TRGP

What You Should Know

Targa Resources Corp. is one of the largest independent midstream energy companies in North America, gathering, processing, transporting, storing, and marketing natural gas and natural-gas liquids (NGLs), with major infrastructure in the Permian Basin and along the Gulf Coast. Providing midstream energy infrastructure is permissible at the activity level, so the business screen passes. The concern is leverage: like most midstream operators, Targa is financed with a very large pool of interest-bearing debt used to build and acquire pipelines and processing plants, so its total-debt-to-market-cap ratio should be confirmed against the 33% threshold using the latest filings — the deciding screen, and one that midstream names frequently fail. Interest income should be checked against the 5% threshold and the corresponding portion of returns purified. Because the leverage screen is the binding constraint, TRGP is generally screened as doubtful and can move to non-compliant depending on the ratio.