Targa Resources, Targa Resources Partners Announce Eagle Ford Shale JV

(RTTNews) - Targa Resources Corp., or TRC (TRGP) and Targa Resources Partners LP (NGLS), or TRP or the partnership, announced a preliminary financial outlook for 2016, with dividend growth of 15% over FY2015, dividend coverage of approximately 1x and effective cash tax rate of 0% to 5%.

TRP also announced that for the third quarter of 2015, TRP estimates distribution coverage of approximately 1.0x to 1.1x.

Targa Resources Partners also announced that it has entered into joint venture agreements with Sanchez Energy Corporation (SN) to construct a new 200 million cubic feet per day cryogenic natural gas processing plant in La Salle County, Texas and approximately 45 miles of associated pipelines.

TRP said it expects to invest approximately $125 million of growth capex related to the joint ventures, and assuming full contribution from Sanchez Energy, will have a 50% ownership interest in the plant and the approximately 45 miles of high pressure gathering pipelines that will connect SN's Catarina gathering system to the plant. Targa will hold all the transportation capacity on the pipeline, and the gathering joint venture will receive fees for transportation.

The La Salle County Plant will accommodate the growing production from Sanchez Energy's premier Eagle Ford Shale acreage position in Dimmit, La Salle and Webb Counties, Texas and from other third party producers. The plant and high pressure gathering lines are supported by long-term, firm, fee-based contracts and acreage dedications with Sanchez Energy. TRP will manage construction and operations of the plant and high pressure gathering lines, and the plant is expected to begin operations in early 2017. Prior to the plant being placed in-service, TRP will benefit from Sanchez Energy natural gas volumes that will be processed at TRP's Silver Oak facilities in Bee County, Texas.