Matt Meloy: Yes, sure. Now, 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 of the large scale downstream projects are accounted for. Daytona is 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 to 2025. So then it really just comes to Gathering & Processing. 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, just depending on overall volumes and then adding processing plants.
We’ve already got, as we mentioned, the Pembrook II 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 big delta, I’d say, in overall growth expectations or growth realizations for us in GMP to have a large scale move. So that’s why we feel pretty good about the $1.4 billion. As it goes through the year, we’ll give guidance, we’ll refine it. And 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 billion for next year.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Neel Mitra from Bank of America. Your question, please.
Neel 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.
Jen Kneale: Good morning, Neel. This is Jen. We talked very openly on our February call, and you can even see it in our proxy and 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 certainly appreciate the support and alignment of our producers related to that capital spend. 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, 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 fall volume growth, as well as fee floor growth in our Gathering & Processing business and our contracts.
Neel Mitra: Okay, perfect. And the second question on the LNG side, fractionation volumes were down, looks to schedule downtime. Could you maybe provide how often you have scheduled downtime on the frac side and then if you incur third-party frac costs this quarter that you probably shouldn’t run through for the rest of the year?
Scott Pryor: Yes, Neel, this is Scott. When you look at the first quarter relative to fourth quarter of last year, yes, our frac volumes were down, but our fractionators 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. Looking forward for us into the second quarter, obviously, as Jen mentioned, we’re really happy to see Train 9 in startup mode, and then we’ll be real happy to see GCF start up 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 into the second quarter for us when we come out of that quarter with Train 9 online and with GCF 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, 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,
Neel Mitra: Perfect. Thank you.
Jen Kneale: Thanks, Neel.
Matt Meloy: Thank you.
Operator: One moment for our next question. And our next question comes from the line of Keith Stanley from Wolfe Research. Your question, please.
Keith Stanley: Hi. Good morning. The – so I know the company is more fee-based and well hedged this year. But I want to make sure with Waha prices being pretty extreme here that there’s no meaningful impact from price 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? Do you need to see something happen by the summer, the fall or how you’re thinking about that overall?
Matt Meloy: Okay. Hi, Keith. Yes. Good questions. I’ll start with just talking a little bit about Waha. And then Bobby and Pat can talk a little bit about that and the Permian supply. Yes. So there are pluses and minuses for us when we have really weak Waha prices. We have just – 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. So we still have some length on natural gas. So when you see negative prices that is a negative force. 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 be depending on where we’re moving it and where we’re able to get it to. There could be some positives there. So I’d say there’s 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, do you want to talk about that?
Bobby Muraro: Yes. So a couple of things relative to what Matt said. Not to use the phrase. It’s not our first rodeo. Right. So every couple of years we see Waha get crushed. We have those really defined forecasts relative to the Waha connection. So we’re always planning, and 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. 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 four producers out of our plants, and we are working on multiple fronts, multiple options, multiple pipes. All that have, I call, very good traction. I fully expect, I’ve said this before, that pipe will go FID by the end of this year. If we make good progress on one of the options or the industry does, it could go earlier than year end. I won’t guess to what month, but I fully expect that gas pipeline to go and go this year. 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.
Keith Stanley: Thank you. That’s helpful. That’s all from me.
Matt Meloy: All right. 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.
Tristan Richardson: Hi, guys, thank you for squeezing me at the end here. I appreciate it. A lot has been asked and answered. Maybe just one for me on the CapEx side. I think last quarter in the February call, you offered that illustrative annual expending 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’ve laid out in that hypothetical. But the ’25 guide is quite a bit below, 20% below. So just thinking about maybe where we’re deviating from some of that illustrative example, 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.
Matt Meloy: Yes, sure. Hi, Tristan, 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 multiyear basis. That’s one item.
Jen Kneale: And then another one would be with the really low cost export expansion we have. We’ve got in that illustrative multiyear guidance, spending for both transport and exports that we wouldn’t expect to need to do in a meaningful way in 2025.
Tristan Richardson: Well, That’s it from me. That’s super helpful. I appreciate it. Thank you, guys.
Jen Kneale: Thanks, Tristan.
Matt Meloy: Okay. Thank you. Appreciate it.
Operator: Thank you. And our next question comes from the line of Sunil Sibal from Seaport Global. Your question, please.
Sunil Sibal: Yes, hi. Good morning, everybody, and thanks for all the good color on the call. So, I wanted to start off on the infrastructure side in Permian. I think you previously talked about how you kind of debottleneck the Permian portion of Grand Prix through pump capacity additions and all that. Could you talk about where does your kind of current capacity stand there? And obviously, Daytona comes online later this year. How should we think about volume trending on that and competition for third-party volumes, per se?
Scott Pryor: Hi, Sunil, this is Scott. Yes. With Daytona coming online at 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 Grand Prix, that can put us over 600,000 barrels a day between that. So that gives us a lot of operating leverage on the West side of the portion of Grand Prix with Daytona coming online. When you look at our South leg, we’ve got a lot of operating capacity there. Again, the capacity is around 1 million barrels a day.
We’re bringing in just over 700,000 barrels a day currently. So that gives us also some operating leverage as it relates to that. And when you look at the numbers, we move today, there’s a lot of volume that still comes into our facility. That comes from third-party pipes. 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 on third-party pipes where it makes sense both physically as well as economically for us.
Bobby Muraro: And this is Bobby. Yes. About third-party competition, we’ve talked about this before. We are a wellhead to water company, right? So we build Grand Prix and we build Daytona. We build our NGL 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. The third-party business exists within Targa. But that’s not the driver of Targa’s NGL business. It is our wellhead to water starting at the wellhead.
Sunil Sibal: Okay. Thanks for that. And then as a follow-up, I think on the strategic side of things. I was curious, how do you think of your assets outside of Permian? Seems like if I remember correctly, the Badlands JV is past the five-year mark. How should we think about your assets outside the Permian? You still kind of view them as free cash flow positive assets or are there any investment opportunities outside that?
Matt Meloy: Yes, 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. 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 go 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. I’d say up in the Badlands, we’re actually through the remainder of this year and into next year seeing some strong activity.
