TRGP filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements.

 TARGA RESOURCES CORP.

 CONSOLIDATED BALANCE SHEETS

 September 30, 2020
 
 December 31, 2019
 
 (Unaudited)
 
 (In millions)
 
 ASSETS
 
 Current assets:
 
 Cash and cash equivalents
 
 $
 
 275.0 
 
 $
 
 331.1 
 
 Trade receivables, net of allowances of $ 0.1 and $ 0.0 million at September 30, 2020 and December 31, 2019
 
 609.8 
 
 855.0 
 
 Inventories
 
 261.7 
 
 161.5 
 
 Assets from risk management activities
 
 88.9 
 
 103.3 
 
 Deposits
 
 110.1 
 
 35.4 
 
 Held for sale assets
 
 62.2 
 
 137.7 
 
 Other current assets
 
 36.7 
 
 34.3 
 
 Total current assets
 
 1,444.4 
 
 1,658.3 
 
 Property, plant and equipment, net
 
 12,292.8 
 
 14,548.5 
 
 Intangible assets, net
 
 1,417.6 
 
 1,735.0 
 
 Long-term assets from risk management activities
 
 79.5 
 
 35.5 
 
 Investments in unconsolidated affiliates
 
 718.8 
 
 738.7 
 
 Other long-term assets
 
 99.0 
 
 99.1 
 
 Total assets
 
 $
 
 16,052.1 
 
 $
 
 18,815.1 
 
 LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS' EQUITY
 
 Current liabilities:
 
 Accounts payable
 
 $
 
 617.7 
 
 $
 
 954.8 
 
 Accrued liabilities
 
 69.5 
 
 114.4 
 
 Dividends payable
 
 125.9 
 
 122.6 
 
 Interest payable
 
 95.3 
 
 125.7 
 
 Accrued taxes
 
 85.9 
 
 62.4 
 
 Liabilities from risk management activities
 
 121.1 
 
 104.1 
 
 Current debt obligations
 
 261.9 
 
 382.2 
 
 Held for sale liabilities
 
 3.6 
 
 6.4 
 
 Total current liabilities
 
 1,380.9 
 
 1,872.6 
 
 Long-term debt
 
 7,652.2 
 
 7,440.2 
 
 Long-term liabilities from risk management activities
 
 62.9 
 
 40.8 
 
 Deferred income taxes, net
 
 131.1 
 
 434.2 
 
 Other long-term liabilities
 
 307.0 
 
 305.6 
 
 Contingencies (see Note 13)
 
 Series A Preferred 9.5 % Stock, $ 1,000 per share liquidation preference, ( 1,200,000 shares authorized, 965,100 shares issued and outstanding), net of discount (see Note 7)
 
 306.5 
 
 278.8 
 
 Owners' equity:
 
 Targa Resources Corp. stockholders' equity:
 
 Common stock ($ 0.001 par value, 300,000,000 shares authorized)
 
 0.2 
 
 0.2 
 
 Issued Outstanding 
 
 September 30, 2020 234,745,594 233,517,921 
 
 December 31, 2019 233,852,810 232,843,526 
 
 Preferred stock ($ 0.001 par value, after designation of Series A Preferred Stock: 98,800,000 shares authorized, no shares issued and outstanding)
 
 — 
 
 — 
 
 Additional paid-in capital
 
 4,911.7 
 
 5,221.2 
 
 Retained earnings (deficit)
 
 ( 1,927.1 
 
 )
 
 ( 339.6 
 
 )
 
 Accumulated other comprehensive income (loss)
 
 ( 90.8 
 
 )
 
 92.5 
 
 Treasury stock, at cost ( 1,227,673 shares as of September 30, 2020 and 1,009,284 shares as of December 31, 2019)
 
 ( 59.0 
 
 )
 
 ( 53.5 
 
 )
 
 Total Targa Resources Corp. stockholders' equity
 
 2,835.0 
 
 4,920.8 
 
 Noncontrolling interests
 
 3,376.5 
 
 3,522.1 
 
 Total owners' equity
 
 6,211.5 
 
 8,442.9 
 
 Total liabilities, Series A Preferred Stock and owners' equity
 
 $
 
 16,052.1 
 
 $
 
 18,815.1 
 
 See notes to consolidated financial statements.

 4

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF OPERATIONS

 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 2020
 
 2019
 
 (Unaudited)
 
 (In millions, except per share amounts)
 
 Revenues:
 
 Sales of commodities
 
 $
 
 1,840.8 
 
 $
 
 1,594.2 
 
 $
 
 4,900.8 
 
 $
 
 5,254.8 
 
 Fees from midstream services
 
 274.3 
 
 308.3 
 
 786.7 
 
 942.4 
 
 Total revenues
 
 2,115.1 
 
 1,902.5 
 
 5,687.5 
 
 6,197.2 
 
 Costs and expenses:
 
 Product purchases
 
 1,303.2 
 
 1,328.1 
 
 3,346.8 
 
 4,415.7 
 
 Operating expenses
 
 181.9 
 
 200.2 
 
 565.1 
 
 600.8 
 
 Depreciation and amortization expense
 
 203.7 
 
 244.3 
 
 647.3 
 
 718.9 
 
 General and administrative expense
 
 58.6 
 
 69.9 
 
 180.6 
 
 223.5 
 
 Impairment of long-lived assets
 
 —
 
 —
 
 2,442.8 
 
 —
 
 Other operating (income) expense
 
 72.2 
 
 18.4 
 
 73.8 
 
 21.7 
 
 Income (loss) from operations
 
 295.5 
 
 41.6 
 
 ( 1,568.9 
 
 )
 
 216.6 
 
 Other income (expense):
 
 Interest expense, net
 
 ( 97.7 
 
 )
 
 ( 89.1 
 
 )
 
 ( 292.4 
 
 )
 
 ( 241.8 
 
 )
 
 Equity earnings (loss)
 
 18.6 
 
 10.0 
 
 54.1 
 
 15.9 
 
 Gain (loss) from financing activities
 
 ( 13.7 
 
 )
 
 —
 
 47.4 
 
 ( 1.4 
 
 )
 
 Gain (loss) from sale of equity-method investment
 
 —
 
 65.8 
 
 —
 
 65.8 
 
 Change in contingent considerations
 
 —
 
 —
 
 —
 
 ( 8.8 
 
 )
 
 Other, net
 
 1.4 
 
 —
 
 2.2 
 
 —
 
 Income (loss) before income taxes
 
 204.1 
 
 28.3 
 
 ( 1,757.6 
 
 )
 
 46.3 
 
 Income tax (expense) benefit
 
 ( 31.9 
 
 )
 
 3.8 
 
 286.6 
 
 10.0 
 
 Net income (loss)
 
 172.2 
 
 32.1 
 
 ( 1,471.0 
 
 )
 
 56.3 
 
 Less: Net income (loss) attributable to noncontrolling interests
 
 102.9 
 
 79.4 
 
 116.5 
 
 152.7 
 
 Net income (loss) attributable to Targa Resources Corp.
 
 69.3 
 
 ( 47.3 
 
 )
 
 ( 1,587.5 
 
 )
 
 ( 96.4 
 
 )
 
 Dividends on Series A Preferred Stock
 
 22.9 
 
 22.9 
 
 68.8 
 
 68.8 
 
 Deemed dividends on Series A Preferred Stock
 
 9.5 
 
 8.4 
 
 27.7 
 
 24.4 
 
 Net income (loss) attributable to common shareholders
 
 $
 
 36.9 
 
 $
 
 ( 78.6 
 
 )
 
 $
 
 ( 1,684.0 
 
 )
 
 $
 
 ( 189.6 
 
 )
 
 Net income (loss) per common share - basic
 
 $
 
 0.16 
 
 $
 
 ( 0.34 
 
 )
 
 $
 
 ( 7.22 
 
 )
 
 $
 
 ( 0.82 
 
 )
 
 Net income (loss) per common share - diluted
 
 $
 
 0.16 
 
 $
 
 ( 0.34 
 
 )
 
 $
 
 ( 7.22 
 
 )
 
 $
 
 ( 0.82 
 
 )
 
 Weighted average shares outstanding - basic
 
 233.4 
 
 232.7 
 
 233.2 
 
 232.4 
 
 Weighted average shares outstanding - diluted
 
 233.8 
 
 232.7 
 
 233.2 
 
 232.4 
 
 See notes to consolidated financial statements.

 5

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 Three Months Ended September 30,
 
 2020
 
 2019
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 (Unaudited)
 
 (In millions)
 
 Net income (loss)
 
 $
 
 172.2 
 
 $
 
 32.1 
 
 Other comprehensive income (loss):
 
 Commodity hedging contracts:
 
 Change in fair value
 
 $
 
 ( 128.7 
 
 )
 
 $
 
 31.7 
 
 ( 97.0 
 
 )
 
 $
 
 118.2 
 
 $
 
 ( 28.8 
 
 )
 
 89.4 
 
 Settlements reclassified to revenues
 
 ( 19.2 
 
 )
 
 3.8 
 
 ( 15.4 
 
 )
 
 ( 41.5 
 
 )
 
 10.0 
 
 ( 31.5 
 
 )
 
 Other comprehensive income (loss)
 
 ( 147.9 
 
 )
 
 35.5 
 
 ( 112.4 
 
 )
 
 76.7 
 
 ( 18.8 
 
 )
 
 57.9 
 
 Comprehensive income (loss)
 
 59.8 
 
 90.0 
 
 Less: Comprehensive income (loss) attributable to noncontrolling interests
 
 102.9 
 
 79.4 
 
 Comprehensive income (loss) attributable to Targa Resources Corp.
 
 $
 
 ( 43.1 
 
 )
 
 $
 
 10.6 
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 (Unaudited)
 
 (In millions)
 
 Net income (loss)
 
 $
 
 ( 1,471.0 
 
 )
 
 $
 
 56.3 
 
 Other comprehensive income (loss):
 
 Commodity hedging contracts:
 
 Change in fair value
 
 $
 
 ( 102.6 
 
 )
 
 $
 
 23.5 
 
 ( 79.1 
 
 )
 
 $
 
 167.8 
 
 $
 
 ( 40.7 
 
 )
 
 127.1 
 
 Settlements reclassified to revenues
 
 ( 139.4 
 
 )
 
 35.2 
 
 ( 104.2 
 
 )
 
 ( 106.1 
 
 )
 
 25.6 
 
 ( 80.5 
 
 )
 
 Other comprehensive income (loss)
 
 ( 242.0 
 
 )
 
 58.7 
 
 ( 183.3 
 
 )
 
 61.7 
 
 ( 15.1 
 
 )
 
 46.6 
 
 Comprehensive income (loss)
 
 ( 1,654.3 
 
 )
 
 102.9 
 
 Less: Comprehensive income (loss) attributable to noncontrolling interests
 
 116.5 
 
 152.7 
 
 Comprehensive income (loss) attributable to Targa Resources Corp.
 
 $
 
 ( 1,770.8 
 
 )
 
 $
 
 ( 49.8 
 
 )
 
 See notes to consolidated financial statements.

 6

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY AND SERIES A PREFERRED STOCK

 Retained
 
 Accumulated
 
 Additional
 
 Earnings
 
 Other
 
 Treasury
 
 Total
 
 Series A
 
 Common Stock
 
 Paid in
 
 (Accumulated
 
 Comprehensive
 
 Shares
 
 Noncontrolling
 
 Owner's
 
 Preferred
 
 Shares
 
 Amount
 
 Capital
 
 Deficit)
 
 Income (Loss)
 
 Shares
 
 Amount
 
 Interests
 
 Equity
 
 Stock
 
 (Unaudited)
 
 (In millions, except shares in thousands)
 
 Balance, June 30, 2020
 
 233,177 
 
 $
 
 0.2 
 
 $
 
 4,949.1 
 
 $
 
 ( 1,996.4 
 
 )
 
 $
 
 21.6 
 
 1,116 
 
 $
 
 ( 56.9 
 
 )
 
 $
 
 3,351.5 
 
 $
 
 6,269.1 
 
 $
 
 297.0 
 
 Compensation on equity grants
 
 —
 
 —
 
 16.4 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 16.4 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 1.9 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 1.9 
 
 —
 
 Shares issued under compensation program
 
 453 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares and units tendered for tax withholding obligations
 
 ( 112 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 112 
 
 ( 2.1 
 
 )
 
 —
 
 ( 2.1 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 23.75 per share
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 22.9 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Deemed dividends - accretion of beneficial conversion feature
 
 —
 
 —
 
 ( 9.5 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 9.5 
 
 )
 
 9.5 
 
 Common stock dividends
 
 Dividends - $ 0.10 per share
 
 —
 
 —
 
 —
 
 ( 23.3 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 23.3 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 23.3 
 
 )
 
 23.3 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 113.1 
 
 )
 
 ( 113.1 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 7.7 
 
 7.7 
 
 —
 
 Non-cash allocation to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 27.5 
 
 27.5 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 ( 112.4 
 
 )
 
 —
 
 —
 
 —
 
 ( 112.4 
 
 )
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 69.3 
 
 —
 
 —
 
 —
 
 102.9 
 
 172.2 
 
 —
 
 Balance, September 30, 2020
 
 233,518 
 
 $
 
 0.2 
 
 $
 
 4,911.7 
 
 $
 
 ( 1,927.1 
 
 )
 
 $
 
 ( 90.8 
 
 )
 
 1,228 
 
 $
 
 ( 59.0 
 
 )
 
 $
 
 3,376.5 
 
 $
 
 6,211.5 
 
 $
 
 306.5 
 
 See notes to consolidated financial statements.

 7

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY AND SERIES A PREFERRED STOCK

 Retained
 
 Accumulated
 
 Additional
 
 Earnings
 
 Other
 
 Treasury
 
 Total
 
 Series A
 
 Common Stock
 
 Paid in
 
 (Accumulated
 
 Comprehensive
 
 Shares
 
 Noncontrolling
 
 Owner's
 
 Preferred
 
 Shares
 
 Amount
 
 Capital
 
 Deficit)
 
 Income (Loss)
 
 Shares
 
 Amount
 
 Interests
 
 Equity
 
 Stock
 
 (Unaudited)
 
 (In millions, except shares in thousands)
 
 Balance, June 30, 2019
 
 232,476 
 
 $
 
 0.2 
 
 $
 
 5,687.8 
 
 $
 
 ( 179.5 
 
 )
 
 $
 
 83.0 
 
 896 
 
 $
 
 ( 49.2 
 
 )
 
 $
 
 3,396.8 
 
 $
 
 8,939.1 
 
 $
 
 261.7 
 
 Compensation on equity grants
 
 —
 
 —
 
 16.1 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 16.1 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 3.7 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 3.7 
 
 )
 
 —
 
 Shares issued under compensation program
 
 412 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares and units tendered for tax withholding obligations
 
 ( 105 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 105 
 
 ( 3.9 
 
 )
 
 —
 
 ( 3.9 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 23.75 per share
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 22.9 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Deemed dividends - accretion of beneficial conversion feature
 
 —
 
 —
 
 ( 8.4 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 8.4 
 
 )
 
 8.4 
 
 Common stock dividends
 
 Dividends - $ 0.91 per share
 
 —
 
 —
 
 —
 
 ( 211.7 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 211.7 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 211.7 
 
 )
 
 211.7 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 90.0 
 
 )
 
 ( 90.0 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 115.3 
 
 115.3 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 57.9 
 
 —
 
 —
 
 —
 
 57.9 
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 ( 47.3 
 
 )
 
 —
 
 —
 
 —
 
 79.4 
 
 32.1 
 
 —
 
 Balance, September 30, 2019
 
 232,783 
 
 $
 
 0.2 
 
 $
 
 5,457.2 
 
 $
 
 ( 226.8 
 
 )
 
 $
 
 140.9 
 
 1,001 
 
 $
 
 ( 53.1 
 
 )
 
 $
 
 3,501.5 
 
 $
 
 8,819.9 
 
 $
 
 270.1 
 
 See notes to consolidated financial statements.

 8

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY AND SERIES A PREFERRED STOCK

 Retained
 
 Accumulated
 
 Additional
 
 Earnings
 
 Other
 
 Treasury
 
 Total
 
 Series A
 
 Common Stock
 
 Paid in
 
 (Accumulated
 
 Comprehensive
 
 Shares
 
 Noncontrolling
 
 Owner's
 
 Preferred
 
 Shares
 
 Amount
 
 Capital
 
 Deficit)
 
 Income (Loss)
 
 Shares
 
 Amount
 
 Interests
 
 Equity
 
 Stock
 
 (Unaudited)
 
 (In millions, except shares in thousands)
 
 Balance, December 31, 2019
 
 232,844 
 
 $
 
 0.2 
 
 $
 
 5,221.2 
 
 $
 
 ( 339.6 
 
 )
 
 $
 
 92.5 
 
 1,010 
 
 $
 
 ( 53.5 
 
 )
 
 $
 
 3,522.1 
 
 $
 
 8,442.9 
 
 $
 
 278.8 
 
 Compensation on equity grants
 
 —
 
 —
 
 49.5 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 49.5 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 3.5 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 3.5 
 
 )
 
 —
 
 Shares issued under compensation program
 
 892 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares and units tendered for tax withholding obligations
 
 ( 218 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 218 
 
 ( 5.5 
 
 )
 
 —
 
 ( 5.5 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 71.25 per share
 
 —
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 68.8 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Deemed dividends - accretion of beneficial conversion feature
 
 —
 
 —
 
 ( 27.7 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 27.7 
 
 )
 
 27.7 
 
 Common stock dividends
 
 —
 
 —
 
 Dividends - $ 1.11 per share
 
 —
 
 —
 
 —
 
 ( 259.0 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 259.0 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 259.0 
 
 )
 
 259.0 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 322.9 
 
 )
 
 ( 322.9 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 33.3 
 
 33.3 
 
 —
 
 Non-cash allocation to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 27.5 
 
 27.5 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 ( 183.3 
 
 )
 
 —
 
 —
 
 —
 
 ( 183.3 
 
 )
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 ( 1,587.5 
 
 )
 
 —
 
 —
 
 —
 
 116.5 
 
 ( 1,471.0 
 
 )
 
 —
 
 Balance, September 30, 2020
 
 233,518 
 
 $
 
 0.2 
 
 $
 
 4,911.7 
 
 $
 
 ( 1,927.1 
 
 )
 
 $
 
 ( 90.8 
 
 )
 
 1,228 
 
 $
 
 ( 59.0 
 
 )
 
 $
 
 3,376.5 
 
 $
 
 6,211.5 
 
 $
 
 306.5 
 
 See notes to consolidated financial statements.

 9

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY AND SERIES A PREFERRED STOCK

 Retained
 
 Accumulated
 
 Additional
 
 Earnings
 
 Other
 
 Treasury
 
 Total
 
 Series A
 
 Common Stock
 
 Paid in
 
 (Accumulated
 
 Comprehensive
 
 Shares
 
 Noncontrolling
 
 Owner's
 
 Preferred
 
 Shares
 
 Amount
 
 Capital
 
 Deficit)
 
 Income (Loss)
 
 Shares
 
 Amount
 
 Interests
 
 Equity
 
 Stock
 
 (Unaudited)
 
 (In millions, except shares in thousands)
 
 Balance, December 31, 2018
 
 231,791 
 
 $
 
 0.2 
 
 $
 
 6,154.9 
 
 $
 
 ( 130.4 
 
 )
 
 $
 
 94.3 
 
 666 
 
 $
 
 ( 39.6 
 
 )
 
 $
 
 1,391.4 
 
 $
 
 7,470.8 
 
 $
 
 245.7 
 
 Compensation on equity grants
 
 —
 
 —
 
 49.0 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 49.0 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 10.5 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 10.5 
 
 )
 
 —
 
 Shares issued under compensation program
 
 1,327 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares and units tendered for tax withholding obligations
 
 ( 335 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 335 
 
 ( 13.5 
 
 )
 
 —
 
 ( 13.5 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 71.25 per share
 
 —
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 68.8 
 
 )
 
 68.8 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Deemed dividends - accretion of beneficial conversion feature
 
 —
 
 —
 
 ( 24.4 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 24.4 
 
 )
 
 24.4 
 
 Common stock dividends
 
 Dividends - $ 2.73 per share
 
 —
 
 —
 
 —
 
 ( 634.8 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 634.8 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 634.8 
 
 )
 
 634.8 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 181.1 
 
 )
 
 ( 181.1 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 518.8 
 
 518.8 
 
 —
 
 Sale of ownership interests in subsidiaries, net
 
 —
 
 —
 
 ( 8.2 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 1,619.7 
 
 1,611.5 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 46.6 
 
 —
 
 —
 
 —
 
 46.6 
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 ( 96.4 
 
 )
 
 —
 
 —
 
 —
 
 152.7 
 
 56.3 
 
 —
 
 Balance, September 30, 2019
 
 232,783 
 
 $
 
 0.2 
 
 $
 
 5,457.2 
 
 $
 
 ( 226.8 
 
 )
 
 $
 
 140.9 
 
 1,001 
 
 $
 
 ( 53.1 
 
 )
 
 $
 
 3,501.5 
 
 $
 
 8,819.9 
 
 $
 
 270.1 
 
 See notes to consolidated financial statements.

 10

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Nine Months Ended September 30,
 
 2020
 
 2019
 
 (Unaudited)
 
 (In millions)
 
 Cash flows from operating activities
 
 Net income (loss)
 
 $
 
 ( 1,471.0 
 
 )
 
 $
 
 56.3 
 
 Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 Amortization in interest expense
 
 8.5 
 
 7.6 
 
 Compensation on equity grants
 
 49.5 
 
 49.0 
 
 Depreciation and amortization expense
 
 647.3 
 
 718.9 
 
 Impairment of long-lived assets
 
 2,442.8 
 
 —
 
 Accretion of asset retirement obligations
 
 2.6 
 
 3.7 
 
 Deferred income tax expense (benefit)
 
 ( 269.8 
 
 )
 
 ( 10.0 
 
 )
 
 Equity (earnings) loss of unconsolidated affiliates
 
 ( 54.1 
 
 )
 
 ( 15.9 
 
 )
 
 Distributions of earnings received from unconsolidated affiliates
 
 65.5 
 
 26.0 
 
 Risk management activities
 
 ( 214.2 
 
 )
 
 100.8 
 
 (Gain) loss on sale or disposition of business and assets
 
 58.0 
 
 3.6 
 
 Write-downs of assets
 
 13.5 
 
 17.9 
 
 (Gain) loss from financing activities
 
 ( 47.4 
 
 )
 
 1.4 
 
 (Gain) loss from sale of equity-method investment
 
 —
 
 ( 65.8 
 
 )
 
 Change in contingent considerations
 
 —
 
 8.8 
 
 Changes in operating assets and liabilities, net of business acquisitions:
 
 Receivables and other assets
 
 168.7 
 
 98.4 
 
 Inventories
 
 ( 115.8 
 
 )
 
 ( 89.7 
 
 )
 
 Accounts payable, accrued liabilities and other liabilities
 
 ( 158.0 
 
 )
 
 ( 4.2 
 
 )
 
 Interest payable
 
 ( 30.4 
 
 )
 
 12.2 
 
 Net cash provided by operating activities
 
 1,095.7 
 
 919.0 
 
 Cash flows from investing activities
 
 Outlays for property, plant and equipment
 
 ( 803.1 
 
 )
 
 ( 2,434.1 
 
 )
 
 Proceeds from sale of business and assets
 
 135.9 
 
 2.7 
 
 Investments in unconsolidated affiliates
 
 ( 2.2 
 
 )
 
 ( 243.7 
 
 )
 
 Proceeds from sale of equity-method investment
 
 —
 
 70.3 
 
 Return of capital from unconsolidated affiliates
 
 10.7 
 
 1.1 
 
 Other, net
 
 4.7 
 
 ( 16.3 
 
 )
 
 Net cash used in investing activities
 
 ( 654.0 
 
 )
 
 ( 2,620.0 
 
 )
 
 Cash flows from financing activities
 
 Debt obligations:
 
 Proceeds from borrowings under credit facilities
 
 1,460.0 
 
 2,630.0 
 
 Repayments of credit facilities
 
 ( 1,360.0 
 
 )
 
 ( 2,500.0 
 
 )
 
 Proceeds from borrowings under accounts receivable securitization facility
 
 476.4 
 
 770.0 
 
 Repayments of accounts receivable securitization facility
 
 ( 596.4 
 
 )
 
 ( 804.0 
 
 )
 
 Proceeds from issuance of senior notes
 
 1,000.0 
 
 1,500.0 
 
 Redemption of senior notes
 
 ( 831.0 
 
 )
 
 ( 749.4 
 
 )
 
 Principal payments of finance leases
 
 ( 9.3 
 
 )
 
 ( 8.5 
 
 )
 
 Costs incurred in connection with financing arrangements
 
 ( 9.6 
 
 )
 
 ( 25.2 
 
 )
 
 Payment of contingent consideration
 
 —
 
 ( 317.1 
 
 )
 
 Repurchase of shares and units under compensation plans
 
 ( 5.5 
 
 )
 
 ( 13.5 
 
 )
 
 Sale of ownership interests in subsidiaries
 
 —
 
 1,619.7 
 
 Contributions from noncontrolling interests
 
 33.3 
 
 518.8 
 
 Distributions to noncontrolling interests
 
 ( 310.6 
 
 )
 
 ( 98.9 
 
 )
 
 Distributions to Partnership unitholders
 
 ( 8.4 
 
 )
 
 ( 8.4 
 
 )
 
 Dividends paid to common and Series A preferred shareholders
 
 ( 336.7 
 
 )
 
 ( 718.3 
 
 )
 
 Net cash provided by (used in) financing activities
 
 ( 497.8 
 
 )
 
 1,795.2 
 
 Net change in cash and cash equivalents
 
 ( 56.1 
 
 )
 
 94.2 
 
 Cash and cash equivalents, beginning of period
 
 331.1 
 
 232.1 
 
 Cash and cash equivalents, end of period
 
 $
 
 275.0 
 
 $
 
 326.3 
 
 See notes to consolidated financial statements.

 11

 TARGA RESOURCES CORP. 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)

 Except as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in millions of dollars.

 Note 1 — Organization and Operations

 Our Organization

 Targa Resources Corp. (“TRC”) is a publicly traded Delaware corporation formed in October 2005. Our common stock is listed on the New York Stock Exchange under the symbol “TRGP.” In this Quarterly Report, unless the context requires otherwise, references to “we,” “us,” “our,” “the Company” or “Targa” are intended to mean our consolidated business and operations. TRC controls the general partner of and owns all of the outstanding common units representing limited partner interests in Targa Resources Partners LP, referred to herein as the “Partnership” or “TRP.”

 Our Operations

 The Company is primarily engaged in the business of:

 • 
 
 gathering, compressing, treating, processing, transporting and purchasing and selling natural gas; 
 
 • 
 
 transporting, storing, fractionating, treating and purchasing and selling NGLs and NGL products, including services to LPG exporters; and 
 
 • 
 
 gathering, storing, terminaling and purchasing and selling crude oil. 
 
 See Note 18 – Segment Information for certain financial information regarding our business segments.
 
 Note 2 — Basis of Presentation

 The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by GAAP. Therefore, this information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results of the interim periods reported. All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
 
 Note 3 — Significant Accounting Policies

 The accounting policies that we follow are set forth in Note 3 – Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Annual Report. Other than the updates noted below, there were no significant updates or revisions to our accounting policies during the nine months ended September 30, 2020.
 
 Recent Accounting Pronouncements

 Recently issued accounting pronouncements not yet adopted

 Convertible Debt and Equity Instruments

 In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this update simplify the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and embedded conversion features that can be recognized separately from the primary contract. These amendments also enhance transparency and improve disclosures for convertible instruments and earnings per share guidance. These amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2021, with early adoption permitted. This update permits the use of either the modified retrospective or full retrospective method of adoption. We are currently evaluating the effects of such amendments on our consolidated financial statements.

 12

 Recently adopted accounting pronouncements 

 Measurement of Credit Losses

 In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The amendments in this update modify the impairment model for financial instruments, including trade and other receivables, held-to-maturity debt securities and other instruments.

 The amendments require entities to consider historical information, current conditions, and supportable forecasts to estimate expected credit losses, which may result in earlier recognition of losses. The amendments were effective for us on January 1, 2020 and were adopted by applying the modified retrospective transition approach. The adoption did not result in a cumulative effect adjustment to retained earnings on January 1, 2020. As a result of our adoption, see Accounting Policy Updates – Allowance for Doubtful Accounts below.

 Accounting Policy Updates

 Allowance for Doubtful Accounts

 Estimated losses on accounts receivable are provided through an allowance for doubtful accounts. We estimate the allowance for doubtful accounts through various procedures, including extensive review of our trade receivable balances by counterparty, assessing economic events and conditions, our historical experience with counterparties, the counterparty’s financial condition and the amount and age of past due accounts. 

 We continuously evaluate our ability to collect amounts owed to us. Receivables are considered past due if full payment is not received by the contractual due date. These procedures also include performing account reconciliations, dispute resolution and payment confirmation. We may involve our legal counsel to pursue the recovery of defaulted trade receivables.

 As the financial condition of any counterparty changes, circumstances develop or additional information becomes available, adjustments to our allowance may be required.
 
 Note 4 — Property, Plant and Equipment and Intangible Assets
 
 September 30, 2020
 
 December 31, 2019
 
 Estimated Useful Lives (In Years)
 
 Gathering systems
 
 $
 
 9,125.2 
 
 $
 
 8,976.8 
 
 5 to 20 
 
 Processing and fractionation facilities
 
 6,138.3 
 
 5,143.0 
 
 5 to 25 
 
 Terminaling and storage facilities
 
 1,514.8 
 
 1,495.5 
 
 5 to 25 
 
 Transportation assets
 
 2,422.6 
 
 2,292.4 
 
 10 to 50 
 
 Other property, plant and equipment
 
 123.9 
 
 184.1 
 
 3 to 50 
 
 Land
 
 160.7 
 
 159.7 
 
 —
 
 Construction in progress
 
 697.5 
 
 1,576.5 
 
 —
 
 Finance lease right-of-use assets
 
 51.3 
 
 48.8 
 
 Property, plant and equipment
 
 20,234.3 
 
 19,876.8 
 
 Accumulated depreciation, amortization and impairment
 
 ( 7,941.5 
 
 )
 
 ( 5,328.3 
 
 )
 
 Property, plant and equipment, net
 
 $
 
 12,292.8 
 
 $
 
 14,548.5 
 
 Intangible assets
 
 $
 
 2,643.5 
 
 $
 
 2,643.5 
 
 10 to 20 
 
 Accumulated amortization and impairment
 
 ( 1,225.9 
 
 )
 
 ( 908.5 
 
 )
 
 Intangible assets, net
 
 $
 
 1,417.6 
 
 $
 
 1,735.0 
 
 During the preparation of the Company's first quarter 2019 consolidated financial statements, the Company identified an error related to depreciation expense on certain assets that should have been placed in-service during 2018. The Company does not believe this error is material to its previously issued historical consolidated financial statements for any of the periods impacted and accordingly, has not adjusted the historical financial statements. The Company recorded the cumulative impact of a one-time $ 12.5 million overstatement of depreciation expense during the first quarter of 2019. 

 During the three and nine months ended September 30, 2020, depreciation expense was $ 168.5 million and $ 538.5 million, respectively. During the three and nine months ended September 30, 2019, depreciation expense was $ 201.4 million and $ 590.1 million, respectively.

 13

 Asset Impairments 

 We review and evaluate our long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, and changes to our estimates could have an impact on our assessment of asset recoverability . 

 During the nine months ended September 30, 2020, global commodity prices declined due to factors that significantly impacted both demand and supply. As the COVID-19 pandemic spread, causing travel and other restrictions to be implemented globally, the demand for commodities declined. Additionally, the supply shock late in the first quarter from certain major oil producing nations increasing production also significantly contributed to the sharp drop in commodity prices. While these major oil and gas producing countries subsequently agreed to collectively decrease production and global economies are beginning to re-open, these events, combined with the outbreak of the COVID-19 pandemic, contributed to volatility and depressed commodity prices. The drop in commodity prices resulted in prompt reactions from some domestic producers, including significantly reducing capital budgets and resultant drilling activity and shutting-in production. Commodity prices remain weak relative to historical levels and have remained volatile as uncertainty around global commodity supply and demand continues due to the COVID-19 pandemic. 

 In the first quarter of 2020, we determined that indicators of impairment existed for certain asset groups reported primarily within our Gathering and Processing segment. For each asset group for which undiscounted future net cash flows were not sufficient to recover the net book value, fair value was determined through use of discounted estimated cash flows to measure the impairment loss.

 The estimated cash flows used to assess recoverability of our long-lived assets and measure fair value of our asset groups are derived from current business plans, which are developed using near-term price and volume projections reflective of the current environment and management's projections for long-term average prices and volumes. In addition to near and long-term price assumptions, other key assumptions include volume projections, operating costs, timing of incurring such costs and the use of an appropriate discount rate. We believe our estimates and models used to determine fair value are similar to what a market participant would use.

 The fair value measurement of our long-lived assets was based, in part, on significant inputs not observable in the market (as discussed above) and thus represents a Level 3 measurement. The significant unobservable inputs used include discount rates and terminal value exit multiples. We utilized a weighted average discount rate of 14.0 % when deriving the fair value of the asset groups impaired during the first quarter of 2020. The weighted average discount rate and exit multiples reflect management’s best estimate of inputs a market participant would utilize.

 In the first quarter of 2020, we recorded non-cash pre-tax impairments of $ 2,442.8 million primarily associated with the partial impairment of gas processing facilities and gathering systems associated with our Mid-Continent operations and full impairment of our Coastal operations - all of which are in our Gathering and Processing segment. Our first quarter impairment assessment forecasted further decline in natural gas production across the Mid-Continent and Gulf of Mexico. The carrying value adjustments are included in Impairment of long-lived assets in our Consolidated Statements of Operations. There were no indicators of impairment identified during the second or third quarters of 2020.

 Intangible Assets

 Intangible assets consist of customer contracts and customer relationships acquired in prior business combinations. The fair value of these acquired intangible assets were determined at the date of acquisition based on the present values of estimated future cash flows. Amortization expense attributable to these assets is recorded over the periods in which we benefit from services provided to customers. 

 As a result of the triggering events and analysis described above, in the first quarter of 2020, we recognized a non-cash pre-tax impairment loss associated with certain intangible customer relationships for which undiscounted future net cash flows were not sufficient to recover the net book value. 

 The estimated annual amortization expense for intangible assets is approximately $ 144.0 million, $ 130.9 million, $ 122.7 million, $ 117.5 million and $ 113.7 million for each of the years 2020 through 2024, respectively.

 The changes in our intangible assets are as follows:

 Balance at December 31, 2019
 
 $
 
 1,735.0 
 
 Impairment
 
 ( 208.6 
 
 )
 
 Amortization
 
 ( 108.8 
 
 )
 
 Balance at September 30, 2020
 
 $
 
 1,417.6 
 
 14

 Assets and L iabilities H eld for S ale 

 In October 2020, we executed agreements to sell our assets in Channelview, Texas for approximately $ 58 million (the “October 2020 Sale”). As of September 30, 2020, we classified our assets as held for sale and measured the fair value of the disposal group using the expected sales price under a contract with a third party (an input within Level 3 of the fair value hierarchy). We recognized a loss of $ 58.3 million included within other operating (income) expense in our Consolidated Statements of Operations for the three and nine months ended September 30, 2020 to reduce the carrying value of our assets to their recoverable amounts. 

 The sale closed in October 2020, and we used the proceeds for general corporate purposes. The sale of the assets is included in our Logistics and Transportation segment and does not qualify for reporting as a discontinued operation, as its divestiture did not represent a strategic shift that would have a major effect on our operations or financial results.

 The adjusted carrying amounts of the assets and liabilities held for sale as of September 30, 2020 are as follows:

 September 30, 2020
 
 Current assets:
 
 Property, plant and equipment, net of accumulated depreciation and estimated loss on sale
 
 $
 
 61.0 
 
 Other current assets
 
 1.2 
 
 Total assets held for sale
 
 $
 
 62.2 
 
 Current liabilities:
 
 Accounts payable and accrued liabilities
 
 $
 
 1.0 
 
 Other long-term obligations
 
 2.6 
 
 Total liabilities held for sale
 
 $
 
 3.6 
 
 15

 Note 5 — Debt Obligations
 
 September 30, 2020
 
 December 31, 2019
 
 Current:
 
 Obligations of the Partnership: (1)
 
 Accounts receivable securitization facility, due April 2021 (2)
 
 $
 
 250.0 
 
 $
 
 370.0 
 
 Finance lease liabilities
 
 11.9 
 
 12.2 
 
 Current debt obligations
 
 261.9 
 
 382.2 
 
 Long-term:
 
 TRC obligations:
 
 TRC Senior secured revolving credit facility, variable rate, due

 June 2023 (3)
 
 435.0 
 
 435.0 
 
 Obligations of the Partnership: (1)
 
 Senior secured revolving credit facility, variable rate, due

 June 2023 (4)
 
 100.0 
 
 — 
 
 Senior unsecured notes:
 
 5¼% fixed rate, due May 2023 
 
 559.6 
 
 559.6 
 
 4¼% fixed rate, due November 2023 
 
 583.9 
 
 583.9 
 
 6¾% fixed rate, due March 2024 
 
 — 
 
 580.1 
 
 5⅛% fixed rate, due February 2025 
 
 481.0 
 
 500.0 
 
 5⅞% fixed rate, due April 2026 
 
 963.2 
 
 1,000.0 
 
 5⅜% fixed rate, due February 2027 
 
 468.1 
 
 500.0 
 
 6½% fixed rate, due July 2027 
 
 705.2 
 
 750.0 
 
 5% fixed rate, due January 2028 
 
 700.3 
 
 750.0 
 
 6⅞% fixed rate, due January 2029 
 
 679.3 
 
 750.0 
 
 5½% fixed rate, due March 2030 
 
 949.6 
 
 1,000.0 
 
 4⅞% fixed rate, due February 2031 
 
 1,000.0 
 
 — 
 
 TPL notes, 4¾% fixed rate, due November 2021 (5)
 
 6.5 
 
 6.5 
 
 TPL notes, 5⅞% fixed rate, due August 2023 (5)
 
 48.1 
 
 48.1 
 
 Unamortized premium
 
 0.2 
 
 0.3 
 
 7,680.0 
 
 7,463.5 
 
 Debt issuance costs, net of amortization
 
 ( 48.5 
 
 )
 
 ( 49.1 
 
 )
 
 Finance lease liabilities
 
 20.7 
 
 25.8 
 
 Long-term debt
 
 7,652.2 
 
 7,440.2 
 
 Total debt obligations
 
 $
 
 7,914.1 
 
 $
 
 7,822.4 
 
 Irrevocable standby letters of credit:
 
 Letters of credit outstanding under the TRC Senior

 secured credit facility (3)
 
 $
 
 — 
 
 $
 
 — 
 
 Letters of credit outstanding under the Partnership senior

 secured revolving credit facility (4)
 
 35.3 
 
 88.2 
 
 $
 
 35.3 
 
 $
 
 88.2 
 
 (1) 
 
 While we consolidate the debt of the Partnership in our financial statements, we do not have the obligation to make interest payments or debt payments with respect to the debt of the Partnership. 
 
 (2) 
 
 As of September 30, 2020, the Partnership had $ 250.0 million of qualifying receivables under its $ 250.0 million accounts receivable securitization facility (“Securitization Facility”), resulting in zero availability. During the second quarter of 2020, the Partnership amended the Securitization Facility to decrease the facility size from $ 400.0 million to $ 250.0 million to more closely align with our expectations for borrowing needs given commodity prices and to extend the facility termination date to April 21, 2021 . 
 
 (3) 
 
 As of September 30, 2020, availability under TRC’s $ 670.0 million senior secured revolving credit facility (“TRC Revolver”) was $ 235.0 million. 
 
 (4) 
 
 As of September 30, 2020, availability under the Partnership’s $ 2.2 billion senior secured revolving credit facility (“TRP Revolver”) was $ 2,064.7 million .
 
 (5) 
 
 “TPL” refers to Targa Pipeline Partners LP. 
 
 The following table shows the range of interest rates and weighted average interest rate incurred on variable-rate debt obligations during the nine months ended September 30, 2020:

 Range of Interest Rates Incurred
 
 Weighted Average Interest Rate Incurred
 
 TRC Revolver
 
 1.9% - 3.5% 
 
 2.5 %
 
 TRP Revolver
 
 1.9% - 6.0% 
 
 2.3 %
 
 Partnership's Securitization Facility
 
 1.5% - 2.7% 
 
 2.0 %
 
 Compliance with Debt Covenants

 As of September 30, 2020, we were in compliance with the covenants contained in our various debt agreements.

 16

 Senior Unsecured Notes Issuance 

 In August 2020, the Partnership issued $ 1.0 billion aggregate principal amount of 4⅞ % Senior Notes due 2031 (the “August 2020 Offering”), resulting in net proceeds of $ 991.0 million. The 4⅞ % Senior Notes due 2031 have substantially similar terms and covenants as our other series of Senior Notes. A portion of the net proceeds from the issuance were used to fund the concurrent cash tender offer (the “Tender Offer”) of the Partnership’s 6¾ % Senior Notes due 2024 and redeem any 6¾ % Senior Notes due 2024 that remained outstanding after consummation of the Tender Offer, with the remainder used for repayment of borrowings under the Partnership’s senior secured revolving credit facility. See “Debt Extinguishments and Repurchases” for further details of the concurrent tender offer.

 Debt Extinguishments and Repurchases

 Concurrent with the August 2020 Offering, the Partnership commenced the Tender Offer to purchase for cash, subject to certain terms and conditions, any and all of our outstanding 6¾ % Senior Notes due 2024. We accepted for purchase all the notes that were validly tendered as of the early tender date, which totaled $ 262.1 million. 

 Subsequent to the closing of the Tender Offer in August 2020, the Partnership redeemed the 6¾ % Senior Notes due 2024 for the remaining note balance of $ 318.0 million (the “2024 Note Redemption”). As a result of the Tender Offer and the 2024 Note Redemption, we recorded a loss due to debt extinguishment of $ 13.7 million comprised of $ 11.1 million premiums paid and a write-off of $ 2.6 million of debt issuance costs.

 Debt Repurchases
 
 The following table summarizes the Partnership’s senior note repurchases for the nine months ended September 30, 2020: 

 Debt Repurchased
 
 Book Value
 
 Payment
 
 Gain (Loss)
 
 Write-off of Debt Issuance Costs
 
 Net Gain
 
 5⅛% Senior Notes due 2025
 
 $
 
 19.0 
 
 $
 
 ( 14.6 
 
 )
 
 $
 
 4.4 
 
 $
 
 ( 0.1 
 
 )
 
 $
 
 4.3 
 
 5⅞% Senior Notes due 2026
 
 36.8 
 
 ( 29.7 
 
 )
 
 7.1 
 
 ( 0.2 
 
 )
 
 6.9 
 
 5⅜% Senior Notes due 2027
 
 31.9 
 
 ( 26.6 
 
 )
 
 5.3 
 
 ( 0.2 
 
 )
 
 5.1 
 
 6½% Senior Notes due 2027
 
 44.8 
 
 ( 35.5 
 
 )
 
 9.3 
 
 ( 0.4 
 
 )
 
 8.9 
 
 5% Senior Notes due 2028
 
 49.7 
 
 ( 38.0 
 
 )
 
 11.7 
 
 ( 0.4 
 
 )
 
 11.3 
 
 6⅞% Senior Notes due 2029
 
 70.7 
 
 ( 55.2 
 
 )
 
 15.5 
 
 ( 0.6 
 
 )
 
 14.9 
 
 5½% Senior Notes due 2030
 
 50.4 
 
 ( 40.2 
 
 )
 
 10.2 
 
 ( 0.5 
 
 )
 
 9.7 
 
 6¾% Senior Notes due 2024
 
 580.1 
 
 ( 591.2 
 
 )
 
 ( 11.1 
 
 )
 
 ( 2.6 
 
 )
 
 ( 13.7 
 
 )
 
 $
 
 883.4 
 
 $
 
 ( 831.0 
 
 )
 
 $
 
 52.4 
 
 $
 
 ( 5.0 
 
 )
 
 $
 
 47.4 
 
 We or the Partnership may retire or purchase various series of the Partnership’s outstanding debt through cash purchases and/or exchanges for other debt, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

 Contractual Obligations 

 The following table summarizes payment obligations for debt instruments after giving effect to the debt repurchases detailed above:

 Payments Due By Period
 
 Less Than
 
 More Than
 
 Total
 
 1 Year
 
 1-3 Years
 
 3-5 Years
 
 5 Years
 
 (in millions)
 
 Long-term debt obligations (1)
 
 $
 
 7,679.8 
 
 $
 
 -
 
 $
 
 1,149.2 
 
 $
 
 1,064.9 
 
 $
 
 5,465.7 
 
 Interest on debt obligations (2)
 
 2,754.7 
 
 411.3 
 
 807.1 
 
 657.6 
 
 878.7 
 
 $
 
 10,434.5 
 
 $
 
 411.3 
 
 $
 
 1,956.3 
 
 $
 
 1,722.5 
 
 $
 
 6,344.4 
 
 (1) 
 
 Represents scheduled future maturities of consolidated debt obligations for the periods indicated. 
 
 (2) 
 
 Represents interest expense on debt obligations based on both fixed debt interest rates and prevailing September 30, 2020 rates for floating debt. 
 
 17

 Subsequent Event

 On November 2, 2020, the Partnership redeemed the $ 559.6 million remaining balance of its 5¼ % Senior Notes due 2023. 

 Note 6 — Other Long-term Liabilities

 Other long-term liabilities are comprised of deferred revenue, asset retirement obligations and operating lease liabilities.

 Deferred Revenue

 We have certain long-term contractual arrangements for which we have received consideration that we are not yet able to recognize as revenue. The resulting deferred revenue will be recognized once all conditions for revenue recognition have been met.

 Deferred revenue as of September 30, 2020 and December 31, 2019, was $ 169.4 million and $ 172.0 million, respectively, which includes $ 129.0 million of payments received from Vitol Americas Corp. (“Vitol”) (formerly known as Noble Americas Corp.), a subsidiary of Vitol US Holding Co., in 2016, 2017, and 2018 as part of an agreement (the “Splitter Agreement”) related to the construction and operation of a crude oil and condensate splitter. In December 2018, Vitol elected to terminate the Splitter Agreement. The Splitter Agreement provides that the first three annual payments are ours if Vitol elects to terminate, which Vitol disputes. The timing of revenue recognition related to the Splitter Agreement deferred revenue is dependent on the outcome of current litigation with Vitol. Deferred revenue also includes nonmonetary consideration received in a 2015 amendment to a gas gathering and processing agreement and consideration received for other construction activities of facilities connected to our systems. See Part II—Item 1. Legal Proceedings for further details on the related litigation. 

 Note 7 — Preferred Stock

 Preferred Stock Dividends

 As of September 30, 2020, we have accrued cumulative preferred dividends of $ 22.9 million on our Series A Preferred Stock (“Series A Preferred”), which will be paid on November 13, 2020 . During the three and nine months ended September 30, 2020, we paid $ 22.9 million and $ 68.8 million of dividends to preferred shareholders, and recorded deemed dividends of $ 9.5 million and $ 27.7 million attributable to accretion of the preferred discount resulting from beneficial conversion feature accounting. Such accretion is included in the book value of the Series A Preferred.
 
 Note 8 — Common Stock and Related Matters

 Common Stock Dividends

 The following table details the dividends declared and/or paid by us to common shareholders for the nine months ended September 30, 2020:

 Three Months Ended
 
 Date Paid or

 To Be Paid
 
 Total Common

 Dividends Declared
 
 Amount of Common

 Dividends Paid or

 To Be Paid
 
 Accrued

 Dividends (1)
 
 Dividends Declared per Share of Common Stock
 
 (In millions, except per share amounts)
 
 September 30, 2020
 
 November 16, 2020 
 
 $
 
 23.8 
 
 $
 
 23.3 
 
 $
 
 0.5 
 
 $
 
 0.10000 
 
 June 30, 2020
 
 August 17, 2020 
 
 23.7 
 
 23.3 
 
 0.4 
 
 0.10000 
 
 March 31, 2020
 
 May 15, 2020 
 
 23.7 
 
 23.3 
 
 0.4 
 
 0.10000 
 
 December 31, 2019
 
 February 18, 2020 
 
 216.0 
 
 212.0 
 
 4.0 
 
 0.91000 
 
 (1) 
 
 Represents accrued dividends on restricted stock and restricted stock units that are payable upon vesting. 
 
 18

 Subsequent Event 

 In October 2020, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) for the repurchase of up to $ 500 million of our outstanding common stock. As of November 2, 2020, we have repurchased 4,505,507 shares at a weighted average price of $ 16.33 for a total net cost of $ 73.6 million. There is approximately $ 426 million remaining under the Share Repurchase Program. We may discontinue the Share Repurchase Program at any time and are not obligated to repurchase any specific dollar amount or number of shares.
 
 Note 9 — Partnership Units and Related Matters

 Distributions

 We are entitled to receive all Partnership distributions from available cash on the Partnership’s common units after payment of preferred unit distributions each quarter.
 
 The following table details the distributions declared and paid by the Partnership for the nine months ended September 30, 2020:

 Three Months Ended
 
 Date Paid or To Be Paid
 
 Total Distributions
 
 Distributions to

 Targa Resources Corp.
 
 September 30, 2020
 
 November 13, 2020 
 
 $
 
 51.7 
 
 $
 
 48.9 
 
 June 30, 2020
 
 August 13, 2020 
 
 51.7 
 
 48.9 
 
 March 31, 2020
 
 May 13, 2020 
 
 53.1 
 
 50.3 
 
 December 31, 2019
 
 February 13, 2020 
 
 241.9 
 
 239.1 
 
 Contributions

 All capital contributions to the Partnership continue to be allocated 98 % to the limited partner and 2 % to the general partner; however, no units will be issued for those contributions. For the nine months ended September 30, 2020, we made a total of $ 50.0 million in contributions to the Partnership. 

 Preferred Units

 The Partnership’s issued and outstanding Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Preferred Units”) rank senior to the Partnership’s common units with respect to the distribution rights. Distributions on the Partnership’s 5,000,000 Preferred Units are cumulative from the date of original issue in October 2015 and are payable monthly in arrears on the 15th day of each month of each year, when, as and if declared by the board of directors of the Partnership’s general partner. Distributions on the Preferred Units are payable out of amounts legally available at a rate equal to 9.0 % per annum. On and after November 1, 2020, distributions on the Preferred Units will accumulate at an annual floating rate equal to the one-month LIBOR plus a spread of 7.71 %.

 The Partnership paid $ 2.8 million and $ 8.4 million of distributions to the holders of Preferred Units (“Preferred Unitholders”) for the three and nine months ended September 30, 2020. The Preferred Units are reported as noncontrolling interests in our financial statements.

 Subsequent Event

 In October 2020 , the board of directors of the general partner of the Partnership declared a cash distribution of $ 0.1875 per Preferred Unit, resulting in approximately $ 0.9 million in distributions that will be paid on November 16, 2020 .

 19

 Note 1 0 — Earnings per Common Share 

 The following table sets forth a reconciliation of net income and weighted average shares outstanding (in millions) used in computing basic and diluted net income per common share:

 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 2020
 
 2019
 
 Net income (loss) attributable to Targa Resources Corp.
 
 $
 
 69.3 
 
 $
 
 ( 47.3 
 
 )
 
 $
 
 ( 1,587.5 
 
 )
 
 $
 
 ( 96.4 
 
 )
 
 Less: Dividends on preferred stock
 
 32.4 
 
 31.3 
 
 96.5 
 
 93.2 
 
 Net income (loss) attributable to common shareholders for basic earnings per share
 
 $
 
 36.9 
 
 $
 
 ( 78.6 
 
 )
 
 $
 
 ( 1,684.0 
 
 )
 
 $
 
 ( 189.6 
 
 )
 
 Weighted average shares outstanding
 
 233.4 
 
 232.7 
 
 233.2 
 
 232.4 
 
 Dilutive effect of unvested stock awards (1)
 
 0.4 
 
 —
 
 —
 
 —
 
 Weighted average shares outstanding – diluted
 
 233.8 
 
 232.7 
 
 233.2 
 
 232.4 
 
 Net income (loss) available per common share - basic and diluted
 
 $
 
 0.16 
 
 $
 
 ( 0.34 
 
 )
 
 $
 
 ( 7.22 
 
 )
 
 $
 
 ( 0.82 
 
 )
 
 (1) 
 
 For the three months ended September 30, 2020, on a weighted average basis, 2.3 million unvested restricted stock awards, 0.5 million unvested performance stock units and 46.5 million Series A Preferred Stock were antidilutive, and accordingly, were excluded from the diluted earnings per common share calculation. For all other periods presented above, all unvested restricted stock awards, unvested performance stock units, and Series A Preferred Stock were antidilutive because a net loss existed for those respective periods. 
 
 Note 11 — Derivative Instruments and Hedging Activities

 The primary purposes of our commodity risk management activities are to manage our exposure to commodity price risk and reduce volatility in our operating cash flow due to fluctuations in commodity prices. We have entered into derivative instruments to hedge the commodity price risks associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from percent-of-proceeds processing arrangements, (ii) future commodity purchases and sales in our Logistics and Transportation segment and (iii) natural gas transportation basis risk in our Logistics and Transportation segment. The hedge positions associated with (i) and (ii) above will move favorably in periods of falling commodity prices and unfavorably in periods of rising commodity prices and are designated as cash flow hedges for accounting purposes.

 The hedges generally match the NGL product composition and the NGL delivery points of our physical equity volumes. Our natural gas hedges are a mixture of specific gas delivery points and Henry Hub. The NGL hedges may be transacted as specific NGL hedges or as baskets of ethane, propane, normal butane, isobutane and natural gasoline based upon our expected equity NGL composition. We believe this approach avoids uncorrelated risks resulting from employing hedges on crude oil or other petroleum products as “proxy” hedges of NGL prices. Our natural gas and NGL hedges are settled using published index prices for delivery at various locations.

 We hedge a portion of our condensate equity volumes using crude oil hedges that are based on the NYMEX futures contracts for West Texas Intermediate light, sweet crude, which approximates the prices received for condensate. This exposes us to a market differential risk if the NYMEX futures do not move in exact parity with the sales price of our underlying condensate equity volumes.

 We also enter into derivative instruments to help manage other short-term commodity-related business risks. We have not designated these derivatives as hedges and record changes in fair value and cash settlements to revenues.
 
 At September 30, 2020, the notional volumes of our commodity derivative contracts were:

 Commodity 
 
 Instrument 
 
 Unit 
 
 2020 
 
 2021 
 
 2022 
 
 2023 
 
 2024 
 
 2025 
 
 Natural Gas
 
 Swaps
 
 MMBtu/d
 
 168,317 
 
 166,216 
 
 90,600 
 
 33,350 
 
 - 
 
 - 
 
 Natural Gas
 
 Basis Swaps
 
 MMBtu/d
 
 445,084 
 
 471,168 
 
 295,390 
 
 250,000 
 
 90,000 
 
 5,000 
 
 NGL
 
 Swaps
 
 Bbl/d
 
 30,909 
 
 29,261 
 
 16,848 
 
 2,627 
 
 - 
 
 - 
 
 NGL
 
 Futures
 
 Bbl/d
 
 52,685 
 
 25,526 
 
 - 
 
 - 
 
 - 
 
 - 
 
 Condensate
 
 Swaps
 
 Bbl/d
 
 5,190 
 
 4,872 
 
 2,125 
 
 515 
 
 - 
 
 - 
 
 20

 Our derivative contracts are subject to netting arrangements that permit our contracting subsidiaries to net cash settle offsetting asset and liability positions with the same counterparty within the same Targa entity. We record derivative assets and liabilities on our Consolidated Balance Sheets on a gross basis, without considering the effect of master netting arrangements. The following schedules reflect the fair value of our derivative instruments and their location on our Consolidated Balance Sheets as well as pro forma reporting assuming that we reported derivatives subject to master netting agreements on a net basis: 
 
 Fair Value as of September 30, 2020
 
 Fair Value as of December 31, 2019
 
 Balance Sheet
 
 Derivative
 
 Derivative
 
 Derivative
 
 Derivative
 
 Location
 
 Assets
 
 Liabilities
 
 Assets
 
 Liabilities
 
 Derivatives designated as hedging instruments
 
 Commodity contracts
 
 Current
 
 $
 
 58.4 
 
 $
 
 116.1 
 
 $
 
 102.1 
 
 $
 
 11.6 
 
 Long-term
 
 14.0 
 
 62.8 
 
 33.7 
 
 6.4 
 
 Total derivatives designated as hedging instruments
 
 $
 
 72.4 
 
 $
 
 178.9 
 
 $
 
 135.8 
 
 $
 
 18.0 
 
 Derivatives not designated as hedging instruments
 
 Commodity contracts
 
 Current
 
 $
 
 30.5 
 
 $
 
 5.0 
 
 $
 
 1.2 
 
 $
 
 92.5 
 
 Long-term
 
 65.5 
 
 0.1 
 
 1.8 
 
 34.4 
 
 Total derivatives not designated as hedging instruments
 
 $
 
 96.0 
 
 $
 
 5.1 
 
 $
 
 3.0 
 
 $
 
 126.9 
 
 Total current position
 
 $
 
 88.9 
 
 $
 
 121.1 
 
 $
 
 103.3 
 
 $
 
 104.1 
 
 Total long-term position
 
 79.5 
 
 62.9 
 
 35.5 
 
 40.8 
 
 Total derivatives
 
 $
 
 168.4 
 
 $
 
 184.0 
 
 $
 
 138.8 
 
 $
 
 144.9 
 
 The pro forma impact of reporting derivatives on our Consolidated Balance Sheets on a net basis is as follows:

 Gross Presentation
 
 Pro Forma Net Presentation
 
 September 30, 2020
 
 Asset
 
 Liability
 
 Collateral
 
 Asset
 
 Liability
 
 Current Position
 
 Counterparties with offsetting positions or collateral
 
 $
 
 80.3 
 
 $
 
 ( 121.1 
 
 )
 
 $
 
 60.1 
 
 $
 
 31.5 
 
 $
 
 ( 12.2 
 
 )
 
 Counterparties without offsetting positions - assets
 
 8.6 
 
 -
 
 -
 
 8.6 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 -
 
 -
 
 -
 
 -
 
 88.9 
 
 ( 121.1 
 
 )
 
 60.1 
 
 40.1 
 
 ( 12.2 
 
 )
 
 Long Term Position
 
 Counterparties with offsetting positions or collateral
 
 63.4 
 
 ( 62.6 
 
 )
 
 -
 
 26.3 
 
 ( 25.5 
 
 )
 
 Counterparties without offsetting positions - assets
 
 16.1 
 
 -
 
 -
 
 16.1 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 ( 0.3 
 
 )
 
 -
 
 -
 
 ( 0.3 
 
 )
 
 79.5 
 
 ( 62.9 
 
 )
 
 -
 
 42.4 
 
 ( 25.8 
 
 )
 
 Total Derivatives
 
 Counterparties with offsetting positions or collateral
 
 143.7 
 
 ( 183.7 
 
 )
 
 60.1 
 
 57.8 
 
 ( 37.7 
 
 )
 
 Counterparties without offsetting positions - assets
 
 24.7 
 
 -
 
 -
 
 24.7 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 ( 0.3 
 
 )
 
 -
 
 -
 
 ( 0.3 
 
 )
 
 $
 
 168.4 
 
 $
 
 ( 184.0 
 
 )
 
 $
 
 60.1 
 
 $
 
 82.5 
 
 $
 
 ( 38.0 
 
 )
 
 Gross Presentation
 
 Pro Forma Net Presentation
 
 December 31, 2019
 
 Asset
 
 Liability
 
 Collateral
 
 Asset
 
 Liability
 
 Current Position
 
 Counterparties with offsetting positions or collateral
 
 $
 
 99.8 
 
 $
 
 ( 85.0 
 
 )
 
 $
 
 ( 4.9 
 
 )
 
 $
 
 56.0 
 
 $
 
 ( 46.1 
 
 )
 
 Counterparties without offsetting positions - assets
 
 3.5 
 
 -
 
 -
 
 3.5 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 ( 19.1 
 
 )
 
 -
 
 -
 
 ( 19.1 
 
 )
 
 103.3 
 
 ( 104.1 
 
 )
 
 ( 4.9 
 
 )
 
 59.5 
 
 ( 65.2 
 
 )
 
 Long Term Position
 
 Counterparties with offsetting positions or collateral
 
 33.3 
 
 ( 40.5 
 
 )
 
 -
 
 18.1 
 
 ( 25.3 
 
 )
 
 Counterparties without offsetting positions - assets
 
 2.2 
 
 -
 
 -
 
 2.2 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 ( 0.3 
 
 )
 
 -
 
 -
 
 ( 0.3 
 
 )
 
 35.5 
 
 ( 40.8 
 
 )
 
 -
 
 20.3 
 
 ( 25.6 
 
 )
 
 Total Derivatives
 
 Counterparties with offsetting positions or collateral
 
 133.1 
 
 ( 125.5 
 
 )
 
 ( 4.9 
 
 )
 
 74.1 
 
 ( 71.4 
 
 )
 
 Counterparties without offsetting positions - assets
 
 5.7 
 
 -
 
 -
 
 5.7 
 
 -
 
 Counterparties without offsetting positions - liabilities
 
 -
 
 ( 19.4 
 
 )
 
 -
 
 -
 
 ( 19.4 
 
 )
 
 $
 
 138.8 
 
 $
 
 ( 144.9 
 
 )
 
 $
 
 ( 4.9 
 
 )
 
 $
 
 79.8 
 
 $
 
 ( 90.8 
 
 )
 
 21

 Our payment obligations in connection with a majority of these hedging transactions are secured by a first priority lien in the collateral securing the TRP Revolver that ranks equal in right of payment with liens granted in favor of the Partnership’s senior secured lenders. Some of our hedges are futures contracts executed through brokers that clear the hedges through an exchange. We maintain a margin deposit with the brokers in an amount sufficient enough to cover the fair value of our open futures positions. The margin deposit is considered collateral, which is located within Deposits on our Consolidated Balance Sheets and is not offset against the fair value of our derivative instruments.

 The fair value of our derivative instruments, depending on the type of instrument, was determined by the use of present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. The estimated fair value of our derivative instruments was a net liability of $ 15.6 million as of September 30, 2020. The estimated fair value is net of an adjustment for credit risk based on the default probabilities as indicated by market quotes for the counterparties’ credit default swap rates. The credit risk adjustment was immaterial for all periods presented. Our futures contracts that are cleared through an exchange are margined daily and do not require any credit adjustment.
 
 The following tables reflect amounts recorded in Other comprehensive income (“OCI”) and amounts reclassified from OCI to revenue for the periods indicated: 

 Gain (Loss) Recognized in OCI on

 Derivatives (Effective Portion)
 
 Derivatives in Cash Flow
 
 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 Hedging Relationships
 
 2020
 
 2019
 
 2020
 
 2019
 
 Commodity contracts
 
 $
 
 ( 128.7 
 
 )
 
 $
 
 118.2 
 
 $
 
 ( 102.6 
 
 )
 
 $
 
 167.8 
 
 Gain (Loss) Reclassified from OCI into

 Income (Effective Portion)
 
 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 Location of Gain (Loss)
 
 2020
 
 2019
 
 2020
 
 2019
 
 Revenues
 
 $
 
 19.2 
 
 $
 
 41.5 
 
 $
 
 139.4 
 
 $
 
 106.1 
 
 Based on valuations as of September 30, 2020, we expect to reclassify commodity hedge-related deferred losses of $( 106.0 ) million included in accumulated other comprehensive income into earnings before income taxes through the end of 2023, with $( 57.2 ) million of losses to be reclassified over the next twelve months.

 Our consolidated earnings are also affected by the use of the mark-to-market method of accounting for derivative instruments that do not qualify for hedge accounting or that have not been designated as hedges. The changes in fair value of these instruments are recorded on the balance sheet and through earnings rather than being deferred until the anticipated transaction settles. The use of mark-to-market accounting for financial instruments can cause non-cash earnings volatility due to changes in the underlying commodity price indices. For the three and nine months ended September 30, 2020, the unrealized mark-to-market gains are primarily attributable to favorable movements in natural gas forward basis prices, as compared to our hedged positions. 
 
 Location of Gain
 
 Gain (Loss) Recognized in Income on Derivatives
 
 Derivatives Not Designated
 
 Recognized in Income on
 
 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 as Hedging Instruments
 
 Derivatives
 
 2020
 
 2019
 
 2020
 
 2019
 
 Commodity contracts
 
 Revenue
 
 $
 
 90.0 
 
 $
 
 ( 103.3 
 
 )
 
 $
 
 197.9 
 
 $
 
 ( 113.8 
 
 )
 
 See Note 12 – Fair Value Measurements and Note 18 – Segment Information for additional disclosures related to derivative instruments and hedging activities.

 22

 Note 1 2 — Fair V alue Measurements 

 Under GAAP, our Consolidated Balance Sheets reflect a mixture of measurement methods for financial assets and liabilities (“financial instruments”). Derivative financial instruments and contingent consideration related to business acquisitions are reported at fair value on our Consolidated Balance Sheets. Other financial instruments are reported at historical cost or amortized cost on our Consolidated Balance Sheets. The following are additional qualitative and quantitative disclosures regarding fair value measurements of financial instruments.

 Fair Value of Derivative Financial Instruments

 Our derivative instruments consist of financially settled commodity swaps, futures, option contracts and fixed-price forward commodity contracts with certain counterparties. We determine the fair value of our derivative contracts using present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. We have consistently applied these valuation techniques in all periods presented and we believe we have obtained the most accurate information available for the types of derivative contracts we hold.

 The fair values of our derivative instruments are sensitive to changes in forward pricing on natural gas, NGLs and crude oil. The financial position of these derivatives at September 30, 2020, a net liability position of $ 15.6 million, reflects the present value, adjusted for counterparty credit risk, of the amount we expect to receive or pay in the future on our derivative contracts. If forward pricing on natural gas, NGLs and crude oil were to increase by 10%, the result would be a fair value reflecting a net liability of $( 136.8 ) million. If forward pricing on natural gas, NGLs and crude oil were to decrease by 10%, the result would be a fair value reflecting a net asset of $ 106.1 million.

 Fair Value of Other Financial Instruments

 Due to their cash or near-cash nature, the carrying value of other financial instruments included in working capital (i.e., cash and cash equivalents, accounts receivable, accounts payable) approximates their fair value. Long-term debt is primarily the other financial instrument for which carrying value could vary significantly from fair value. We determined the supplemental fair value disclosures for our long-term debt as follows:

 • 
 
 The TRC Revolver, TRP Revolver, and the Partnership’s Securitization Facility are based on carrying value, which approximates fair value as their interest rates are based on prevailing market rates; and 
 
 • 
 
 The Partnership’s senior unsecured notes are based on quoted market prices derived from trades of the debt. 
 
 Contingent consideration liabilities related to business acquisitions are carried at fair value until the end of the related earn-out period.

 Fair Value Hierarchy

 We categorize the inputs to the fair value measurements of financial assets and liabilities at each balance sheet reporting date using a three-tier fair value hierarchy that prioritizes the significant inputs used in measuring fair value:

 • 
 
 Level 1 – observable inputs such as quoted prices in active markets; 
 
 • 
 
 Level 2 – inputs other than quoted prices in active markets that we can directly or indirectly observe to the extent that the markets are liquid for the relevant settlement periods; and 
 
 • 
 
 Level 3 – unobservable inputs in which little or no market data exists, therefore we must develop our own assumptions. 
 
 23

 The following table shows a breakdown by fair value hierarchy category for (1) financial instruments measurements included on our Consolidated Balance Sheets at fair value and (2) supplemental fair value disclosures for other financial instruments:

 September 30, 2020
 
 Carrying
 
 Fair Value
 
 Value
 
 Total
 
 Level 1
 
 Level 2
 
 Level 3
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Fair Value:
 
 Assets from commodity derivative contracts (1)
 
 $
 
 168.4 
 
 $
 
 168.4 
 
 $
 
 — 
 
 $
 
 168.4 
 
 $
 
 — 
 
 Liabilities from commodity derivative contracts (1)
 
 184.0 
 
 184.0 
 
 — 
 
 183.7 
 
 0.3 
 
 TPL contingent consideration (2)
 
 2.3 
 
 2.3 
 
 — 
 
 — 
 
 2.3 
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Carrying Value:
 
 Cash and cash equivalents
 
 275.0 
 
 275.0 
 
 — 
 
 — 
 
 — 
 
 TRC Revolver
 
 435.0 
 
 435.0 
 
 — 
 
 435.0 
 
 — 
 
 TRP Revolver
 
 100.0 
 
 100.0 
 
 — 
 
 100.0 
 
 — 
 
 Partnership's Senior unsecured notes
 
 7,145.0 
 
 7,206.0 
 
 — 
 
 7,206.0 
 
 — 
 
 Partnership's Securitization Facility
 
 250.0 
 
 250.0 
 
 — 
 
 250.0 
 
 — 
 
 December 31, 2019
 
 Carrying
 
 Fair Value
 
 Value
 
 Total
 
 Level 1
 
 Level 2
 
 Level 3
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Fair Value:
 
 Assets from commodity derivative contracts (1)
 
 $
 
 136.5 
 
 $
 
 136.5 
 
 $
 
 — 
 
 $
 
 136.2 
 
 $
 
 0.3 
 
 Liabilities from commodity derivative contracts (1)
 
 142.6 
 
 142.6 
 
 — 
 
 142.0 
 
 0.6 
 
 TPL contingent consideration (2)
 
 2.3 
 
 2.3 
 
 — 
 
 — 
 
 2.3 
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Carrying Value:
 
 Cash and cash equivalents
 
 331.1 
 
 331.1 
 
 — 
 
 — 
 
 — 
 
 TRC Revolver
 
 435.0 
 
 435.0 
 
 — 
 
 435.0 
 
 — 
 
 TRP Revolver
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Partnership's Senior unsecured notes
 
 7,028.5 
 
 7,376.9 
 
 — 
 
 7,376.9 
 
 — 
 
 Partnership's Securitization Facility
 
 370.0 
 
 370.0 
 
 — 
 
 370.0 
 
 — 
 
 (1) 
 
 The fair value of derivative contracts in this table is presented on a different basis than the Consolidated Balance Sheets presentation as disclosed in Note 11 –Derivative Instruments and Hedging Activities. The above fair values reflect the total value of each derivative contract taken as a whole, whereas the Consolidated Balance Sheets presentation is based on the individual maturity dates of estimated future settlements. As such, an individual contract could have both an asset and liability position when segregated into its current and long-term portions for Consolidated Balance Sheets classification purposes. 
 
 (2) 
 
 We have a contingent consideration liability for TPL’s previous acquisition of a gas gathering system and related assets, which is carried at fair value. 
 
 Additional Information Regarding Level 3 Fair Value Measurements Included on Our Consolidated Balance Sheets

 We reported certain of our swaps and option contracts at fair value using Level 3 inputs due to such derivatives not having observable market prices or implied volatilities for substantially the full term of the derivative asset or liability. For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations whose contract length extends into unobservable periods.

 The fair value of these swaps is determined using a discounted cash flow valuation technique based on a forward commodity basis curve. For these derivatives, the primary input to the valuation model is the forward commodity basis curve, which is based on observable or public data sources and extrapolated when observable prices are not available.

 The significant unobservable inputs used in the fair value measurements of our Level 3 derivatives were (i) the forward natural gas liquids pricing curves, for which a significant portion of the derivative’s term is beyond available forward pricing and (ii) implied volatilities, which are unobservable as a result of inactive natural gas liquids options trading. The change in the fair value of Level 3 derivatives associated with a 10% change in the forward basis curve where prices are not observable was immaterial. As of September 30, 2020, we had three commodity swap and option contracts categorized as Level 3.

 The fair value of the TPL contingent consideration was determined using a probability-based model measuring the likelihood of meeting certain volumetric measures. The inputs are not observable; therefore, the entire valuation of the contingent consideration is categorized in Level 3.
 
 24

 The following table summarizes the changes in fair value of our financial instruments classified as Level 3 in the fair value hierarchy:

 Commodity
 
 Derivative Contracts
 
 Contingent
 
 Asset/(Liability)
 
 Consideration
 
 Balance, December 31, 2019
 
 $
 
 ( 0.3 
 
 )
 
 $
 
 ( 2.3 
 
 )
 
 New Level 3 derivative instruments
 
 ( 0.5 
 
 )
 
 — 
 
 Transfers out of Level 3 (1)
 
 0.3 
 
 — 
 
 Unrealized gain/(loss) included in OCI
 
 0.2 
 
 — 
 
 Balance, September 30, 2020
 
 $
 
 ( 0.3 
 
 )
 
 $
 
 ( 2.3 
 
 )
 
 (1) 
 
 Transfers relate to long-term over-the-counter swaps for NGL products for which observable market prices became available for substantially their full term. 
 
 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

 Nonfinancial assets and liabilities, such as long-lived assets, are measured at fair value on a nonrecurring basis upon impairment. In the first quarter of 2020, we recorded non-cash pre-tax impairments of $ 2,442.8 million. The impairment charge is primarily associated with the partial impairment of gas processing facilities and gathering systems associated with our Mid-Continent operations and full impairment of our Coastal operations. For disclosures related to valuation techniques, see Note 4 – Property, Plant and Equipment and Intangible Assets.

 The techniques described above may produce a fair value calculation that may not be indicative or reflective of future fair values. Furthermore, while we believe our valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial and nonfinancial assets and liabilities could result in a different fair value measurement at the reporting date.
 
 Note 13 — Contingencies

 Legal Proceedings 

 We and the Partnership are parties to various legal, administrative and regulatory proceedings that have arisen in the ordinary course of our business. We and the Partnership are also parties to various proceedings with governmental environmental agencies, including but not limited to the U.S. Environmental Protection Agency, Texas Commission on Environmental Quality, Oklahoma Department of Environmental Quality, New Mexico Environment Department, Louisiana Department of Environmental Quality and North Dakota Department of Environmental Quality, which assert monetary sanctions for alleged violations of environmental regulations, including air emissions, discharges into the environment and reporting deficiencies, related to events that have arisen at certain of our facilities in the ordinary course of our business. See Part II—Item 1. Legal Proceedings for further details.

 Note 14 — Revenue

 Fixed consideration allocated to remaining performance obligations

 The following table presents the estimated minimum revenue related to unsatisfied performance obligations at the end of the reporting period, and is comprised of fixed consideration primarily attributable to contracts with minimum volume commitments, for which a guaranteed amount of revenue can be calculated. These contracts are comprised primarily of gathering and processing, fractionation, export, terminaling and storage agreements, with remaining contract terms ranging from 1 to 19 years .

 2020
 
 2021
 
 2022 and after
 
 Fixed consideration to be recognized as of September 30, 2020
 
 $
 
 140.7 
 
 $
 
 518.1 
 
 $
 
 2,858.8 
 
 Based on the optional exemptions we elected to apply, the amounts presented in the table above exclude remaining performance obligations for (i) variable consideration for which the allocation exception is met and (ii) contracts with an original expected duration of one year or less. 

 For disclosures related to disaggregated revenue, see Note 18 – Segment Information. 
 
 25

 Note 15 — Income Taxes

 The Company records income taxes using an estimated annual effective tax rate (“ETR”) and recognizes specific events discretely as they occur. We have concluded that the annual ETR is a reliable estimate considering recent economic and financial market effects of decreased commodity prices and demand destruction due to the COVID-19 pandemic. We regularly evaluate the realizable tax benefits of deferred tax assets and record a valuation allowance, if required, based on an estimate of the amount of deferred tax assets that we believe does not meet the more-likely-than-not criteria of being realized. 

 We established a valuation allowance against our deferred tax assets during the nine months ended September 30, 2020, primarily due to the tax consequences of the impairment of long-lived assets. See Note 4 – Property Plant and Equipment and Intangible Assets. The Company recognized the valuation allowance as an ordinary item in its estimated annual ETR. After the valuation allowance, we have a net deferred tax liability of $ 131.1 million. We will continue to evaluate the sufficiency of the valuation allowance based on current and expected earnings and other factors and adjust accordingly. The valuation allowance decreased by approximately $ 15.5 million from June 30, 2020.
 
 Note 16 — Other Operating (Income) Expense 

 Other operating (income) expense is comprised of the following: 
 
 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 2020
 
 2019
 
 (Gain) loss on sale of disposition of business and assets (1)
 
 $
 
 58.0 
 
 $
 
 0.5 
 
 $
 
 58.0 
 
 $
 
 3.6 
 
 Write-down of assets (2)
 
 13.5 
 
 17.9 
 
 13.5 
 
 17.9 
 
 Other
 
 0.7 
 
 —
 
 2.3 
 
 0.2 
 
 $
 
 72.2 
 
 $
 
 18.4 
 
 $
 
 73.8 
 
 $
 
 21.7 
 
 (1) 
 
 In October 2020, we recognized a loss of $ 58.3 million for the three and nine months ended September 30, 2020 to reduce the carrying value of our assets in Channelview, Texas in connection with the October 2020 Sale. See Note 4 – Property, Plant and Equipment and Intangible Assets for further details. 
 
 (2) 
 
 Related to the write-down of certain assets to their recoverable amounts .
 
 Note 17 — Supplemental Cash Flow Information
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 Cash:
 
 Interest paid, net of capitalized interest (1)
 
 $
 
 315.9 
 
 $
 
 228.4 
 
 Income taxes (received), net of payments
 
 ( 44.4 
 
 )
 
 0.3 
 
 Non-cash investing activities:
 
 Impact of capital expenditure accruals on property, plant and equipment, net
 
 ( 194.7 
 
 )
 
 ( 150.9 
 
 )
 
 Transfers from materials and supplies inventory to property, plant and equipment
 
 1.9 
 
 21.7 
 
 Non-cash financing activities:
 
 Changes in accrued distributions to noncontrolling interests
 
 3.9 
 
 73.8 
 
 (1) 
 
 Interest capitalized on major projects was $ 31.1 million and $ 50.5 million for the nine months ended September 30, 2020 and 2019. 
 
 Note 18 — Segment Information

 We operate in two primary segments: (i) Gathering and Processing, and (ii) Logistics and Transportation (also referred to as the Downstream Business). Our reportable segments include operating segments that have been aggregated based on the nature of the products and services provided. 

 Our Gathering and Processing segment includes assets used in the gathering of natural gas produced from oil and gas wells and processing this raw natural gas into merchantable natural gas by extracting NGLs and removing impurities; and assets used for crude oil purchase and sale, gathering and terminaling. The Gathering and Processing segment's assets are located in the Permian Basin of West Texas and Southeast New Mexico (including the Midland, Central and Delaware Basins); the Eagle Ford Shale in South Texas; the Barnett Shale in North Texas; the Anadarko, Ardmore, and Arkoma Basins in Oklahoma (including the SCOOP and STACK) and South Central Kansas; the Williston Basin in North Dakota (including the Bakken and Three Forks plays); and the onshore and near offshore regions of the Louisiana Gulf Coast and the Gulf of Mexico.

 26

 Our Logistics and Transportation segment includes the activities and assets necessary to convert mixed NGLs into NGL products and also includes other assets and value-added services such as transporting, storing, fractionating, terminaling and marketing of NGLs and NGL products, including services to LPG exporters; and certain natural gas supply and marketing activities in support of our other businesses. The Logistics and Transportation segment also includes the Grand Prix NGL pipeline (“Grand Prix”), as well as our equity interest in Gulf Coast Express Pipeline LLC (“GCX”), a natural gas pipeline transporting volumes from West Texas to the Gulf Coast. Grand Prix connects our gathering and processing positions in the Permian Basin, Southern Oklahoma and North Texas with our downstream facilities in Mont Belvieu, Texas. The associated assets are generally connected to and supplied in part by our Gathering and Processing segment and, except for pipelines and smaller terminals, are located predominantly in Mont Belvieu and Galena Park, Texas, and in Lake Charles, Louisiana. 

 Other contains the mark-to-market gains/losses related to derivative contracts that were not designated as cash flow hedges. Elimination of inter-segment transactions are reflected in the corporate and eliminations column. 
 
 Reportable segment information is shown in the following tables: 

 Three Months Ended September 30, 2020
 
 Gathering and Processing
 
 Logistics and Transportation
 
 Other
 
 Corporate

 and

 Eliminations
 
 Total
 
 Revenues
 
 Sales of commodities
 
 $
 
 135.7 
 
 $
 
 1,616.5 
 
 $
 
 88.6 
 
 $
 
 —
 
 $
 
 1,840.8 
 
 Fees from midstream services
 
 126.2 
 
 148.1 
 
 —
 
 —
 
 274.3 
 
 261.9 
 
 1,764.6 
 
 88.6 
 
 —
 
 2,115.1 
 
 Intersegment revenues
 
 Sales of commodities
 
 611.9 
 
 37.4 
 
 —
 
 ( 649.3 
 
 )
 
 —
 
 Fees from midstream services
 
 1.7 
 
 8.5 
 
 —
 
 ( 10.2 
 
 )
 
 —
 
 613.6 
 
 45.9 
 
 —
 
 ( 659.5 
 
 )
 
 —
 
 Revenues
 
 $
 
 875.5 
 
 $
 
 1,810.5 
 
 $
 
 88.6 
 
 $
 
 ( 659.5 
 
 )
 
 $
 
 2,115.1 
 
 Operating margin
 
 $
 
 261.0 
 
 $
 
 280.4 
 
 $
 
 88.6 
 
 $
 
 —
 
 $
 
 630.0 
 
 Other financial information:
 
 Total assets (1)
 
 $
 
 8,929.4 
 
 $
 
 6,841.2 
 
 $
 
 78.2 
 
 $
 
 203.3 
 
 $
 
 16,052.1 
 
 Goodwill
 
 $
 
 45.2 
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 $
 
 45.2 
 
 Capital expenditures
 
 $
 
 63.6 
 
 $
 
 69.0 
 
 $
 
 —
 
 $
 
 4.0 
 
 $
 
 136.6 
 
 (1) 
 
 Assets in the Corporate and Eliminations column primarily include tax-related assets, cash, prepaids and debt issuance costs for our revolving credit facilities.
 
 Three Months Ended September 30, 2019
 
 Gathering and Processing
 
 Logistics and Transportation
 
 Other
 
 Corporate

 and

 Eliminations
 
 Total
 
 Revenues
 
 Sales of commodities
 
 $
 
 292.3 
 
 $
 
 1,403.1 
 
 $
 
 ( 101.2 
 
 )
 
 $
 
 —
 
 $
 
 1,594.2 
 
 Fees from midstream services
 
 173.0 
 
 135.3 
 
 —
 
 —
 
 308.3 
 
 465.3 
 
 1,538.4 
 
 ( 101.2 
 
 )
 
 —
 
 1,902.5 
 
 Intersegment revenues
 
 Sales of commodities
 
 534.0 
 
 34.9 
 
 —
 
 ( 568.9 
 
 )
 
 —
 
 Fees from midstream services
 
 1.9 
 
 7.4 
 
 —
 
 ( 9.3 
 
 )
 
 —
 
 535.9 
 
 42.3 
 
 —
 
 ( 578.2 
 
 )
 
 —
 
 Revenues
 
 $
 
 1,001.2 
 
 $
 
 1,580.7 
 
 $
 
 ( 101.2 
 
 )
 
 $
 
 ( 578.2 
 
 )
 
 $
 
 1,902.5 
 
 Operating margin
 
 $
 
 246.5 
 
 $
 
 228.9 
 
 $
 
 ( 101.2 
 
 )
 
 $
 
 —
 
 $
 
 374.2 
 
 Other financial information:
 
 Total assets (1)
 
 $
 
 12,326.5 
 
 $
 
 6,475.0 
 
 $
 
 2.9 
 
 $
 
 114.1 
 
 $
 
 18,918.5 
 
 Goodwill
 
 $
 
 46.6 
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 $
 
 46.6 
 
 Capital expenditures
 
 $
 
 230.3 
 
 $
 
 301.2 
 
 $
 
 —
 
 $
 
 10.8 
 
 $
 
 542.3 
 
 (1) 
 
 Assets in the Corporate and Eliminations column primarily include tax-related assets, cash, prepaids and debt issuance costs for our revolving credit facilities. 
 
 27

 Nine Months Ended September 30, 2020
 
 Gathering and Processing
 
 Logistics and Transportation
 
 Other
 
 Corporate

 and

 Eliminations
 
 Total
 
 Revenues
 
 Sales of commodities
 
 $
 
 512.9 
 
 $
 
 4,172.0 
 
 $
 
 215.9 
 
 $
 
 —
 
 $
 
 4,900.8 
 
 Fees from midstream services
 
 354.5 
 
 432.2 
 
 —
 
 —
 
 786.7 
 
 867.4 
 
 4,604.2 
 
 215.9 
 
 —
 
 5,687.5 
 
 Intersegment revenues
 
 Sales of commodities
 
 1,444.3 
 
 140.1 
 
 —
 
 ( 1,584.4 
 
 )
 
 —
 
 Fees from midstream services
 
 4.9 
 
 23.8 
 
 —
 
 ( 28.7 
 
 )
 
 —
 
 1,449.2 
 
 163.9 
 
 —
 
 ( 1,613.1 
 
 )
 
 —
 
 Revenues
 
 $
 
 2,316.6 
 
 $
 
 4,768.1 
 
 $
 
 215.9 
 
 $
 
 ( 1,613.1 
 
 )
 
 $
 
 5,687.5 
 
 Operating margin
 
 $
 
 753.7 
 
 $
 
 806.0 
 
 $
 
 215.9 
 
 $
 
 —
 
 $
 
 1,775.6 
 
 Other financial information:
 
 Total assets (1)
 
 $
 
 8,929.4 
 
 $
 
 6,841.2 
 
 $
 
 78.2 
 
 $
 
 203.3 
 
 $
 
 16,052.1 
 
 Goodwill
 
 $
 
 45.2 
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 $
 
 45.2 
 
 Capital expenditures
 
 $
 
 218.0 
 
 $
 
 375.5 
 
 $
 
 —
 
 $
 
 16.8 
 
 $
 
 610.3 
 
 (1) 
 
 Assets in the Corporate and Eliminations column primarily include tax-related assets, cash, prepaids and debt issuance costs for our revolving credit facilities.
 
 Nine Months Ended September 30, 2019
 
 Gathering and Processing
 
 Logistics and Transportation
 
 Other
 
 Corporate

 and

 Eliminations
 
 Total
 
 Revenues
 
 Sales of commodities
 
 $
 
 847.4 
 
 $
 
 4,508.5 
 
 $
 
 ( 101.1 
 
 )
 
 $
 
 —
 
 $
 
 5,254.8 
 
 Fees from midstream services
 
 549.1 
 
 393.3 
 
 —
 
 —
 
 942.4 
 
 1,396.5 
 
 4,901.8 
 
 ( 101.1 
 
 )
 
 —
 
 6,197.2 
 
 Intersegment revenues
 
 Sales of commodities
 
 1,896.5 
 
 117.0 
 
 —
 
 ( 2,013.5 
 
 )
 
 —
 
 Fees from midstream services
 
 5.3 
 
 20.1 
 
 —
 
 ( 25.4 
 
 )
 
 —
 
 1,901.8 
 
 137.1 
 
 —
 
 ( 2,038.9 
 
 )
 
 —
 
 Revenues
 
 $
 
 3,298.3 
 
 $
 
 5,038.9 
 
 $
 
 ( 101.1 
 
 )
 
 $
 
 ( 2,038.9 
 
 )
 
 $
 
 6,197.2 
 
 Operating margin
 
 $
 
 716.8 
 
 $
 
 565.0 
 
 $
 
 ( 101.1 
 
 )
 
 $
 
 —
 
 $
 
 1,180.7 
 
 Other financial information:
 
 Total assets (1)
 
 $
 
 12,326.5 
 
 $
 
 6,475.0 
 
 $
 
 2.9 
 
 $
 
 114.1 
 
 $
 
 18,918.5 
 
 Goodwill
 
 $
 
 46.6 
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 $
 
 46.6 
 
 Capital expenditures
 
 $
 
 1,068.7 
 
 $
 
 1,197.5 
 
 $
 
 —
 
 $
 
 38.7 
 
 $
 
 2,304.9 
 
 (1) 
 
 Assets in the Corporate and Eliminations column primarily include tax-related assets, cash, prepaids and debt issuance costs for our revolving credit facilities.
 
 28

 The following table shows our consolidated revenues disaggregated by product and service for the periods presented:

 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 2020
 
 2019
 
 Sales of commodities:
 
 Revenue recognized from contracts with customers:
 
 Natural gas
 
 $
 
 351.1 
 
 $
 
 305.3 
 
 $
 
 893.9 
 
 $
 
 934.2 
 
 NGL
 
 1,312.9 
 
 1,160.5 
 
 3,382.0 
 
 3,752.4 
 
 Condensate and crude oil
 
 54.4 
 
 178.7 
 
 217.8 
 
 488.4 
 
 Petroleum products
 
 13.2 
 
 11.5 
 
 69.8 
 
 87.5 
 
 1,731.6 
 
 1,656.0 
 
 4,563.5 
 
 5,262.5 
 
 Non-customer revenue:
 
 Derivative activities - Hedge
 
 19.2 
 
 41.5 
 
 139.4 
 
 106.1 
 
 Derivative activities - Non-hedge (1)
 
 90.0 
 
 ( 103.3 
 
 )
 
 197.9 
 
 ( 113.8 
 
 )
 
 109.2 
 
 ( 61.8 
 
 )
 
 337.3 
 
 ( 7.7 
 
 )
 
 Total sales of commodities
 
 1,840.8 
 
 1,594.2 
 
 4,900.8 
 
 5,254.8 
 
 Fees from midstream services:
 
 Revenue recognized from contracts with customers:
 
 Gathering and processing
 
 123.7 
 
 171.6 
 
 347.1 
 
 543.7 
 
 NGL transportation, fractionation and services
 
 43.8 
 
 45.8 
 
 116.7 
 
 122.0 
 
 Storage, terminaling and export
 
 96.6 
 
 84.6 
 
 285.5 
 
 254.7 
 
 Other
 
 10.2 
 
 6.3 
 
 37.4 
 
 22.0 
 
 Total fees from midstream services
 
 274.3 
 
 308.3 
 
 786.7 
 
 942.4 
 
 Total revenues
 
 $
 
 2,115.1 
 
 $
 
 1,902.5 
 
 $
 
 5,687.5 
 
 $
 
 6,197.2 
 
 (1) 
 
 Represents derivative activities that are not designated as hedging instruments under ASC 815.
 
 The following table shows a reconciliation of reportable segment operating margin to income (loss) before income taxes for the periods presented: 

 Three Months Ended September 30,
 
 Nine Months Ended September 30,
 
 2020
 
 2019
 
 2020
 
 2019
 
 Reconciliation of reportable segment operating

 margin to income (loss) before income taxes:
 
 Gathering and Processing operating margin
 
 $
 
 261.0 
 
 $
 
 246.5 
 
 $
 
 753.7 
 
 $
 
 716.8 
 
 Logistics and Transportation operating margin
 
 280.4 
 
 228.9 
 
 806.0 
 
 565.0 
 
 Other operating margin
 
 88.6 
 
 ( 101.2 
 
 )
 
 215.9 
 
 ( 101.1 
 
 )
 
 Depreciation and amortization expense
 
 ( 203.7 
 
 )
 
 ( 244.3 
 
 )
 
 ( 647.3 
 
 )
 
 ( 718.9 
 
 )
 
 General and administrative expense
 
 ( 58.6 
 
 )
 
 ( 69.9 
 
 )
 
 ( 180.6 
 
 )
 
 ( 223.5 
 
 )
 
 Impairment of long-lived assets
 
 —
 
 —
 
 ( 2,442.8 
 
 )
 
 —
 
 Interest expense, net
 
 ( 97.7 
 
 )
 
 ( 89.1 
 
 )
 
 ( 292.4 
 
 )
 
 ( 241.8 
 
 )
 
 Equity earnings (loss)
 
 18.6 
 
 10.0 
 
 54.1 
 
 15.9 
 
 Gain (loss) on sale or disposition of business and assets
 
 ( 58.0 
 
 )
 
 ( 0.5 
 
 )
 
 ( 58.0 
 
 )
 
 ( 3.6 
 
 )
 
 Write-down of assets
 
 ( 13.5 
 
 )
 
 ( 17.9 
 
 )
 
 ( 13.5 
 
 )
 
 ( 17.9 
 
 )
 
 Gain (loss) from financing activities
 
 ( 13.7 
 
 )
 
 —
 
 47.4 
 
 ( 1.4 
 
 )
 
 Gain (loss) from sale of equity-method investment
 
 —
 
 65.8 
 
 —
 
 65.8 
 
 Change in contingent considerations
 
 —
 
 —
 
 —
 
 ( 8.8 
 
 )
 
 Other, net
 
 0.7 
 
 —
 
 ( 0.1 
 
 )
 
 ( 0.2 
 
 )
 
 Income (loss) before income taxes
 
 $
 
 204.1 
 
 $
 
 28.3 
 
 $
 
 ( 1,757.6 
 
 )
 
 $
 
 46.3 
 
 29
Targa Resources Corp. 10-Q

Item 1. Financial Statements
