Targa Posts Record EBITDA as Fee-Based Growth Accelerates
Second-quarter adjusted EBITDA reached $1.603 billion, up 14% sequentially.
Targa Resources Corp. (TRGP), the midstream energy infrastructure company, reported record second-quarter adjusted EBITDA as rising Permian volumes and stronger logistics activity lifted earnings. Adjusted EBITDA increased 38% from a year earlier, with sequential growth accelerating from 5% in the first quarter.
The quarter marked a rebound from weather, producer curtailments and an export outage early in the year. Fee-based midstream services and higher export volumes helped counter lower natural-gas prices and unfavorable hedges, shifting the revenue mix further toward gathering, processing, transportation and fractionation fees.
Revenue rose 4% to $4.440 billion, as midstream-service fees jumped 36% to $847.2 million and commodity sales declined 1%. Net income attributable to Targa increased 22% to $764.6 million from $629.1 million a year earlier and $480 million in the first quarter. Operating margin widened about 3.5 percentage points to 27.8% as operating income rose faster than revenue.
Gathering and Processing adjusted operating margin increased 21% to $973.5 million. Total Permian gas inlet volume reached a record 7,187.3 MMcf/d, up 14%, despite producer curtailments prompted by negative Waha prices. Delaware Basin volume grew 20%, outpacing Midland Basin growth of 9%, while total NGL production rose 15%.
Logistics and Transportation adjusted operating margin climbed 44% to $1.063 billion, supported by higher marketing, pipeline, fractionation and LPG-export margins. NGL pipeline transportation volume rose 14%, fractionation volume increased 24% and export volume gained 15%, with each reaching a quarterly record after the first-quarter disruptions.
Targa now expects 2026 adjusted EBITDA toward the top of its $5.7 billion-to-$5.9 billion range, which it raised in the first quarter from an initial forecast of $5.4 billion to $5.6 billion. Stronger outlook is attributed to marketing and optimization margins and continued volume growth across its integrated assets. Its net growth-capital forecast remains about $4.5 billion, while maintenance capital remains about $250 million.
Train 11 and the Delaware Express NGL Pipeline expansion entered service during the quarter, and the East Driver processing plant began operating ahead of schedule. Adjusted free cash flow improved to $205.3 million from negative $9.6 million a year earlier. Targa repurchased $80 million of shares, up from $55 million in the first quarter, and kept its quarterly dividend at $1.25 a share, 25% above the year-earlier payout.