Delaware
|
20-3701075
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1000 Louisiana St, Suite 4300, Houston, Texas
|
77002
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer R
|
Accelerated filer £
|
Non-accelerated filer £
|
Smaller reporting company £
|
Item 1.
|
Financial Statements. |
4
|
4
|
||
5
|
||
6
|
||
8
|
||
9
|
||
10
|
||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations. |
36
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk. |
67
|
Item 4.
|
Controls and Procedures. |
71
|
PART II—OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings. |
72
|
Item 1A.
|
Risk Factors. |
72
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds. |
73
|
Item 3.
|
Defaults Upon Senior Securities. |
73
|
Item 4.
|
Mine Safety Disclosures. |
73
|
Item 5.
|
Other Information. |
73
|
Item 6.
|
Exhibits. |
74
|
SIGNATURES
|
||
76
|
· | the Partnership’s and our ability to access the debt and equity markets, which will depend on general market conditions and the credit ratings for our debt obligations; |
· | the amount of collateral required to be posted from time to time in the Partnership’s transactions; |
· | the Partnership’s success in risk management activities, including the use of derivative instruments to hedge commodity risks; |
· | the level of creditworthiness of counterparties to various transactions with the Partnership; |
· | changes in laws and regulations, particularly with regard to taxes, safety and protection of the environment; |
· | the timing and extent of changes in natural gas, natural gas liquids (“NGL”), crude oil and other commodity prices, interest rates and demand for the Partnership’s services; |
· | weather and other natural phenomena; |
· | industry changes, including the impact of consolidations and changes in competition; |
· | the Partnership’s ability to obtain necessary licenses, permits and other approvals; |
· | the level and success of crude oil and natural gas drilling around the Partnership’s assets, its success in connecting natural gas supplies to its gathering and processing systems, oil supplies to its gathering systems and NGL supplies to its logistics and marketing facilities and the Partnership’s success in connecting its facilities to transportation and markets; |
· | the Partnership’s and our ability to grow through acquisitions or internal growth projects and the successful integration and future performance of such assets; including with respect to the Atlas mergers (as defined below) which were completed on February 27, 2015 between Targa Resources Corp. and Atlas Energy, L.P., a Delaware limited partnership (“ATLS”) and between Atlas Pipeline Partners L.P., a Delaware limited partnership (“APL”) and the Partnership; |
· | general economic, market and business conditions; and |
· | the risks described in our Annual Report on Form 10-K for the year ended December 31, 2014 (“Annual Report”) and our reports and registration statements filed from time to time with the United States Securities and Exchange Commission (“SEC”). |
Bbl
|
Barrels (equal to 42 U.S. gallons)
|
Bcf
|
Billion cubic feet
|
Btu
|
British thermal units, a measure of heating value
|
BBtu
|
Billion British thermal units
|
/d
|
Per day
|
/hr
|
Per hour
|
gal
|
U.S. gallons
|
GPM
|
Liquid volume equivalent expressed as gallons per 1000 cu. ft. of natural gas
|
LPG
|
Liquefied petroleum gas
|
MBbl
|
Thousand barrels
|
MMBbl
|
Million barrels
|
MMBtu
|
Million British thermal units
|
MMcf
|
Million cubic feet
|
NGL(s)
|
Natural gas liquid(s)
|
NYMEX
|
New York Mercantile Exchange
|
GAAP
|
Accounting principles generally accepted in the United States of America
|
LIBOR
|
London Interbank Offered Rate
|
NYSE
|
New York Stock Exchange
|
Price Index Definitions
|
|
IF-NGPL MC
|
Inside FERC Gas Market Report, Natural Gas Pipeline, Mid-Continent
|
IF-PB
|
Inside FERC Gas Market Report, Permian Basin
|
IF-WAHA
|
Inside FERC Gas Market Report, West Texas WAHA
|
NY-WTI
|
NYMEX, West Texas Intermediate Crude Oil
|
OPIS-MB
|
Oil Price Information Service, Mont Belvieu, Texas
|
NG-NYMEX
|
NYMEX, Natural Gas
|
June 30,
2015
|
December 31,
2014
|
|||||||||||||||
(Unaudited)
(In millions) |
||||||||||||||||
ASSETS
|
||||||||||||||||
Current assets:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
105.7
|
$
|
81.0
|
||||||||||||
Trade receivables, net of allowances of $0.0 million
|
602.5
|
567.3
|
||||||||||||||
Inventories
|
124.8
|
168.9
|
||||||||||||||
Deferred income taxes
|
-
|
0.1
|
||||||||||||||
Assets from risk management activities
|
91.8
|
44.4
|
||||||||||||||
Other current assets
|
38.7
|
20.9
|
||||||||||||||
Total current assets
|
963.5
|
882.6
|
||||||||||||||
Property, plant and equipment
|
11,602.0
|
6,521.1
|
||||||||||||||
Accumulated depreciation
|
(1,917.7
|
)
|
(1,696.5
|
)
|
||||||||||||
Property, plant and equipment, net
|
9,684.3
|
4,824.6
|
||||||||||||||
Goodwill
|
557.9
|
-
|
||||||||||||||
Intangible assets, net
|
1,735.6
|
591.9
|
||||||||||||||
Long-term assets from risk management activities
|
40.3
|
15.8
|
||||||||||||||
Investments in unconsolidated affiliates
|
258.0
|
50.2
|
||||||||||||||
Other long-term assets
|
113.3
|
88.4
|
||||||||||||||
Total assets
|
$
|
13,352.9
|
$
|
6,453.5
|
||||||||||||
LIABILITIES AND OWNERS' EQUITY
|
||||||||||||||||
Current liabilities:
|
||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
689.1
|
$
|
638.5
|
||||||||||||
Accounts receivable securitization facility
|
124.2
|
182.8
|
||||||||||||||
Deferred income taxes
|
31.8
|
0.6
|
||||||||||||||
Liabilities from risk management activities
|
1.9
|
5.2
|
||||||||||||||
Total current liabilities
|
847.0
|
827.1
|
||||||||||||||
Long-term debt
|
5,796.1
|
2,885.4
|
||||||||||||||
Long-term liabilities from risk management activities
|
5.3
|
-
|
||||||||||||||
Deferred income taxes
|
133.5
|
138.2
|
||||||||||||||
Other long-term liabilities
|
78.8
|
63.3
|
||||||||||||||
Contingencies (see Note 16)
|
||||||||||||||||
Owners' equity:
|
||||||||||||||||
Targa Resources Corp. stockholders' equity:
|
||||||||||||||||
Common stock ($0.001 par value, 300,000,000 shares authorized)
|
0.1
|
-
|
||||||||||||||
Issued
|
Outstanding
|
|||||||||||||||
June 30, 2015
|
56,442,449
|
56,030,634
|
||||||||||||||
December 31, 2014
|
42,532,353
|
42,143,463
|
||||||||||||||
Preferred stock ($0.001 par value, 100,000,000 shares authorized, no shares issued and outstanding)
|
-
|
-
|
||||||||||||||
Additional paid-in capital
|
1,524.6
|
164.9
|
||||||||||||||
Retained earnings
|
15.4
|
25.5
|
||||||||||||||
Accumulated other comprehensive income (loss)
|
3.5
|
4.8
|
||||||||||||||
Treasury stock, at cost (411,815 shares as of June 30, 2015 and 388,890 as of December 31, 2014)
|
(27.5
|
)
|
(25.4
|
)
|
||||||||||||
Total Targa Resources Corp. stockholders' equity
|
1,516.1
|
169.8
|
||||||||||||||
Noncontrolling interests in subsidiaries
|
4,976.1
|
2,369.7
|
||||||||||||||
Total owners' equity
|
6,492.2
|
2,539.5
|
||||||||||||||
Total liabilities and owners' equity
|
$
|
13,352.9
|
$
|
6,453.5
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(Unaudited)
(In millions, except per share amounts) |
||||||||||||||||
Revenues
|
$
|
1,699.4
|
$
|
2,000.6
|
$
|
3,379.1
|
$
|
4,295.3
|
||||||||
Costs and expenses:
|
||||||||||||||||
Product purchases
|
1,237.0
|
1,616.6
|
2,505.3
|
3,531.7
|
||||||||||||
Operating expenses
|
136.9
|
106.6
|
248.2
|
210.9
|
||||||||||||
Depreciation and amortization expenses
|
163.9
|
85.9
|
282.5
|
165.4
|
||||||||||||
General and administrative expenses
|
49.2
|
41.6
|
91.7
|
79.5
|
||||||||||||
Other operating (income) expense
|
-
|
(0.4
|
)
|
0.6
|
(1.0
|
)
|
||||||||||
Income from operations
|
112.4
|
150.3
|
250.8
|
308.8
|
||||||||||||
Other income (expense):
|
||||||||||||||||
Interest expense, net
|
(70.2
|
)
|
(35.7
|
)
|
(125.1
|
)
|
(69.6
|
)
|
||||||||
Equity earnings (loss)
|
(1.5
|
)
|
4.2
|
0.5
|
9.1
|
|||||||||||
Loss on debt redemptions and amendments
|
(3.8
|
)
|
-
|
(12.9
|
)
|
-
|
||||||||||
Other
|
1.7
|
(0.1
|
)
|
(23.5
|
)
|
-
|
||||||||||
Income before income taxes
|
38.6
|
118.7
|
89.8
|
248.3
|
||||||||||||
Income tax (expense) benefit:
|
||||||||||||||||
Current
|
(2.4
|
)
|
(16.6
|
)
|
(11.6
|
)
|
(40.5
|
)
|
||||||||
Deferred
|
(12.4
|
)
|
1.1
|
(18.5
|
)
|
2.4
|
||||||||||
(14.8
|
)
|
(15.5
|
)
|
(30.1
|
)
|
(38.1
|
)
|
|||||||||
Net income
|
23.8
|
103.2
|
59.7
|
210.2
|
||||||||||||
Less: Net income attributable to noncontrolling interests
|
8.6
|
76.8
|
41.1
|
164.2
|
||||||||||||
Net income available to common shareholders
|
$
|
15.2
|
$
|
26.4
|
$
|
18.6
|
$
|
46.0
|
||||||||
Net income available per common share - basic
|
$
|
0.27
|
$
|
0.63
|
$
|
0.37
|
$
|
1.10
|
||||||||
Net income available per common share - diluted
|
$
|
0.27
|
$
|
0.63
|
$
|
0.36
|
$
|
1.09
|
||||||||
Weighted average shares outstanding - basic
|
55.9
|
42.0
|
50.9
|
42.0
|
||||||||||||
Weighted average shares outstanding - diluted
|
56.1
|
42.1
|
51.0
|
42.1
|
Three Months Ended June 30,
|
||||||||||||||||||||||||
2015
|
2014
|
|||||||||||||||||||||||
Pre-Tax
|
Related
Income
Tax
|
After
Tax
|
Pre-
Tax
|
Related
Income
Tax
|
After Tax
|
|||||||||||||||||||
Targa Resources Corp.
|
(Unaudited)
(In millions) |
|||||||||||||||||||||||
Net income attributable to Targa Resources Corp.
|
$
|
15.2
|
$
|
26.4
|
||||||||||||||||||||
Other comprehensive income (loss) attributable to Targa Resources Corp.
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
(1.1
|
)
|
$
|
0.4
|
(0.7
|
)
|
$
|
(0.8
|
)
|
$
|
0.3
|
(0.5
|
)
|
||||||||||
Settlements reclassified to revenues
|
(1.8
|
)
|
0.7
|
(1.1
|
)
|
0.5
|
(0.2
|
)
|
0.3
|
|||||||||||||||
Interest rate swaps:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
0.1
|
(0.1
|
)
|
-
|
|||||||||||||||||
Other comprehensive income (loss) attributable to Targa Resources Corp.
|
$
|
(2.9
|
)
|
$
|
1.1
|
(1.8
|
)
|
$
|
(0.2
|
)
|
$
|
-
|
(0.2
|
)
|
||||||||||
Comprehensive income attributable to Targa Resources Corp.
|
$
|
13.4
|
$
|
26.2
|
||||||||||||||||||||
Noncontrolling interests
|
||||||||||||||||||||||||
Net income attributable to noncontrolling interests
|
$
|
8.6
|
$
|
76.8
|
||||||||||||||||||||
Other comprehensive income (loss) attributable to noncontrolling interests
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
(7.6
|
)
|
$
|
-
|
(7.6
|
)
|
$
|
(6.0
|
)
|
$
|
-
|
(6.0
|
)
|
||||||||||
Settlements reclassified to revenues
|
(14.5
|
)
|
-
|
(14.5
|
)
|
4.0
|
-
|
4.0
|
||||||||||||||||
Interest rate swaps:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
1.0
|
-
|
1.0
|
||||||||||||||||||
Other comprehensive income (loss) attributable to noncontrolling interests
|
$
|
(22.1
|
)
|
$
|
-
|
(22.1
|
)
|
$
|
(1.0
|
)
|
$
|
-
|
(1.0
|
)
|
||||||||||
Comprehensive income (loss) attributable to noncontrolling interests
|
$
|
(13.5
|
)
|
$
|
75.8
|
|||||||||||||||||||
Total
|
||||||||||||||||||||||||
Net income
|
$
|
23.8
|
$
|
103.2
|
||||||||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
(8.7
|
)
|
$
|
0.4
|
(8.3
|
)
|
$
|
(6.8
|
)
|
$
|
0.3
|
(6.5
|
)
|
||||||||||
Settlements reclassified to revenues
|
(16.3
|
)
|
0.7
|
(15.6
|
)
|
4.5
|
(0.2
|
)
|
4.3
|
|||||||||||||||
Interest rate swap:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
1.1
|
(0.1
|
)
|
1.0
|
|||||||||||||||||
Other comprehensive income (loss)
|
$
|
(25.0
|
)
|
$
|
1.1
|
(23.9
|
)
|
$
|
(1.2
|
)
|
$
|
-
|
(1.2
|
)
|
||||||||||
Total comprehensive income
|
$
|
(0.1
|
)
|
$
|
102.0
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
2015
|
2014
|
|||||||||||||||||||||||
Pre-Tax
|
Related
Income
Tax
|
After
Tax
|
Pre-
Tax
|
Related
Income
Tax
|
After Tax
|
|||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||
(In millions)
|
||||||||||||||||||||||||
Net income attributable to Targa Resources Corp.
|
$
|
18.6
|
$
|
46.0
|
||||||||||||||||||||
Other comprehensive income (loss) attributable to Targa Resources Corp.
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
0.6
|
$
|
(0.2
|
)
|
0.4
|
$
|
(2.4
|
)
|
$
|
0.9
|
(1.5
|
)
|
|||||||||||
Settlements reclassified to revenues
|
(2.7
|
)
|
1.0
|
(1.7
|
)
|
1.4
|
(0.5
|
)
|
0.9
|
|||||||||||||||
Interest rate swaps:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
0.3
|
(0.1
|
)
|
0.2
|
|||||||||||||||||
Other comprehensive income (loss) attributable to Targa Resources Corp.
|
$
|
(2.1
|
)
|
$
|
0.8
|
(1.3
|
)
|
$
|
(0.7
|
)
|
$
|
0.3
|
(0.4
|
)
|
||||||||||
Comprehensive income attributable to Targa Resources Corp.
|
$
|
17.3
|
$
|
45.6
|
||||||||||||||||||||
Net income attributable to noncontrolling interests
|
$
|
41.1
|
$
|
164.2
|
||||||||||||||||||||
Other comprehensive loss attributable to noncontrolling interests
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
15.9
|
$
|
-
|
15.9
|
$
|
(16.2
|
)
|
$
|
-
|
(16.2
|
)
|
||||||||||||
Settlements reclassified to revenues
|
(21.7
|
)
|
-
|
(21.7
|
)
|
9.4
|
-
|
9.4
|
||||||||||||||||
Interest rate swaps:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
2.1
|
-
|
2.1
|
||||||||||||||||||
Other comprehensive income (loss) attributable to noncontrolling interests
|
$
|
(5.8
|
)
|
$
|
-
|
(5.8
|
)
|
$
|
(4.7
|
)
|
$
|
-
|
(4.7
|
)
|
||||||||||
Comprehensive income attributable to noncontrolling interests
|
35.3
|
159.5
|
||||||||||||||||||||||
Total
|
||||||||||||||||||||||||
Net income
|
$
|
59.7
|
$
|
210.2
|
||||||||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||||||
Commodity hedging contracts:
|
||||||||||||||||||||||||
Change in fair value
|
$
|
16.5
|
$
|
(0.2
|
)
|
16.3
|
$
|
(18.6
|
)
|
$
|
0.9
|
(17.7
|
)
|
|||||||||||
Settlements reclassified to revenues
|
(24.4
|
)
|
1.0
|
(23.4
|
)
|
10.8
|
(0.5
|
)
|
10.3
|
|||||||||||||||
Interest rate swap:
|
||||||||||||||||||||||||
Settlements reclassified to interest expense, net
|
-
|
-
|
-
|
2.4
|
(0.1
|
)
|
2.3
|
|||||||||||||||||
Other comprehensive income (loss)
|
$
|
(7.9
|
)
|
$
|
0.8
|
(7.1
|
)
|
$
|
(5.4
|
)
|
$
|
0.3
|
(5.1
|
)
|
||||||||||
Total comprehensive income
|
$
|
52.6
|
$
|
205.1
|
Common Stock
|
Additional
Paid in
|
Retained
Earnings (Accumulated
|
Accumulated
Other
Comprehensive
|
Treasury Shares
|
Noncontrolling
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit)
|
Income (Loss)
|
Shares
|
Amount
|
Interests
|
Total
|
||||||||||||||||||||||||||||
(Unaudited)
(In millions, except shares in thousands) |
||||||||||||||||||||||||||||||||||||
Balance, December 31, 2014
|
42,143
|
$
|
-
|
$
|
164.9
|
$
|
25.5
|
$
|
4.8
|
389
|
$
|
(25.4
|
)
|
$
|
2,369.7
|
$
|
2,539.5
|
|||||||||||||||||||
Compensation on equity grants
|
-
|
-
|
3.5
|
-
|
-
|
-
|
-
|
8.9
|
12.4
|
|||||||||||||||||||||||||||
Accrual of distribution equivalent rights
|
-
|
-
|
(0.3
|
)
|
-
|
-
|
-
|
-
|
(0.7
|
)
|
(1.0
|
)
|
||||||||||||||||||||||||
Shares issued under compensation program
|
47
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Common stock and Partnership units tendered for tax withholding obligations
|
(23
|
)
|
-
|
-
|
-
|
-
|
23
|
(2.1
|
)
|
(2.1
|
)
|
(4.2
|
)
|
|||||||||||||||||||||||
Sale of Partnership limited partner interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
293.4
|
293.4
|
|||||||||||||||||||||||||||
Proceeds from equity issuances
|
3,738
|
-
|
336.6
|
-
|
-
|
-
|
-
|
-
|
336.6
|
|||||||||||||||||||||||||||
Impact of Partnership equity transactions
|
-
|
-
|
56.5
|
-
|
-
|
-
|
-
|
(56.5
|
)
|
-
|
||||||||||||||||||||||||||
Dividends
|
-
|
-
|
-
|
(28.7
|
)
|
-
|
-
|
-
|
-
|
(28.7
|
)
|
|||||||||||||||||||||||||
Dividends in excess of retained earnings
|
-
|
-
|
(50.2
|
)
|
-
|
-
|
-
|
-
|
-
|
(50.2
|
)
|
|||||||||||||||||||||||||
Distributions to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(226.9
|
)
|
(226.9
|
)
|
|||||||||||||||||||||||||
Contributions from noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
5.9
|
5.9
|
||||||||||||||||||||||||||||
Noncontrolling interest in acquired subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
113.4
|
113.4
|
|||||||||||||||||||||||||||
Common stock issued in ATLS merger
|
10,126
|
0.1
|
1,013.6
|
-
|
-
|
-
|
-
|
-
|
1,013.7
|
|||||||||||||||||||||||||||
Issuance of Partnership units in APL merger
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,435.7
|
2,435.7
|
|||||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
-
|
(1.3
|
)
|
-
|
-
|
(5.8
|
)
|
(7.1
|
)
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
18.6
|
-
|
-
|
-
|
41.1
|
59.7
|
|||||||||||||||||||||||||||
Balance, June 30, 2015
|
56,031
|
$
|
0.1
|
$
|
1,524.6
|
$
|
15.4
|
$
|
3.5
|
412
|
$
|
(27.5
|
)
|
$
|
4,976.1
|
$
|
6,492.2
|
|||||||||||||||||||
Balance, December 31, 2013
|
42,162
|
$
|
-
|
$
|
151.6
|
$
|
20.5
|
$
|
(0.5
|
)
|
367
|
$
|
(22.8
|
)
|
$
|
1,942.5
|
$
|
2,091.3
|
||||||||||||||||||
Compensation on equity grants
|
4
|
-
|
2.6
|
-
|
-
|
-
|
-
|
4.9
|
7.5
|
|||||||||||||||||||||||||||
Accrual of distribution equivalent rights
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1.4
|
)
|
(1.4
|
)
|
|||||||||||||||||||||||||
Repurchase of common stock
|
(8
|
)
|
-
|
-
|
-
|
-
|
8
|
(0.8
|
)
|
-
|
(0.8
|
)
|
||||||||||||||||||||||||
Sale of Partnership limited partner interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
163.0
|
163.0
|
|||||||||||||||||||||||||||
Impact of Partnership equity transactions
|
-
|
-
|
8.6
|
-
|
-
|
-
|
-
|
(8.6
|
)
|
-
|
||||||||||||||||||||||||||
Dividends
|
-
|
-
|
(40.0
|
)
|
-
|
-
|
-
|
-
|
(40.0
|
)
|
||||||||||||||||||||||||||
Dividends in excess of retained earnings
|
-
|
-
|
(13.0
|
)
|
-
|
-
|
-
|
-
|
-
|
(13.0
|
)
|
|||||||||||||||||||||||||
Distributions
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(168.7
|
)
|
(168.7
|
)
|
|||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
-
|
(0.4
|
)
|
-
|
-
|
(4.7
|
)
|
(5.1
|
)
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
46.0
|
-
|
-
|
-
|
164.2
|
210.2
|
|||||||||||||||||||||||||||
Balance, June 30, 2014
|
42,158
|
$
|
-
|
$
|
149.8
|
$
|
26.5
|
$
|
(0.9
|
)
|
375
|
$
|
(23.6
|
)
|
$
|
2,091.2
|
$
|
2,243.0
|
Six Months Ended June 30,
|
||||||||
2015
|
2014
|
|||||||
(Unaudited)
(In millions) |
||||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
59.7
|
$
|
210.2
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization in interest expense
|
7.2
|
6.9
|
||||||
Compensation on equity grants
|
12.4
|
7.5
|
||||||
Depreciation and amortization expense
|
282.5
|
165.4
|
||||||
Accretion of asset retirement obligations
|
2.7
|
2.2
|
||||||
Deferred income tax expense (benefit)
|
18.5
|
(2.4
|
)
|
|||||
Equity earnings of unconsolidated affiliates
|
(0.5
|
)
|
(9.1
|
)
|
||||
Distributions received from unconsolidated affiliates
|
6.9
|
9.1
|
||||||
Risk management activities
|
31.5
|
(0.7
|
)
|
|||||
Gain on sale or disposition of assets
|
(0.2
|
)
|
(1.2
|
)
|
||||
Loss on debt redemptions and amendments
|
12.9
|
-
|
||||||
Changes in operating assets and liabilities, net of business acquisitions:
|
||||||||
Receivables and other assets
|
131.7
|
(31.7
|
)
|
|||||
Inventory
|
57.9
|
(18.1
|
)
|
|||||
Accounts payable and other liabilities
|
(139.0
|
)
|
86.4
|
|||||
Net cash provided by operating activities
|
484.2
|
424.5
|
||||||
Cash flows from investing activities
|
||||||||
Outlays for property, plant and equipment
|
(436.2
|
)
|
(419.6
|
)
|
||||
Outlays for business acquisitions, net of cash acquired
|
(1,574.4
|
)
|
-
|
|||||
Return of capital from unconsolidated affiliate
|
0.1
|
3.6
|
||||||
Other, net
|
(1.3
|
)
|
2.3
|
|||||
Net cash used in investing activities
|
(2,011.8
|
)
|
(413.7
|
)
|
||||
Cash flows from financing activities
|
||||||||
Partnership debt obligations:
|
||||||||
Proceeds from borrowings under credit facilities
|
1,343.0
|
950.0
|
||||||
Repayments of credit facilities
|
(465.0
|
)
|
(850.0
|
)
|
||||
Proceeds from accounts receivable securitization facility
|
253.4
|
67.8
|
||||||
Repayments of accounts receivable securitization facility
|
(312.0
|
)
|
(113.2
|
)
|
||||
Proceeds from issuance of senior notes
|
1,100.0
|
-
|
||||||
Redemption of APL senior notes
|
(1,168.8
|
)
|
-
|
|||||
Non-Partnership debt obligations:
|
||||||||
Proceeds from borrowings under credit facility
|
481.0
|
39.0
|
||||||
Repayments of credit facility
|
(123.0
|
)
|
(36.0
|
)
|
||||
Proceeds from issuance of senior term loan
|
422.5
|
-
|
||||||
Repayments on senior term loan
|
(270.0
|
)
|
-
|
|||||
Costs incurred in connection with financing arrangements
|
(37.1
|
)
|
(1.7
|
)
|
||||
Proceeds from sale of common units of the Partnership
|
295.8
|
164.7
|
||||||
Repurchase of common units under Partnership compensation plans
|
(2.1
|
)
|
-
|
|||||
Contributions from noncontrolling interests
|
5.9
|
-
|
||||||
Distributions to noncontrolling interests
|
(226.9
|
)
|
(168.7
|
)
|
||||
Proceeds from TRC equity offerings
|
336.6
|
-
|
||||||
Repurchase of common stock under TRC compensation plans
|
(2.1
|
)
|
(0.8
|
)
|
||||
Dividends to common shareholders
|
(78.9
|
)
|
(52.7
|
)
|
||||
Net cash provided by (used in) financing activities
|
1,552.3
|
(1.6
|
)
|
|||||
Net change in cash and cash equivalents
|
24.7
|
9.2
|
||||||
Cash and cash equivalents, beginning of period
|
81.0
|
66.7
|
||||||
Cash and cash equivalents, end of period
|
$
|
105.7
|
$
|
75.9
|
· | a 2% general partner interest, which we hold through our 100% ownership interest in the general partner of the Partnership; |
· | all Incentive Distribution Rights (“IDRs”); |
· | 16,309,594 common units of the Partnership, representing an 8.9% limited partnership interest; and |
· | a Special GP Interest representing retained tax benefits related to the contribution to the Partnership from us of the APL general partner interest acquired in the ATLS merger (see Note 4 – Business Acquisitions). |
Pro Forma Results for the Six Months Ended
|
||||||||
June 30, 2015
|
June 30, 2014
|
|||||||
Revenues
|
$
|
3,667.8
|
$
|
5,647.6
|
||||
Net income
|
41.7
|
182.0
|
· | Reflect the change in amortization expense resulting from the difference between the historical balances of APL’s intangible assets, net, and our preliminary estimate of the fair value of intangible assets acquired. |
· | Reflect the change in depreciation expense resulting from the difference between the historical balances of APL’s property, plant and equipment, net, and our preliminary estimate of the fair value of property, plant and equipment acquired. |
· | Reflect the change in interest expense resulting from our financing activities directly related to the Atlas mergers as compared with APL’s historical interest expense. |
· | Reflect the changes in stock-based compensation expense related to the fair value of the unvested portion of replacement Partnership Long Term Incentive Plan (“LTIP”) awards which were issued in connection with the acquisition to APL phantom unitholders who continue to provide service as Targa employees following the completion of the APL merger. |
· | Remove the results of operations attributable to APL businesses sold during the periods: (1) the May 2014 sale of APL’s 20% interest in West Texas LPG Pipeline Limited Partnership and (2) the February 2015 transfer to Atlas Resource Partners, L.P. of 100% of APL’s interest in gas gathering assets located in the Appalachian Basin of Tennessee. |
· | Exclude $26.6 million of acquisition-related costs incurred in 2015 from pro forma net income for the six months ended June 30, 2015. Pro forma net income for the six months ended June 30, 2014 was adjusted to include these charges. |
· | To conform to our accounting policy, we also adjusted TPL’s revenues to report plant sales of Y-grade at contractual net-back values, rather than grossed up for transportation and fractionation deduction factors. |
Fair Value of Consideration Transferred:
|
||||
Cash paid, net of cash acquired (1):
|
||||
TRC
|
$
|
745.7
|
||
TRP
|
828.7
|
|||
Common shares of TRC
|
1,008.5
|
|||
Replacement restricted stock units awarded (2)
|
5.2
|
|||
Common units of TRP
|
2,421.1
|
|||
Replacement phantom units awarded (2)
|
15.0
|
|||
Total
|
$
|
5,024.2
|
(1) | Net of cash acquired of $40.8 million, including $7.3 million received in April 2015 by us as part of the Atlas mergers, representing the one-time cash payment from the Partnership for the APL common units owned by ATLS. The one-time cash payment was paid by the Partnership in February 2015 and received by us from the transfer agent in April 2015. |
(2) | The fair value of consideration transferred in the form of replacement restricted stock unit awards and replacement phantom unit awards represent the allocation of the fair value of the awards to the pre-combination service period. The fair value of the awards associated with the post-combination service period will be recognized over the remaining service period of the award. |
Preliminary fair value determination:
|
February 27, 2015
|
|||
Trade and other current receivables, net
|
$
|
181.1
|
||
Other current assets
|
25.1
|
|||
Assets from risk management activities
|
102.1
|
|||
Property, plant and equipment
|
4,693.2
|
|||
Investments in unconsolidated affiliates
|
214.2
|
|||
Intangible assets
|
1,204.0
|
|||
Other long-term assets
|
6.6
|
|||
Current liabilities
|
(255.6
|
)
|
||
Long-term debt
|
(1,573.3
|
)
|
||
Deferred income tax liabilities, net
|
(8.6
|
)
|
||
Other long-term liabilities
|
(9.1
|
)
|
||
Total identifiable net assets
|
4,579.7
|
|||
Noncontrolling interest in subsidiaries
|
(113.4
|
)
|
||
Goodwill
|
557.9
|
|||
$
|
5,024.2
|
June 30, 2015
|
December 31, 2014
|
|||||||
Partnership:
|
||||||||
Commodities
|
$
|
112.7
|
$
|
157.4
|
||||
Materials and supplies
|
12.1
|
11.5
|
||||||
$
|
124.8
|
$
|
168.9
|
June 30, 2015
|
December 31, 2014
|
Estimated Useful Lives
(In Years)
|
||||||||||
Gathering systems
|
$
|
6,052.6
|
$
|
2,588.6
|
5 to 40
|
|||||||
Processing and fractionation facilities
|
2,982.6
|
1,890.7
|
5 to 40
|
|||||||||
Terminaling and storage facilities
|
1,090.0
|
1,038.9
|
5 to 25
|
|||||||||
Transportation assets
|
438.7
|
359.0
|
10 to 25
|
|||||||||
Other property, plant and equipment
|
210.0
|
149.3
|
3 to 40
|
|||||||||
Land
|
102.7
|
95.6
|
-
|
|||||||||
Construction in progress
|
725.4
|
399.0
|
-
|
|||||||||
Property, plant and equipment
|
11,602.0
|
6,521.1
|
||||||||||
Accumulated depreciation
|
(1,917.7
|
)
|
(1,696.5
|
)
|
||||||||
Property, plant and equipment, net
|
$
|
9,684.3
|
$
|
4,824.6
|
||||||||
Intangible assets
|
$
|
1,885.6
|
$
|
681.8
|
20
|
|||||||
Accumulated amortization
|
(150.0
|
)
|
(89.9
|
)
|
||||||||
Intangible assets, net
|
$
|
1,735.6
|
$
|
591.9
|
Six Months Ended
June 30, 2015
|
||||
Beginning of period
|
$
|
57.1
|
||
Preliminary fair value of ARO acquired with APL merger
|
4.0
|
|||
Change in cash flow estimate
|
3.8
|
|||
Accretion expense
|
2.7
|
|||
End of period
|
$
|
67.6
|
Six Months Ended
June 30, 2015
|
||||
Beginning of period
|
$
|
50.2
|
||
Preliminary fair value of T2 Joint Ventures acquired
|
214.2
|
|||
Equity earnings (1)
|
0.5
|
|||
Cash distributions (2)
|
(7.0
|
)
|
||
Cash calls for expansion projects
|
0.1
|
|||
End of period
|
$
|
258.0
|
(1) | Includes equity earnings of acquired investments since the date of acquisition of February 27, 2015. |
(2) | Includes $0.1 million distributions received in excess of the Partnership’s share of cumulative earnings for the six months ended June 30, 2015. Such excess distributions are considered a return of capital and disclosed in cash flows from investing activities in the Consolidated Statements of Cash Flows. |
June 30, 2015
|
December 31, 2014
|
|||||||||||||||||||||||
Targa
Resources
Partners LP
|
TRC Non-
Partnership
|
Targa
Resources
Corp.
Consolidated
|
Targa
Resources
Partners LP
|
TRC Non-
Partnership
|
Targa
Resources
Corp.
Consolidated
|
|||||||||||||||||||
Commodities
|
$
|
402.5
|
$
|
-
|
$
|
402.5
|
$
|
416.7
|
$
|
-
|
$
|
416.7
|
||||||||||||
Other goods and services
|
105.9
|
1.4
|
107.3
|
108.9
|
2.2
|
111.1
|
||||||||||||||||||
Interest
|
63.3
|
1.0
|
64.3
|
37.3
|
-
|
37.3
|
||||||||||||||||||
Compensation and benefits
|
1.8
|
29.3
|
31.1
|
1.3
|
44.8
|
46.1
|
||||||||||||||||||
Income and other taxes
|
31.6
|
0.1
|
31.7
|
13.6
|
(1.9
|
)
|
11.7
|
|||||||||||||||||
Other
|
47.6
|
4.6
|
52.2
|
14.9
|
0.7
|
15.6
|
||||||||||||||||||
$
|
652.7
|
$
|
36.4
|
$
|
689.1
|
$
|
592.7
|
$
|
45.8
|
$
|
638.5
|
June 30, 2015
|
December 31, 2014
|
|||||||
Current:
|
||||||||
Obligations of the Partnership
|
||||||||
Accounts receivable securitization facility, due December 2015 (1)
|
$
|
124.2
|
$
|
182.8
|
||||
Long-term:
|
||||||||
Non-Partnership obligations:
|
||||||||
TRC Senior secured revolving credit facility, variable rate, due February 2020 (2)
|
460.0
|
-
|
||||||
TRC Senior secured term loan, variable rate, due February 2022
|
160.0
|
-
|
||||||
Unamortized discount
|
(2.7
|
)
|
-
|
|||||
TRC Senior secured revolving credit facility, variable rate, due October 2017
|
-
|
102.0
|
||||||
Obligations of the Partnership: (1)
|
||||||||
Senior secured revolving credit facility, variable rate, due October 2017 (3)
|
878.0
|
-
|
||||||
Senior unsecured notes, 5% fixed rate, due January 2018
|
1,100.0
|
-
|
||||||
Senior unsecured notes, 6⅞% fixed rate, due February 2021
|
483.6
|
483.6
|
||||||
Unamortized discount
|
(23.8
|
)
|
(25.2
|
)
|
||||
Senior unsecured notes, 6⅝% fixed rate, due October 2020 (4)
|
342.1
|
-
|
||||||
Unamortized premium
|
5.4
|
-
|
||||||
Senior unsecured notes, 6⅜% fixed rate, due August 2022
|
300.0
|
300.0
|
||||||
Senior unsecured notes, 5¼% fixed rate, due May 2023
|
600.0
|
600.0
|
||||||
Senior unsecured notes, 4¼% fixed rate, due November 2023
|
625.0
|
625.0
|
||||||
Senior unsecured notes, 4⅛% fixed rate, due November 2019
|
800.0
|
800.0
|
||||||
Senior unsecured notes, 6⅝% fixed rate, due October 2020 (4) (5)
|
13.1
|
-
|
||||||
Unamortized premium
|
0.2
|
-
|
||||||
Senior unsecured notes, 4¾% fixed rate, due November 2021 (5)
|
6.5
|
-
|
||||||
Senior unsecured notes, 5⅞% fixed rate, due August 2023 (5)
|
48.1
|
-
|
||||||
Unamortized premium
|
0.6
|
-
|
||||||
Total long-term debt
|
5,796.1
|
2,885.4
|
||||||
Total debt
|
$
|
5,920.3
|
$
|
3,068.2
|
||||
Irrevocable standby letters of credit:
|
||||||||
Letters of credit outstanding under the TRC Senior secured credit facility (2)
|
$
|
-
|
$
|
-
|
||||
Letters of credit outstanding under the Partnership senior secured revolving credit facility (3)
|
20.5
|
44.1
|
||||||
$
|
20.5
|
$
|
44.1
|
(1) | While we consolidate the debt of the Partnership in our financial statements, we do not have the obligation to make interest payments or debt payments with respect to the debt of the Partnership. |
(2) | As of June 30, 2015, availability under TRC’s $670.0 million senior secured revolving credit facility was $210.0 million. |
(3) | As of June 30, 2015, availability under the Partnership’s $1.6 billion senior secured revolving credit facility (“TRP Revolver”) was $701.5 million. |
(4) | In May 2015, the Partnership exchanged TRP 6⅝% Senior Notes with the same economic terms to holders of the 2020 APL Notes (as defined below) who validly tendered such notes for exchange to us. |
(5) | Senior unsecured notes issued by APL entities and acquired in the ATLS mergers. While the Partnership consolidates the debt acquired in the Atlas mergers, neither we nor the Partnership guarantees the acquired debt of APL. |
Range of Interest
Rates Incurred
|
Weighted Average
Interest Rate Incurred
|
||
TRC senior secured revolving credit facility
|
2.9%
|
2.9%
|
|
TRC senior secured term loan
|
5.75%
|
5.75%
|
|
Partnership's senior secured revolving credit facility
|
1.9% - 4.3%
|
2.0%
|
|
Partnership's accounts receivable securitization facility
|
0.9%
|
0.9%
|
Senior Notes
|
Outstanding
Note Balance
|
Amount
Tendered
|
Premium
Paid
|
Accrued
Interest
Paid
|
Total Tender
Offer
payments
|
% Tendered
|
Note Balance
after Tender
Offers
|
|||||||||||||||||||||
($ amounts in millions)
|
||||||||||||||||||||||||||||
6⅝% due 2020
|
$
|
500.0
|
$
|
140.1
|
$
|
2.1
|
$
|
3.7
|
$
|
145.9
|
28.02
|
%
|
$
|
359.9
|
||||||||||||||
4¾% due 2021
|
400.0
|
393.5
|
5.9
|
5.3
|
404.7
|
98.38
|
%
|
6.5
|
||||||||||||||||||||
5⅞% due 2023
|
650.0
|
601.9
|
8.7
|
2.6
|
613.2
|
92.60
|
%
|
48.1
|
||||||||||||||||||||
Total
|
$
|
1,550.0
|
$
|
1,135.5
|
$
|
16.7
|
$
|
11.6
|
$
|
1,163.8
|
$
|
414.5
|
Distributions
|
||||||||||||||||||||||||||||
Three Months
Ended
|
Date Paid or to
be Paid
|
Limited
Partners
|
General Partner
|
Distributions
to Targa
Resources
Corp.
|
Distributions
per limited
partner unit
|
|||||||||||||||||||||||
Common
|
Incentive
|
2%
|
Total
|
|||||||||||||||||||||||||
(In millions, except per unit amounts)
|
||||||||||||||||||||||||||||
June 30, 2015
|
August 14, 2015
|
$
|
152.5
|
$
|
43.9
|
(1
|
)
|
$
|
4.0
|
$
|
200.4
|
$
|
61.4
|
$
|
0.8250
|
|||||||||||||
March 31, 2015
|
May 15, 2015
|
148.3
|
41.7
|
(1
|
)
|
3.9
|
193.9
|
59.0
|
0.8200
|
|||||||||||||||||||
December 31, 2014
|
February 13, 2015
|
96.3
|
38.4
|
2.7
|
137.4
|
51.6
|
0.8100
|
(1) | Pursuant to the IDR Giveback Amendment in conjunction with the Atlas mergers, IDRs of $9.375 million were allocated to common unitholders in the first and second quarter of 2015. The IDR Giveback Amendment covers sixteen quarterly distribution declarations following the completion of the Atlas mergers on February 27, 2015 and will result in reallocation of IDR payments to common unitholders at the following amounts: $9.375 million per quarter for 2015, $6.25 million per quarter for 2016, $2.5 million per quarter for 2017 and $1.25 million per quarter for 2018. |
Three Months Ended
|
Date Paid or To
Be Paid
|
Total
Dividend
Declared
|
Amount of
Dividend
Paid
|
Accrued
Dividends (1)
|
Dividend
Declared per
Share of
Common Stock
|
|||||||||||||
(In millions, except per share amounts)
|
||||||||||||||||||
June 30, 2015
|
August 17, 2015
|
$
|
49.2
|
$
|
49.0
|
$
|
0.2
|
$
|
0.87500
|
|||||||||
March 31, 2015
|
May 18, 2015
|
46.6
|
46.4
|
0.2
|
0.83000
|
|||||||||||||
December 31, 2014
|
February 17, 2015
|
32.8
|
32.6
|
0.2
|
0.77500
|
(1) | Represents accrued dividends on restricted stock units that are payable upon vesting. |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Net income
|
$
|
23.8
|
$
|
103.2
|
$
|
59.7
|
$
|
210.2
|
||||||||
Less: Net income attributable to noncontrolling interests
|
8.6
|