Targa Resources Q2 2026 Earnings Call: Complete Transcript

Targa Resources (NYSE: TRGP ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Targa Resources Corp reported a 38% year-over-year increase in adjusted EBITDA, driven by record volumes in the Permian Basin.

The company expects its 2026 adjusted EBITDA to be at the top end of its guidance range, projecting nearly $1 billion growth over 2025. Operational highlights include record NGL transportation and fractionation volumes, as well as a strong performance in LPG export loadings. Strategic projects like the Speedway NGL transportation system and LPG export expansion are on track for completion by Q3 2027. Management emphasized confidence in continued growth, supported by a strong balance sheet and active producer customers in the Permian.

Full Transcript OPERATOR Good day and thank you for standing by. Welcome to the Targa Resources Corp. second quarter 2026 earnings webcast and presentation. At this time all participants are in a listen-only mode.

After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again.

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tristan Richardson, Vice President, Investor Relations and Fundamentals. Please go ahead. Tristan Richardson, Vice President, Investor Relations and Fundamentals Thanks, operator.

Good morning and welcome to the second quarter 2026 earnings call for Targa Resources Corp. com. Statements made during this call that may include Targa's expectations or predictions should be considered forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in forward-looking statements.

For a discussion of factors that could cause actual results to differ, please refer to our latest SEC filings. Our speakers for the call today will be Matt Malloy, Chief Executive Officer, Jen Neal, President, and Will Byers, Chief Financial Officer. Additionally, members of Targa's senior management will be available for Q&A, including Pat McDonney, President, Gathering and Processing, Ben Brandstetter, President, Logistics and Transportation, and Bobby Mararo, Chief Commercial Officer. I'll now turn the call over to Matt.

Matt Malloy, Chief Executive Officer Thanks, Tristan, and good morning. We had another great quarter where we reported numerous financial and operational records. Adjusted EBITDA increased 38% year over year. We reported record volumes again in the Permian, up more than 900 million cubic feet per day from a year ago and up 450 million cubic feet per day compared to Q1.

That's almost two plants worth of gas in one quarter. This strong Permian growth drove record volumes across our downstream systems including NGL transportation, fractionation and LPG export. Our customers remain active and the commercial service offering we've built the past many years continues to gain traction with our customers. We continue to benefit from the activity of our producer customers with millions of acres dedicated across the Permian and that number continues to grow.

With the largest G&P footprint in the Permian, we believe we are positioned very well for continued growth over the long term, and given the strength we have seen so far this year, we now expect to be towards the top end of our previously provided adjusted EBITDA guidance range, suggesting that our 2026 adjusted EBITDA growth over 2025 may be close to $1 billion, all while reducing our share count and increasing our dividend. This strong performance underscores the value of the organic growth projects that we continue to invest in and positions Targa Resources for success across a range of market conditions.

In the first half of 2026, against the backdrop of weather-related challenges in the first quarter, natural gas takeaway constraints, negative Permian gas pricing and broader market volatility, we were still able to deliver record results. S. energy. S.

energy plays in supporting economic growth and energy security worldwide. Against this backdrop, we believe Targa Resources is uniquely positioned to benefit from sustained producer activity and increasing demand for the critical infrastructure services we provide. Our focus at Targa Resources remains unchanged: to deliver the very best operating performance for our customers, to utilize that track record to continue to add contracts with existing and new customers, and to deliver on our major projects currently underway.

We believe our premier Permian asset footprint, integrated wellhead-to-water system and strong financial position provide a durable competitive advantage. These strengths allow us to continue investing in high return integrated growth opportunities that maximize the value of our existing network while supporting our customers' development plans. Before I turn the call over to Jen to discuss operations in more detail, I would like to thank the Targa Resources team for their continued focus on safety and execution while continuing to provide best-in-class service and reliability to our customers. Jen Neal, President Thanks, Matt.

Good morning, everyone. 2 billion cubic feet per day, up approximately 7% from the first quarter and 14% from a year ago. We mentioned in early May that we had about 200 to 400 million cubic feet per day of gas shut in behind our Permian systems on any given day with weak Waha prices. So our volume growth of 450 million cubic feet a day quarter over quarter despite a second quarter with shut-ins demonstrates the robust activity that we are seeing on our assets.

With Hugh Brintz in Phase One and the GCX expansion now online, we have seen most of the price-driven producer shut-ins return to our system in July, and we continue to see a lot of activity behind our systems positioning us really well for strong growth in Permian volumes across 2026 that are tracking higher than what we were expecting in February. This will position us well with continued momentum heading into 2027.

The constrained gas egress environment across the past several quarters has created increased marketing opportunities for Targa Resources with our marketing businesses outperforming our expectations by approximately $250 million in the first half of the year, much of which occurred in the second quarter. Waha gas prices have improved, narrowing basis spreads, and curtailed volumes are returning to our system, highlighting some of the built-in offsets in our business in addition to the strong growth we are seeing from our customers. 2026 is a year of significant execution for Targa Resources as we continue to progress the major projects along our integrated system.

In the Permian Delaware, our five gas processing plants—Copperhead 1 and 2, Yeti 1 and 2, and Roadrunner 3—are on track to begin operations as previously announced. In the Permian Midland, our East Driver plant began service late in the second quarter ahead of schedule. We continue to see growth behind our Midland and are currently evaluating the timing of our next Midland processing plant. We also continue to execute on our residue natural gas strategy, adding intra-basin connectivity across our Permian footprint with our key natural gas projects on track, which will enhance our producer customers' access to multiple premium markets.

Blackcomb and Traverse, two natural gas pipelines in which we have an equity interest, remain on track for the fourth quarter of 2026 and mid-2027, contributing to continued improving natural gas egress in the Permian for the near to medium term. 2 million barrels per day. S. 8 million barrels per month during the second quarter.

The Targa Resources team was able to respond quickly and serve our customers, and our commercial teams have been active adding to our long-term contract portfolio. With our strong outlook for continued growth on our Permian G&P footprint, which we expect will create meaningful incremental supply of NGLs, we have several key downstream projects underway. Our Train 11 fractionator came online early in the second quarter and was quickly highly utilized, and our Train 12 and Train 13 fractionators remain on track.

Targa Resources' Delaware Express Pipeline, an expansion of our NGL pipeline transportation system within the Permian, came online during the second quarter and will give us much-needed capacity for the growing supply of NGLs we are seeing across the Delaware Basin. Speedway, the large expansion of our NGL transportation system connecting our Permian G&P position to our leading fractionation footprint in Mont Belvieu, remains on track for the third quarter of 2027.

Our NGL transportation system has effectively been running full since we announced Speedway, and our transportation volumes reflect our proactive and capital-efficient efforts to secure medium-term transportation agreements on third-party pipelines until Speedway comes into service. We have completed five processing plants in the Permian since we announced Speedway and have five plants currently underway. The growth we expect from our G&P footprint positions us well for a base load of supply for Speedway's initial capacity of 500,000 barrels per day.

Lastly, we expect our large LPG export expansion that will increase our capacity to around 19 million barrels per month will be much needed and remains on track for the third quarter of 2027. We believe that we are exceptionally well positioned operationally and that our wellhead-to-water strategy, driven by activity in the Permian Basin, will continue to put us in excellent position to execute for our shareholders and customers. I would also like to thank our employees that have worked tirelessly to continue to perform safely and at an exceptional level for our customers and our shareholders.

I will now turn the call over to Will to discuss our financial results and outlook in more detail. Will Byers (Chief Financial Officer) Thanks, Jen. 603 billion, 14% higher than the first quarter. The increase was primarily a result of contributions from higher optimization opportunities in our marketing businesses and record volumes across our operations including Permian G&P, NGL transportation, fractionation, and LPG export.

9 billion. As has long been our practice, we do not forecast material marketing optimization margin when we provide our financial expectations. The first half of 2026 benefited from marketing opportunities that were not included in our guidance provided in February, and our approach remains unchanged as we look to the balance of the year. Importantly, the fundamentals supporting our business are very constructive.

Improved Permian takeaway capacity and stronger Waha pricing are benefiting our customers and supporting continued growth in liquids-rich natural gas volumes across our integrated system, combined with the ongoing execution of our growth projects and the strength of our asset footprint. These factors continue to support our confidence in the outlook for the second half of 2026 and beyond. 5 billion. We also continue to estimate 2026 net maintenance capital spending of $250 million.

4 times, well within our long-term leverage ratio target range of 3 to 4 times. In July, we also extended the maturity of our accounts receivable securitization facility to July 30, 2027 and expanded the total capacity by $200 million. Shifting to capital allocation, our focus is more of the same from Targa: maintain our strong investment-grade balance sheet, continue to invest in high-returning integrated projects, and return an increasing amount of capital to our shareholders. 25 per share, which is a 25% increase relative to the second quarter common dividend for 2025.

93 per share during the second quarter. We are on track for another record year at Targa across multiple dimensions and remain well positioned to create value for our shareholders over the long term. And with that, I will turn the call back over to Tristan. Tristan Richardson, Vice President, Investor Relations and Fundamentals Thanks, Will.

For the Q&A session, we ask that you limit to one question and one follow-up and re-enter the queue if you have additional questions. OPERATOR As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Our first question comes from Jeremy Tonant with JPMorgan Securities. Your line is open. Jeremy Tonant, Analyst at JPMorgan Securities Hi, good morning. Tristan Richardson, Vice President, Investor Relations and Fundamentals Morning, Jeremy.

Jeremy Tonant, Analyst at JPMorgan Securities Just wanted to touch on how you see the volume trajectory at this point. If you could drill in on what type of curtailment you see on the system and you know what could come back over, I guess the balance of the year. And just thinking, I guess some of your competitors say that they're seeing activity picking up quicker than they expected. I'm wondering how you see activity in your system and the trajectory into 27.

Jen Neal, President Morning, Jeremy, this is Jen. I think as I tried to describe in my scripted remarks, volume growth is going really, really well across the Targa system. We had a really good start to the first half of the year, which is pretty remarkable when you think about the weather impacts in the first quarter, and then as we described on our May earnings call, about 200 to 400 million a day of shut-ins on any given day during the second quarter. So to have 450 million cubic feet a day of growth quarter over quarter I think is really reflective of the producers and the activity in and around our systems.

As we look forward, July was another really strong month of volume growth, so as I said, for the year now I'd say that we are tracking ahead of expectations with a view of continued volume growth across the back half of the year. I think largely the growth that we're seeing is consistent with what we expected, again maybe a little bit ahead. But we've got really active producers across the system that I think are feeling supported by a macro backdrop now with both higher crude oil prices and now with the egress situation in the Permian at least temporarily resolved, benefiting from higher gas prices.

So it's just a really supportive environment of both an expectation for continued activity back half of '26, and then that of course I think means we're well supported for the continued growth into '27 and beyond. Jeremy Tonant, Analyst at JPMorgan Securities Got it. Thank you for that. And then just wanted to go back, I guess, to any thoughts you could share on the cadence of gas processing plant additions.

How you see that going forward each year. Is it three a year? Would you expect three for '28 or how should we think about that at this point? Jen Neal, President I think you've seen a quick cadence of plant adds for us over the last several years.

Here already this year, getting two plants online in the Midland Basin, that's a little bit lumpier for us, having two plants come online as quickly, sort of back to back, as they did. But part of that was an exceptional job by our engineering and operations team to get East Pembroke online earlier than expected. We've now got five plants that are under construction. Indicated on the call this morning that we're evaluating the next time, or the next appropriate time, to move forward with our next Midland plant.

So as we look forward, we put out an illustrative framework now a couple of quarters ago that demonstrated continued cadence of, call it, three plants a year if we assumed high single-digit, low double-digit Permian growth.