Targa Resources Hits 52-Week High - Analyst Blog

On May 15, 2014, the shares of pipeline service provider Targa Resources Partners LP NGLS touched a 52-week high of $64.11 on the back of increased investments in expanding midstream infrastructures, improvements in horizontal drilling and fraternization completions as well as exposure to the prime liquids-rich plays. The shares finally closed at $63.82, up 40.0% from the year-ago closing price.

Rising liquid petroleum gas exports and higher contributions from the train Cedar Bayou Fractionator 4 project, which came into operation in the second half of 2013, boosted the partnership's growth trajectory. In addition, strong commodity prices in the first three months of 2014 lend additional upside.  

These factors were primarily responsible for the Targa Resources' impressive 62.5% earnings beat in the first quarter 2014. The current shale revolution has led to a substantial requirement for pipeline networks across the resource-rich basins, which are bringing in lucrative opportunities for the partnership.

Targa Resources is poised to benefit from the spurring upstream activity owing to America's efforts to transform itself into energy independent entity in the not-so-distant future. To exploit the positive fundamentals, the partnership is investing heavily to optimize its midstream capability. For 2014, Targa Resources plans to incur capital spending of approximately $700 million.

Some notable growth-centric projects, which are likely to accentuate long-term prospects, include the addition of a condensate splitter in the Channelview oil Terminal on the Houston Ship Channel and a 40 million cubic feet per day cryogenic processing plant in the Williston Basin to support the positive momentum in the Bakken and Three Forks Shale plays.

Furthermore, Targa Resources' quarterly distribution hike of 9% to 76.25 cents per unit from the year-ago period in Apr 2014 will certainly retain investors' confidence on the stock.

Texas-based Targa Resources currently holds a Zacks Rank #1 (Strong Buy). Other well-placed midstream operators include Magellan Midstream Partners LP MMP, Tesoro Logistics LP TLLP and Delek Logistics Partners, LP DKL. All the above stocks carry a Zacks Rank #2 (Buy).