Financial Data and Key Metrics Changes - The company reported adjusted EBITDA for the second quarter of $1,163 million, an 18% increase year-over-year, primarily driven by higher Permian volumes and margin contributions from the Badlands assets [18][19][21] - The full-year 2025 adjusted EBITDA is estimated to be in the range of $4,650 million to $4,850 million [19] Business Line Data and Key Metrics Changes - In the Permian, natural gas inlet volumes averaged a record 6,300 million cubic feet per day in the second quarter, an 11% increase year-over-year [12] - NGL pipeline transportation volumes averaged a record 961,000 barrels per day, while fractionation volumes averaged 969,000 barrels per day during the second quarter [15][16] - The fractionation volumes were impacted by a planned turnaround, but are now exceeding 1,000,000 barrels per day post-turnaround [16] Market Data and Key Metrics Changes - The company noted that while the Permian rig count has softened, the number of rigs on its system remains largely unchanged, indicating stability in its operations [7] - The demand for natural gas and NGLs is expected to continue increasing, supported by strong customer performance across the value chain [10] Company Strategy and Development Direction - The company is focused on increasing adjusted EBITDA, common dividends per share, and reducing share count while maintaining a strong investment-grade balance sheet [10][21] - The company plans to invest in integrated growth opportunities and return increasing capital to shareholders over the long term [10][21] - The company is preparing for growth in 2027 and beyond by ordering long lead items for additional Permian plants [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong growth on the Permian system for the remainder of 2025 and into 2026, supported by ongoing discussions with producers [7][9] - The company highlighted its differentiated growth profile, outperforming crude and gas production growth rates over the past five years [8][9] Other Important Information - The company repurchased $324 million in common shares during the second quarter and authorized a new $1 billion share repurchase program [21][22] - The company expects net growth capital spending for 2025 to be approximately $3 billion, with maintenance capital spending of $250 million [20] Q&A Session Summary Question: Thoughts on outperforming the basin - Management noted that the combination of having the largest footprint and being over some of the best rock in the Midland and Delaware Basins contributes to their ability to outperform [25][26] Question: Outlook on NGL margins - Management indicated that they have a growing supply from their gas processing footprint and are well-positioned due to long-term contracts, despite concerns about overbuild and margin pressures [28][30] Question: Competition in the Northern Delaware - Management acknowledged increased competition but emphasized their established capabilities and long-term contracts that provide a competitive advantage [37][42] Question: Capital expenditures for 2026 - Management stated that they will assess producer budgeting cycles to inform their 2026 capital budget, but they expect to continue capital-efficient spending aligned with growth opportunities [46] Question: Confidence in future volume growth - Management expressed confidence based on observed volume ramp-up and the expected contributions from new processing plants coming online [54][56] Question: Expectations for Bull Run extension - Management described the Bull Run extension as a natural extension of their capabilities, supported by existing volumes and expected growth [60][61] Question: Balancing buybacks with other capital uses - Management emphasized an opportunistic approach to share repurchases while maintaining flexibility to invest in organic growth projects [62][64] Question: Performance of Badlands assets - Management confirmed that the Badlands transaction has met expectations, with overall volumes remaining flat but potential for future increases [69][70] Question: Approach to LPG export docks and competition - Management reiterated their strong position due to long-term contracts and the ability to meet growing global demand, despite new entrants in the market [81][83]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA for Q2 2025 of $1,163 million, an 18% increase year-over-year, primarily driven by higher Permian volumes and margin improvements across segments [19][20] - Full-year 2025 adjusted EBITDA is estimated to be in the range of $4,650 million to $4,850 million [20] - The company had $3,500 million of available liquidity at the end of Q2 2025, with a pro forma consolidated leverage ratio of 3.6 times, within the long-term target range of three to four times [20][21] Business Line Data and Key Metrics Changes - Natural gas inlet volumes in the Permian averaged a record 6,300 million cubic feet per day in Q2 2025, an 11% increase year-over-year [12] - NGL pipeline transportation volumes averaged a record 961,000 barrels per day, while fractionation volumes averaged 969,000 barrels per day during the same period [15] - The company experienced a planned turnaround at its fractionation complex, which reduced capacity for two-thirds of Q2, but volumes have since increased to over 1,000,000 barrels per day post-turnaround [15][16] Market Data and Key Metrics Changes - The Permian gas production growth has outpaced crude production, with associated gas growth averaging 13% per year over the past five years, while crude production has averaged 8% [8][9] - The company’s year-over-year volume growth averaged 17%, outperforming both associated gas and crude production [9] - The company is well-positioned for growth due to its footprint across high-quality rock in the Permian Basin and strong relationships with world-class producers [9][10] Company Strategy and Development Direction - The company aims to increase adjusted EBITDA and return capital to shareholders through share repurchases and dividends, while maintaining a strong investment-grade balance sheet [10][22] - The company is focused on integrated growth opportunities, with a capital spending plan of approximately $3,000 million for 2025 [21] - The company is preparing for future growth by ordering long lead items for additional Permian plants and enhancing connectivity through pipeline extensions [14][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong growth in volumes for the remainder of 2025 and into 2026, despite some macroeconomic volatility [6][10] - The company noted that ongoing discussions with producers indicate robust growth potential, supported by a strong demand for natural gas and NGLs [10][9] - Management highlighted the resilience of the business model amid commodity price volatility and global trade concerns [18] Other Important Information - The company announced a retirement of a key executive, Scott Pryor, effective March 1, 2026, with Ben Branstetter set to succeed him [4][5] - The company repurchased $324 million in common shares during Q2 2025, continuing its strategy of opportunistic share repurchases [20][22] - A new $1,000 million common share repurchase program was authorized, bringing total available repurchase capacity to approximately $1,600 million [22] Q&A Session Summary Question: Ability to outperform peers in the basin - Management highlighted the largest footprint and strong relationships with active producers as key factors for continued outperformance [26][27] Question: Outlook for NGL margins - Management noted growing supply and long-term contracts as supportive of margins, despite concerns about overbuilding [29][30] Question: Competition in the Northern Delaware - Management acknowledged increased competition but emphasized Targa's established capabilities and strategic positioning in sour gas treatment [38][39] Question: Capital expenditures for future projects - Management indicated that capital expenditures would be informed by producer budgeting cycles and ongoing project efficiencies [47][48] Question: Performance of Badlands assets post-acquisition - Management confirmed that the Badlands assets are performing as expected, with potential for increased production in the future [71][72] Question: LPG export docks performance - Management clarified that while dock loadings were strong, sequential volume fluctuations were due to market dynamics and contract structures [80][84] Question: Impact of new pipeline capacity on pricing - Management expressed optimism about new egress pipelines unlocking the basin and potentially improving pricing dynamics [90][92] Question: Use of third-party NGL transport - Management indicated that utilizing third-party transport allows for capital efficiency and diversification of transport options [93][94] Question: Capital costs for processing plants - Management acknowledged rising costs but emphasized effective cost management strategies to maintain competitive returns [100]

Financial Performance - Adjusted EBITDA increased by 18% from Q2 2024 to Q2 2025[6] - Adjusted EBITDA decreased by 1% from Q1 2025 to Q2 2025[12] - G&P segment operating margin increased by $15 million from Q2 2024[8] - L&T segment operating margin increased by $85 million from Q2 2024[9] - G&P segment operating margin decreased by $15 million from Q1 2025[14] - L&T segment operating margin decreased by $14 million from Q1 2025[14] - Net income attributable to Targa Resources Corp was $6291 million for the three months ended June 30, 2025[41] - Adjusted EBITDA was $11630 million for the three months ended June 30, 2025[41] Operational Performance - Permian inlet volumes increased from 969 MBbl/d in Q1 2025 to 980 MBbl/d in Q2 2025[17] - NGL Production increased from 6006 MBbl/d in Q1 2025 to 6278 MBbl/d in Q2 2025[17] Outlook - FY25 Adjusted EBITDA is estimated to be in the range of $465 billion to $485 billion[27] - Net Growth Capex is estimated to be approximately $3 billion[28] - Net Maintenance Capex is estimated to be approximately $250 million[28]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Targa Resources Corp. reported strong Q2 2025 financial results, including significant net income and adjusted EBITDA growth, record volumes, and accelerated growth projects [Second Quarter 2025 Financial Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Overview) Targa Resources Corp. reported strong financial results for Q2 2025, with significant year-over-year increases in net income and adjusted EBITDA, driven by record Permian and NGL transportation volumes Q2 2025 Financial Performance (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :---------------- | :--------- | | Net Income Attributable to TRGP | $629.1 | $298.5 | $330.6 | 111% | | Adjusted EBITDA | $1,163.0 | $984.3 | $178.7 | 18% | [Key Highlights](index=1&type=section&id=Key%20Highlights) Key highlights for Q2 2025 include a declared quarterly dividend, significant share repurchases, record Permian and NGL transportation volumes, and accelerated completion timelines for several growth projects, alongside a new share repurchase program - Declared a quarterly cash dividend of **$1.00 per common share** (**$4.00 annualized**) for Q2 2025, totaling approximately **$215 million**[5](index=5&type=chunk) - Repurchased **1.96 million shares** for **$324.3 million** in Q2 2025, with **$566.2 million** remaining under the existing **$1.0 billion** program. A new **$1.0 billion** share repurchase program was approved in August 2025[6](index=6&type=chunk)[10](index=10&type=chunk) - Achieved record Permian and NGL transportation volumes during Q2 2025[10](index=10&type=chunk) - Expect early completion of the Pembrook II plant in Permian Midland (August 2025), Bull Moose II plant in Permian Delaware (Q4 2025), Delaware Express Pipeline (Q2 2026), and Train 11 fractionator (Q2 2026)[10](index=10&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) - Announced a **43-mile** extension of the Bull Run natural gas pipeline to enhance connectivity from Permian Delaware to WAHA, expected to begin operations in Q1 2027[10](index=10&type=chunk)[17](index=17&type=chunk) [Sequential Quarter Over Quarter Commentary](index=1&type=section&id=Sequential%20Quarter%20Over%20Quarter%20Commentary) Adjusted EBITDA for Q2 2025 remained relatively flat compared to Q1 2025, despite a planned turnaround at Mont Belvieu fractionation facilities. This was supported by record Permian and NGL transportation volumes, offsetting lower marketing margin, commodity prices, and higher operating expenses - Q2 2025 adjusted EBITDA of **$1,163.0 million** was relatively flat sequentially, despite a planned turnaround at Mont Belvieu fractionation facilities[7](index=7&type=chunk) - G&P segment adjusted operating margin was flat due to strong Permian natural gas inlet volumes and higher recoveries, offset by significantly lower commodity prices[8](index=8&type=chunk) - L&T segment adjusted operating margin was sequentially flat, as record NGL pipeline transportation volumes were offset by lower marketing margin and reduced fractionation volumes due to the planned turnaround[9](index=9&type=chunk) [Capitalization, Financing and Liquidity](index=2&type=section&id=Capitalization%2C%20Financing%20and%20Liquidity) Targa's total consolidated debt was $16.85 billion as of June 30, 2025, supported by strong liquidity of approximately $3.5 billion [Debt and Financing Activities](index=2&type=section&id=Debt%20and%20Financing%20Activities) As of June 30, 2025, Targa's total consolidated debt was $16.85 billion. The company completed a $1.5 billion public offering of notes in June 2025, using proceeds to redeem existing notes and for general corporate purposes Consolidated Debt as of June 30, 2025 | Debt Type | Amount (Millions) | | :------------------------ | :---------------- | | Total Consolidated Debt | $16,850.5 | | Senior Unsecured Notes | $16,034.4 | | Commercial Paper Program | $667.0 | | Finance Lease Liabilities | $304.5 | - Completed an underwritten public offering of **4.900% Notes due 2030** and **5.650% Notes due 2036** in June 2025, generating approximately **$1.5 billion** in net proceeds[12](index=12&type=chunk) - Net proceeds from the debt issuance were used to redeem **6.500% Notes due 2027** and for general corporate purposes, including repayment of Commercial Paper Program borrowings[12](index=12&type=chunk) [Liquidity Position](index=2&type=section&id=Liquidity%20Position) Targa maintained strong liquidity, with approximately $3.5 billion available as of June 30, 2025, and extended its Securitization Facility maturity to August 31, 2026 Consolidated Liquidity as of June 30, 2025 | Source | Amount (Millions) | | :------------------------- | :---------------- | | Total Consolidated Liquidity | ~$3,500.0 | | TRGP Revolver | $2,800.0 | | Securitization Facility | $600.0 | | Cash | $113.1 | - Extended the maturity of its Securitization Facility to August 31, 2026, in July 2025[14](index=14&type=chunk) [Growth Projects Update](index=2&type=section&id=Growth%20Projects%20Update) Targa is accelerating completion timelines for several G&P and L&T projects, including new plants and pipeline extensions, with operations expected from Q4 2025 to Q1 2027 [Gathering and Processing (G&P) Segment Projects](index=2&type=section&id=Gathering%20and%20Processing%20%28G%26P%29%20Segment%20Projects) Targa anticipates early completion of its Pembrook II plant in Permian Midland by August 2025 and the Bull Moose II plant in Permian Delaware by Q4 2025. Construction continues on other Permian plants, and the company is acquiring long-lead items for future expansions - Pembrook II plant (**275 MMcf/d**) in Permian Midland expected to be completed early in August 2025[15](index=15&type=chunk) - Bull Moose II plant (**275 MMcf/d**) in Permian Delaware expected to begin operations in Q4 2025, earlier than previously anticipated[15](index=15&type=chunk) - Construction continues on East Pembrook and East Driver plants in Permian Midland, and Falcon II plant in Permian Delaware[15](index=15&type=chunk) - Acquiring long-lead items for next gas processing expansions in the Permian to accommodate future growth[15](index=15&type=chunk) [Logistics and Transportation (L&T) Segment Projects](index=2&type=section&id=Logistics%20and%20Transportation%20%28L%26T%29%20Segment%20Projects) The Delaware Express Pipeline expansion and Train 11 fractionator are now expected to begin operations earlier, in Q2 2026. Construction also continues on Train 12 fractionator and GPMT LPG Export Expansion - Delaware Express Pipeline expansion and Train 11 fractionator (**150 MBbl/d**) in Mont Belvieu expected to begin operations in Q2 2026, earlier than previously anticipated[16](index=16&type=chunk) - Construction continues on Train 12 fractionator in Mont Belvieu and GPMT LPG Export Expansion[16](index=16&type=chunk) [New Pipeline Extensions](index=2&type=section&id=New%20Pipeline%20Extensions) Targa announced a 43-mile extension of its Bull Run intrastate natural gas pipeline in the Permian Delaware, aiming to enhance connectivity to WAHA, with operations expected to commence in Q1 2027 - Announced a **43-mile** extension of the Bull Run intrastate natural gas pipeline in Permian Delaware to expand connectivity to WAHA[17](index=17&type=chunk) - The Bull Run Extension is expected to begin operations in Q1 2027[17](index=17&type=chunk) [2025 Outlook](index=2&type=section&id=2025%20Outlook) Targa maintains its 2025 adjusted EBITDA guidance of $4.65 billion to $4.85 billion, with increased growth capital expenditures of $3.0 billion [Adjusted EBITDA Guidance](index=2&type=section&id=Adjusted%20EBITDA%20Guidance) Targa maintains its full-year 2025 adjusted EBITDA estimate between $4.65 billion and $4.85 billion, anticipating record Permian, NGL pipeline transportation, fractionation, and LPG export volumes - Full year 2025 adjusted EBITDA is estimated to be between **$4.65 billion** and **$4.85 billion**[18](index=18&type=chunk) - Forecasted growth across Permian G&P footprint is expected to drive record Permian, NGL pipeline transportation, fractionation, and LPG export volumes in 2025[18](index=18&type=chunk) [Capital Expenditures](index=2&type=section&id=Capital%20Expenditures) Due to accelerated project completions and new expansions, Targa's estimated net growth capital expenditures for 2025 have increased to approximately $3.0 billion, while maintenance capital expenditures remain unchanged at $250 million - Estimated total net growth capital expenditures for 2025 are approximately **$3.0 billion**, an increase due to accelerated projects and new expansions[19](index=19&type=chunk) - Estimated 2025 net maintenance capital expenditures remain unchanged at approximately **$250 million**[19](index=19&type=chunk) [Consolidated Financial Results of Operations](index=4&type=section&id=Consolidated%20Financial%20Results%20of%20Operations) Targa reported strong financial performance for Q2 and H1 2025, with significant increases in total revenues, net income, and Adjusted EBITDA year-over-year [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=4&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) For Q2 2025, Targa experienced a 20% increase in total revenues, driven by higher commodity sales from increased NGL volumes, natural gas prices, and favorable hedges. Net income attributable to Targa Resources Corp. surged by 111%, and Adjusted EBITDA increased by 18% year-over-year Consolidated Financial Results (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Change (%) | | :---------------------------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Revenues | $4,260.1 | $3,562.0 | $698.1 | 20% | | Income from Operations | $1,033.6 | $627.2 | $406.4 | 65% | | Net Income Attributable to TRGP | $629.1 | $298.5 | $330.6 | 111% | | Adjusted EBITDA | $1,163.0 | $984.3 | $178.7 | 18% | | Adjusted Cash Flow from Operations | $934.4 | $808.5 | $125.9 | 16% | | Adjusted Free Cash Flow | $(9.6) | $(43.0) | $33.4 | 78% | - Increase in commodity sales was due to higher NGL volumes (**$304.2 million**), higher natural gas prices (**$296.4 million**), and favorable hedges (**$290.5 million**), partially offset by lower NGL and condensate prices (**$217.3 million**)[24](index=24&type=chunk) - Increase in fees from midstream services primarily from higher gas gathering and processing fees and export volumes, partially offset by lower transportation and fractionation fees due to a planned turnaround[25](index=25&type=chunk) - Operating expenses increased due to higher labor and maintenance costs, and taxes associated with system expansions and the Mont Belvieu turnaround[26](index=26&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=6&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) For the first half of 2025, total revenues increased by 9%, and net income attributable to Targa Resources Corp. grew by 57%. Adjusted EBITDA saw a 20% increase, driven by similar factors as the quarterly performance, including higher natural gas prices and NGL volumes Consolidated Financial Results (H1 2025 vs. H1 2024) | Metric | H1 2025 (Millions) | H1 2024 (Millions) | Change (Millions) | Change (%) | | :---------------------------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Revenues | $8,821.6 | $8,124.4 | $697.2 | 9% | | Income from Operations | $1,576.9 | $1,266.7 | $310.2 | 24% | | Net Income Attributable to TRGP | $899.6 | $573.7 | $325.9 | 57% | | Adjusted EBITDA | $2,341.5 | $1,950.8 | $390.7 | 20% | | Adjusted Cash Flow from Operations | $1,904.4 | $1,547.2 | $357.2 | 23% | | Adjusted Free Cash Flow | $318.6 | $(40.0) | $358.6 | NM | - Increase in commodity sales reflected higher natural gas prices (**$503.7 million**), higher NGL volumes (**$133.8 million**), and favorable hedges (**$34.4 million**), partially offset by lower condensate prices and natural gas/condensate volumes[30](index=30&type=chunk) - Increase in fees from midstream services was primarily due to higher gas gathering and processing fees and export volumes, partially offset by lower transportation and fractionation fees due to a planned turnaround[31](index=31&type=chunk) - Operating expenses increased due to higher labor and maintenance costs, and taxes associated with system expansions and the Mont Belvieu turnaround[32](index=32&type=chunk) [Review of Segment Performance](index=6&type=section&id=Review%20of%20Segment%20Performance) Both G&P and L&T segments demonstrated strong adjusted operating margin growth in Q2 and H1 2025, driven by increased volumes and new infrastructure, while the 'Other' segment saw significant gains from derivative activities [Gathering and Processing Segment](index=7&type=section&id=Gathering%20and%20Processing%20Segment) The G&P segment saw a 4% increase in adjusted operating margin for Q2 2025 and a 6% increase for H1 2025, primarily driven by higher natural gas inlet volumes in the Permian Basin due to new plant additions and strong producer activity, despite lower volumes in other areas Gathering and Processing Segment Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :----------------- | :----------------- | :--------- | | Operating Margin | $587.6 | $572.6 | 3% | $1,189.8 | $1,128.9 | 5% | | Adjusted Operating Margin | $807.0 | $778.3 | 4% | $1,617.4 | $1,522.6 | 6% | | Total Plant Natural Gas Inlet (MMcf/d) | 7,894.0 | 7,390.2 | 7% | 7,711.3 | 7,246.8 | 6% | | Total NGL Production (MBbl/d) | 1,025.2 | 965.7 | 6% | 984.5 | 904.8 | 9% | - Permian natural gas inlet volumes increased by **11%** in Q2 2025 and H1 2025, driven by the addition of Roadrunner II (Q2 2024), Greenwood II (Q4 2024), and Bull Moose (Q1 2025) plants, and continued strong producer activity[39](index=39&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) - Operating expenses increased primarily due to higher volumes and multiple plant additions in the Permian[42](index=42&type=chunk)[44](index=44&type=chunk) [Logistics and Transportation Segment](index=8&type=section&id=Logistics%20and%20Transportation%20Segment) The L&T segment reported a 17% increase in adjusted operating margin for Q2 2025 and an 18% increase for H1 2025. This growth was fueled by higher pipeline transportation and fractionation volumes, primarily from Permian G&P systems, and increased LPG export margin, despite a planned turnaround at Mont Belvieu Logistics and Transportation Segment Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | H1 2025 (Millions) | H1 2024 (Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :----------------- | :----------------- | :--------- | | Operating Margin | $632.4 | $547.7 | 15% | $1,279.1 | $1,079.8 | 18% |\ | Adjusted Operating Margin | $737.8 | $633.1 | 17% | $1,480.0 | $1,255.2 | 18% | | NGL Pipeline Transportation Volumes (MBbl/d) | 961.2 | 783.5 | 23% | 902.7 | 750.6 | 20% | | Fractionation Volumes (MBbl/d) | 969.1 | 902.2 | 7% | 974.5 | 849.7 | 15% | | Export Volumes (MBbl/d) | 423.1 | 394.1 | 7% | 435.3 | 416.6 | 4% | - Increase in adjusted operating margin was due to higher pipeline transportation and fractionation margin, and higher LPG export margin[48](index=48&type=chunk)[50](index=50&type=chunk) - Pipeline transportation and fractionation volumes benefited from higher supply from Permian G&P systems and full operation of Train 9 (Q2 2024), Daytona NGL Pipeline (Q3 2024), and Train 10 (Q4 2024)[48](index=48&type=chunk)[50](index=50&type=chunk) - Operating expenses increased predominantly due to a planned turnaround and system expansions[49](index=49&type=chunk)[51](index=51&type=chunk) [Other Segment](index=9&type=section&id=Other%20Segment) The 'Other' segment primarily reflects commodity derivative activity, including mark-to-market gains/losses on derivative contracts not designated as cash flow hedges. For Q2 2025, this segment reported an operating margin and adjusted operating margin of $280.5 million, a significant increase from a negative $46.6 million in Q2 2024 Other Segment Performance | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | H1 2025 (Millions) | H1 2024 (Millions) | Change (Millions) | | :-------------------------- | :----------------- | :----------------- | :---------------- | :----------------- | :----------------- | :---------------- | | Operating Margin | $280.5 | $(46.6) | $327.1 | $31.7 | $(68.7) | $100.4 | | Adjusted Operating Margin | $280.5 | $(46.6) | $327.1 | $31.7 | $(68.7) | $100.4 | - The 'Other' segment contains results from commodity derivative activity mark-to-market gains/losses related to derivative contracts not designated as cash flow hedges[52](index=52&type=chunk) [Company Overview](index=10&type=section&id=Company%20Overview) Targa Resources Corp. is a leading independent North American midstream services provider, operating diversified infrastructure for natural gas, NGLs, and crude oil - Targa Resources Corp. is a leading provider of midstream services and one of the largest independent infrastructure companies in North America[53](index=53&type=chunk) - The company's operations include gathering, compressing, treating, processing, transporting, purchasing, and selling natural gas; transporting, storing, fractionating, treating, purchasing, and selling NGLs and NGL products (including services to LPG exporters); and gathering, storing, terminaling, purchasing, and selling crude oil[53](index=53&type=chunk) - Targa is a FORTUNE 500 company and is included in the S&P 500[54](index=54&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) Targa utilizes non-GAAP financial measures like Adjusted EBITDA and Adjusted Free Cash Flow to assess performance, providing detailed reconciliations to GAAP measures [Introduction and Limitations](index=10&type=section&id=Introduction%20and%20Limitations) Targa uses non-GAAP financial measures like adjusted EBITDA, adjusted cash flow from operations, adjusted free cash flow, and adjusted operating margin to analyze performance. These measures are supplemental and should not replace GAAP measures, as they have limitations and may not be comparable to similarly titled measures used by other companies - Non-GAAP measures used include adjusted EBITDA, adjusted cash flow from operations, adjusted free cash flow, and adjusted operating margin (segment)[56](index=56&type=chunk) - These measures are supplemental and should not be considered an alternative to GAAP measures, having important limitations as analytical tools[57](index=57&type=chunk) - Management reviews comparable GAAP measures and understands the differences to incorporate insights into decision-making[57](index=57&type=chunk) [Adjusted Operating Margin](index=10&type=section&id=Adjusted%20Operating%20Margin) Adjusted operating margin is defined as revenues less product purchases and fuel, reflecting the core profitability of operations. It is influenced by volumes, commodity prices, contract mix, and hedging programs, and is used by management and external users to assess financial performance and capital returns - Adjusted operating margin for segments is defined as revenues less product purchases and fuel, impacted by volumes, commodity prices, contract mix, and commodity hedging[58](index=58&type=chunk) - For G&P, it includes service fees for natural gas and crude oil gathering/processing, and revenues from commodity sales less settlements, fuel, transport, and equity volume hedge settlements[61](index=61&type=chunk) - For L&T, it includes service fees, system product gains/losses, and NGL/natural gas sales less purchases, fuel, third-party transportation, and net inventory change[61](index=61&type=chunk) [Adjusted EBITDA](index=12&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is defined as Net income (loss) attributable to Targa Resources Corp. before interest, income taxes, depreciation and amortization, and other items adjusted for core operating performance. It is used by management and external users to measure the ability of assets to generate cash for interest costs, indebtedness, and dividends - Adjusted EBITDA is Net income (loss) attributable to Targa Resources Corp. before interest, income taxes, depreciation and amortization, and other adjustments consistent with core operating performance[62](index=62&type=chunk) - Used to measure the ability of assets to generate cash sufficient to pay interest costs, support indebtedness, and pay dividends[62](index=62&type=chunk) [Adjusted Cash Flow from Operations and Adjusted Free Cash Flow](index=12&type=section&id=Adjusted%20Cash%20Flow%20from%20Operations%20and%20Adjusted%20Free%20Cash%20Flow) Adjusted cash flow from operations is adjusted EBITDA less cash interest expense and cash tax. Adjusted free cash flow further subtracts maintenance and growth capital expenditures (net of contributions). These measures assess the company's ability to generate cash earnings for corporate purposes like dividends, debt retirement, or other financing arrangements - Adjusted cash flow from operations is adjusted EBITDA less cash interest expense on debt obligations and cash tax (expense) benefit[63](index=63&type=chunk) - Adjusted free cash flow is adjusted cash flow from operations less net maintenance and growth capital expenditures (including contributions to unconsolidated affiliates)[63](index=63&type=chunk) - These measures assess the company's ability to generate cash earnings (after servicing debt and funding capital expenditures) for corporate purposes such as dividends, debt retirement, or redemption of other financing arrangements[63](index=63&type=chunk) [Reconciliation Tables](index=12&type=section&id=Reconciliation%20Tables) The report provides detailed reconciliations of non-GAAP financial measures (Adjusted EBITDA, Adjusted Cash Flow from Operations, Adjusted Free Cash Flow) to their most directly comparable GAAP measures for both the three and six months ended June 30, 2025 and 2024, as well as an estimated reconciliation for full-year 2025 Reconciliation of Net Income to Adjusted EBITDA, Adjusted Cash Flow from Operations, and Adjusted Free Cash Flow (Q2 & H1 2025 vs. 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | H1 2025 (Millions) | H1 2024 (Millions) | | :---------------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Net income (loss) attributable to TRGP | $629.1 | $298.5 | $899.6 | $573.7 | | Interest (income) expense, net | $218.4 | $176.0 | $415.5 | $404.6 | | Income tax expense (benefit) | $184.1 | $94.3 | $256.3 | $177.1 | | Depreciation and amortization expense | $373.7 | $348.6 | $741.3 | $689.1 | | Risk management activities | $(280.5) | $46.6 | $(31.7) | $68.8 | | **Adjusted EBITDA** | **$1,163.0** | **$984.3** | **$2,341.5** | **$1,950.8** | | Interest expense on debt obligations | $(214.3) | $(172.4) | $(407.5) | $(397.3) | | Cash taxes | $(14.3) | $(3.4) | $(29.6) | $(6.3) | | **Adjusted Cash Flow from Operations** | **$934.4** | **$808.5** | **$1,904.4** | **$1,547.2** | | Maintenance capital expenditures, net | $(58.9) | $(52.8) | $(106.2) | $(102.7) | | Growth capital expenditures, net | $(885.1) | $(798.7) | $(1,479.6) | $(1,484.5) | | **Adjusted Free Cash Flow** | **$(9.6)** | **$(43.0)** | **$318.6** | **$(40.0)** | Reconciliation of Estimated Net Income to Estimated Adjusted EBITDA (2025E) | Metric | 2025E (Millions) | | :---------------------------------------- | :--------------- | | Net income attributable to Targa Resources Corp. | $1,830.0 | | Interest expense, net | $865.0 | | Income tax expense | $485.0 | | Depreciation and amortization expense | $1,510.0 | | Equity earnings | $(22.0) | | Distributions from unconsolidated affiliates | $26.0 | | Compensation on equity grants | $70.0 | | Risk management and other | $(17.0) | | Noncontrolling interests adjustments | $3.0 | | **Estimated Adjusted EBITDA** | **$4,750.0** | [Additional Information](index=13&type=section&id=Additional%20Information) This section outlines Targa's Regulation FD compliance and provides disclaimers regarding forward-looking statements, emphasizing inherent uncertainties and risks [Regulation FD Disclosures](index=13&type=section&id=Regulation%20FD%20Disclosures) Targa complies with Regulation FD by using press releases, SEC filings, public conference calls, and its website to disclose material information, encouraging investors to monitor these channels - Targa uses press releases, SEC filings, public conference calls, or its website (www.targaresources.com) to comply with Regulation FD disclosure obligations[67](index=67&type=chunk) - The company routinely posts important and potentially material information on its website[67](index=67&type=chunk) [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements regarding future activities, financial performance, capital spending, and dividends, which are subject to various uncertainties, factors, and risks, including commodity price volatility, weather, political, economic, and market conditions. Targa does not undertake to update or revise these statements - Statements in the release regarding future activities, events, or developments, including projected financial performance, capital spending, and future dividends, are forward-looking statements[68](index=68&type=chunk) - These statements rely on assumptions and are subject to uncertainties, factors, and risks, such as actions by hydrocarbon-producing countries, weather, political, economic, and market conditions, commodity price volatility, and changes in laws and regulations[68](index=68&type=chunk) - Targa does not undertake an obligation to update or revise any forward-looking statement[68](index=68&type=chunk)

Core Viewpoint - Targa Resources Corp. reported strong financial results for the second quarter of 2025, with significant increases in net income and adjusted EBITDA compared to the same period in 2024, driven by record transportation volumes and strategic share repurchase programs [2][10][17]. Financial Performance - Net income attributable to Targa Resources Corp. for Q2 2025 was $629.1 million, a 111% increase from $298.5 million in Q2 2024 [2][23]. - Adjusted EBITDA for Q2 2025 was $1,163.0 million, representing an 18% increase year-over-year from $984.3 million in Q2 2024 [2][10]. - Total revenues for Q2 2025 reached $4,260.1 million, a 20% increase from $3,562.0 million in Q2 2024 [21]. Dividend and Share Repurchase - The company declared a quarterly cash dividend of $1.00 per common share for Q2 2025, totaling approximately $215 million to be paid on August 15, 2025 [4]. - Targa repurchased 1.96 million shares at a total cost of $324.3 million during Q2 2025, with $566.2 million remaining under the existing share repurchase program [5][10]. Segment Performance - In the Gathering and Processing segment, adjusted operating margin was approximately flat, driven by strong growth in Permian natural gas inlet volumes, despite lower commodity prices [7][43]. - The Logistics and Transportation segment saw a sequentially flat adjusted operating margin, with record NGL pipeline transportation volumes offset by lower marketing margins [8][50]. Capitalization and Liquidity - Total consolidated debt as of June 30, 2025, was $16,850.5 million, with total consolidated liquidity of approximately $3.5 billion [11][13]. - The company completed a public offering resulting in net proceeds of approximately $1.5 billion, which were used to redeem existing notes and for general corporate purposes [12]. Growth Projects - Targa expects early completion of several projects, including the Pembrook II plant and the Bull Moose II plant, which are anticipated to enhance operational capacity [10][14]. - A 43-mile extension of the Bull Run natural gas pipeline was announced to improve connectivity from Targa's Permian Delaware system to WAHA, expected to begin operations in Q1 2027 [16]. 2025 Outlook - The company estimates full-year 2025 adjusted EBITDA to be between $4.65 billion and $4.85 billion, supported by growth across its Permian G&P footprint [17][18]. - Net growth capital expenditures for 2025 are estimated at approximately $3.0 billion, reflecting the acceleration of several projects [18].

Core Viewpoint - Analysts expect Targa Resources, Inc. (TRGP) to report quarterly earnings of $1.91 per share, reflecting a year-over-year increase of 43.6%, with revenues projected at $4.85 billion, up 36.2% from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised 2% higher over the last 30 days, indicating a collective reevaluation by analysts [1][2]. Key Metrics Forecast - Analysts predict 'Gathering and Processing - NGL sales per day' to reach 591.25 thousand barrels, an increase from 569.70 thousand barrels year-over-year [4]. - 'Gathering and Processing - Gross NGL production - Coastal' is expected to be 32.03 thousand barrels per day, down from 34.40 thousand barrels [4]. - 'Gathering and Processing - Condensate sales per day' is estimated at 19.31 thousand barrels, a decrease from 21.20 thousand barrels [5]. - 'Logistics and Marketing - NGL sales' are projected to be 1,093.79 thousand barrels per day, up from 1,018.40 thousand barrels in the same quarter last year [6]. - 'Logistics and Marketing - Export volumes' are expected to reach 443.45 thousand barrels per day, compared to 394.10 thousand barrels year-over-year [6]. - 'Logistics and Marketing - Fractionation volumes' are forecasted at 1,106.38 thousand barrels per day, up from 902.20 thousand barrels [7]. - 'Gathering and Processing - Total Gross NGL production' is estimated at 990.94 thousand barrels per day, compared to 965.70 thousand barrels in the same quarter last year [8]. - The average realized price for 'Gathering and Processing - Average realized prices - Condensate' is projected at $62.47, down from $72.83 year-over-year [8]. Stock Performance - Targa Resources shares have shown a return of -6.1% over the past month, contrasting with the Zacks S&P 500 composite's +0.6% change [10].

Group 1 - Natural gas producers and transportation stocks have significantly declined, following a drop in U.S. natural gas futures, erasing most of last week's gains due to cooler weather forecasts and high production levels near 107 billion cubic feet [1] - The number of natural gas drilling rigs in the U.S. increased by 9 to a total of 117, indicating plans for increased production, which may provide short-selling opportunities in the natural gas market [1] - The NYMEX August natural gas futures price fell sharply by 6.7% to $3.325 per million British thermal units, marking the lowest settlement price since July 11 [1] Group 2 - The four biggest decliners in the S&P 500 index were all from the natural gas energy sector, with EQT Energy down 9.5%, Expand Energy down 8.5%, Coterra Energy down 5.3%, and Targa Resources down 4.5% [2] - The significant drop in natural gas futures and related stocks is rare this year, especially following favorable policies for the oil and gas industry and the ongoing high temperatures driving demand [2] - Major tech companies like Google, Microsoft, and Amazon AWS are significantly increasing their demand for natural gas due to the construction of large data centers, which aligns with the global trend towards cleaner energy sources [2] Group 3 - The importance of natural gas resources, particularly liquefied natural gas (LNG), is increasing as countries seek cleaner energy alternatives to oil and coal, making it a core energy source for large AI data centers in the coming years [3]

Core Points - Targa Resources Corp. declared a quarterly cash dividend of $1.00 per common share for Q2 2025, equating to an annualized rate of $4.00 per share, payable on August 15, 2025, to shareholders of record as of July 31, 2025 [1] - The company will report its Q2 2025 financial results before market opens on August 7, 2025, followed by a live webcast at 11:00 a.m. Eastern Time to discuss these results [2][3] Company Overview - Targa Resources Corp. is a leading provider of midstream services and one of the largest independent infrastructure companies in North America, focusing on the efficient delivery of energy across the U.S. and globally [4] - The company operates a diversified portfolio of assets that connect natural gas and NGLs to domestic and international markets, catering to the growing demand for cleaner fuels [4] - Targa is engaged in various activities including gathering, compressing, treating, processing, transporting, and selling natural gas, as well as handling NGLs and crude oil [4]

Targa's Value Proposition and Growth - Targa is the largest gatherer and processor in the Permian Basin, driving integrated returns through NGL pipeline transportation, fractionation, and LPG exports[9] - The company has experienced significant volume growth, with a +24% CAGR in fractionation volumes and +12% CAGR in LPG export volumes from FY 2019 to YTD 3Q24[12] - Permian natural gas inlet volumes have grown at a +25% CAGR from Q4 2019 to YTD 3Q24[16] - Targa's adjusted EBITDA has grown by +182% since 2019, driven by its integrated NGL business and strong business fundamentals[19] Financial Performance and Shareholder Returns - Management expects to recommend to Targa's Board of Directors an increase to the 2025 quarterly cash common dividend to $4.00 per share annualized for the first quarter of 2025, representing a +33% YoY increase[9, 10] - Targa has repurchased over 202 million shares since October 2020 at a weighted average price of ~$7069[19] - The company's 2024E fee-based volumes in G&P are approximately ~90%[9, 66] - Targa expects to return 40-50% of adjusted cash flow from operations across a multi-year horizon[75] Permian Basin and Infrastructure - Targa has a premier Permian asset footprint with ~88 Bcf/d gross processing capacity across 43 plants[26, 27, 80] - The company is expanding its Permian G&P footprint, with several new plants scheduled to come online between 1Q25 and 3Q26[32, 94] - Targa's Daytona NGL Pipeline has a capacity of 400 MBbl/d and was expected to be in service in 3Q24[95]

Core Insights - Targa Resources Corp. (TRGP) has experienced a significant share price increase of 43.9% over the past year, outperforming the broader Oils-Energy sector's 7.2% rise and the Oil Refining & Marketing sub-industry's 28% growth [1][8] - The company is strategically positioned in the energy infrastructure sector, focusing on natural gas operations, including gathering, processing, and transportation [3][4] Financial Performance - TRGP reported a record adjusted EBITDA of $1.18 billion in Q1 2025, reflecting a 22% year-over-year increase, driven by higher volumes from the Permian Basin and improved marketing margins [5][8] - The company has reaffirmed its full-year 2025 adjusted EBITDA guidance of $4.65-$4.85 billion, indicating confidence in sustained growth [5] Strategic Advantages - Targa's operations are supported by fee-based contracts, providing stability in volatile commodity price environments, with a competitive edge due to its scale [6] - The company has a dominant presence in the Permian Basin, with natural gas inlet volumes increasing by 11% year over year, and is expanding its infrastructure to enhance capacity [9][10] Growth Initiatives - Targa's LPG export volumes averaged 13.4 million barrels per month in Q1 2025, with plans to expand capacity at the Galena Park terminal to 19 million barrels per month by Q3 2027 [11] - The company is executing $2.6-$2.8 billion in growth capital expenditures for 2025, focusing on high-return projects to support volume growth and system integration [15] Shareholder Returns - Targa has repurchased $214 million in shares through April 2025 and increased its quarterly dividend by 33% to $1 per share, reflecting a commitment to rewarding shareholders [13] Risk Mitigation - The company has hedged over 90% of its exposed volumes through 2026, reducing earnings volatility from fluctuating natural gas and NGL prices, ensuring stable cash flows [14]