trgp-8k_20191107.htm
false 0001389170 0001389170 2019-11-07 2019-11-07

  

 

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):

November 7, 2019

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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock

TRGP

New York Stock Exchange

 

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 November 7, 2019, Targa Resources Corp. (the “Company”) issued a press release regarding its financial results for the three months ended September 30, 2019. A conference call to discuss these results is scheduled for 11:00 a.m. Eastern time (10:00 a.m. Central time) on Thursday, November 7, 2019. 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 November 7, 2019.

 

 

 

Exhibit 104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

 

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: November 7, 2019

By:

/s/ Jennifer R. Kneale

 

 

Jennifer R. Kneale

 

 

Chief Financial Officer

(Principal Financial Officer)

 

trgp-ex991_31.htm

Exhibit 99.1

811 Louisiana, Suite 2100

Houston, TX 77002

713.584.1000

 

Targa Resources Corp. Reports Third Quarter 2019 Financial Results

and Provides Preliminary 2020 Growth Capital Outlook

 

 

HOUSTON – November 7, 2019 - Targa Resources Corp. (NYSE: TRGP) (“TRC”, the “Company” or “Targa”) today reported third quarter 2019 results.

 

Third Quarter 2019 Financial Results

 

Third quarter 2019 net loss attributable to Targa Resources Corp. was $47.3 million compared to a net loss of $23.7 million for the third quarter of 2018.

 

The Company reported quarterly earnings before interest, income taxes, depreciation and amortization, and other non-cash items (“Adjusted EBITDA”) of $349.6 million for the third quarter of 2019 compared to $347.2 million for the third quarter of 2018 (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 Gathering and Processing and Downstream systems continued to perform very well, bolstered by the partial quarter contribution of our recently completed Grand Prix NGL Pipeline,” said Joe Bob Perkins, Chief Executive Officer of the Company. “With the recent completion of Grand Prix and other important growth projects, we are beginning to demonstrate the strategic benefits of our premier integrated midstream position and our cash flow profile is expected to strengthen meaningfully, positioning Targa well over the long-term.”

 

On October 16, 2019, TRC declared a quarterly dividend of $0.91 per share of its common stock for the three months ended September 30, 2019, or $3.64 per share on an annualized basis. Total cash dividends of approximately $211.8 million will be paid on November 15, 2019 on all outstanding shares of common stock to holders of record as of the close of business on November 1, 2019. Also, on October 16, 2019, 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 November 14, 2019 on all outstanding shares of Series A Preferred Stock to holders of record as of the close of business on November 1, 2019.

 

The Company reported distributable cash flow for the third quarter of 2019 of $229.9 million compared to total common dividends to be paid of $211.8 million and total Series A Preferred Stock dividends to be paid of $22.9 million, resulting in dividend coverage of approximately 1.0 times.

 

Third Quarter 2019 - Sequential Quarter over Quarter Commentary

 

Third quarter 2019 Adjusted EBITDA of $349.6 million was 14 percent higher than the second quarter of 2019, driven by meaningful contributions from recently completed growth projects in Targa’s Gathering and Processing and Downstream segments. In the Gathering and Processing segment, strong volume performance in the Permian region and the Badlands, combined with lower operating expenses, was partially offset by lower natural gas liquids (“NGL”) price realizations. Sequentially lower realized NGL prices in the third quarter versus the second quarter were partially offset by realized hedge gains, which are presented in Other. Strong financial performance in the Downstream segment was led by Targa’s Grand Prix NGL Pipeline (“Grand Prix”), which commenced full operations into Mont Belvieu in August 2019. Grand Prix deliveries into Mont Belvieu averaged approximately 230 thousand barrels per day in September 2019 and are expected to further increase. Fractionation volumes in the third quarter were flat relative to the second quarter as the Company completed a scheduled turnaround and related maintenance, and Targa’s fractionation complex in Mont Belvieu has since returned to operating at a very high utilization rate. Higher sequential operating expenses in the Downstream segment were attributable to a full quarter of Train 6 operations and a partial quarter of full operations of Grand Prix.

 

The Company has forward natural gas basis swaps that do not qualify for hedge accounting treatment. As of September 30, 2019, the non-cash unrealized mark-to-market loss attributable to the change in fair value of the financial instruments was $101.2 million. This unrealized mark-to-market loss is attributable to unfavorable movements in forward natural gas basis prices and will be more than offset by locked-in gains to be realized in future periods from the underlying transportation arrangements.

 

Third Quarter 2019 - Capitalization and Liquidity

 

 


 

The Company’s total consolidated debt as of September 30, 2019 was $7,537.7 million including $435.0 million outstanding under TRC’s $670.0 million senior secured revolving credit facility. The consolidated debt included $7,102.7 million of Targa Resources Partners LP’s (“TRP” or the “Partnership”) debt, net of $40.7 million of debt issuance costs, with $830.0 million outstanding under TRP’s $2.2 billion senior secured revolving credit facility, $246.0 million outstanding under TRP’s accounts receivable securitization facility, $6,028.5 million of outstanding TRP senior notes, net of unamortized premiums, and $38.9 million of finance lease liabilities.

 

Total consolidated liquidity of the Company as of September 30, 2019, including $326.3 million of cash, was over $1.8 billion. As of September 30, 2019, TRC had available borrowing capacity under its senior secured revolving credit facility of $235.0 million. TRP had $830.0 million of borrowings and $73.8 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 $1,296.2 million.

 

Growth Projects Update

 

Since the beginning of 2019, the Company has completed and commenced operations on numerous major growth projects, aggregating to approximately $4.0 billion of growth capital projects placed in-service. In addition to Grand Prix being placed in-service during the third quarter, Targa also commenced operations on its 200 million cubic feet per day (“MMcf/d”) Little Missouri 4 Plant (“LM4  Plant”) in the Badlands, its 250 MMcf/d Pembrook Plant in Permian Midland and its 250 MMcf/d Falcon Plant in Permian Delaware, and also completed a dock rebuild at its LPG export facility in Galena Park.

 

The fourth quarter of 2019 will be the first full quarter of margin contribution from Grand Prix, the LM4 Plant, the Pembrook Plant, the Falcon Plant, and additional export services capacity at Galena Park.

 

2019 Financial and Operational Expectations and 2020 Preliminary Growth Capital Outlook

 

Targa affirms its previously disclosed full year financial and operational outlook for 2019, despite generally lower year-to-date commodity prices versus original assumptions. Through September 30, 2019, the Company spent $1,946.2 million on net growth capital expenditures, including net contributions to investments in unconsolidated affiliates. Targa’s estimated 2019 net growth capital expenditures continues to be approximately $2.4 billion. Based on current assumptions, Targa’s preliminary outlook for 2020 net growth capital expenditures is approximately $1.2 to $1.3 billion. The timing of moving forward with new Permian gas processing plants and fractionation Train 9 in Mont Belvieu is predicated on the Company’s outlook for estimated volume growth and activity levels, which would impact whether the Company is at the lower or higher end of its estimated net growth capital range as a result of the timing of capital spend.

 

Asset Sales

Targa continues to evaluate and execute asset sales to reduce leverage and focus on its core operations. During the third quarter of 2019, the Company closed on the sale of an equity-method investment for $70.3 million.

 

The Company has also engaged Jefferies LLC to evaluate the potential divestiture of its Permian crude gathering business, which includes crude gathering and storage assets in both the Permian Midland and Permian Delaware. The potential divestiture is predicated on third party valuations adequately capturing Targa's forward growth expectations for the assets, and no assurance can be made that a sale will be consummated.

 

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 November 7, 2019 to discuss third quarter 2019 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/mmc/p/ih4at2qd or by dialing 877-881-2598. The conference ID number for the dial-in is 4349515. Please dial in ten minutes prior to the scheduled start time. A webcast replay will be available at the link above approximately two hours after the conclusion of the event.


 


 

Targa Resources Corp. – Consolidated Financial Results of Operations

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

2019 vs. 2018

 

 

2019

 

 

2018

 

 

2019 vs. 2018

 

 

(In millions)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of commodities

$

1,594.2

 

 

$

2,654.1

 

 

$

(1,059.9

)

 

 

(40

%)

 

$

5,254.8

 

 

$

6,981.4

 

 

$

(1,726.6

)

 

 

(25

%)

Fees from midstream services

 

308.3

 

 

 

332.3

 

 

 

(24.0

)

 

 

(7

%)

 

 

942.4

 

 

 

904.9

 

 

 

37.5

 

 

 

4

%

Total revenues

 

1,902.5

 

 

 

2,986.4

 

 

 

(1,083.9

)

 

 

(36

%)

 

 

6,197.2

 

 

 

7,886.3

 

 

 

(1,689.1

)

 

 

(21

%)

Product purchases

 

1,328.1

 

 

 

2,383.5

 

 

 

(1,055.4

)

 

 

(44

%)

 

 

4,415.7

 

 

 

6,229.7

 

 

 

(1,814.0

)

 

 

(29

%)

Gross margin (1)

 

574.4

 

 

 

602.9

 

 

 

(28.5

)

 

 

(5

%)

 

 

1,781.5

 

 

 

1,656.6

 

 

 

124.9

 

 

 

8

%

Operating expenses

 

200.2

 

 

 

194.9

 

 

 

5.3

 

 

 

3

%

 

 

600.8

 

 

 

538.7

 

 

 

62.1

 

 

 

12

%

Operating margin (1)

 

374.2

 

 

 

408.0

 

 

 

(33.8

)

 

 

(8

%)

 

 

1,180.7

 

 

 

1,117.9

 

 

 

62.8

 

 

 

6

%

Depreciation and amortization expense

 

244.3

 

 

 

206.3

 

 

 

38.0

 

 

 

18

%

 

 

718.9

 

 

 

607.1

 

 

 

111.8

 

 

 

18

%

General and administrative expense

 

69.9

 

 

 

63.2

 

 

 

6.7

 

 

 

11

%

 

 

223.5

 

 

 

176.9

 

 

 

46.6

 

 

 

26

%

Other operating (income) expense

 

18.4

 

 

 

61.8

 

 

 

(43.4

)

 

 

(70

%)

 

 

21.7

 

 

 

15.7

 

 

 

6.0

 

 

 

38

%

Income (loss) from operations

 

41.6

 

 

 

76.7

 

 

 

(35.1

)

 

 

(46

%)

 

 

216.6

 

 

 

318.2

 

 

 

(101.6

)

 

 

(32

%)

Interest expense, net

 

(89.1

)

 

 

(78.2

)

 

 

(10.9

)

 

 

(14

%)

 

 

(241.8

)

 

 

(124.2

)

 

 

(117.6

)

 

 

(95

%)

Equity earnings (loss)

 

10.0

 

 

 

3.0

 

 

 

7.0

 

 

 

233

%

 

 

15.9

 

 

 

6.4

 

 

 

9.5

 

 

 

148

%

Gain (loss) from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.4

)

 

 

(2.0

)

 

 

0.6

 

 

 

30

%

Gain (loss) from sale of equity-method investment

 

65.8

 

 

 

 

 

 

65.8

 

 

 

 

 

 

65.8

 

 

 

 

 

 

65.8

 

 

 

 

Change in contingent considerations

 

 

 

 

(16.6

)

 

 

16.6

 

 

 

100

%

 

 

(8.8

)

 

 

(12.1

)

 

 

3.3

 

 

 

27

%

Income tax (expense) benefit

 

3.8

 

 

 

3.9

 

 

 

(0.1

)

 

 

(3

%)

 

 

10.0

 

 

 

(37.7

)

 

 

47.7

 

 

 

127

%

Net income (loss)

 

32.1

 

 

 

(11.2

)

 

 

43.3

 

 

NM

 

 

 

56.3

 

 

 

148.6

 

 

 

(92.3

)

 

 

(62

%)

Less: Net income (loss) attributable to noncontrolling interests

 

79.4

 

 

 

12.5

 

 

 

66.9

 

 

NM

 

 

 

152.7

 

 

 

40.4

 

 

 

112.3

 

 

 

278

%

Net income (loss) attributable to Targa Resources Corp.

 

(47.3

)

 

 

(23.7

)

 

 

(23.6

)

 

 

(100

%)

 

 

(96.4

)

 

 

108.2

 

 

 

(204.6

)

 

 

(189

%)

Dividends on Series A Preferred Stock

 

22.9

 

 

 

22.9

 

 

 

 

 

 

 

 

 

68.8

 

 

 

68.8

 

 

 

 

 

 

 

Deemed dividends on Series A Preferred Stock

 

8.4

 

 

 

7.4

 

 

 

1.0

 

 

 

14

%

 

 

24.4

 

 

 

21.5

 

 

 

2.9

 

 

 

13

%

Net income (loss) attributable to common shareholders

$

(78.6

)

 

$

(54.0

)

 

$

(24.6

)

 

 

(46

%)

 

$

(189.6

)

 

$

17.9

 

 

$

(207.5

)

 

NM

 

Financial data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (1)

$

349.6

 

 

$

347.2

 

 

$

2.4

 

 

 

 

 

$

970.3

 

 

$

958.3

 

 

$

12.0

 

 

 

1

%

Distributable cash flow (1)

 

229.9

 

 

 

287.2

 

 

 

(57.3

)

 

 

(20

%)

 

 

619.4

 

 

 

728.5

 

 

 

(109.1

)

 

 

(15

%)

Growth capital expenditures (2)

 

511.3

 

 

 

984.4

 

 

 

(473.1

)

 

 

(48

%)

 

 

2,203.4

 

 

 

2,230.0

 

 

 

(26.6

)

 

 

(1

%)

Maintenance capital expenditures (3)

 

31.0

 

 

 

33.3

 

 

 

(2.3

)

 

 

(7

%)

 

 

101.5

 

 

 

80.4

 

 

 

21.1

 

 

 

26

%

 

(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)

Growth capital expenditures, net of contributions from noncontrolling interest, were $1,870.8 million and $1,824.0 million for the nine months ended September 30, 2019 and 2018. Net contributions to investments in unconsolidated affiliates were $75.4 million and $99.9 million for the nine months ended September 30, 2019 and 2018.

(3)

Maintenance capital expenditures, net of contributions from noncontrolling interests, were $95.5 million and $78.8 million for the nine months ended September 30, 2019 and 2018.

NM

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

 

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

 

The decrease in commodity sales reflects lower NGL, natural gas, and condensate prices ($1,352.5 million), the unfavorable impact of mark-to-market hedges ($102.0 million) and lower petroleum products and condensate volumes ($62.2 million), partially offset by higher NGL, crude marketing and natural gas volumes ($373.3 million), the favorable impact of equity volume hedges ($59.5 million) and higher crude marketing prices ($20.1 million).

 

The decrease in fees from midstream services is largely due to lower gas gathering fees attributable to the Company's non-cash take in-kind equity volumes, partially offset by an overall increase in gas gathered volumes. Subsequent to the Company's January 2018 adoption of ASC 606, Revenue from Contracts with Customers, non-cash take in-kind volumes, which have exposure to commodity prices, received from a customer are presented as a component of fees from midstream services with a corresponding offset to product purchases and have no impact to the Company's operating margin or gross margin.

 

The decrease in product purchases reflects decreased NGL, natural gas and condensate prices, partially offset by increases in volumes.

 

 


 

Lower 2019 operating margin and gross margin reflect decreased segment results for Gathering and Processing, offset by increased segment results for Logistics and Marketing. See “Review of Segment Performance” for additional information regarding changes in operating margin and gross margin on a segment basis. Operating margin and gross margin also include the effect of hedges as discussed in “Review of Segment Performance – Other.”

 

Depreciation and amortization expense increased primarily due to higher depreciation related to major growth projects placed in service, including additional processing plants and associated infrastructure in the Permian Basin and Grand Prix.

 

General and administrative expense increased primarily due to higher compensation and benefits costs as a result of increased staffing levels, partially offset by lower professional services and lower contract labor.

 

During the third quarter of 2019, the Company wrote down certain assets to their recoverable amounts. In the prior year, a loss on sale was recognized associated with the Company’s refined products and crude oil storage and terminaling facilities in Tacoma, WA, and Baltimore, MD.

 

Interest expense, net, increased due to higher average borrowings, partially offset by higher capitalized interest related to the Company's major growth investments.

 

The increase in equity earnings is primarily due to higher earnings from GCX.

 

During the third quarter of 2019, the Company closed on the sale of an equity-method investment for $70.3 million that resulted in the recognition of a gain of $65.8 million.

 

During 2019, the Permian Acquisition contingent consideration earn-out period ended and resulted in a final payment in May. During 2018, the Company recorded an expense resulting primarily from an increase in fair value of the contingent consideration liability. The fair value change was primarily attributable to a shorter discount period.

 

The change in income tax benefit is primarily due to a lower annual effective tax rate and higher tax benefits related to share-based awards that vested during the quarter.

 

Net income attributable to noncontrolling interests was higher in 2019 due to earnings allocated to noncontrolling interest holders in Targa Badlands, Grand Prix and Train 6.

 

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

 

The decrease in commodity sales reflects lower commodity prices ($2,640.8 million) and lower petroleum products volumes due to the sale of certain petroleum logistics storage and terminaling facilities in the fourth quarter of 2018 ($85.3 million), partially offset by higher NGL, crude marketing and natural gas volumes ($936.4 million) and the favorable impact of hedges ($65.8 million). Higher exports and crude gathering fees resulted in increased fees from midstream services.

 

The decrease in product purchases reflects decreased NGL, natural gas and condensate prices, partially offset by increases in volumes.

 

Higher 2019 operating margin and gross margin reflect increased segment results for Logistics and Marketing, offset by decreased segment results for Gathering and Processing. See “Review of Segment Performance” for additional information regarding changes in operating margin and gross margin on a segment basis. Operating margin and gross margin also include the effect of hedges as discussed in “Review of Segment Performance – Other.”

 

Depreciation and amortization expense increased primarily due to higher depreciation related to major growth projects placed in service, including additional processing plants and associated infrastructure in the Permian Basin and Grand Prix.

 

General and administrative expense increased primarily due to higher compensation and benefits costs as a result of increased staffing levels and higher system costs.

 

Interest expense, net, increased due to higher average borrowings, partially offset by higher capitalized interest related to the Company's major growth investments. During 2018, the Company recognized non-cash interest income resulting from a decrease in the estimated redemption value of the mandatorily redeemable interests, primarily attributable to the February 2018 amendments to such arrangements.

 

The increase in equity earnings is primarily due to higher earnings from GCX.

 

During 2019, the Company closed on the sale of an equity-method investment for $70.3 million that resulted in the recognition of a gain of $65.8 million.

 


 

 

The change in income tax (expense) benefit was primarily due to lower net income before tax, a lower annual effective tax rate and higher tax benefits related to share-based payment awards that vested during the period.

 

Net income attributable to noncontrolling interests was higher in 2019 due to earnings allocated to noncontrolling interest holders in Targa Badlands, Grand Prix and Train 6.

 

Review of Segment Performance

 

The following discussion of segment performance includes inter-segment activities. The Company views segment operating margin and gross margin as important performance measures of the core profitability of its operations. These measures are key components of internal financial reporting and are reviewed for consistency and trend analysis. For a discussion of operating margin and gross margin, see “Targa Resources Corp. ― Non-GAAP Financial Measures ― Operating Margin” and “Targa Resources Corp. ― Non-GAAP Financial Measures ― Gross 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 (including the Midland and Delaware Basins); the Eagle Ford Shale in South Texas; the Barnett Shale in North Texas; the Anadarko, Ardmore, and Arkoma Basins in Oklahoma (including the SCOOP and STACK) 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 September 30,

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

2019 vs. 2018

 

 

2019

 

 

2018

 

 

 

2019 vs. 2018

 

Gross margin

$

 

328.8

 

 

$

 

373.7

 

 

$

 

(44.9

)

 

 

(12

%)

 

$

 

1,006.1

 

 

$

 

1,046.3

 

 

$

 

(40.2

)

 

 

(4

%)

Operating expenses

 

 

120.2

 

 

 

 

118.4

 

 

 

 

1.8

 

 

 

2

%

 

 

 

375.2

 

 

 

 

327.9

 

 

 

 

47.3

 

 

 

14

%

Operating margin

$

 

208.6

 

 

$

 

255.3

 

 

$

 

(46.7

)

 

 

(18

%)

 

$

 

630.9

 

 

$

 

718.4

 

 

$

 

(87.5

)

 

 

(12

%)

Operating statistics (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permian Midland (4)

 

 

1,546.7

 

 

 

 

1,161.7

 

 

 

 

385.0

 

 

 

33

%

 

 

 

1,438.7

 

 

 

 

1,100.8

 

 

 

 

337.9

 

 

 

31

%

Permian Delaware

 

 

629.4

 

 

 

 

470.5

 

 

 

 

158.9

 

 

 

34

%

 

 

 

552.2

 

 

 

 

432.5

 

 

 

 

119.7

 

 

 

28

%

Total Permian

 

 

2,176.1

 

 

 

 

1,632.2

 

 

 

 

543.9

 

 

 

 

 

 

 

 

1,990.9

 

 

 

 

1,533.3

 

 

 

 

457.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SouthTX (5)

 

 

328.6

 

 

 

 

364.1

 

 

 

 

(35.5

)

 

 

(10

%)

 

 

 

335.3

 

 

 

 

397.8

 

 

 

 

(62.5

)

 

 

(16

%)

North Texas

 

 

228.2

 

 

 

 

247.6

 

 

 

 

(19.4

)

 

 

(8

%)

 

 

 

227.6

 

 

 

 

243.0

 

 

 

 

(15.4

)

 

 

(6

%)

SouthOK (6)

 

 

590.8

 

 

 

 

568.2

 

 

 

 

22.6

 

 

 

4

%

 

 

 

606.1

 

 

 

 

549.4

 

 

 

 

56.7

 

 

 

10

%

WestOK

 

 

329.2

 

 

 

 

353.9

 

 

 

 

(24.7

)

 

 

(7

%)

 

 

 

335.2

 

 

 

 

350.8

 

 

 

 

(15.6

)

 

 

(4

%)

Total Central

 

 

1,476.8

 

 

 

 

1,533.8

 

 

 

 

(57.0

)

 

 

 

 

 

 

 

1,504.2

 

 

 

 

1,541.0

 

 

 

 

(36.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badlands (7), (8)

 

 

120.8

 

 

 

 

90.5

 

 

 

 

30.3

 

 

 

33

%

 

 

 

103.4

 

 

 

 

83.3

 

 

 

 

20.1

 

 

 

24

%

Total Field

 

 

3,773.7

 

 

 

 

3,256.5

 

 

 

 

517.2

 

 

 

 

 

 

 

 

3,598.5

 

 

 

 

3,157.6

 

 

 

 

440.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coastal

 

 

721.0

 

 

 

 

783.3

 

 

 

 

(62.3

)

 

 

(8

%)

 

 

 

765.1

 

 

 

 

724.5

 

 

 

 

40.6

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

4,494.7

 

 

 

 

4,039.8

 

 

 

 

454.9

 

 

 

11

%

 

 

 

4,363.6

 

 

 

 

3,882.1

 

 

 

 

481.5

 

 

 

12

%

NGL production, MBbl/d (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permian Midland (4)

 

 

216.5

 

 

 

 

152.2

 

 

 

 

64.3

 

 

 

42

%

 

 

 

199.8

 

 

 

 

148.0

 

 

 

 

51.8

 

 

 

35

%

Permian Delaware

 

 

82.3

 

 

 

 

58.9

 

 

 

 

23.4

 

 

 

40

%

 

 

 

71.4

 

 

 

 

51.6

 

 

 

 

19.8

 

 

 

38

%

Total Permian

 

 

298.8

 

 

 

 

211.1

 

 

 

 

87.7

 

 

 

 

 

 

 

 

271.2

 

 

 

 

199.6

 

 

 

 

71.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SouthTX (5)

 

 

41.5

 

 

 

 

49.0

 

 

 

 

(7.5

)

 

 

(15

%)

 

 

 

44.0

 

 

 

 

52.5

 

 

 

 

(8.5

)

 

 

(16

%)

North Texas

 

 

27.3

 

 

 

 

29.6

 

 

 

 

(2.3

)

 

 

(8

%)

 

 

 

26.9

 

 

 

 

28.1

 

 

 

 

(1.2

)

 

 

(4

%)

SouthOK (6)

 

 

69.5

 

 

 

 

61.2

 

 

 

 

8.3

 

 

 

14

%

 

 

 

65.4

 

 

 

 

53.8

 

 

 

 

11.6

 

 

 

22

%

WestOK

 

 

19.2

 

 

 

 

20.7

 

 

 

 

(1.5

)

 

 

(7

%)

 

 

 

22.4

 

 

 

 

19.9

 

 

 

 

2.5

 

 

 

13

%

Total Central

 

 

157.5

 

 

 

 

160.5

 

 

 

 

(3.0

)

 

 

 

 

 

 

 

158.7

 

 

 

 

154.3

 

 

 

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Badlands (8)

 

 

14.0

 

 

 

 

10.5

 

 

 

 

3.5

 

 

 

33

%

 

 

 

12.2

 

 

 

 

10.5

 

 

 

 

1.7

 

 

 

16

%

Total Field

 

 

470.3

 

 

 

 

382.1

 

 

 

 

88.2

 

 

 

 

 

 

 

 

442.1

 

 

 

 

364.4

 

 

 

 

77.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coastal

 

 

45.4

 

 

 

 

47.3

 

 

 

 

(1.9

)

 

 

(4

%)

 

 

 

47.0

 

 

 

 

42.8

 

 

 

 

4.2

 

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

515.7