Filed by Targa Resources Corp.
Pursuant to Rule 425 of the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Targa Resources Partners LP
Commission File No.: 001-33303
This filing relates to a proposed business combination involving Targa Resources Corp. and Targa Resources Partners LP.
 Targa
Resources All Employee Meeting
Year End Review December 3, 2015 |
 Today’s
Discussion 2
Accomplishments for 2015
Current Environment and Outlook for 2016
Implications for Targa
Q & A |
 2015 Accomplishments – A Good Year in a Tough Environment 3 A Brief Summary . . . Excellent execution across our businesses, substantially offsetting impacts of commodity prices well below beginning of year expectations Field G&P and export volumes exceeding initial 2015 expectations Significant operating cost and G&A savings relative to budgets Hitting early 2015 public guidance for 2015 distribution and dividend growth Disciplined and proactive management of our financial position—balance sheet, liquidity, capital
formation Successful closing of the Atlas Mergers early in the year, and excellent coordination and execution with talented employees joining the Targa team Investing in our business growth Capital efficiency with over $700 million of 2015 growth capex—CBF Train 5 in progress; Little
Missouri plant start-up; interconnection of Sand Hills, WestTX and SAOU; Raptor (SouthTX) and Buffalo Plant (WestTX) in progress Development project backlog of over $4 billion across our businesses Continued strong record and industry leadership on safety and in environmental and regulatory compliance |
 2015 Accomplishments – Transactions Supporting Targa Progress 4 A Brief Summary . . . January Issued $1.1 billion of 5% Senior Notes due 2018 February Completed a tender for over $1.1 billion of Atlas Pipeline Partners, L.P. notes Completed acquisitions of Atlas Pipeline Partners, L.P. and Atlas Energy, L.P. March Raised $336 million at TRC via an equity offering May Completed exchange of $342 million of Atlas Pipeline Partners, L.P. 6 5/8% Notes, issuing TRP Notes September Issued $600 million of 6.75% Senior Notes due 2024 October Announced joint venture with Sanchez Energy to build 200 MMcf/d plant and high pressure gathering lines ($125 million of Targa capex expected) Raised $124 million at TRP through issuance of 9% Series A Preferred Units November Announced TRC is acquiring TRP in a transaction expected to close in Q1 2016 |
 Early Holiday
Bonus* 5 Early Holiday Bonus Cash award paid or deposited to your account about December 4 th Generally lower levels than recent years $1000 before tax for almost all employees Lesser amounts if not employed for full year Excludes all officers If a bonus is paid, this amount will be a portion of your total awarded bonus Related Messages We have done well against the 2015 business priorities – Thank You As you are aware, the current industry environment presents challenges to our customers, to Targa and to our investors The outlook for 2016 continues to be one of low prices and weak industry fundamentals In this difficult environment, we are reviewing with the Board whether we will pay bonuses … if so, they will be at levels lower than recent years Nonetheless, management, with Board support, has approved a cash award to be paid before the holidays * Letter should arrive at your home address about December 4, describing bonus and related messages |
 Today’s
Discussion 6
Accomplishments for 2015
Current Environment and Outlook for 2016
Implications for Targa
Q & A |
 Energy
Markets – Performance (2006 to Present)
7 Source: Bloomberg, Citigroup |
 Commodity
Price Performance 8
Crude Oil, $/Bbl Natural Gas, $/MMBtu Average Targa Field G&P NGL Bbl, $/gal Note: Targa’s composite NGL barrel above comprised of 37% ethane, 35% propane, 6% iso-butane, 12% normal butane, and 10% natural
gasoline |
 Activity
Levels – Oil Drilling and Productivity by Well
9 Permian Bakken Eagle Ford (1) Source: EIA and Morgan Stanley |
 Today’s
Discussion 10
Accomplishments for 2015
Current Environment and Outlook for 2016
Implications for Targa
Q & A |
 11 Targa Team |
 12 Capital Investment Efficiency Capital spending focused on efficiently meeting customer needs Spending may be delayed/deferred to reflect lower activity levels, especially in Field G&P
Projects with greater cash flow certainty likely to proceed
Increased Cost Management Apply lessons learned in prior commodity price cycles to reduce costs Capture identified and not yet identified savings opportunities associated with recent mergers
Use additional workforce supply to hire selected permanent positions, improve skills and
reduce overtime/contractor costs
Strong positioning in leading G&P basins and Downstream markets creates
opportunities U.S. position as a long-term low cost producer of
hydrocarbons creates continued export services opportunities
Larger asset base post merger will create additional opportunities
Fee-based margin provides cash flow stability
4.0x Debt/EBITDA at end of Q3 2015
Continue to fund growth capital with mix of debt and equity
Continue to Identify and Capture Opportunities Preserve and Improve Balance Sheet Strategic Focus |
 13 Illustrative Price Scenarios (1) Note: Targa’s composite NGL barrel comprises 37% ethane, 35% propane, 6% iso-butane, 12% normal butane, and 10% natural
gasoline Crude Oil, $/Bbl
Natural Gas, $/MMBtu Average Targa Field G&P NGL Bbl, $/gal |
 14 Transaction Overview Targa Resources Corp. (NYSE: TRGP; “TRC” or the “Company”) has executed a definitive
agreement to acquire all of the outstanding common units of Targa Resources Partners LP
(NYSE: NGLS; “TRP” or the “Partnership”) not already
owned by TRC TRP common unitholders will receive 0.62 of a TRC share for
each TRP common unit All existing debt remains at TRP and Series A preferred
units at TRP remain outstanding Transaction is expected to close in Q1 2016,
subject to customary closing conditions HSR early termination already
received (1)
Taxes paid will vary depending on individual common unitholder attributes
Transaction expected to provide both immediate and long-term benefits to
Targa’s investors |
 (1) Based on Consensus Pricing case, consistent with scenario shown to Targa’s respective Boards to be provided in proxy materials.
15 Positioning Targa for Continued Long-Term Success Stronger Long-Term Growth Outlook Immediately accretive to TRC shareholders Transaction allows Targa to continue to invest in high-return growth projects
Better positioned for “lower for longer” environment in downside
cases Enhanced upside potential in price recovery cases
Expected cumulative incremental coverage of over $400 million through 2018
(1) Increased coverage supports dividend growth outlook, while reducing external financing
needs Expected dividend coverage greater than 1.05x through 2018 (1) Reduces leverage and expected to improve metrics over time C-Corp structure with $9 billion pro forma market capitalization should attract broader
universe of investors Deeper pool of capital available to finance growth One public entity structure with simplified governance Improved Coverage and Credit Profile Simplified Structure Improved Cost of Capital Elimination of IDRs provides immediate cost of capital improvement Lower cost of equity improves competitive position for expansion and acquisition
opportunities Tax attributes of combination lowers TRC’s cash taxes |
 $3.56
$4.10 $4.39 $4.81 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 2015 2016 2017 2018 0.91x 0.90x 0.92x 1.13x 1.10x 1.05x – 0.20x 0.40x 0.60x 0.80x 1.00x 1.20x 1.40x 2016 2017 2018 Coverage – Consensus Pricing (1) Pro Forma: Strong pro forma dividend growth compared to current flat TRP distribution outlook 15% expected dividend growth in 2016 Over 10% estimated dividend CAGR from 2015 to 2018 ~0.2x average improvement in pro forma coverage Stronger coverage improves capital access and supports dividend growth outlook TRP Standalone: EBITDA growth offset by lower hedge settlements, IDR giveback roll-off and growing interest expense from coverage shortfall Results in relatively flat coverage at $3.30 distribution per unit Standalone Incremental Coverage Pro Forma 16 TRC Pro Forma Dividends per Share – Consensus Pricing (1) Over $400 million of cumulative incremental coverage 2016 to 2018 (1) Consistent with scenarios shown to Targa’s respective Boards to be provided in proxy materials
Note: In this scenario, Targa expects $554.5 million of growth capex in 2016, $600
million in 2017 and $600 million in 2018 2016
2017 2018 Consensus Pricing Targa BBL Wtd. Avg. ($/Gal) $0.51 $0.66 $0.71 Henry Hub Natural Gas ($/MMBtu) $3.25 $3.53 $3.67 WTI Crude Oil ($/Bbl) $54.99 $63.32 $70.29 Improved Dividend Growth and Coverage |
 4.4x
4.5x 4.5x 4.3x 4.3x 4.3x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 2016 2017 2018 TRP Compliance Leverage – Consensus Pricing (1) TRP’s existing debt remains outstanding TRP will continue as a reporting entity TRP will continue to have flexibility under its leverage compliance covenant (remains 5.5x) TRP leverage profile improves over time through increased retained cash flow Consolidated Leverage – Consensus Pricing (1) Standalone Pro Forma 17 Targa is not subject to a compliance covenant for consolidated leverage Targa enterprise leverage improves as well Standalone Pro Forma TRP Compliance Covenant (1) Consistent with scenarios shown to Targa’s respective Boards to be provided in proxy materials
Improved Credit Profile 5.1x 5.1x 5.1x 5.0x 4.9x 4.8x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 2016 2017 2018 |
 0.86x
0.80x
0.76x 1.11x 1.05x 1.00x – 0.20x 0.40x 0.60x 0.80x 1.00x 1.20x 1.40x 2016 2017 2018 $3.56 $3.92 $3.99 $4.05 $3.00 $3.50 $4.00 $4.50 2015 2016 2017 2018 Better Positioned in Lower Commodity Price Environments Coverage – Price Sensitivity (1) Pro Forma: Dividend growth with positive coverage even in lower price scenario ~10% expected dividend growth in 2016 Modest growth thereafter Pro forma coverage improves ~0.2x on average Increased retained cash flow improves leverage TRP Standalone: Flat EBITDA profile offset by IDR giveback roll-off and growing interest expense from coverage shortfall Results in declining coverage at $3.30 distribution per unit 18 TRC Pro Forma Dividends per Share – Price Sensitivity (1) 2016 2017 2018 Price Sensitivity Targa BBL Wtd. Avg. ($/Gal) $0.45 $0.51 $0.53 Henry Hub Natural Gas ($/MMBtu) $3.00 $3.00 $3.05 WTI Crude Oil ($/Bbl) $47.00 $53.00 $55.00 Standalone Incremental Coverage Pro Forma Over $600 million of cumulative incremental coverage 2016 to 2018 (1) Consistent with scenarios shown to Targa’s respective Boards to be provided in proxy materials
Note: In this scenario, Targa expects $554.5 million of growth capex in 2016, $399.6
million in 2017 and $224.5 million in 2018 |
 5.3x
5.4x 5.8x 5.2x 5.2x 5.3x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 6.0x 2016 2017 2018 4.6x 4.8x 5.2x 4.5x 4.5x 4.7x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 2016 2017 2018 Better Positioned in Lower Commodity Price Environments TRP Compliance Leverage – Price Sensitivity (1) Consolidated Leverage – Price Sensitivity (1) 19 Targa is not subject to a compliance covenant for consolidated leverage Targa enterprise leverage improves as well TRP Compliance Covenant Standalone Pro Forma Standalone Pro Forma (1) Consistent with scenarios shown to Targa’s respective Boards to be provided in proxy materials
TRP’s existing debt
remains outstanding TRP will continue as a reporting entity TRP will continue to have flexibility under its leverage compliance covenant (remains 5.5x) TRP leverage profile improves over time through increased retained cash flow |
 20 Future Growth – Projects in Progress and Under Development Pro Forma Targa Well Positioned to Capitalize on Opportunity-Rich Environment 2016 growth capex of approximately $600 million, including the following: CBF Train 5 200 MMcf/d Buffalo Plant in WestTX 200 MMcf/d La Salle County Plant in SouthTX Additional G&P expansions in Versado and Badlands Targa has over $4 billion of projects under development Demand for additional infrastructure across all areas of operations continues, with current environment resulting in acceleration of need for some projects and delay for others Representative projects include natural gas processing plants, natural gas and crude gathering lines and associated infrastructure, fractionation, NGL storage and export projects |
 What can you
do? 21 Flexibility Cost control Capital expenditure efficiency Teamwork What are your other ideas? |
 Today’s
Discussion 22
Accomplishments for 2015
Current Environment and Outlook for 2016
Implications for Targa
Q & A |