Global Hunter Upgrades Targa Resources Partners

Global Hunter Securities upgraded Targa Resources Partners LP NGLS from Accumulate to Buy and cut its price target from $73 to $70.

Analyst Sunil Sibal noted that the “new estimates incorporate NGLS' strong Q3 results from its logistics business, partially offset by lower volumes in the field G&P segment. We lowered our 2015 adjusted EBITDA estimate ~3 percent as we incorporated lower commodity prices for 2015; it is about 3 percent above the consensus estimate of $1,330MM.”

Sibal believed that “APL's 2015 NGL commodity hedge book coupled with NGLS's growing fee-based business, position the combined entity well. In our lower commodity scenario ($70/bbl oil price average for 2015), we believe that NGLS should still be able to meet its 11-13 percent distribution growth guidance for 2015.”

“If commodity prices or volume growth were to pull back more sharply than our alternate, lower commodity price scenario, then NGLS' results and distribution growth could be pressured. Also, we have assumed essentially flat volume from the West OK assets of APL after the end of this year.

“If Sand Ridge Energy (SD), which has been APL’s primary customer in the region, reduces activity sharply, then the contribution from that segment could be weaker; we estimate these asset will contribute less than 10 percent of NGLS’ combined segment EBITDA in 2015,” according to the analyst report.

Targa Resources Partners LP closed at $58.47 Thursday, up 1.05 percent.