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Targa Prices Equity Offering to Fund $1.3B Pipeline Project
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Shares of Texas-based midstream energy player Targa Resources Corp (TRGP - Free Report) slumped to a six-month low to close at $47.34 on May 26. The decline came post the announcement of the company’s plans to raise equity to fund the construction of its new natural gas liquids (NGL) pipeline – Grand Prix.
The NGL pipeline will connect Permian Basin in west Texas and New Mexico to the company’s plant in Mont Belvieu, east of Houston. The pipeline will transport volumes from the Permian Basin and Targa's North Texas system to the company’s fractionation and storage complex in the NGL market hub at Mont Belvieu. Total capital expenditure associated with the Grand Prix project is expected to be around $1.3 billion, out of which the company intends to spend approximately $250 million in 2017. The company's total capex budget for 2017 totaled approximately $1.25 billion. Targa expects Grand Prix’s transport capacity to be approximately 300,000 barrels per day (bpd), expandable up to 550,000 bpd. The pipeline is expected to come into service in the second quarter of 2019.
Targa, which is one of the largest gatherers and processors of natural gas in the Permian, has been looking for opportunities to leverage its growing gathering and processing volumes to additional downstream options. Grand Prix is likely to enhance the company’s ability to move customers’ volumes from the wellhead in the Permian Basin and North Texas to key petrochemical and export markets.
Grand Prix is the latest in the series of proposed NGL pipelines to serve Permian Basin. Earlier this month, Houston’s energy explorer Apache Corporation (APA - Free Report) announced plans to spend $500 million to construct an NGL pipeline in Permian Basin. In April, midstream energy player Enterprise Products Partners L.P. (EPD - Free Report) also announced to build Shin Oak NGL pipeline which is expected to come to service by the second quarter of 2019. DCP Midstream, L.P. is also planning to expand the transport capacity of its Sand Hills NGL pipeline connecting Permian Basin to Mont Belvieu.
In a separate statement, Targa has planned to launch a public offering of 17 million shares of its common stock at $46.10 per share, with an underwriter’s option to purchase up to an additional 2.55 million of common shares. The company expects to receive net proceeds of $777.3 million, excluding the underwriter’s right to exercise their option. Part of the proceeds from the offering will be used to fund the construction of Grand Prix pipeline. The rest will be used to repay outstanding borrowings under its credit facilities, redeem senior notes and for general corporate purposes.
Zacks Rank
Targa is a midstream natural gas and natural gas liquid service provider in U.S. The company processes, stores, transports and provides related services of NGL components. Targa, under the Zacks categorized Oil Refining & Marketing MLP, currently carries a Zacks Rank #3 (Hold).
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Targa Prices Equity Offering to Fund $1.3B Pipeline Project
Shares of Texas-based midstream energy player Targa Resources Corp (TRGP - Free Report) slumped to a six-month low to close at $47.34 on May 26. The decline came post the announcement of the company’s plans to raise equity to fund the construction of its new natural gas liquids (NGL) pipeline – Grand Prix.
The NGL pipeline will connect Permian Basin in west Texas and New Mexico to the company’s plant in Mont Belvieu, east of Houston. The pipeline will transport volumes from the Permian Basin and Targa's North Texas system to the company’s fractionation and storage complex in the NGL market hub at Mont Belvieu. Total capital expenditure associated with the Grand Prix project is expected to be around $1.3 billion, out of which the company intends to spend approximately $250 million in 2017. The company's total capex budget for 2017 totaled approximately $1.25 billion. Targa expects Grand Prix’s transport capacity to be approximately 300,000 barrels per day (bpd), expandable up to 550,000 bpd. The pipeline is expected to come into service in the second quarter of 2019.
Targa, which is one of the largest gatherers and processors of natural gas in the Permian, has been looking for opportunities to leverage its growing gathering and processing volumes to additional downstream options. Grand Prix is likely to enhance the company’s ability to move customers’ volumes from the wellhead in the Permian Basin and North Texas to key petrochemical and export markets.
Grand Prix is the latest in the series of proposed NGL pipelines to serve Permian Basin. Earlier this month, Houston’s energy explorer Apache Corporation (APA - Free Report) announced plans to spend $500 million to construct an NGL pipeline in Permian Basin. In April, midstream energy player Enterprise Products Partners L.P. (EPD - Free Report) also announced to build Shin Oak NGL pipeline which is expected to come to service by the second quarter of 2019. DCP Midstream, L.P. is also planning to expand the transport capacity of its Sand Hills NGL pipeline connecting Permian Basin to Mont Belvieu.
In a separate statement, Targa has planned to launch a public offering of 17 million shares of its common stock at $46.10 per share, with an underwriter’s option to purchase up to an additional 2.55 million of common shares. The company expects to receive net proceeds of $777.3 million, excluding the underwriter’s right to exercise their option. Part of the proceeds from the offering will be used to fund the construction of Grand Prix pipeline. The rest will be used to repay outstanding borrowings under its credit facilities, redeem senior notes and for general corporate purposes.
Zacks Rank
Targa is a midstream natural gas and natural gas liquid service provider in U.S. The company processes, stores, transports and provides related services of NGL components. Targa, under the Zacks categorized Oil Refining & Marketing MLP, currently carries a Zacks Rank #3 (Hold).
Targa Resources, Inc. Price
Targa Resources, Inc. Price | Targa Resources, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>