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With Whistler pipeline, Targa keeps focus on Permian buildout

Targa Resources Corp.'s top executive said the Whistler natural gas pipeline project will strengthen the company's position in the Permian Basin.

Targa CEO and director Joe Bob Perkins said during an Aug. 9 earnings call that many of the company's growth projects are slated for completion by the first half of 2019. Closer to the start of the development cycle, the Whistler residue gas pipeline will enhance the company's ability to offer gas transportation service to Permian Basin producers and midstream companies.

The Whistler pipeline, announced Aug. 3, is a joint venture backed by Targa, NextEra Energy Inc., WhiteWater Midstream LLC and MPLX LP. It would connect the booming Permian Basin to customers in Texas Gulf Coast market areas. According to Perkins, the project could supply LNG export terminals. A 450-mile, 42-inch-diameter pipeline would deliver up to 2 Bcf/d of gas supplies to NextEra's hub in southeast Texas, and a 170-mile, 30-inch-diameter leg would move gas on to Wharton County, Texas. The pipeline is expected to be finished in late 2020.

"We have really good commitments in place from industry players that have a lot of experience and a lot of growth in their forecast for the midstream side of the business they participate in," Perkins said.

Perkins also said Permian takeaway for commodities is "tight and tightening." Targa is keeping tabs on the issue. "We believe that Targa customers are relatively well-positioned and that basin infrastructure constraints caused by growth rates ... will be temporary, mitigated by economic and other logistical factors."

According to an Aug. 3 CreditSights note, Targa recently bought a 10% equity interest in the Agua Blanca Permian gas pipeline, which is owned by WhiteWater, MPLX and WPX Energy Inc.

"Our operational and financial performance through the first half of this year has us on track to meet or exceed our previously disclosed full-year 2018 guidance," Perkins said. The company reported net income of $109.1 million for the second quarter, compared to $57.6 million for the second quarter of 2017. Targa reported adjusted EBITDA of $326.0 million for the second quarter, up from $257.9 million for the same quarter of 2017.