Targa Resources executives on Thursday said they expect production volumes from the Permian Basin in Texas will continue to rise, despite a third-quarter decline.
In a call with analysts to discuss Q3 financial results, Targa Chief Executive Matt Meloy blamed the 5% third-quarter decline in Permian Basin NGL volumes and 0.1% dip in gas inlet volumes on several temporary factors, including at a previously announced shift of 200 MMcf/d of natural gas to a third-party plant, delays in adding new compression and severe heat that hindered overall operations.
The Q3 production drop occurred almost exclusively in the Delaware portion of the Permian Basin, where NGL production tumbled by 12.3% from the second quarter to 322,500 b/d and natural gas inlet volumes fell by 2.9% to 2,485.4 MMcf/d. Growth in Permian Midland volumes of about 2.5% for natural gas and NGLs partly offset the decline.
Company officials said the mid-year dip was not necessarily due to a change in broader producer activities. “The underlying outlook [is that] we’re very confident Permian volumes are going to continue to grow, not just for Q4, but as you look out to 2024, 2025 and beyond,” Meloy said.
Total Q3 Permian Basin NGL volumes of 695,600 b/d were up 28% from the same period of 2022, while natural gas volumes at 5,052.3 MMcf/d were up 28% year to year.
Third-quarter NGL production across all Targa operating regions totaled 836,300 b/d, down 4% from the second quarter, but up 23% year to year. Overall natural gas inlet volumes came in at 6,923.4 MMcf/d, nearly unchanged from the previous quarter and up 17% from a year ago.
Targa in the quarter brought online the 275 MMcf/d Greenwood processing plant in the Permian Midland and completed a 1 million bbl/month expansion at its Galena Park, Texas, LPG export terminal. Meloy said both actions point to the “positive momentum” seen in the broader market.
Targa officials said Q3 cargo loadings at its LPG export facility rose 15% from Q2 on improved market conditions, despite the downtime needed to the company’s dock expansion online. The company reported export volumes of 349,300 b/d out of Galena Park for the quarter, up 27% year to year.
“Our volumes in the third quarter certainly benefited from increased demand and improved spot opportunities despite obviously having to work around the planned outage,” Meloy said, adding that Targa expects its fourth-quarter export volumes “to be equal to or better than the third quarter.”
Scott Pryor, president of logistics and transportation, said Targa is currently examining additional ways it can optimize export capacity, though through smaller, debottlenecking projects.
“We’ll continue to watch the volume growth in and through our systems, and we’ll time those various projects accordingly,” he added.
Targa reported third-quarter net income, attributable to the company, of $220 million, up 14% from Q3 2022. Adjusted earnings before interest, taxes, depreciation and amortization rose 9% to $840.2 million.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Jessica Marron, [email protected]; Editing by Jeff Barber, [email protected]
Read the full article here