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    TRGP
    Earnings call· Mar 2026(Q1 FY26)

    Targa Resources Q1 FY26 earnings call TRGP

    May 7, 2026 Source

    Executive summary

    Targa Resources Corp. Q1 FY26 — Record Adjusted EBITDA and Permian Volumes

    Targa Resources delivered a strong first quarter, achieving record adjusted EBITDA and Permian volumes despite winter weather and Waha gas price-related shut-ins. The company raised its full-year adjusted EBITDA outlook, driven by robust Permian activity, marketing opportunities, and strong LPG export demand. Management remains focused on project execution and increasing shareholder returns through its integrated asset footprint.

    Highlights

    5

    • Achieved record first quarter adjusted EBITDA of $1.4 billion, representing a 5% sequential increase.

    • Reported record Permian natural gas inlet volumes and NGL fractionation volumes, reaching 1.145 million barrels per day.

    • Increased full-year 2026 adjusted EBITDA outlook to a range of $5.7 billion to $5.9 billion, with the midpoint $300 million higher than previous estimates.

    • East Pembrook plant began service early at the end of Q1 FY26, ahead of its Q2 FY26 schedule.

    • Declared a first quarter common dividend of $1.25 per share, marking a 25% increase relative to Q1 FY25.

    Concerns

    3

    • Experienced impacts from severe winter weather (Winter Storm Fern) and periodic producer shut-ins due to weak Waha gas prices.

    • Between 200 million and 400 million cubic feet per day of Permian gas was temporarily shut in by producers on any given day.

    • An unplanned outage at a portion of the LPG export facility reduced loadings towards the end of Q1 and early Q2 FY26.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year 2026 Adjusted EBITDA
    $5.7 billion to $5.9 billion
    high materiality
    High
    Net growth capital spending
    approximately $4.5 billion
    high materiality
    High
    Net maintenance capital spending
    $250 million
    medium materiality
    High
    Permian volume growth
    low double-digit
    medium materiality
    Medium
    LPG export capacity expansion
    more than 19 million barrels per month
    medium materiality
    High
    LPG export loadings
    record
    low materiality
    Medium

    Operational metrics

    5
    Adjusted EBITDA
    $1.4 billion5% higher sequentially
    Q1 FY26

    Record first quarter adjusted EBITDA, primarily from Permian Basin acquisition and marketing optimization, partially offset by winter weather.

    Available liquidity
    $3.1 billion
    end of Q1 FY26

    Company is in an excellent liquidity position to execute on its capital program.

    Pro forma consolidated leverage ratio
    3.6x
    end of Q1 FY26

    Well within the long-term leverage ratio target range of 3 to 4x.

    Permian gas temporarily shut in
    200 million to 400 million cubic feet per day
    daily

    Due to weak Waha natural gas prices and egress constraints.

    Debt offering
    $1.5 billion
    March FY26

    Successfully completed debt offering to support capital program.

    Industry KPIs

    6
    MetricValueDetails
    Pipeline throughput storage1.02 millionbbl/d
    Sanctioned expansion backlog—
    Basin level production volumeNew record
    FCF shareholder distributions$1.25per share
    Take or pay contract structure—
    Weather event volume earnings impact—

    Orderbook & backlog

    1
    Common shares repurchased$55 millionQ1 FY26

    Average price of $241.43 per share

    Deals & partnerships

    1
    Undisclosedacquisition

    Permian Basin acquisition closed at the beginning of January FY26, contributing to financial results and integrating new employees into the Targa team.

    Capital programs

    13
    East Pembrook plantcompleted

    Permian Midland plant began service early, ahead of its Q2 FY26 schedule.

    East Driver planton track

    Permian Midland plant remains on track to begin operations.

    Falcon II plantcompleted

    Permian Delaware plant successfully came online.

    Roadrunner III plantannounced

    New Permian Delaware plant announced, needed to accommodate expected growth from customers in the active Delaware Basin.

    Copperhead II plantannounced

    New Permian Delaware plant announced, needed to accommodate expected growth from customers in the active Delaware Basin.

    Delaware Express NGL pipelinein startup

    NGL pipeline is currently in startup phase.

    Train 11 fractionatorcompleted

    Fractionator began operations early in the second quarter.

    Speedway NGL pipelineon track

    Benefit: 500,000 barrels per day initial capacity

    Large expansion of NGL pipeline transportation system remains on track.

    Train 12 fractionatoron track

    Fractionator remains on track for operations.

    Train 13 fractionatoron track

    Fractionator remains on track for operations.

    LPG export expansionon track

    Benefit: more than 19 million barrels per month

    Large LPG export expansion is expected to be much needed when it comes online.

    Blackcomb natural gas pipelineon track

    Pipeline in which Targa has an equity interest, expected to provide much needed egress relief for the Permian.

    Traverse natural gas pipelineon track

    Pipeline will further enhance market connectivity.

    Risks & headwinds

    3
    Severe winter weather impactsQ1 FY26

    Impacted G&P and L&T volumes

    Mitigation: Field operations and engineering employees worked to support producer customers and quickly resolve issues.

    Weak Waha natural gas pricesQ1 FY26 and early Q2 FY26

    Caused 200-400 million cubic feet per day of temporary producer shut-ins

    Mitigation: Targa has available capacity to ensure producer volumes flow and is identifying marketing optimization opportunities. Egress capacity additions expected by late 2026.

    Unplanned outage at LPG export facilityQ1 FY26 and early Q2 FY26

    Reduced loadings towards the end of Q1 and early Q2 FY26

    Mitigation: Operations and engineering teams quickly brought the facility back online; commercial team worked with customers to maximize loadings and secure additional contracts.

    Q&A highlights

    8

    How do you see the interplay between Waha basis, new pipelines coming online, and the uplift from marketing opportunities throughout the year?

    Waha is playing out as expected, remaining tight until incremental pipes like GCX expansion and Blackcomb come online in late 2026/early 2027, which will bring relief and collapse the basis. Targa has capacity for producers, and the guidance uplift includes realized Q1 marketing gains and modest future expectations, driven by strong fundamentals.

    “Waha is largely playing out as we expected this year, which is that as we go through the year ahead of the incremental pipes coming online as well as the GCX expansion, it's going to continue to be really tight.”

    asked by Jeremy Tonet · answered by Jennifer Kneale

    2 min read6 chapters

    Detailed Narrative

    01

    Permian Basin Activity and Egress

    Targa continues to observe strong production activity in the Permian Basin, with current natural gas inlet volumes exceeding the Q1 average by over 250 million cubic feet per day. This growth occurs despite temporary shut-ins of 200-400 million cubic feet per day by producers due to weak Waha gas prices. The company anticipates significant Permian egress relief by late 2026, with the Blackcomb pipeline coming online in Q4 2026 and Traverse in mid-2027, which is expected to lead to sustained higher Waha gas prices and a positive impact on volumes.

    02

    Project Execution and Expansion Track Record

    Targa highlights its strong track record of project execution, having brought 27 major projects into service over the last six years. These include 16 Permian processing plants, 5 fractionators, and 3 NGL transportation pipelines, all delivered on time or ahead of schedule. Recent examples include the East Pembrook plant starting service early in Q1 FY26 and the Train 11 fractionator beginning operations early in Q2 FY26, demonstrating consistent operational efficiency.

    03

    Downstream Growth and LPG Export Capabilities

    In Q1 FY26, Targa's NGL pipeline transportation volumes averaged 1.02 million barrels per day, and fractionation volumes reached a record 1.145 million barrels per day. LPG export loadings averaged 13.1 million barrels per month, even with an unplanned outage. The company is expanding its LPG export capacity to over 19 million barrels per month by Q3 2027, positioning itself to meet increasing global demand for U.S. Gulf Coast LPGs.

    04

    Capital Allocation and Financial Strength

    Targa maintains a robust financial position, with $3.1 billion in available liquidity and a pro forma consolidated leverage ratio of 3.6x at the end of Q1 FY26, well within its target range. The company continues its strategy of returning capital to shareholders, evidenced by a 25% increase in its Q1 common dividend to $1.25 per share and the opportunistic repurchase of $55 million in common shares at an average price of $241.43 per share during the quarter.

    05

    New Permian Processing Plant Announcements

    To accommodate anticipated growth in the active Delaware Basin, Targa announced two new Permian Delaware gas processing plants: Roadrunner III and Copperhead II. Both facilities are expected to begin service in the first quarter of 2028, further expanding the company's processing capacity and reinforcing its integrated value chain.

    06

    Marketing and Optimization Opportunities

    Significant contributions from natural gas marketing and LPG export optimization opportunities bolstered Targa's Q1 FY26 results and contributed to the increased full-year adjusted EBITDA outlook. These opportunities are expected to persist, particularly in natural gas marketing, until incremental Permian egress capacity becomes available later in 2026, improving Waha gas prices.

    AI-generated summary of the company’s earnings call. Not investment advice.