Q1 2024 Targa Resources Corp Earnings Call

Thank you for standing by and welcome to the Targa resources first quarter 2024 earnings webcast and presentation. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

Operator: Thank you for standing by, and welcome to the Targa Resources first quarter 2024 earnings webcast and presentation. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sanjay Lad, Vice President of Finance and Investor Relations. Please go ahead, sir.

Operator: If your question has been answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program Sanjay Lad, Vice President of Finance and Investor Relations. Please go ahead Sir.

Operator: Yes.

Sanjay Lad: Thanks, Jonathan. Good morning, and welcome to the first quarter 2024 earnings call for Targa Resources Corp. The first quarter earnings release along with the first quarter earnings supplement presentation for Targa that accompany our call are available on our website at targaresources.com in the investor section. In addition, an updated investor presentation has also been posted to our website. Statements made during this call that might include Targa's expectations or predictions should be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, because actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our latest SEC filing.

Sanjay Lad: Thanks, Jonathan Good morning, and welcome to the first quarter 2024 earnings call for Targa Resources Corp, first quarter earnings release, along with our first quarter earnings supplement presentation for Targa.

Sanjay Lad: Accompany our call are available on our website, our targa resources Dot com in the investors section. In addition, an updated investor presentation has also been posted to our website.

Sanjay Lad: Statements made during this call that might include Targa is expectations or predictions should be considered forward looking statements within the meaning of section 21.

Sanjay Lad: And the Securities Exchange Act of $19 34, actual results could differ materially from those projected in forward looking statements.

Sanjay Lad: For a discussion of factors that could cause actual results to differ please refer to our latest SEC filings.

Sanjay Lad: Our speakers for the call today will be Matt Meloy, Chief Executive Officer, and Jen Kneale, Chief Financial Officer. Additionally, the following senior management team members will be available for Q&A: Pat McDonie, President, Gathering and Processing; Scott Pryor, President, Logistics and Transportation; and Bobby Muraro, Chief Commercial Officer. I will now turn the call over to Matt.

Sanjay Lad: Our speakers for the call today will be Matt Meloy, Chief Executive Officer, and Jen Kneale Chief Financial Officer.

Sanjay Lad: Additionally, the following senior management team members, who will be available for Q&A, Pat Mcdonald, President gathering and processing, Scott Pryor, President logistics, and transportation and Bobby Morrow Chief Commercial officer.

Matthew J. Meloy: I'll now turn the call over to Matt.

Sanjay Lad: I'll turn the call over to Matt. Thanks, Sanjay, and good morning. We are proud of our first quarter results as we continue to execute across the organization to deliver another quarter of record adjusted EBITDA, Permian volumes, and LPG export volumes, along with a 50% increase to our common dividend per share and 124 million common share repurchase. For the quarter, we really benefited from strong back-half-of-the-quarter Permian volume growth. January was impacted by operational upsets associated with harsh weather.

Sanjay Lad: From there, volumes significantly increased throughout the quarter, which helped drive record results and sets us up well looking forward. We are adding a substantial amount of compression across the rest of the year, and our expectation is for continued Permian volume growth, recognizing that prior to Matterhorn initiating service and adding incremental natural gas takeaway capacity, gas markets will remain tight. As we saw in March and April, if there are upsets associated with pipeline maintenance that create further constraints, it may affect volumes and significantly impact WAHA gas prices.

Matt: Thanks, Sanjay and good morning.

Sanjay Lad: We're proud of our first quarter results as we continue to execute across the organization to deliver another quarter of record adjusted EBITDA Permian volumes in LPG export volumes, along with a 50% increase to our common dividend per share and $124 million of common share repurchases.

Sanjay Lad: For the quarter, we really benefited from strong back half of the quarter Permian volume growth January was impacted by operational upsets associated with harsh weather from their volume significantly increased throughout the quarter, which helped drive record results and sets us up well looking forward.

Sanjay Lad: We are adding a substantial amount of compression across the rest of the year and our expectation is for continued Permian volume growth recognizing that prior to Matterhorn, initiating service and adding incremental natural gas takeaway capacity gas markets will remain tight.

Sanjay Lad: As we saw in March and April with their upsets associated with pipeline maintenance that create further constraints it may affect volumes and significantly impact walhalla gas prices.

Matthew J. Meloy: Short-term constraints aside, given our outlook for increasing Permian volumes and resulting NGL supply growth, we announced this morning that we are moving forward with two major growth capital projects, our next Permian Midland plant, Pembroke II, and our next fractionator in Mount Bellevue, Train 11, to support the infrastructure needs of our customers. We mentioned in February that we are ordering long-lead items for both projects and have since received board approval to move forward with no change to our estimates for 2024 and 2025 net growth capital spend.

Sanjay Lad: Short term constraints aside given our outlook for increasing Permian volumes, and resulting NGL supply growth. We announced this morning that we are moving forward with two major growth capital projects. Our next Permian Midland plant <unk> II and our next fractionator in Mont Belvieu train a letter to support the infrastructure needs of our customers.

Matthew J. Meloy: We mentioned in February that we are ordering long lead items for both projects and have since received board approval to move forward with no change to our estimates for 2024 and 2025 net growth capital spend.

Matthew J. Meloy: I am pleased to announce that we are also moving forward with a small capital project at our Galena Park facility that will increase our LPG export capacity by approximately 650,000 barrels per month within the second half of 2025. This project is an excellent example of our organization balancing capital efficiency while ensuring our ability to support increasing volumes through our systems and also does not change our estimates for growth capital spending.

Matthew J. Meloy: I'm pleased to announce that we are also moving forward with a small capital project at our Galena Park facility that will increase our LPG export capacity by approximately 650000 barrels per month within the second half of 2025. This project is an excellent example of our organization balancing between <unk>.

Matthew J. Meloy: Capital efficient, while ensuring our ability to support increasing volumes through our systems and also does not change our estimates for growth capital spending.

Matthew J. Meloy: Despite the current weakness in WAHA natural gas and NGL prices, we continue to estimate full-year 2024 adjusted EBITDA between $3.7 and $3.9 billion, which we believe is reflective of the importance of our fees and fee floors and our GMP business, which are supporting our continued investment in infrastructure despite a lower commodity price environment. Looking ahead, our premier Permian supply aggregation position, coupled with our integrated NGL system, positions us nicely to continue to generate high-return organic opportunities and be able to continue to return incremental capital to our shareholders. Let's now discuss our operations in more detail.

Matthew J. Meloy: Despite the current weakness in Oaxaca natural gas and NGL prices, we continue to estimate full year 2024, adjusted EBITDA between three seven and $3 9 billion.

Matthew J. Meloy: Which we believe is reflective of the importance of our fees and fee floors in our G&P business, which are supporting our continued investment in infrastructure, despite a lower commodity price environment.

Matthew J. Meloy: Looking ahead, our premier Permian supply aggregation position, coupled with our integrated NGL system positions us nicely to continue to generate high return organic opportunities and be able to continue to return incremental capital to our shareholders.

Matthew J. Meloy: Let's now discuss our operations in more detail starting in the Permian activity continues to remain strong across our dedicated acreage in Permian Midland construction continues on our new Greenwood to plan and remains on track to begin operations in the fourth quarter of this year.

Matthew J. Meloy: Starting in the Permian, activity continues to remain strong across our dedicated acreage. In the Permian Midland, construction continues on our new Greenwood II plant and remains on track to begin operations in the fourth quarter of this year. Greenwood II is expected to be highly utilized when it comes online, which is necessitating moving forward with Pembroke II, which is expected to begin operations in the fourth quarter of 2025. As you may have seen publicly, we had a fire at our Greenwood One plant in Permian Midland on April 16th.

Matthew J. Meloy: Greenway II is expected to be highly utilized when it comes online which is necessitating moving forward with <unk> II, which is expected to begin operations in the fourth quarter of 2025.

Matthew J. Meloy: As you may have seen publicly we had a fire at our Greenwood one plant in Permian Midland on April 16th there were no injuries and we appreciate the work by our target team and first responders, who are able to extinguish the fire safely and quickly with 19 plants and abroad footprint across the Permian Midland we are leveraging our opera.

Matthew J. Meloy: There were no injuries, and we appreciate the work by our Targa team and first responders who were able to extinguish the fire safely and quickly. With 19 plants in a broad footprint across the Permian Midland, we are leveraging our operational flexibility to move gas around to handle all existing volumes and plan production growth to continue to be able to provide reliable service to our producer customers while the plant is down. We expect to have the plant back online before the end of the second quarter and do not expect a plant downtime to significantly impact our midland volumes for the second quarter. We estimate about $10 million in repairs related to the impact.

Matthew J. Meloy: <unk> flexibility to move gas around the handle all existing volumes and planned production growth to continue to be able to provide reliable service to our producer customers. While the plant is down.

Matthew J. Meloy: We expect the plant back online before the end of the second quarter and do not expect the plant downtime to significantly impact our Midland volumes for the second quarter, we estimate about $10 million of repairs related to the incident.

Matthew J. Meloy: In Permian, Delaware activity and volumes across our footprint are also running strong or road runner. Two plant is expected to commence operations in June and is also expected to begin service highly utilized our next Delaware plant bold moves remains on track to come online in the second quarter of 2025.

Matthew J. Meloy: In Permian, Delaware, activity and volumes across our footprint are also running strong. Our Roadrunner 2 plant is expected to commence operations in June and is also expected to begin service highly utilized. Our next Delaware plant, Bull Moose, remains on track to come online in the second quarter of 2025. We continue to expect increasing Permian volumes as we move through the rest of the year, as we benefit from new compression and plants coming online. For the second quarter, WAHA gas prices are averaging around negative $1.30, as residue gas pipeline downtime for maintenance and operational upsets have resulted in additional tightness in the Permian Basin.

Matthew J. Meloy: We continue to expect increasing Permian volumes as we move through the rest of the year as we benefit from new compression and plants coming online.

Matthew J. Meloy: For the second quarter Wahaha gas prices are averaging around negative $1 30, as residue gas pipeline downtime for maintenance and operational upsets have resulted in additional tightness in the Permian basin, we have done a good job of managing our Permian gas takeaway positions to ensure surety of flow from our producers as the market.

Matthew J. Meloy: We have done a good job of managing our Permian gas takeaway positions to ensure a surety of flow from our producers as the market awaits some relief when the Matterhorn pipeline comes on line later this year. Shifting to our logistics and transportation segment, construction continues on our Daytona NGL pipeline expansion, and we remain on track to begin operations in the fourth quarter of this year. The outlook for NGL supply growth continuing means our Daytona expansion will be much needed to handle incremental barrels.

Matthew J. Meloy: Await some relief with the Matterhorn pipeline comes on later this year.

Matthew J. Meloy: Shifting to our logistics and transportation segment construction continues on our Daytona NGL pipeline expansion and we remain on track to begin operations in the fourth quarter of this year the outlook for NGL supply growth continuing means our daytona expansion will be much needed to handle incremental barrels. We are currently starting up our new fractionator.

Matthew J. Meloy: We are currently starting up our new Fractionator in Mont Belvieu, train nine, and expect it to be highly utilized. We expect to restart our Gulf Coast Fractionator joint venture during the second quarter, and we also expect our portion of the capacity to be highly utilized at startup. Construction continues on our train 10 fractionator, which is also expected to be much needed when it comes online. Given our outlook for increasing NGO production growth to Montbellevue supports us officially moving forward with train 11, a new 150,000 barrel per day fractionator.

Matthew J. Meloy: And Mont Belvieu train nine and expect it to be highly utilized we expect to restart our Gulf coast Fractionator joint venture during the second quarter, which we also expect our portion of the capacity to be highly utilized at startup costs.

Matthew J. Meloy: Construction continues on our train 10, fractionator, which is also expected to be much needed when it comes online.

Matthew J. Meloy: Given our outlook for increasing NGL production growth to Mont Belvieu supports us efficiently moving forward with train 11, a new 150000 barrel per day Fractionator train 11 is expected to begin operations in the third quarter of 2026.

Matthew J. Meloy: Train 11 is expected to begin operations in the third quarter of 2026, and the capital associated with train 11 was already included in our expectations for spending that we provided publicly for both 2024 and 2025. In our LPG export business at Galena Park, our loadings were a record 13.3 million barrels per month during the first quarter as we continue to benefit from strong market conditions and the Houston ship channel allowance of nighttime transits for larger vessels.

Matthew J. Meloy: And the capital associated with train 11 was already included in our expectations for spending that we provided publicly for both 2024 and 2025.

Matthew J. Meloy: In our LPG export business at Galena Park, our loadings were a record $13 3 million barrels per month during the first quarter as we continue to benefit from strong market conditions and the Houston ship channel allowance of nighttime transits for larger vessels.

Matthew J. Meloy: Before I turn the call over to Jen to discuss our first quarter results in more detail, I would like to extend a thank you to the Targa team for their continued focus on safety and execution while continuing to provide best-in-class service and reliability to our customers. Our employees continue to rise to the challenges of our business, and we are appreciative of their efforts.

Matthew J. Meloy: Before I turn the call over to Jen to discuss our first quarter results in more detail I would like to extend a thank you to the target team for their continued focus on safety and execution, while continuing to provide best in class service and reliability to our customers. Our employees continue to rise to the challenges of our business and we are appreciative of their efforts.

Jennifer R. Kneale: Thanks, Matt. Good morning, everyone.

Jen: Thanks, Matt Good morning, everyone charges reported quarterly adjusted EBITDA for the first quarter was a record $966 million, a 1% increase over the fourth quarter for the first quarter, our natural gas inlet volumes in the Permian averaged a record $5 4 billion cubic feet per day, a 2% increase when <unk>.

Jennifer R. Kneale: Targa's reported quarterly adjusted EBITDA for the first quarter was a record $966 million, a 1% increase over the fourth quarter. For the first quarter, our natural gas inlet volumes in the Permian averaged a record 5.4 billion cubic feet per day, a 2% increase when compared to the fourth quarter. March Permian volumes were stronger than estimated when we hosted our February earnings call and significantly higher than January, which translated into additional volumes downstream. For the full quarter, our NGL pipeline transportation volumes averaged 718,000 barrels per day. Our fractionation volumes averaged 797,000 barrels per day, including the impacts of scheduled maintenance at our Mont Bellevue complex.

Jennifer R. Kneale: Compared to the fourth quarter March Permian volumes were stronger than estimated when we hosted our February earnings call and significantly higher than January which translated into additional volumes downstream.

Jennifer R. Kneale: For the full quarter, our NGL pipeline transportation volumes averaged 718000 barrels per day, our fractionation volumes averaged 797000 barrels per day, including the impacts of scheduled maintenance at our Mont Belvieu complex, our LPG export loadings were a record $13 3 million barrels per month and we benefit.

Jennifer R. Kneale: Our LPG export loadings were a record 13.3 million barrels per month, and we benefited from optimization opportunities in our marketing business. As we look across the rest of 2024, second quarter EBITDA may be weaker than Q1, given seasonality in our business, the impacts of the fire at our Greenwood plant in the quarter, and the tight Permian residue gas market, with EBITDA increasing through the back half of the year. The combination of our fee and fee-for contracts in our gathering and processing segment and our hedges means we are largely insulated from current commodity prices that are significantly lower than our guidance prices.

Jennifer R. Kneale: From optimization opportunities in our marketing business.

Jennifer R. Kneale: As we look across the rest of 2024 second quarter EBITDA may be weaker than Q1, given seasonality in our business the impacts on the quarter of the fire at our Greenwood plant and the tight Permian residue gas market with EBITDA, increasing through the back half of the year the.

Jennifer R. Kneale: The combination of our fee and CFR contracts in our gathering and processing segment and our hedges I mean, we are largely insulated from current commodity prices that are significantly lower than our guidance prices.

Jennifer R. Kneale: As Matt said, we continue to estimate full-year 2024 adjusted EBITDA between $3.7 and $3.9 billion and expect to exit 2024 with a lot of momentum heading into 2025 given our new infrastructure that comes online this year. This morning, we included a new performance metric in our disclosures, adjusted cash flow from operations, which is adjusted EBITDA, less interest expense, and cash taxes. This is the metric that we first started discussing last November around our return of capital framework looking forward, and we thought it made sense for us to also include it in our disclosures.

Jennifer R. Kneale: As Matt said, we continue to estimate full year 2024, adjusted EBITDA between three seven and $3 9 billion in.

Jennifer R. Kneale: And expect to exit 2024, with a lot of momentum heading into 2025, given our new infrastructure that comes online this year.

Jennifer R. Kneale: This morning, we included a new performance metric in our disclosures adjusted cash flow from operations, which is adjusted EBITDA less interest expense and cash taxes. This is a metric that we first started discussing last November around our return of capital framework looking forward and we thought it made sense for US to also include it in our disclosures.

Jennifer R. Kneale: Including the new growth projects announced this morning, there is no change to our estimate for 2024 growth capital spending of between $2.3 billion and $2.5 billion. We also continue to estimate approximately $1.4 billion of net growth capital expenditures in 2025, which will result in meaningful free cash flow generation. Our current year estimate for net maintenance capital spending remains $225 million.

Jennifer R. Kneale: Including the new growth projects announced this morning, there is no change to our estimate for 2024 gross capital spending of between $2 3 billion and $2 5 billion.

Jennifer R. Kneale: We also continue to estimate.

Jennifer R. Kneale: Ultimately $1 4 billion of net growth capital expenditures in 2025, which will result in meaningful free cash flow generation.

Jennifer R. Kneale: Our current your estimate for net maintenance capital spending remains $225 million.

Sanjay Lad: At quarter end, we had $2.6 billion of available liquidity, and our consolidated net leverage ratio was 3.6 times, well within our long-term leverage ratio target range of 3 to 4 times. Shifting to capital allocation, our priorities remain the same, which are to maintain a strong investment-grade balance sheet, to continue to invest in high-returning, integrated projects, and to return an increasing amount of capital to our shareholders across cycles. And we are delivering on those priorities.

Jennifer R. Kneale: At quarter end, we had $2 6 billion of available liquidity and our consolidated net leverage ratio was three six times well within our long term leverage ratio target range of three to four times.

Sanjay Lad: Shifting to capital allocation, our priorities remain the same which are to maintain a strong investment grade balance sheet to continue to invest in high returning integrated projects and to return an increasing amount of capital to our shareholders across cycles and we are delivering on those priorities. We are continuing to model the ability over time to return.

Sanjay Lad: We are continuing to model the ability over time to return 40 to 50 percent of adjusted cash flow from operations to equity holders and believe that this is a useful framework for thinking about Targa's return on capital proposition over time. Consistent with previously announced expectations, our board approved the declaration of a 50% increase in the 2024 Annual Common Dividend to $3 per share, and we expect to be able to grow the Annual Common Dividend meaningfully thereafter.

Sanjay Lad: And 40% to 50% of adjusted cash flow from operations to equity holders and believes that this is a useful framework for thinking about targeted return of capital proposition over time.

Sanjay Lad: Consistent with previously announced expectations our board approved the declaration of a 50% increase to the 2024 annual common dividend to $3 per share and we expect to be able to grow the economy. The annual common dividend meaningfully thereafter.

Sanjay Lad: We also repurchased $124 million of common shares during the first quarter at a weighted average price of approximately $104 per share. We believe that we continue to offer a unique value proposition for our shareholders and potential shareholders, growing EBITDA, a growing common dividend per share, reducing share count, and excellent short, medium, and long-term outlooks. Our talented team continues to execute on our strategic priorities and safely operate our assets to deliver the energy that enhances our everyday lives, and we are so thankful for the efforts of all of our employees. With that, I will turn the call back over to Sanjay.

Sanjay Lad: We also repurchased $124 million of common shares during the first quarter at a weighted average price of approximately $104 per share.

Sanjay Lad: We believe that we continue to offer a unique value proposition for our shareholders and potential shareholders growing EBITDA, a grilling common dividend per share reducing share count and excellent short medium and long term outlooks. Our talented team continues to execute on our strategic priorities and safely operate our assets to deliver the energy that.

Sanjay Lad: Our everyday lives and we are so thankful for the efforts of all of our employees.

Sanjay Lad: That I will turn the call back over to Sanjay.

Operator: Thanks, Jen. For the Q&A session, we kindly ask that you limit your questions to one and follow-up and re-enter the lineup if you have additional questions. Jonathan, would you please open the line for Q&A?

Sanjay Lad: Thanks, Ken for the Q&A session. We kindly ask that you limit to one question and one follow up and re enter the lineup. If you have additional questions. Jonathan would you. Please open the line for Q&A certainly and our first question comes from the line of Michael Blum from Wells Fargo. Your question. Please.

Operator: Certainly, and our first question comes from the line of...

Speaker Change: Thanks, Good morning, everyone.

Unknown Speaker: Thanks. Good morning, everyone. So once we start with the LPG Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: Hey, Michael.

Speaker Change: Good morning, I wanted to start with the LPG.

Speaker Change: Volumes it seems like still had really strong volumes in the quarter.

Speaker Change: It seems like the Panama Canal issues, all the global shipping volatility is not really impacting.

Speaker Change: U S cargoes are your targets. So I wonder if you could just speak to what Youre seeing in the global markets and then how you see the rest of the year shaping up.

Scott Pryor: Hey Michael, this is Scott. Yeah, we continue to have great success across the DOC, you know, obviously in the fourth quarter of last year and that continued through the first quarter of this year. To your point around shipping, shipping has certainly moderated, does not seem to be an issue today, and we were able to take advantage of that in the fourth quarter and again in the first quarter this year, with vessels being available so that our spot opportunities really persisted throughout the quarter, both on propane as well as on butane. The Panama Canal issues don't seem to be really impacting us at all.

Unknown Speaker: Hey, Michael This is Scott.

Scott Pryor: We continue to have great success across the dock.

Scott Pryor: Obviously in the fourth quarter of last year and that continued through the first quarter of this year.

Scott Pryor: To your point around shipping shipping has certainly moderated.

Scott Pryor: Not seem to be an issue today, we were able to take advantage of that in the fourth quarter and again in the first quarter. This year with vessels being available so that our spot opportunities really persisted throughout the quarter.

Scott Pryor: Both on propane as well as on butane.

Scott Pryor: I will say that overall shipping has kind of resolved itself to really going around the Cape of Good Hope, as opposed to transiting through the Panama Canal, though there are still some LPG vessels that are going through, but again, it's not near to the level that you have seen historically; probably two to three vessels per week are transiting the Panama Canal on an LPG type basis. For us, certainly, the spot opportunities were there during the first quarter, but we really benefited from a continuation of our expansion project that we had last, the third quarter of last year, as well as the nighttime transits, which we continue to benefit from, and we would really see that continuing.

Scott Pryor: Panama Canal issues don't seem to be really impacting at all I will say that overall shipping has kind of resolved itself that we're really going around the Cape of good hope as opposed to trending through the Panama Canal, though there are still some LPG vessels that are going through but again its not near to the level that you have seen historically probably too.

Scott Pryor: Two to three vessels per week are transiting the Panama Canal on an LPTA type basis.

Scott Pryor: For us certainly the spot opportunities where there during the first quarter, but we really benefited from a continuation of our of our expansion project that we had last.

Scott Pryor: Third quarter of last year as well as the night time, transits, which we continue to.

Scott Pryor: The benefit from and we would really see that continuing again hats off to the Houston ship channel. The Houston pilots Association. They have operated that those nighttime transit.

Scott Pryor: Again, hats off to the Houston Ship Channel and the Houston Pilots Association. They have operated those nighttime transits very safely, and they have accommodated the industry as a whole, and I really believe that that will just continue for years to come.

Scott Pryor: Safely and accommodating the industry as a whole.

Scott Pryor: And I really believe that that will just continue for years to come so.

Scott Pryor: For the balance of the year, we'll just have to see how things shake out. I think demand is really strong in the east, with new PDH plants coming online in China, though that will somewhat marginalize some of the older plants. But again, in the domestic market, demands that are happening in third world countries that are developing their marketplaces, it really just looks good for us throughout the balance of this year.

Scott Pryor: For the balance of the year, we'll just have to see how things shake out I think the demand is really strong in the east with.

Scott Pryor: With new PVH plants coming online in China, though that will somewhat marginalized some of the older plants, but again.

Scott Pryor: The domestic market demands that are happening in the third world countries that are developing their marketplaces.

Scott Pryor: It really just looks good for us throughout the balance of this year.

Speaker Change: Great. Thanks for that and maybe just a follow up on this topic.

Scott Pryor: Great, thanks for that. Maybe just to follow up on this topic, the nighttime transit, can you quantify, you know, how much of that adds for the quarter or, just in general, how much you think that adds on a sort of effective capacity basis? And would you say this is kind of a new normal?

Scott Pryor: <unk> time transit.

Scott Pryor: Can you quantify.

Scott Pryor: How much of that AD for the quarter or just in general how much you think that adds on a sort of effective capacity basis would you say this is kind of a new normal.

Scott Pryor: I think, you know, we alluded to the fact that last quarter we saw it probably in the range of call it 7% or something like that. But I would actually suggest to you that we've actually seen a better percentage benefit to us. It really just allows us to operate our refrigeration units at a higher utilization rate with those nighttime transits. So we're getting significantly above, say, a 10% improvement in our overall operating rate.

Scott Pryor: I think we alluded to the fact that last quarter that we saw it probably in the range of call it 7% or something like that I would actually suggest to you that we've actually seen better percentage benefit to us. It really just allows us to operate our refrigeration units at a higher utilization rate with those night.

Scott Pryor: Transits, so we're getting significantly above say, a 10% type improvement over in our overall operating rates.

Speaker Change: Great. Thank you.

Unknown Speaker: Great, thank you.

Operator: Thank you. One moment for our next question, and our next question comes from the line of Theresa Chen from Barclays. Your question, please.

Speaker Change: Thank you one moment for our next question.

Operator: And our next question comes from the line of Theresa Chen from Barclays. Your question. Please.

Theresa Chen: Good morning. Thank you for taking my questions. Maybe turning to the upstream side of things, just given the strength of the inlet volumes in Q1, which arguably was higher than many expected given the weather impact this year, and I appreciate the intra-quarter commentary, Matt, but how do you view the cadence for growth for the remainder of 2024, taking into account the Oaxaca egress issues?

Theresa Chen: Good morning, Thanks for taking my questions and maybe turning to the upstream side of things just given the strength of the inlet volumes in Q1, which was higher than many expected given the weather impact this year and I appreciate the intra quarter commentary.

Theresa Chen: But how do you view the cadence for growth for the remainder of 2024, taking into account the Valhalla egress issues.

Matthew J. Meloy: Yeah, sure, I'll start, and then Pat, if you want to add anything. Yeah, we were, I think, kind of pleasantly surprised with how volumes responded after the harsh weather in January. You know, we were starting to see it in February, and then March was a very, strong month, and that's really setting us up really well here in the second quarter. So, I expect there to be continued growth in both Midland and Delaware, really from now throughout the end of the year.

Speaker Change: Yes, sure I'll start and then Pat if you want to add anything yes, we were I would say kind of pleasantly surprised with how volumes responded post the harsh weather in January we're starting to see it in February and then March was a very strong.

Matthew J. Meloy: <unk> month, and Thats really setting us up really well here in the second quarter. So.

Matthew J. Meloy: I expect there to be continued growth in both Midland and Delaware really from now throughout the end of the year.

Matthew J. Meloy: There's a lot of producer activity. So, kind of barring any upsets, you know, we have seen residue pipes go down from time to time, which can cause us to move gas around the system and can result in some lower volumes for a short period of time. It's hard to see, it's hard to know exactly what impact that'll have until Matterhorn comes on. But I think we're still optimistic we're going to have continued growth from now through the end of the year, even despite those issues.

Pat: There's a lot of producer activity, so I kind of barring any upsets we have seen residue pipes go down from time to time, which can cause.

Matthew J. Meloy: To move gas around the system and can result in some lower volumes for a short period of time, it's hard to see it's hard to know exactly what impact that will have until Matterhorn comes on I think we're still optimistic we're going to have continued growth from now through the end of the year, even despite those issues.

Patrick J. McDonie: I would agree, Matt, barring constraints caused by residue issues. We have a great line of sight with our producers, and the activity continues. We've got infrastructure going in place to handle it, so we're set up very well for that continued growth, and we expect it throughout the year.

Matthew J. Meloy: Wood agreement borrowing constraints on.

Patrick J. McDonie: Caused by residue issues.

Patrick J. McDonie: We have great line of sight with our producers.

Patrick J. McDonie: Activity continues we've got infrastructure in place to handle it. So we're set up very well for that continued growth and we expect it throughout the year.

Speaker Change: Got it and great to see the Capex unchanged, while taking into account the new projects that you've previously telegraphed and with the backdrop of the free cash flow inflection next year as capex steps lowering returning more cash to shareholders.

Matthew J. Meloy: Got it. And great to see the CapEx unchanged while taking into account the new projects, as you previously telegraphed. With the backdrop of the free cash flow inflection next year as CapEx steps lower and returns more cash to shareholders, you hit a decent run rate. And I was wondering, you know, what is Targa's next area of strategic focus from here?

Matthew J. Meloy: Recent run rate.

Matthew J. Meloy: I was wondering what is targus neck area of strategic focus from here.

Matthew J. Meloy: Okay.

Matthew J. Meloy: Well, really, I think it's more of the same. I think our top priority, as Jen mentioned, is making sure first we have a strong balance sheet and good financial flexibility and then investing in our core business. And I think we're going to continue to do that. You know, we announced Train 11, we announced Pembroke 2. We're looking at when we're going to need the next plan in Delaware.

Matthew J. Meloy: Well.

Matthew J. Meloy: Really.

Matthew J. Meloy: I think.

Matthew J. Meloy: It's more of the same.

Matthew J. Meloy: It's our top priority as John mentioned is making sure first we have a strong balance sheet and good financial flexibility and then investing in our core business through organic growth and I think we're going to continue to do that we announced train 11, we announced timber to we're looking at when we're going to need the next plant in the Delaware.

Matthew J. Meloy: We're already looking at when we'll need the next plan after Pembroke 2. So it's really continued organic growth along kind of our core business, which is gathering and processing and then moving those NGLs through our, you know, Grand Prix or Daytona and our fractionation and export. So I think that's been our focus and that's going to continue to be our focus. And Theresa, this is...

Matthew J. Meloy: Or are you looking at any of the next playing out November two so it's really continued organic growth along kind of along our core business, which is gathering and processing.

Matthew J. Meloy: And then moving those Ngls through our Grand Prairie or Daytona into our fractionation and export. So I think thats been our focus and thats going to continue continue to be our focus and Theresa. This is Jim I would just add that I think thats part of why we're so excited about the short medium and long term outlooks for Targa, when we think about the millions of acre.

Jennifer R. Kneale: Theresa, this is Jen. I would just add that I think that's part of why we're so excited about the short, medium, and long-term outlooks for Targa. When we think about the millions of acres that are already dedicated to us in the Permian, where we've got a great set of producers that have been so successful with their drilling activity, it feels like we just have an excellent runway in front of us over the short, medium, and long-term to just continue to do what I think we've put up a very credible track record of doing successfully, really for as far as the eye can see.

Jennifer R. Kneale: Or is that already dedicated to us in the Permian, where we've got a great set of producers that have been so successful with their drilling activity. It feels like we just have an excellent runway in front of us over that short medium and long term to just continue to do what I think we've put up a very credible track record around doing successfully really first far as the eye can see.

Theresa Chen: That makes sense. Thank you.

Unknown Speaker: That makes me, thank you. Okay. Thank you.

Operator: Okay, thank you. Thank you for our next question. And our next question comes from the line of Jeremy Tonet from JPMorgan Securities. Your question, please. Hi, good morning.

Speaker Change: Okay. Thank you.

Jeremy Bryan Tonet: Q4, our next question.

Operator: And our next question comes from the line of Jeremy Tonet from Jpmorgan Securities. Your question. Please.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Hey, good morning, Jeremy.

Jeremy Bryan Tonet: Just wanted to kind of.

Jeremy Bryan Tonet: See how youre thinking about taking stock of result, so far in.

Jeremy Bryan Tonet: The plan it seems like Thats, a minor issue there.

Jeremy Bryan Tonet: You see yourselves within the guidance range reaffirm do you see yourself tracking towards the higher end or the lower end or how do you see I guess.

Jeremy Bryan Tonet: Factors that could drive upside versus downside at this point.

Jeremy Bryan Tonet: Within the range.

Jeremy Bryan Tonet: Jeremy, this is Jen. I'd say that it's early. It's April, but so far, our employees have done a really excellent job of executing on a really strong first quarter in April that has had its challenges. So we're just really pleased with the efforts of all of our employees to date. And I think that's setting us up really well for the rest of the year as well. We've talked a little bit about the fact that we certainly are assuming that volumes are going to continue to ramp up in both Delaware and the Midland Basins, and that's not without some potential constraints. So, ultimately, it's early, and we'd like to see how the rest of the year shapes up, but we're clearly feeling really good about our performance to date and the outlook we have going forward.

Operator: Jeremy This is Jen I would say that it's early it's April but so far our employees have done a really execute excellent job of executing on a really strong first quarter in April that has had its challenges. So we're just really pleased of the efforts of all of our employees to date and I think that setting us up really well for the rest of the year as well.

Jeremy Bryan Tonet: We've talked a little bit about the fact that we certainly are assuming that volumes are going to continue to ramp in both the Delaware and Midland basins, and thats not without some potential constraints. So ultimately it's early and we'd like to see how the rest of the year shapes up but we're clearly feeling really good about our performance to date and the outlook we have going forward.

Jeremy: Got it that's very helpful. I'll leave it there. Thank you.

Jennifer R. Kneale: Okay, thanks, Jeremy. Thank you one moment for our next question. And our next question comes from the line of John Mackay from Goldman Sachs. Your question, please.

Jeremy: Okay. Thanks, Jeremy.

John Ross Mackay: Thank you one moment for our next question.

John Ross Mackay: And our next question comes from the line of John Mccain from Goldman Sachs. Your question. Please.

John Ross Mackay: Hey, good morning. Thanks for the time.

John Ross Mackay: Hey, good morning, Thanks for the time maybe.

John Ross Mackay: Maybe let's take that last one up again, if you don't mind and understand that.

John Ross Mackay: Kind of initial commentary on <unk> EBITDA, but I was wondering if you can just tie that with the message that Permian volumes should still be growing quarter over quarter.

Jennifer R. Kneale: Maybe we could pick that last one up again, if you don't mind, and understand the kind of initial commentary on 2QE. But I was wondering if we could just tie that in with the message that Permian volumes should still be growing quarter over quarter. Is it the $10 million kind of expense from the plant outage? Is it marketing rolling off, or seasonality? Maybe just kind of bridge that and kind of balance that against, again, the quarter over quarter Permian growth. Thanks.

Jennifer R. Kneale: Is it.

Jennifer R. Kneale: The $10 million of kind of expense from the plant outage is it marketing rolling off seasonality, maybe just kind of bridge that and kind of balance that against again.

Jennifer R. Kneale: Quarter over quarter Permian growth. Thanks.

Jennifer R. Kneale: John, this is Jen. I think you've got a lot of the pieces already, which is why the Greenwood Fire MAC quantifies that we see about $10 million of additional expenses. Some of that will be in capital in terms of the repairs that we need to make, but some of that will be in operating expenses as well. We'd also expect OPEX to rise in Q2 relative to Q1 as we do have new assets coming into service.

Jennifer R. Kneale: John This is John I think you've got a lot of the pieces already which is with agreement with fire Mac quantify that we see about $10 million of additional expense some of that will be in capital in terms of the repairs that we need to make but some of that will be in operating expenses as well.

Jennifer R. Kneale: Also expect Opex to rise Q2 relative to Q1 is we do have new assets coming into service and we do have a lot of seasonality in our businesses that generally tend to result in weaker second quarters versus certainly the fourth or the first quarters of the year. So I think as we look at all of that it's just playing some conservatism through our MAU.

Jennifer R. Kneale: And we do have a lot of seasonality in our businesses that generally tend to result in weaker second quarters versus, certainly, the fourth or the first quarters of the year. So I think as we look at all of that, it's just playing some conservatism in our minds that we really just want to get through this quarter, and continue to put up strong growth numbers in the Permian that will result in more volumes through the rest of our integrated system.

Jennifer R. Kneale: <unk> that we really just want to get through this quarter continue to put up strong growth numbers in the Permian that will result in more volumes through the rest of our integrated system. We are very happy that train nine is starting up that is very much needed at this point in time, our capacity at gcs will be very much needed as well. So it also has to do with the fact that we've got some operational.

Jennifer R. Kneale: We are very happy that Train 9 is starting up. That is very much needed at this point in time. Our capacity at GCF will be very much needed as well. So it also has to do with the fact that we've got some operational and really sort of facility constraints that have put a little bit of a limiter on us that's coming off now here in the second quarter, and that again sets us up really well when we think about the third and fourth quarters and beyond.

Jennifer R. Kneale: And really sort of facility constraints that have put a little bit of a limiter on us thats coming off now here in the second quarter that again sets us up really well when we think about the third and fourth quarters and beyond.

Speaker Change: I appreciate that and maybe if we just zoom out a little bit taking into account the kind of some of these infrastructure issues. We've seen in the first half and also the fact that most of the producers are talking about second half way to the activity levels for their Permian plans. If at all or are we seeing any shifts in producer activity or does it feel like that second half ramp.

Unknown Speaker: And maybe if we just zoom out a little bit, taking into account the kind of, you know, some of these infrastructure issues we've seen in the first half, and also the fact that most of the producers are talking about second half weighted activity levels for their Permian plans overall, are we seeing any shifts in producer activity? Or does it feel like that second half ramp that we're expecting for the Permian more broadly, that's, that's still on hand?

Unknown Speaker: What we're expecting for the Permian more broadly.

Unknown Speaker: That's still on hand.

Patrick J. McDonie: Well, I would say across our systems that we've seen pretty consistent growth. Frankly, the first half of this year has been pretty robust. We've put a lot of infrastructure in place, and we have a lot more, specifically compression, and obviously Jen and Matt have talked about the plants we're bringing on, and compression to put in place, and that is solely focused on production that we know is getting drilled and being brought online. If I look at the first half versus the second half of the year, across our system, sure, there's some incremental volume there, but it's really strong growth throughout the entire year for us.

Speaker Change: Well I would say across our systems, we've seen pretty consistent growth frankly, the first half of this year is pretty robust.

Patrick J. McDonie: We put a lot of infrastructure in place today.

Patrick J. McDonie: And have a lot more specifically compression and obviously gen and Matt have talked about the plants, we're bringing on compression to put in place and that is solely focused on production that we know is getting drilled and being brought online.

Patrick J. McDonie: If I look at first half versus second half of the year.

Patrick J. McDonie: Across our system sure there is some incremental volume there, but it's really strong growth throughout the entire year for us.

Speaker Change: Okay I appreciate that thank you very much.

Unknown Speaker: I appreciate that. Thank you very much. Okay, thank you.

Operator: Thank you one moment for our next question. And our next question comes from the line of Spiro Dounis from Citi. Your question, please.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Spiro Michael Dounis: And our next question comes from the line of Spiro <unk>.

Spiro Michael Dounis: <unk> from Citi. Your question please.

Spiro Michael Dounis: Thanks, everybody. First question, maybe just to go to some of the projects announced this morning. You've got another plant, another crack, and a small export expansion. As we think about 2025 CapEx, do you still have room to announce even more projects before the need to amend guidance? And just with everything announced today, do you even see the need to announce anything else to facilitate that growth into next year?

Spiro Michael Dounis: Thanks, Good morning, everybody.

Spiro Michael Dounis: First question, maybe just to go to some of the projects announced this morning, you've got another plant another frac and small.

Spiro Michael Dounis: Small export expansion as we think about 2025 Capex do you still have room to go.

Spiro Michael Dounis: What's even more projects before the need to amend guidance and just with everything announced today do you see the need to announcing anything else facilitate that growth into next year.

Speaker Change: Yes sure.

Matthew J. Meloy: Yeah, sure. Yeah, so the Pembroke II and Train 11 were both contemplated in our base case, multi-year plan. You know, as we look forward, we're always assessing when we're going to need additional plants in the gathering and processing, you know, specifically out in the Permian. So we had other plants in there.

Spiro Michael Dounis: Yes, so the <unk>.

Matthew J. Meloy: Pembroke too and train 11, where both contemplated in our base case multi year plan.

Matthew J. Meloy: As we look forward.

Matthew J. Meloy: We're always assessing when we're going to need additional plants on the gathering and processing is supposed to be out in the Permian.

Matthew J. Meloy: So we had other plants in there so I'd say, we're kind of tracking.

Speaker Change: <unk>, what we had expected when we initially came with that guidance and I would say, yes, we have some room to handle some incremental growth.

Matthew J. Meloy: So I'd say we're kind of tracking towards what we had expected when we initially came up with that guidance. And I would say, yeah, we have some room to handle some incremental growth in our business kind of through 25 as planned. And I already mentioned we're already evaluating when we're going to need another Delaware plant, you know, so we're looking into that. I wouldn't think that is going to have a material impact on our outlook for capital for 2025.

Matthew J. Meloy: And our business kind of through 'twenty five as planned and I already mentioned, we're already evaluating when we're going to need another Delaware plant. So we're looking into that I wouldn't think those are going to have a material impact on our outlook for capital for 2025.

Scott Pryor: And Spiro, this is Scott. As it relates to the small expansion project that Matt mentioned in his script, that is a small capital expenditure for us to expand the export capacity. It basically gives us another BLGC a month, starting in, call it the third quarter of 2025, and it's really just a compliment to our operations and our engineering teams for continuing to find ways to de-bottleneck our current assets and giving us a runway, not only with last year's expansion, nighttime transits, as we mentioned earlier in the call, but along with this expansion, it gives us a good runway, likely through

Matthew J. Meloy: And Spiro this is Scott as it relates to the small expansion project that Matt mentioned in his script.

Scott Pryor: That is a small capital.

Scott Pryor: For us to expand the export capacity it basically gives us another VLCC a month starting in call. It the third quarter of 2025, and really just a complement to our operations and our engineering teams for continuing to find ways to debottleneck, our current assets and giving us a runway not only with last year's expansion.

Scott Pryor: Nighttime transits as we mentioned earlier in the call, but along with this expansion. It gives us a good runway likely through train 11.

Scott Pryor: Understood couple of color Theyre switching.

Unknown Speaker: Understandable. A couple of colors there.

Speaker Change: Switching gears, a bit and maybe just to go back to capital return.

Unknown Speaker: On vehicle step up quarter over quarter in the buyback despite.

Unknown Speaker: Despite some of the really strong stock performance.

Speaker Change: Respect you still see a lot of value your stock here. So curious maybe just comment I'm thinking through the rest of the year.

Spiro Michael Dounis: Switching gears a bit, maybe just to go back to capital return. Some meaningful steps up quarter over quarter in the buyback despite some of the really strong stock performance. So I suspect you still see a lot of value in your stock here. Curious, maybe just comment on thinking through the rest of the year, maybe when we could see you start to track closer to that 40 to 50% payout target.

Spiro Michael Dounis: Maybe when we could see you start to track closer to that 40%, 50% payout target.

Jennifer R. Kneale: Spiro, this is Jen. I think, relative to repurchases, we clearly have very strong conviction in our outlook. Our flexible balance sheet is strong today, and it's only going to strengthen as we really move through 2024 and into 2025 and have a much lower growth capital spend next year. So I think that we're really looking at our repurchase program as continuing to be opportunistic, and it's one of the tools that we will continue to use to be able to return an increasing amount of capital to our shareholders.

Spiro Michael Dounis: Spiro. This is Jen I think relative to repurchases, we clearly have very strong conviction in our outlook. Our flexible balance sheet is strong today and it's only going to strengthen as we really move through 2024 and into 2025 and have a much lower growth capital spend next year. So I think that we're really looking that at all.

Jennifer R. Kneale: Our repurchase program as continuing to be opportunistic and it's one of the tools that we will continue to use to be able to return an increasing amount of capital to our shareholders you see some variability quarter to quarter and that's largely dependent on the opportunities that we're seeing in the market to repurchase shares as well as a whole lot of other things that are happening.

Jennifer R. Kneale: You see some variability quarter to quarter, and that's largely dependent on the opportunities that we're seeing in the market to repurchase shares, as well as a whole lot of other things that are happening relative to when we're spending, what we're spending, and what we have in terms of what's coming in on the margin side. So there's just a lot that is factored into what we do every day related to our re

Jennifer R. Kneale: <unk> two when we're spending what we're spending what we have in terms of what's coming in on the margin side Theres. Just a lot that is factored into what we're doing everyday related to our repurchase program. So I'm not going to give guidance on where we are expecting to take this quarter to quarter. The rest of the year, but it is certainly a very important tool that we will continue to utilize to return capital.

Jennifer R. Kneale: So I'm not going to give guidance on where we're expecting to take this quarter to quarter the rest of the year, but it is certainly a very important tool that we will continue to utilize to return capital to our shareholders. And I think we've been pretty open that when we laid out the framework of 40 to 50 percent of cash flow from operations and that really being what we are using internally as the guidepost for how we can return capital to shareholders over sort of a five-year planning horizon, we said that 2024, we may not be in that zip code just because our growth capital lift this year is so big, but ultimately we'll just have to see how the rest of the year shakes out.

Jennifer R. Kneale: To our shareholders and I think we've been pretty open that when we laid out the framework of 40% to 50% of cash flow from operations and that really being what we are using internally as the guidepost for how we can return capital to shareholders over sort of a five year planning horizon. We said that 2024, we may not be in that ZIP code just because.

Jennifer R. Kneale: Our growth capital lift this year is so big but ultimately we will just have to see how the rest of the year shakes out.

Spiro Michael Dounis: Great. I'll leave it there. Thanks, everybody.

Speaker Change: Great I'll leave it there thanks everybody.

Operator: Thank you one moment for our next question. And our next question comes from the line of Neil Dickman from True Securities. Your question, please.

Speaker Change: Okay. Thank you.

Neil Dickman: Thank you one moment for our next question.

Neil Dickman: And our next question comes from the line of Neal Dingman from true Securities. Your question. Please.

Neil Dickman: Hey guys, this is Jake Nivasch. Thanks for your time here.

Operator: Hey, guys. This is Jake <unk> on for Neil Thanks for the time here too for me and I know, we touched on this a good amount, but I just want to ask it a different way in terms of the I guess the upstream growth that you're that we're talking about here are you seeing it across all of your producers is it are there are select few key producers that are that you think.

Jacob Samuel Nivasch: We did drive this growth just curious I guess what.

Jacob Samuel Nivasch: What the dynamic or split it looks like there.

Unknown Speaker: Two for me, and I know we touched on this a good amount, but I just want to ask it another way. In terms of the, I guess, the upstream growth that you're talking about here, are you seeing it across, you know, all of your producers? Is it, is it, are there a select few key producers that you think are going to drive this growth? Just curious, I guess, what the dynamic or split looks like there.

Jacob Samuel Nivasch: What I would say is that it's pretty consistent across all of our producers.

Patrick J. McDonie: What I would say is that it's pretty consistent across all our producers. I mean, certainly some have more rigs running and are a little more of a greater percentage increase than others, but the activity level across our entire producer base is pretty robust across the Delaware, the Central, and the Midland Basins. It's It's not area specific. It's not producer specific. It's really strong, steady activity across the producer base across the entirety of the Midland Basin. So, you know, right now, we feel really good about...

Unknown Speaker: Certainly some have more rigs running and are a little more of a greater percentage increase than others, but.

Patrick J. McDonie: Activity level across our entire producer base is pretty robust.

Patrick J. McDonie: <unk>.

Patrick J. McDonie: Across the Delaware, the central and the Midland Basin, it's not areas specific it's not producer specific it's really.

Patrick J. McDonie: Strong steady activities across the producer base across the entirety of the Midland Basin.

Patrick J. McDonie: So.

Patrick J. McDonie: Right now we feel really good about the way our producers are performing and frankly.

Patrick J. McDonie: We're getting like I said earlier infrastructure in place to be ready to handle it.

Robert M. Muraro: And this is Bobby, and as we think about...

Patrick J. McDonie: And this is Bob as we think about our expectations at the end of the day. So much of our gas is coming from.

Robert M. Muraro: Low pressure gathering this is stuff thats coordinated.

Robert M. Muraro: Months.

Bobby: Year at a time, so we have really good visibility for what we think comes online when and where.

Bobby: Sure. Thank you and then just.

Unknown Speaker: Sure. Thank you.

Speaker Change: Follow up here with.

Bobby: With regards to capital spending I guess in 2025, I guess, how how sticky is that growth Capex number that you guys are looking at that one four and the reason I ask because I guess you are talking about.

Unknown Speaker: And then just to follow up here, with regard to capital spending, I guess in 2025, I guess how sticky is that growth CapEx number that you guys are looking at, that 1.4? And the reason I ask is that, I guess, you know, you're talking about, you know, investing more organically and, you know, seeing some additional opportunities out there. And, you know, I guess, how do you balance that between, you know, inorganic growth and acquiring something? And, you know, is this all accounted for in that 1.4 billion, these organic projects? Or do you think, you know, there could be some more upside here? Yeah, sure. No, good.

Unknown Speaker: Investing more organically and see some additional opportunities out there and I guess, how do you balance that between.

Unknown Speaker: Inorganic growth acquiring something in.

Unknown Speaker: Is this all accounted for in that $1 4 billion. These organic projects or do you think there could be some more upside here.

Matthew J. Meloy: Good question. Look, when we think about $1.4 billion in 2025, what gives us some confidence in that number and it being, you know, a relatively sticky number is that a lot of the large-scale downstream projects are accounted for. Daytona's coming online later this year. We've already announced Train 11. That's in there. We've talked about an export project. So on the downstream side, we don't really see a whole lot being added in 2025. So then it really just comes to gathering and processing.

Unknown Speaker: Yeah, sure. No, good.

Speaker Change: Yes, no. Good question look when we think about $1 4 billion in 2025, what gives us some confidence in that number and it being a relatively sticky number is a lot a lot of the large scale downstream projects are accounted for Daytona is coming online later this year, we have already announced train 11, that's in there we've talked about exports.

Unknown Speaker: Project. So on the downstream side, we don't really see a whole lot being added to 2025. So then it really just comes to gathering and processing and so there I think what could move it plus and minuses just overall field activity. If volumes are a lot stronger than we need to put in even more compression or more pipelines there could be some upward.

Matthew J. Meloy: And so there, I think what could move it plus and minus is just overall field activity. If volumes are a lot stronger, we need to put in even more compression or more pipelines. There could be some upward or downward variations, just depending on overall volumes and then adding processing plants. We've already got, as we mentioned, the Pembroke II, that is already in place. We're ordering long lead times for the next Delaware plant, but that was already contemplated.

Matthew J. Meloy: Downward just depending on overall volumes.

Matthew J. Meloy: And then adding processing plants.

Matthew J. Meloy: <unk> already got as we mentioned the Pembroke <unk> added in there we're ordering long lead times for the next Delaware plant that was already contemplated so it would need to be a pretty.

Matthew J. Meloy: So it would need to be a pretty big Delta, I'd say, and overall growth expectations or growth realizations for us and GMP to have a large, you know, scale move. So that's why we feel pretty good about the 1.4. As we go through the year and we give guidance, we'll refine it. And, you know, could it move down a little bit, up a little bit? We'll see, but I think we feel pretty good about the 1.4 for next year.

Matthew J. Meloy: Big Delta I would say, an overall growth expectations, our growth realizations for us in GMP to have a large scale move. So that's why we feel pretty good about the $1 four as I go through the year and we give guidance, we'll refine it and could it move down a little bit up a little bit we will see but I think we feel pretty good about one four for next year.

Speaker Change: Thank you one moment for our next question.

Indraneel Mitra: Thank you. One moment for our next question, and our next question comes from the line of Neil Mitra from Bank of America. Your question, please.

Indraneel Mitra: And our next question comes from the line of Neel Mitra from Bank of America. Your question. Please.

Indraneel Mitra: Hi, Thanks for taking my question I was looking at the year over year bridge on the G&P segment, and one of the tier ones in the quarter.

Indraneel Mitra: Hi, thanks for taking my question. I was looking at the year over year bridge on the GMP segment, and one of the tailwinds in the quarter was higher fees. I was wondering if you could explain what that is. Is it moving to more fixed fee contracts, escalators, or higher fee floors? Just trying to understand what that comment is and what the driver was for the quarter.

Indraneel Mitra: There was higher fees.

Indraneel Mitra: Just wondering if you could explain what that is is it moving to more fixed fee contract escalators are higher fee floors.

Indraneel Mitra: Trying to understand what that comment is and what the driver was for the quarter.

Jennifer R. Kneale: Good morning, Neal. This is Jen.

Indraneel Mitra: Good morning, Neel this is jen.

Jen: We talked very openly on our February call and you can even see it in our proxy in some of our disclosures that our commercial team was really successful.

Jen: <unk> to put fee floors into some key contracts in the fourth quarter of 2023, and that's what's allowing us to announce a new processing plant. Despite negative wahhab prices today, and very low NGL prices. So certainly appreciate the support and alignment of our producers related to that capital spend.

Jennifer R. Kneale: We talked very openly on our February call, and you can even see it in our proxy in some of our disclosures, that our commercial team was really successful, continuing to put fee floors into some key contracts in the fourth quarter of 2023. And that's what's allowing us to announce a new processing plant, despite negative WAHA prices today and very low NGL prices. So I certainly appreciate the support and alignment of our producers related to that capital spend.

Jennifer R. Kneale: So as you start to look at our quarter, our year-over-year results, I think you'll continue to see that more and more, particularly in a commodity price environment that looks like today, we are going to earn more and more fees in our gathering and processing business. So it's really the result of just more fee-based volume growth, as well as fee floor growth in our gathering and processing business.

Jennifer R. Kneale: As you start to look at our quarter our year over year results I think youll continue to see that more and more particularly in the commodity price environment that looks like today that we are going to earn more and more fees in our gathering and processing business. So it's really the result of just more fee based volume growth as well as the Florida growth.

Jennifer R. Kneale: In our gathering and processing business in our contracts.

Speaker Change: Okay, Okay, and the second question on the LNG side.

Scott Pryor: Okay, perfect. And the second question on the L&T side, fractionation volumes were down, looks like scheduled downtime. Could you maybe provide how often you have scheduled downtime on the FRAC side? And then if you incurred third-party FRAC costs this quarter that we probably shouldn't run through for the rest of the year?

Scott Pryor: Fractionation volumes were down.

Scott Pryor: Scheduled downtime could you maybe provide how often you have scheduled downtime on the Frac side and then if you incurred third party frac costs this quarter.

Scott Pryor: Publishing one through for the rest of the year.

Scott Pryor: Yes, Neil this is Scott.

Scott Pryor: Yeah, Neil, this is Scott. When you look at the first quarter relative to the fourth quarter of last year, yes, our FRAC volumes were down, but our FRAC generators were full in the fourth quarter. They were full in the first quarter, but just limited in terms of availability of space because of the downtime that we had that was scheduled, as well as some of the impacts of the harsh winter weather that we had in January as well.

Scott Pryor: When you look at the first quarter relative to the fourth quarter of last year ESR Frac volumes were down, but our fractionated were full in the fourth quarter. They were full in the first quarter, but just limited in terms of availability of space because of the downtime that we had.

Scott Pryor: That was scheduled as well as some some of the impacts of the harsh winter weather that we had in January as well looking forward for us into the second quarter, obviously as Jim mentioned, we're really happy to see train nine in startup mode, and then will be real real happy to see gcs startup sometime during this quarter as well. So when you look at our Frac volumes Youre going.

Scott Pryor: Looking forward for us into the second quarter, obviously, as Jen mentioned, we're really happy to see train nine in startup mode, and then we'll be really happy to see GCF startup sometime during this quarter as well. So when you look at our FRAC volumes, you're going to see a meaningful step up in volumes for us in the second quarter when we come out of that quarter with train nine online and with GCF giving a partial contribution at the back end of the quarter as well.

Scott Pryor: See a meaningful step up in volumes into the second quarter for us when we come out of that quarter with train nine online and with DCF.

Scott Pryor: Giving a partial contribution at the back end of the quarter as well. So I would anticipate that really to continue throughout third quarter and fourth quarter again with all the operating facilities in terms of scheduled maintenance dose discount periodically there is no really there.

Scott Pryor: So I would anticipate that really to continue throughout the third quarter and fourth quarter, again, with all the operating facilities. In terms of scheduled maintenance, those just come periodically. There's no really – there's scheduled maintenance that we have on certain vessels that we have to inspect due to requirements. And we work those in and try to make those really not impact us in terms of being able to perform for our customers overall.

Scott Pryor: <unk> scheduled maintenance that we have on certain vessels that we have to inspect due to requirements and we work those in and try to make those really.

Scott Pryor: Not impact us in terms of being able to perform for our customers overall.

Speaker Change: Okay perfect. Thank you.

Indraneel Mitra: Perfect. Thank you.

Speaker Change: Alright, thank you.

Indraneel Mitra: One moment for our next question.

Operator: One moment for our next question, and our next question comes from the line of Keith Stanley from Wolf Research. Your question, please.

Operator: And our next question comes from the line of Keith Stanley from Wolfe Research. Your question. Please.

Keith T. Stanley: Hi, good morning. So I know the company is more fee-based than wellheads this year, but I want to make sure that with Waha prices being pretty extreme here, that there's no meaningful impact from prices themselves on the company this year. And then related to that, just given Permian Gas Supply continues to beat expectations kind of over and over, at what point do you start to feel more pressure to move forward on a gas pipeline project like Apex? Is it, you know, do you need to see something happen by the summer or the fall, or how you're thinking about that overall?

Keith T. Stanley: Hi, good morning.

Keith T. Stanley: So I know the company is more fee based and well hedged this year, but I want to make sure with what high prices being pretty extreme here that there is no meaningful impacts from prices themselves on the company. This year and then related to that just given Permian gas supply continues to beat expectations kind of over and over.

Keith T. Stanley: What point do you start to feel more pressure to move forward on our gas pipeline projects like apex is it.

Keith T. Stanley: Do you need to see something happen by the summer fall or how youre thinking about that overall.

Matthew J. Meloy: Okay, hey, Keith. Yeah, good, good questions. I'll start by just talking a little bit about Waha, and then Bobby and Pat can talk a little bit about that and the Permian supply. Yeah, so there are pluses and minuses for us when we have really weak Waha prices. You know, we still have some commodity sensitivity and some length for gas in our GMP business. A lot of that is protected by floors and hybrids and fee-based contracts, but we still have some length on natural gas.

Speaker Change: Okay, Hey, Keith Yes, good question and I'll start with just talking a little bit about Wahaha, and then Bobby and Pat can talk a little bit about that in the Permian supply. So there are pluses and minuses for us when we have what really weak while oil prices. We have just still have some commodity sensitivity in some length for gas.

Matthew J. Meloy: In our G&P business, a lot of that is protected by floors and hybrids and fee based contracts that we still have some length on natural gas. So when you see negative prices that is.

Matthew J. Meloy: So when you see negative prices, that is a negative for us. We also move a lot of gas intra basin and out of the basin, and we have large transport positions to make sure we can get the gas out of the basin. So when you have dislocations in Waha, we do have some gas marketing upticks relative to our transportation position. So that could, depending on where we're moving it and where we're able to get it to, there could be some positives there.

Matthew J. Meloy: That is a negative for us we also move a lot of gas intra basin and out of the basin and we have large transport positions to make sure. We can get the gas out of the basin. So when you have dislocations in Oaxaca, we do have some gas marketing upticks relative to our transportation position, so that could be depending on where we're moving it and where we are.

Matthew J. Meloy: We're able to get it to there could be some positive there so.

Matthew J. Meloy: So you know, I'd say there are pluses and minuses. Overall, we would prefer higher Waha prices than lower, it's good for our customers, it's good for our business. But there are pluses and minuses to volatility in Waha and weaker Waha prices. And then on the Permian supply and gas lines, Bobby, you want to talk about that? Yeah, so a couple.

Bobby: I'd say theres Plusses and minuses overall, we would prefer higher.

Bobby: Prices than lower it's good for our customers is good for our good for our business but.

Matthew J. Meloy: There are pluses and minuses to volatility in Whitehall and weaker while oil prices and then on the Permian supply and gas lines. Bobby you want to talk about that yeah. So a couple of things relative to what Matt said.

Robert M. Muraro: Yeah, so a couple things relative to what Matt said. Nothing's a phrase, it's not our first rodeo, right?

Bobby: Nothing surprises not arthrodia right. So every every couple of years, we see log it crushed.

Robert M. Muraro: So every couple of years, we see Waha get crushed. We have those really defined forecasts relative to the wellhead connection. So we're always planning, Pat mentioned it earlier, with both our producers that market their own gas and take a kind and producers that we market for it. We are ahead of this in planning to make sure we can move all the gas that comes out of our plant. So the immediate issues, ignoring issues on pipes that aren't expected, we're always set up to be ready for this because this happens every two years.

Robert M. Muraro: We have those really defined forecast relative to the wall and connection so we're always planning and Pat mentioned it earlier.

Robert M. Muraro: With both our producers that market their own gas has taken time and producers that we market for it we are.

Robert M. Muraro: We are ahead of this and planning to make sure. We can move all the gas that comes out of our clients. So the immediate issues ignoring issues on pipes.

Robert M. Muraro: The unexpected we're always set up to be ready for that is because this happens every two years.

Robert M. Muraro: Then, relative to thinking about the next pipe, it's a similar refrain to what I've said before. Targa's number one priority is making sure gas moves out of the basin, that our producers can flow their gas out of our plants, and we can move the gas that we move for producers out of our plants.

Robert M. Muraro: Then relative to thinking about the next pipe.

Robert M. Muraro: It's a similar refrain to what I've said before.

Robert M. Muraro: Targa is number one priority is making sure our gas moves out of the basin.

Robert M. Muraro: That our producers can further gas at our plants and we can move gas that we move forward producers out of our plants.

Robert M. Muraro: And we are working on multiple fronts, multiple options, multiple pipelines, all of which have what I'll call very good traction. I fully expect, and I've said this before, that a pipeline will go FID by the end of this year. If we make good progress on one of the options that the industry has, it could go earlier than year-end. I won't guess which month, but I fully expect a gas pipeline to go in and go this year.

Robert M. Muraro: And we are working on.

Robert M. Muraro: Multiple fronts multiple options multiple pipes all that.

Robert M. Muraro: I'll call very good traction.

Robert M. Muraro: I fully expect that this before.

Robert M. Muraro: That pipe will go by the end of this year.

Robert M. Muraro: If we make but good progress.

Robert M. Muraro: On one one of one of the options of the industry does.

Robert M. Muraro: It could go earlier than year end.

Robert M. Muraro: I won't I won't gets to what month, but but I fully expect.

Robert M. Muraro: That gas pipeline to go and go this year when you think about where it is things like that on the margin.

Robert M. Muraro: When you think about WAHA, where it is, things like that on the margin motivate shippers and pipe owners even more to get things done. So I have as much confidence today, it's just three months closer than last call, that something will go FID.

Robert M. Muraro: Motivate shippers and.

Robert M. Muraro: And pipe owners, even more to get things done so.

Robert M. Muraro: I have as much confidence today, it's just three months closer than last call that something will go out.

Speaker Change: Thank you that's helpful. That's all for me.

Keith T. Stanley: Thank you. That's helpful. That's all for me.

Speaker Change: Alright, thank you.

Operator: Thank you. One moment for our next question, and our next question comes from the line of Tristan Richardson from Scotiabank. Your question, please.

Speaker Change: Thank you one moment for our next question.

Operator: And our next question comes from the line of Tristan Richardson from Scotia Bank. Your question. Please.

Tristan James Richardson: Hey guys, thank you for squeezing me in at the end here. I appreciate it. A lot has been asked and answered.

Tristan James Richardson: Hey, guys. Thank you for squeezing me in here I appreciate it a lot has been asked and answered but maybe just one for me on the Capex side I think last quarter.

Tristan James Richardson: Maybe just one for me on the CapEx side. I think last quarter, on the February call, you offered that illustrative annual expenditure example. And if we look at 25, it seems like with another Midland plan and another FRAC announced today, 2025 will look a lot like what you laid out in that hypothetical, but the 25 guide is, you know, quite a bit below 20%. So, just thinking about maybe where we're deviating from some of that illustrative example, you know, and just maybe where you're seeing actuals in 25 looking better than some of that illustrative spend that you guys laid out last quarter.

Tristan James Richardson: As I recall, you offered that illustrative annual spending example.

Tristan James Richardson: And if we look at 2005, it seems like with another Midland plan and another track announced today.

Tristan James Richardson: 2025 will look a lot like what you've laid out in that hypothetical but 25 guidance.

Tristan James Richardson: Quite a bit below 20% below so just thinking about maybe where we are deviating from some of that illustrative example.

Tristan James Richardson: And just maybe where youre seeing.

Tristan James Richardson: Actuals in 'twenty, five looking better than some of that.

Tristan James Richardson: <unk> spend that you guys laid out last quarter.

Matthew J. Meloy: Yeah, sure. Hey, Tristan.

Speaker Change: Yes sure.

Matthew J. Meloy: Interest and I think probably the biggest delta versus the average is completing Daytona. This year, we shouldnt have any NGL transport to speak of on a multi year basis. That's one item and then the other one would be with really low cost export expansion. We have we've got in that illustrative multiyear guidance spending for both transport.

Matthew J. Meloy: I think probably the biggest delta versus the average is completing Daytona this year. We shouldn't have any NGL transport to speak of on a multi-year basis. That's one item.

Matthew J. Meloy: And another one would be with the really low-cost export expansion we have; we've got in that illustrative multi-year guidance spending for both transport and exports that we wouldn't expect to need to do in a meaningful way in 2025.

Matthew J. Meloy: And exports that we wouldn't expect to need to do in a meaningful way in 2025.

Tristan James Richardson: That's it. That's it for me.

Speaker Change: That's it for me that's Super helpful. I appreciate it thank you guys.

Tristan James Richardson: That's super helpful. I appreciate it. Thank you guys. Thanks, Tristan. Thank you.

Speaker Change: Thanks, Rob and thank you I appreciate it.

Speaker Change: Thank you.

Tristan James Richardson: And our next question comes from the line of Sunil Sibal from <unk>.

Operator: And our next question comes from the line of Sunil Sibal from Cport Global. Your question, please.

Sunil K. Sibal: Seaport Global your question please.

Sunil K. Sibal: Yeah, hi. Good morning, everybody, and thanks for all the good color in the call.

Sunil K. Sibal: Yes, hi, good morning, everybody and thanks for all the good color on the call.

Sunil K. Sibal: So, I wanted to start off on the infrastructure side in Permian. I think you previously talked about how you've kind of debottoned the Permian portion of Grand Prix through pump capacity additions and all that. Could you talk about, you know, where your kind of current capacity stands there? And obviously, you know, Daytona comes online later this year. How should we think about, you know, volume trending on that and, you know, competition for third-party volumes per se?

Sunil K. Sibal: So I wanted to start off on the infrastructure side Permian.

Sunil K. Sibal: I think you've previously talked about our view of kind of the bottleneck.

Sunil K. Sibal: The Permian portion of Grande pizza to pump capacity additions and all of that could you talk about that.

Sunil K. Sibal: As your kind of current capacity stands.

Sunil K. Sibal: Obviously when it comes online later this year.

Sunil K. Sibal: Should be think about volume.

Sunil K. Sibal: Volume trending on that.

Sunil K. Sibal: Competition for third party volumes.

Scott Pryor: Hey, Sunil, this is Scott. Yeah, with Daytona coming online in the fourth quarter of this year, just as a reminder, when we bring that online, we're anticipating the initial throughput or capacity to be around 400,000 barrels a day, and with the ability to add pump stations over time where it makes sense as we see the growth in our GMP business filtering in and through our pipelines. So those capacities, similar to what we did on the west leg of the Grand Prix, can put us over 600,000 barrels a day between them.

Sunil K. Sibal: Hey, Sunil this is Scott.

Scott Pryor: With the Daytona coming online in the fourth quarter of this year just as a reminder, when we bring that online we're anticipating the initial throughput or capacity to be around 400000 barrels a day.

Scott Pryor: And with the ability to add pump stations over time, where it makes sense as we see the growth in our G&P business filtering in through our pipelines. So.

Scott Pryor: Those capacities similar to what we did on the west leg of Grand Prix that can put us over 600000 barrels a day.

Scott Pryor: That so that gives us a lot of operating leverage on the on the west side of the portion of Grand Prix with Daytona coming online when you look at our south leg.

Scott Pryor: Got a lot of operating capacity there again the capacity is around 1 million barrels a day, we're bringing in just over 700000 barrels a day currently so that gives US also some operating leverage as it relates to that.

Scott Pryor: And when you look at the numbers we move today. There is a lot of volume that steel comes into our facility that comes from third party pipes, we participate and moving some volume on some of those third party pipes as well as our customers do and I would anticipate continuing to see that happening over a period of time, we'll have to evaluate relative to when we would have.

Scott Pryor: So that gives us a lot of operating leverage on the west side of the portion of Grand Prix with Daytona coming online. We participate in moving some volume on some of those third-party pipes as well as our customers do, and I would anticipate continuing to see that happening over a period of time. We'll have to evaluate relative to when we would have to do a south leg expansion, if you will, but I think we've got a lot of runway for right now, and then we can look to participate in third-party pipes where it makes sense both physically as well as economically for us. And this is Bobby. Yes, about third-party competition. We've talked about this before.

Bobby: Due south leg expansion, if you will but I think we've got a lot of runway for right now and then we can look to participate on third party pipes, where it makes sense, both physically as well as economically for us.

Scott Pryor: This is Bobby you asked about third party competition that we've talked about this before we are a wellhead to water company right. So.

Robert M. Muraro: We are a wellhead to water company, right? So we build Grand Prairie, we build Daytona, and we build our NGO infrastructure to service our GMP footprint that goes out to the wellhead. A vast majority of the liquids that come out of our plants go down our NGL pipes, and we anticipate that being the same going forward. A third-party business exists within Targa, but that's not the driver of Targa's NGL business. It is our well-headed water, starting at the wellhead.

Robert M. Muraro: We build Grand Prix and we build Daytona when we built our NGL infrastructure to service, our GMP footprint that goes out to the wellhead.

Robert M. Muraro: Vast majority of the liquids that come out of our plants go down.

Robert M. Muraro: GL pipes, and we anticipate that being the same going forward.

Robert M. Muraro: Third party business exists within target, but thats not the driver of targets NGL business. It is our wellhead to water starting at the wellhead.

Speaker Change: Okay. Thanks for that.

Sunil K. Sibal: Okay, thanks for that. And then, on the strategic side of things, I was curious, you know, how do you think of your assets outside of Permian? Seems like, if I remember correctly, the Badlands TAV is past the five-year mark.

Speaker Change: And then as a follow up.

Speaker Change: On the strategic side of things it.

Speaker Change: I was curious.

Speaker Change: How do you think of your assets outside of Permian.

Speaker Change: It seems like if I remember correctly, the badlands JV.

Speaker Change: The five year, Mark how should we think about.

Matthew J. Meloy: How should we think about, you know, your assets outside of Permian? You still kind of view them as, you know, free cash flow, positive assets. Are there any investment opportunities outside that? Yeah.

Matthew J. Meloy: Outside the Permian, you're still kind of view them as.

Speaker Change: Yes. Please.

Matthew J. Meloy: Free cash flow positive assets.

Matthew J. Meloy: Are there any investment opportunities outside that.

Matthew J. Meloy: Yeah.

Matthew J. Meloy: Yes, most of the activity is obviously around our Permian and related NGL infrastructure, that's where the activity is thats, where the growth is happening in the other assets.

Matthew J. Meloy: Yeah Yeah, most of the activity is obviously around our Permian and related NGL infrastructure. That's where the activity is. That's where the growth is happening. And the other assets, there's not a lot, especially with weaker gas prices.

Matthew J. Meloy: Not a lot out, especially with weaker gas prices when gas prices moved up in 'twenty. Two we started to see some activity, but youre seeing volumes move off which is not unexpected so to the extent there are some opportunities and there are some limited opportunities in the central region to go get packages of gas and compete we go do that and we're looking to.

Matthew J. Meloy: You know, when gas prices moved up in 22, we started to see some activity, but you're seeing volumes move off, which is not unexpected. So to the extent there are some opportunities, and there are some limited opportunities in the central region to go get packages of gas and compete, we will do that. And we're looking to grow where it makes sense or get additional packages of gas where it makes sense in those businesses.

Matthew J. Meloy: Grow where it makes sense or get additional packages of gas where it makes sense in those businesses I'd say up in the Badlands were actually for the remainder of this year and into next year seeing some strong activity. We would expect there actually it would probably be some growth.

Matthew J. Meloy: I'd say up in the Badlands, we're actually seeing some, you know, strong activity. We'd expect there actually to probably be some growth in our Badlands business over the rest of this year and the next year. So we're seeing some good, some good activity up there. And, you know, if it's economic and it makes sense for us, we'll go and continue to grow that business and other businesses. It's just that there are fewer opportunities outside the Permian.

Matthew J. Meloy: In our in our Badlands business over the rest of this year into next year. So we're seeing some good.

Matthew J. Meloy: Some good activity up there and if.

Matthew J. Meloy: If it's economic and it makes sense for US we will go and continue to grow that business and other.

Matthew J. Meloy: There's just there's less opportunities outside the Permian.

Speaker Change: Understood. Thanks.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you one moment for our next question.

Zackery Lee Van Everen: And for our final question today comes to line of Zachman effort from TP <unk> Company. Your question. Please.

Sunil K. Sibal: Thank you. One moment for our next question. And for our final question today, comes the line of Zack Van Everen from TPH and Company. Your question, please.

Zackery Lee Van Everen: Hey guys, thanks for squeezing me in. I just want to go back to the Permian egress solution. You know, you mentioned FID by the end of this year, potentially. I'd be curious how you think about markets in 2026. You know, consensus seems to be like 26 is when we'll need a new pipe, so curious if you kind of agree with that and is the two-year time frame what you guys are hearing to build another gas egress pipe?

Speaker Change: Hey, guys. Thanks for squeezing me in just wanted to go back to the Permian Egress solution you mentioned by the end of this year potentially just curious how you think about markets in 2026 consensus seems to be like 26 is when we will need a new pipe. So curious on if you kind of agree with that.

Zackery Lee Van Everen: Is the two year timeframe. What you guys are hearing to build another gassy addressed by <unk>.

Robert M. Muraro: This is Bobby. Yeah, no, I think we've reiterated that on multiple calls. We see 26 as the year for a need for another full pipe out of the basin. Whether that's earlier in the year or later in the year, we'll be prepared for whatever that answer is as we move forward in time. And I think, generally speaking, yes, 24 months from FID is kind of the number that everybody talks about.

Robert M. Muraro: This is Bobby I.

Robert M. Muraro: I think we've reiterated that.

Robert M. Muraro: On multiple calls at least May 26, as the year four.

Robert M. Muraro: Our need for another full pipe out of the basin.

Robert M. Muraro: Whether thats earlier in the year later in the year, we'll be we'll be prepared for whatever that answer is as we move forward in time.

Robert M. Muraro: And I think generally speaking, yes. The 24 months from now is kind of the <unk>.

Robert M. Muraro: Number that everybody talks about sometimes talk about 'twenty six maybe its 22, maybe its 28, but 24 is a good guideline I think the whole industry uses for the construction of that volume so.

Robert M. Muraro: Sometimes you talk about 26, maybe it's 22, maybe it's 28, but 24 is a good guideline that I think the whole industry uses for the construction of that pipe. So, and yeah, I'm fully confident that it will go, something will go FID before then, that solves the 26.

Robert M. Muraro: And I'm fully confident that we will go something will go up.

Robert M. Muraro: That <unk> to 'twenty six basin issue.

Speaker Change: Got it perfect. Thank you for that and then.

Zackery Lee Van Everen: Got it. Perfect. Thank you for that.

Speaker Change: Flipping over to propane just wanted to get your views for the rest of the year, we have seen production come in pretty high in storage is still over the five years. So just wanted your views there and then you could remind us of how much marketing you guys have on the docks that can capture that international spread.

Scott Pryor: Zach this is Scott.

Scott Pryor: And then flipping over to propane, you know, just want to get your views for the rest of the year. You know, we've seen production come in pretty hot, and storage is still over five years. So just want to get your views there. And then, if you could remind us of how much marketing you guys have on the docs that can capture that international spread.

Speaker Change: <unk> certainly seen increased production really across the board as it relates to the attitude of the production coming out of the Permian as a whole.

Scott Pryor: Zack, this is Scott. We've certainly seen increased production really across the board as it relates to the added production coming out of the Permian as a whole from a U.S. production perspective. The draws of late have been relatively weak, if you will, so yeah, we're kind of seeing year-on-year similar inventories, and that's the reason why I think you're also seeing max levels, if you will, or high utilization levels of exports across the dock, whether it's us or even the competition in the marketplace.

Scott Pryor: From from our U S production perspective.

Scott Pryor: The draws of late have been relatively weak if you will so yes, we're kind of seeing year on year similar type inventories.

Scott Pryor: And that's the reason why I think Youre also seeing Max levels, if you will or high utilization levels of exports across the dock, whether it's us or even the competition in the marketplace. Some of that is going to get solved by some of the expansion projects that have already been announced of course, we have a small complementary one that we just announced this morning, so folks will be gearing up to push that.

Scott Pryor: Some of that's going to get solved by some of the expansion projects that have already been announced. Of course, we have a small complementary one that we just announced this morning, so folks will be gearing up to push that, you know, push those across the dock. Basically, you know, product will have to get a price to move typically onto the water, and that will aid in developing other marketplaces really across the globe, whether you're feeding, again, domestic use, petrochemical use, or PDH use. And I fully anticipate that to continue.

Scott Pryor: Push those across the dock.

Scott Pryor: Basically.

Scott Pryor: <unk> will have to get price to move typically onto the water and that will aid in developing other marketplaces really across the globe, whether you're feeding again domestic use petrochemical use our PTH use.

Scott Pryor: And I fully anticipate that to continue we continue to hear that the shipping industry also is adding shifts to accommodate the need for those types of movements as well. So I think we will all see benefit of that.

Scott Pryor: We continue to hear that, you know, the shipping industry is also adding ships to accommodate the need for those types of movements as well, so I think we will all see a benefit of that as we move forward in time.

Scott Pryor: We move forward in time.

Speaker Change: Perfect. Thanks, guys.

Zackery Lee Van Everen: Perfect. Thanks, guys.

Zackery Lee Van Everen: Alright. Thank you. Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Sanjay for any further remarks.

Sanjay Lad: Thank you. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Sanjay for any further remarks.

Operator: Thanks to everyone that was on the call this morning, and we appreciate your assistance to Targa Resources. The IR team will be available for any follow-up questions you have. Have a great day.

Sanjay Lad: Thanks to everyone that was on the call. This morning, and we appreciate your interest in Targa resources. The IR team will be available for any follow up questions. You have have a great day.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Sanjay Lad: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: [music].

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Speaker Change: Thank you.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Sure.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: [music].

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Sure.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Sure.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: No.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Thank you.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: No.

Operator: Yes.

Operator: Okay.

Operator: Sure.

Operator: No.

Operator: Sure.

Operator: Okay.

Operator: Thanks.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Sure.

Speaker Change: Thank you.

Operator: Thank you.

Operator: Okay.

Speaker Change: Thank you.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Yes.

Operator: Okay.

Speaker Change: Thank you.

Operator: Great.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Operator: Thanks.

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Thanks.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Thanks.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: [music].

Operator: Sure.

Operator: Thanks.

Operator: Okay.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Great.

Operator: Okay.

Operator: Right.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Thank you.

Operator: [music].

Operator: Sure.

Operator: Okay.

Operator: Thanks.

Operator: Great.

Operator: Sure.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Speaker Change: Thank you.

Operator: Okay.

Operator: Okay.

Operator: Thank you.

Operator: Yes.

Operator: Okay.

Operator: Thanks.

Operator: Understood.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Hi.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Sure.

Operator: Okay.

Operator: Sure.

Operator: Yes.

Operator: Great.

Operator: Sure.

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Speaker Change: Thank you.

Operator: Sure.

Operator: Yes.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: [music].

Operator: Okay.

Operator: Tom.

Operator: Yes.

Operator: Sure.

Operator: Okay.

Operator: Okay.

Operator: Yeah.

Speaker Change: Thank you.

Operator: [music].

Operator: Okay.

Operator: Yeah.

Operator: [music].