Natural gas mover and partner take two spots

Demand for more pipelines from shale basins hasn’t let up

By Robert Grattan

SHORTLY after crude prices plummeted last fall, Targa CEO Joe Bob Perkins and his management team tore up the script for their year-end employee meeting.

The industry was about to sail into a storm, Perkins said, and it wouldn’t have been right to say everything was great. But the management team didn’t tear up its business plan, too, Perkins said.

“2015 is going to be very different,” he told the employees. “Our message was: ‘We’ve got a really good ship, and we’ve been through these seas before.’”

Perkins asked employees of the natural gas processing and transportation company who didn’t live through an oil bust to ask veterans what to expect, and reassured workers nobody would be laid off. And so far, Perkins said, the company has continued to hire and expand.

Targa Resources Corp. took the second spot in the Houston Chronicle’s list of 100 topperforming public companies. It brought in $8.62 billion in annual revenue, an increase of 37 percent over the previous year, notched 57 percent earnings per share growth, and total shareholder return was 23.2 percent.

Meanwhile, Targa Re- sources Partners LP, an asset-holding subsidiary of Targa Resources Corp. and a masterlimited partnership, came in fifth on the list. The partnership, which lays claim to the same $8.62 billion in revenue, had a 133 percent jump in earnings per unit.

Founded in 2003

Targa, founded in 2003, has since built an infrastructure network that reaches from Texas to North Dakota. It employs about 1,850, including 636 in the Houston area, and has a large footprint along the Gulf Coast for processing and treating natural gas and natural gas liquids.

In the previous Chronicle 100, Targa Resources Corp. placed at No. 7, driven by the demand for more pipes to carry production from booming shale basins. For 2014, that demand didn’t change, and Targa spent more than $700 million in boosting capacity across its network. In addition to that, it started work on several Gulf Coast natural gas processing plants.

In October, Houston-based Targa announced a $5.8 billion deal to buy pipeline competitor Atlas, giving it new connections to wells in the Permian Basin, the Eagle Ford and others in Oklahoma and Kansas. The deal closed early this year.

Keeping in sync

Perkins acknowledged that the need for new infrastructure serving wells will slow as U.S. output levels off or falls.

“Being midstream, we try to keep pace with producer activity,” he said. “If producer activity has slowed down, we slow down as required.”

Targa has said it will scale back some plans to expand its gathering and processing operations, which represent about 40 percent of its business. Targa continues to invest in downstream operations such as propane and butane exports. Projects in the works include a $385 million fractionation expansion and $350 million in petroleum logistics projects.

Plus, Perkins said, Targa may buy another competitor if it finds a good deal.

“We’re going to keep looking for opportunities,” he said. “That’s the playbook.”