

%

 

 

Fees from midstream services

 

 

290.3

 

 

 

 

243.9

 

 

 

 

46.4

 

 

 

19

%

 

 

572.6

 

 

 

 

498.6

 

 

 

 

74.0

 

 

 

15

%

 

 

Total revenues

 

 

2,444.4

 

 

 

 

1,867.7

 

 

 

 

576.7

 

 

 

31

%

 

 

4,900.0

 

 

 

 

3,980.3

 

 

 

 

919.7

 

 

 

23

%

 

 

Product purchases

 

 

1,905.3

 

 

 

 

1,420.6

 

 

 

 

484.7

 

 

 

34

%

 

 

3,846.2

 

 

 

 

3,074.8

 

 

 

 

771.4

 

 

 

25

%

 

 

Gross margin (1)

 

 

539.1

 

 

 

 

447.1

 

 

 

 

92.0

 

 

 

21

%

 

 

1,053.8

 

 

 

 

905.5

 

 

 

 

148.3

 

 

 

16

%

 

 

Operating expenses

 

 

170.5

 

 

 

 

155.2

 

 

 

 

15.3

 

 

 

10

%

 

 

343.7

 

 

 

 

307.2

 

 

 

 

36.5

 

 

 

12

%

 

 

Operating margin (1)

 

 

368.6

 

 

 

 

291.9

 

 

 

 

76.7

 

 

 

26

%

 

 

710.1

 

 

 

 

598.3

 

 

 

 

111.8

 

 

 

19

%

 

 

Depreciation and amortization expense

 

 

202.6

 

 

 

 

203.4

 

 

 

 

(0.8

)

 

 

 

 

 

400.7

 

 

 

 

394.6

 

 

 

 

6.1

 

 

 

2

%

 

 

General and administrative expense

 

 

57.0

 

 

 

 

51.0

 

 

 

 

6.0

 

 

 

12

%

 

 

113.8

 

 

 

 

99.6

 

 

 

 

14.2

 

 

 

14

%

 

 

Other operating (income) expense

 

 

(46.4

)

 

 

 

0.3

 

 

 

 

(46.7

)

 

NM

 

 

 

(46.1

)

 

 

 

16.5

 

 

 

 

(62.6

)

 

NM

 

 

 

Income (loss) from operations

 

 

155.4

 

 

 

 

37.2

 

 

 

 

118.2

 

 

NM

 

 

 

241.7

 

 

 

 

87.6

 

 

 

 

154.1

 

 

 

176

%

 

 

Interest income (expense), net

 

 

(62.0

)

 

 

 

(62.1

)

 

 

 

0.1

 

 

 

 

 

 

(46.0

)

 

 

 

(125.1

)

 

 

 

79.1

 

 

 

63

%

 

 

Equity earnings (loss)

 

 

1.9

 

 

 

 

(4.2

)

 

 

 

6.1

 

 

 

145

%

 

 

3.4

 

 

 

 

(16.8

)

 

 

 

20.2

 

 

 

120

%

 

 

Gain (loss) from financing activities

 

 

(2.0

)

 

 

 

(10.7

)

 

 

 

8.7

 

 

 

81

%

 

 

(2.0

)

 

 

 

(16.5

)

 

 

 

14.5

 

 

 

88

%

 

 

Change in contingent considerations

 

 

60.6

 

 

 

 

2.1

 

 

 

 

58.5

 

 

NM

 

 

 

4.5

 

 

 

 

(1.2

)

 

 

 

5.7

 

 

NM

 

 

 

Other income (expense), net

 

 

 

 

 

 

2.3

 

 

 

 

(2.3

)

 

 

(100

%)

 

 

 

 

 

 

(2.8

)

 

 

 

2.8

 

 

 

100

%

 

 

Income tax (expense) benefit

 

 

(32.8

)

 

 

 

106.0

 

 

 

 

(138.8

)

 

 

(131

%)

 

 

(41.6

)

 

 

 

34.9

 

 

 

 

(76.5

)

 

 

(219

%)

 

 

Net income (loss)

 

 

121.1

 

 

 

 

70.6

 

 

 

 

50.5

 

 

 

72

%

 

 

160.0

 

 

 

 

(39.9

)

 

 

 

199.9

 

 

NM

 

 

 

Less: Net income (loss) attributable to noncontrolling interests

 

 

12.0

 

 

 

 

13.0

 

 

 

 

(1.0

)

 

 

(8

%)

 

 

28.0

 

 

 

 

21.8

 

 

 

 

6.2

 

 

 

28

%

 

 

Net income (loss) attributable to Targa Resources Corp.

 

 

109.1

 

 

 

 

57.6

 

 

 

 

51.5

 

 

 

89

%

 

 

132.0

 

 

 

 

(61.7

)

 

 

 

193.7

 

 

NM

 

 

 

Dividends on Series A Preferred Stock

 

 

22.9

 

 

 

 

22.9

 

 

 

 

 

 

 

 

 

 

45.8

 

 

 

 

45.8

 

 

 

 

 

 

 

 

 

 

Deemed dividends on Series A Preferred Stock

 

 

7.2

 

 

 

 

6.3

 

 

 

 

0.9

 

 

 

14

%

 

 

14.1

 

 

 

 

12.5

 

 

 

 

1.6

 

 

 

13

%

 

 

Net income (loss) attributable to common shareholders

$

 

79.0

 

 

$

 

28.4

 

 

$

 

50.6

 

 

 

178

%

$

 

72.1

 

 

$

 

(120.0

)

 

$

 

192.1

 

 

 

160

%

 

 

Financial data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (1)

$

 

326.0

 

 

$

 

257.9

 

 

$

 

68.1

 

 

 

26

%

$

 

632.5

 

 

$

 

534.6

 

 

$

 

97.9

 

 

 

18

%

 

 

Distributable cash flow (1)

 

 

225.1

 

 

 

 

196.0

 

 

 

 

29.1

 

 

 

15

%

 

 

441.4

 

 

 

 

390.2

 

 

 

 

51.2

 

 

 

13

%

 

 

Capital expenditures (2)

 

 

734.8

 

 

 

 

434.5

 

 

 

 

300.3

 

 

 

69

%

 

 

1,292.7

 

 

 

 

609.1

 

 

 

 

683.6

 

 

 

112

%

 

 

Business acquisition (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

987.1

 

 

 

 

(987.1

)

 

 

(100

%)

 

 

 

(1)

Gross margin, operating margin, Adjusted EBITDA, and distributable cash flow are non-GAAP financial measures and are discussed under “Targa Resources Corp. – Non-GAAP Financial Measures.”

(2)

Capital expenditures, net of contributions from noncontrolling interest, were $1,080.0 million and $591.9 million for the six months ended June 30, 2018 and 2017.

(3)

Includes the $416.3 million acquisition date fair value of the potential earn-out payments.

NM

Due to a low denominator, the noted percentage change is disproportionately high and as a result, considered not meaningful.

 

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

 

The increase in commodity sales reflects higher natural gas liquids (“NGL”) and condensate prices ($413.3 million) and increased NGL, natural gas, petroleum and condensate volumes ($384.8 million), partially offset by lower natural gas prices ($175.7 million) and the impact of hedges ($15.3 million). Fee-based and other revenues increased primarily due to higher gas processing and crude gathering fees.

 

The increase in product purchases reflects increased volumes and higher NGL and condensate prices.

 

The prospective adoption of the revenue recognition accounting standard as set forth in Topic 606 in 2018 resulted in lower commodity sales ($79.9 million) and lower fee revenue ($6.2 million) with a corresponding net reduction in product purchases, resulting in no impact on operating margin or gross margin.

 


 

 

The higher operating margin and gross margin in 2018 reflects increased segment margin results for Gathering and Processing and Logistics and Marketing.  Operating expenses increased compared to 2017 primarily due to plant and system expansions in the Permian region and higher compensation and benefits. See “Review of Segment Performance” for additional information regarding changes in operating margin and gross margin on a segment basis.

 

Depreciation and amortization expense was flat as higher depreciation related to the Company’s growth investments was offset by lower depreciation for the Company’s North Texas system, which was partially impaired in the third quarter of 2017, and lower scheduled amortization of Badlands intangibles.

 

General and administrative expense increased primarily due to higher compensation and benefits.

 

Other operating (income) expense in 2018 was comprised primarily of the gain on sale of the Company’s inland marine barge business.  

 

Interest income (expense), net was essentially flat as the impact of higher average borrowings was offset by higher capitalized interest and the effect of lower mandatory redeemable preferred interest valuations.

 

Equity earnings increased in 2018, primarily reflecting increased earnings at Gulf Coast Fractionators LP (“GCF”) and commencement of operations at the Cayenne Pipeline joint venture (“Cayenne”).

 

In 2018, the Company recorded a loss from financing activities of $2.0 million associated with amendments to the Company’s revolving credit facilities, which resulted in a write-off of debt issuance costs. In 2017, the Company recorded a loss from financing activities of $10.7 million on the redemption of the outstanding 6⅜% Senior Notes.

 

During 2018, the Company recorded income of $60.6 million resulting primarily from a decrease in fair value as of June 30, 2018 of the Permian Acquisition contingent consideration liability. The fair value decrease was primarily attributable to lower forecasted volumes for the remainder of the earn-out period, partially offset by a shorter discount period. The underlying forecasted volumes reflect the most recently observed production trends. During 2017, the Company recorded income of $2.1 million resulting from a decrease in the fair value of the contingent consideration liability from the March 1, 2017 acquisition date to June 30, 2017.

 

During 2018, the Company recorded income tax expense, whereas in 2017 the Company recorded an income tax benefit. In the first and second quarters of 2018, the Company determined income tax expense (benefit) using the estimated annual effective tax rate. However, in 2017, the application of interim tax accounting rules required the Company to use the statutory tax rate for the six-month period ended June 30, 2017 versus the estimated annual effective tax rate for the three-month period ending March 31, 2017. As such, the second quarter of 2017 included an income tax benefit of $106.0 million reflecting the difference between (1) an income tax benefit of $34.9 million for the six months ended June 30, 2017 using the statutory tax rate and (2) income tax expense of $71.1 million for the three months ended March 31, 2017 using the estimated annual effective tax rate.

 

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

 

The increase in commodity sales reflects increased NGL, natural gas, petroleum and condensate volumes ($699.7 million) and higher NGL and condensate prices ($627.1 million), partially offset by lower natural gas prices ($262.2 million) and the impact of hedges ($47.3 million). Fee-based and other revenues increased primarily due to higher gas processing and crude gathering fees.

 

The increase in product purchases reflects increased volumes and higher NGL and condensate prices.

 

The prospective adoption of the revenue recognition accounting standard as set forth in Topic 606 in 2018 resulted in lower commodity sales ($166.0 million) and lower fee revenue ($12.8 million) with a corresponding net reduction in product purchases, resulting in no impact on operating margin or gross margin.

 

The higher operating margin and gross margin in 2018 reflects increased segment margin results for Gathering and Processing and Logistics and Marketing. Operating expenses increased compared to 2017 primarily due to plant and system expansions in the Permian region, the inclusion of the Permian Acquisition for six months in 2018 as compared with four months in 2017 and higher compensation and benefits. See “Review of Segment Performance” for additional information regarding changes in operating margin and gross margin on a segment basis.

 

Depreciation and amortization expense increased as higher depreciation related to the Company’s growth investments was partially offset by lower depreciation for the Company’s North Texas system, which was partially impaired in the third quarter of 2017, and lower scheduled amortization of Badlands intangibles.

 

 


 

General and administrative expense increased primarily due to higher compensation and benefits, professional services and franchise taxes, partially offset by lower insurance premiums.

 

Other operating (income) expense in 2018 was comprised primarily of the gain on sale of the Company’s inland marine barge business. In 2017, other operating (income) expense included the first quarter loss due to the reduction in the carrying value of the Company’s 100% ownership interest in the Venice Gathering System, in contemplation of its April 2017 sale.  

 

Lower interest income (expense), net in 2018 was primarily due to higher non-cash interest income related to a decrease in the mandatorily redeemable preferred interests liability and higher capitalized interest. These factors more than offset the impact of higher average outstanding borrowings during 2018. The mandatorily redeemable preferred interests liability is revalued quarterly at the estimated redemption value as of the reporting date, and the decrease in 2018 of its estimated redemption value is primarily attributable to the February 2018 amendments to the agreements governing the WestTX and WestOK joint ventures.

 

Equity earnings increased in 2018, which reflects decreased losses of the T2 Joint Ventures, which in 2017 included a $12.0 million loss provision due to the impairment of the Company’s investment in the T2 EF Cogen joint venture, increased earnings at GCF and the commencement of operations at Cayenne.

 

In 2018, the Company recorded a loss from financing activities of $2.0 million associated with amendments to the Company’s revolving credit facilities, which resulted in a write-off of debt issuance costs. In 2017, the Company recorded a loss from financing activities of $16.5 million on the redemption of the outstanding 6⅜% Senior Notes and the repayment of the outstanding balance on the Company’s senior secured term loan.

 

During 2018, the Company recorded income of $4.5 million resulting from the change in the fair value of contingent considerations, substantially all of which was due to the decrease in fair value as of June 30, 2018 of the Permian Acquisition contingent consideration liability described above. During 2017, the Company recorded expense of $1.1 million resulting from an increase in the fair value of the Permian Acquisition contingent consideration liability from the acquisition date to June 30, 2017.

 

During 2018, the Company recorded income tax expense, whereas in 2017 the Company recorded an income tax benefit. As described above in the quarterly results, the Company utilized the estimated annual effective tax rate in 2018, whereas in 2017 the Company used the then statutory rate of 37.3% due to the loss limitation rule under interim period income tax accounting.  

 

Net income attributable to noncontrolling interests was higher in 2018 due to increased earnings at the Company’s consolidated Carnero joint venture in South Texas.

 

Review of Segment Performance

 

The following discussion of segment performance includes inter-segment activities. The Company views segment operating margin as an important performance measure of the core profitability of its operations. This measure is a key component of internal financial reporting and is reviewed for consistency and trend analysis. For a discussion of operating margin, see “Targa Resources Corp. - Non-GAAP Financial Measures - Operating Margin.” Segment operating financial results and operating statistics include the effects of intersegment transactions. These intersegment transactions have been eliminated from the consolidated presentation.

The Company operates in two primary segments: (i) Gathering and Processing and (ii) Logistics and Marketing.

 

Gathering and Processing Segment

 

The Gathering and Processing segment includes assets used in the gathering of natural gas produced from oil and gas wells and processing this raw natural gas into merchantable natural gas by extracting NGLs and removing impurities; and assets used for crude oil gathering and terminaling. The Gathering and Processing segment's assets are located in the Permian Basin of West Texas and Southeast New Mexico; the Eagle Ford Shale in South Texas; the Barnett Shale in North Texas; the Anadarko, Ardmore, and Arkoma Basins in Oklahoma (including exposure to the SCOOP and STACK plays) and South Central Kansas; the Williston Basin in North Dakota and in the onshore and near offshore regions of the Louisiana Gulf Coast and the Gulf of Mexico.

 

 


 

The following table provides summary data regarding results of operations of this segment for the periods indicated:

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

 

2018 vs. 2017

 

 

2018

 

 

2017

 

 

 

2018 vs. 2017

 

Gross margin

$

 

346.9

 

 

$

 

264.2

 

 

$

 

82.7

 

 

 

31

%

 

$

 

672.6

 

 

$

 

527.4

 

 

$

 

145.2

 

 

 

28

%

Operating expenses

 

 

104.7

 

 

 

 

90.7

 

 

 

 

14.0

 

 

 

15

%

 

 

 

209.3

 

 

 

 

176.3

 

 

 

 

33.0

 

 

 

19

%

Operating margin

$

 

242.2

 

 

$

 

173.5

 

 

$

 

68.7

 

 

 

40

%

 

$

 

463.3

 

 

$

 

351.1

 

 

$

 

112.2

 

 

 

32

%

Operating statistics (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plant natural gas inlet, MMcf/d (2),(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permian Midland (4)

 

 

1,125.1

 

 

 

 

867.5

 

 

 

 

257.6

 

 

 

30

%

 

 

 

1,069.9

 

 

 

 

830.8

 

 

 

 

239.1

 

 

 

29

%

Permian Delaware (4)

 

 

417.3

 

 

 

 

378.2

 

 

 

 

39.1

 

 

 

10

%

 

 

 

413.3

 

 

 

 

358.2

 

 

 

 

55.1

 

 

 

15

%

Total Permian

 

 

1,542.4

 

 

 

 

1,245.7

 

 

 

 

296.7

 

 

 

 

 

 

 

 

1,483.2

 

 

 

 

1,189.0

 

 

 

 

294.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SouthTX

 

 

413.5

 

 

 

 

222.6

 

 

 

 

190.9

 

 

 

86

%

 

 

 

414.9

 

 

 

 

197.4

 

 

 

 

217.5

 

 

 

110

%

North Texas

 

 

246.1

 

 

 

 

277.1

 

 

 

 

(31.0

)

 

 

(11

%)

 

 

 

240.6

 

 

 

 

279.8

 

 

 

 

(39.2

)

 

 

(14

%)

SouthOK

 

 

549.9

 

 

 

 

479.0

 

 

 

 

70.9

 

 

 

15

%

 

 

 

539.9

 

 

 

 

459.8

 

 

 

 

80.1

 

 

 

17

%

WestOK

 

 

348.2

 

 

 

 

387.4

 

 

 

 

(39.2

)

 

 

(10

%)

 

 

 

349.1

 

 

 

 

390.3

 

 

 

 

(41.2

)

 

 

(11

%)

Total Central

 

 

1,557.7

 

 

 

 

1,366.1

 

 

 

 

191.6

 

 

 

 

 

 

 

 

1,544.5

 

 

 

 

1,327.3

 

 

 

 

217.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badlands (5)

 

 

85.9

 

 

 

 

52.2

 

 

 

 

33.7

 

 

 

65

%

 

 

 

79.7

 

 

 

 

49.1

 

 

 

 

30.6

 

 

 

62

%

Total Field

 

 

3,186.0

 

 

 

 

2,664.0

 

 

 

 

522.0

 

 

 

 

 

 

 

 

3,107.4

 

 

 

 

2,565.4

 

 

 

 

542.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coastal

 

 

665.3

 

 

 

 

741.6

 

 

 

 

(76.3

)

 

 

(10

%)

 

 

 

694.6

 

 

 

 

749.9

 

 

 

 

(55.3

)

 

 

(7

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

3,851.3

 

 

 

 

3,405.6

 

 

 

 

445.7

 

 

 

13

%

 

 

 

3,802.0

 

 

 

 

3,315.3

 

 

 

 

486.7

 

 

 

15

%

Gross NGL production, MBbl/d (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permian Midland (4)

 

 

151.4

 

 

 

 

112.8

 

 

 

 

38.6

 

 

 

34

%

 

 

 

145.9

 

 

 

 

106.3

 

 

 

 

39.6

 

 

 

37

%

Permian Delaware (4)

 

 

50.3

 

 

 

 

42.9

 

 

 

 

7.4

 

 

 

17

%

 

 

 

48.0

 

 

 

 

40.4

 

 

 

 

7.6

 

 

 

19

%

Total Permian

 

 

201.7

 

 

 

 

155.7

 

 

 

 

46.0

 

 

 

 

 

 

 

 

193.9

 

 

 

 

146.7

 

 

 

 

47.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SouthTX

 

 

54.5

 

 

 

 

23.5

 

 

 

 

31.0

 

 

 

132

%

 

 

 

54.3

 

 

 

 

20.1

 

 

 

 

34.2

 

 

 

170

%

North Texas

 

 

28.8

 

 

 

 

31.1

 

 

 

 

(2.3

)

 

 

(7

%)

 

 

 

27.4

 

 

 

 

31.5

 

 

 

 

(4.1

)

 

 

(13

%)

SouthOK

 

 

51.1

 

 

 

 

38.5

 

 

 

 

12.6

 

 

 

33

%

 

 

 

50.0

 

 

 

 

39.7

 

 

 

 

10.3

 

 

 

26

%

WestOK

 

 

19.5

 

 

 

 

23.5

 

 

 

 

(4.0

)

 

 

(17

%)

 

 

 

19.5

 

 

 

 

23.1

 

 

 

 

(3.6

)

 

 

(16

%)

Total Central

 

 

153.9

 

 

 

 

116.6

 

 

 

 

37.3

 

 

 

 

 

 

 

 

151.2

 

 

 

 

114.4

 

 

 

 

36.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badlands

 

 

10.8

 

 

 

 

7.7