Targa Resources Corp. 2026 Q2 Earnings Call

Good morning. Welcome to the second quarter 2026 earnings call for Targa Resources Corp. The second quarter earnings release, a supplement presentation, and our latest investor presentation are available in the investor section of our website at targaresources.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 21E 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 Meloy, Chief Executive Officer, Jen Kneale, President, and Will Byers, Chief Financial Officer.

Additionally, members of Targa's senior management will be available for Q&A, including Pat McDonie, President, Gathering and Processing, Ben Branstetter, President, Logistics and Transportation, and Bobby Morraro, Chief Commercial Officer. I'll now turn the call over to Matt.

Thanks, Tristan. 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, 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 in 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. 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. 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 for success across a range of market conditions. In the first half of 2026, against a 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.

Beyond 2026, we believe we are in an excellent position with our multiple projects underway expected to provide our producer customers with the critical infrastructure needed to grow production. The global environment is recognizing the value and importance of U.S. energy now more than ever. We expect to benefit from critical long lead demand catalysts, including expanding LNG export capacity, growing power generation needs, increasing global demand for hydrocarbons, and increasing recognition of the strategic role U.S. energy plays in supporting economic growth and energy security worldwide. Against this backdrop, we believe Targa is uniquely positioned to benefit from sustained producer activity and increasing demand for the critical infrastructure services we provide.

Our focus at Targa 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 team for their continued focus on safety and execution while continuing to provide best-in-class service and reliability to our customers.

Thanks, Matt. Good morning, everyone. Second quarter Permian volumes were a record 7.2 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 million-400 million cubic feet per day of gas shut in behind our Permian systems on any given day with weak Waha prices. 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 Rinson 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, 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 as we continue to progress the major projects along our integrated system. In the Permian Delaware, our five gas processing plants, Copperhead One and Two, Yeti I and II, and Roadrunner III, 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 system and are currently evaluating the timing of our next Midland processing plant. We also continue to execute on our residue natural gas strategy, adding intrabasin 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. Shifting to Logistics and Transportation, the growth we are experiencing in the Permian is flowing through our integrated footprint, contributing to record NGL transportation volumes of 1.1 million barrels per day and record fractionation volumes of 1.2 million barrels per day.

With conflict in the Middle East increasing global demand for U.S. hydrocarbons, our LPG export loadings averaged a record 14.8 million barrels per month during the second quarter. The Targa team was able to respond quickly and serve our customers. 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 and fractionator came online early in the second quarter and was quickly highly utilized. Our Train 12 and Train 13 fractionators remain on track.

Targa's 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, 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 5 processing plants in the Permian since we announced Speedway and have 5 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, 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.