The first quarter earnings release, a supplement pre-presentation, and our latest investor presentation are available in the investor section of our website at targaresources.com. We had record first quarter adjusted EBITDA, Permian volumes, and NGL fractionation volumes despite the impacts of severe winter weather and periodic producer shut-ins from weak Waha gas prices. The efforts by the Targa team supported another record quarter and strong start to the second quarter. The short, medium, and long-term outlook for Targa growth has continued to improve.

A track record of constructing Permian gas processing plants on time or early. Our LPG export facilities, which we are expanding our capacity to more than 19 million barrels per month, timed very well for the increase in demand for long-term LPG export contracts. This track record of execution is a credit to our best-in-class engineering and operations teams and to our commercial team for continuing to identify attractive opportunities to grow our footprint. This increase highlights Targa's strength and the durability of our business across environments.

While it is difficult to predict with precision how producers are managing egress constraints in the short term, we continue to feel good about our low double-digit Permian volume growth estimate for 2026. We are also continuing to execute on our major projects along our Permian footprint to accommodate the growth from our customers. Additionally, we expect WACOM, a natural gas pipeline in which we have an equity interest, will provide much-needed egress relief for the Permian when in service in the fourth quarter of this year. Shifting to our Logistics and Transportation segment, Targa's NGL pipeline transportation volumes averaged 1.02 million barrels per day, and fractionation volumes averaged a record 1.145 million barrels per day during the first quarter.

What went well
  • Targa delivered record first-quarter adjusted EBITDA of $1.4 billion, up 5% sequentially, along with record Permian natural gas inlet volumes and record NGL fractionation volumes of 1.145 million barrels per day.
  • These records came despite severe winter weather (Winter Storm Fern), gas price-related producer shut-ins, and an unplanned outage at part of the LPG export facility.
  • Management raised its full-year 2026 adjusted EBITDA outlook to $5.7-$5.9 billion, a $300 million higher midpoint versus February, driven by strong volumes, gas marketing/optimization gains, and increased global LPG export demand.
  • The company announced two new Permian Delaware gas processing plants (Roadrunner III and Copperhead II) and brought several projects online on time or early, including the East Pembrook and Falcon II plants and Train 11 fractionator.
  • Targa also raised its dividend 25% year-over-year to $1.25 per share, repurchased $55 million of stock, completed a $1.5 billion debt offering, and ended the quarter at roughly 3.6x leverage with $3.1 billion of available liquidity.
What went wrong
  • Severe winter weather and producer shut-ins from weak Waha gas prices reduced first-quarter G&P, NGL transportation, and fractionation volumes, with 200-400 million cubic feet per day temporarily shut in on any given day.
  • An unplanned outage at a portion of the Galena Park LPG export facility reduced loadings late in the first quarter and early in the second, holding loadings to 13.1 million barrels per month.
  • Management expects Waha basis to remain tight and potentially worsen before incremental Permian egress capacity arrives later in 2026.

Guidance Changes

MetricPeriodCurrent guidance
Full-year 2026 adjusted EBITDAFY2026$5.7B-$5.9B (+$300M at midpoint)
Net growth capitalFY2026~$4.5B (No change despite two new plants)
Net maintenance capitalFY2026$250M (No change)
Permian volume growthFY2026Low double-digit growth (Reaffirmed)

Performance Breakdown

MetricYoYNote
Adjusted EBITDA — Record $1.4B, up 5% sequentially on Permian acquisition contributions and marketing optimization, partially offset by winter weather
Permian natural gas inlet volumes Record Acquisition integration plus strong producer activity, partly offset by weather and shut-ins
NGL fractionation volumes Record (1.145 MMbbl/d) Strong underlying fundamentals, impacted by weather and shut-ins but rebounded
Common dividend +25% Increasing return of capital to shareholders

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Waha gas prices / Permian egress constraints—Tight basis driving producer shut-ins; relief expected late 2026 as GCX expansion, Blackcomb, Hugh Brinson, and WACOM come onlineWorsening near-term, improving by year-end
LPG export demand—Higher butane demand after Iran/Middle East conflict; record second-quarter loadings expected; more multi-year contract inbounds than everStrengthening
Project execution cadence—27 major projects online on time or early over six years; six Permian plants under construction; two new plants announcedAccelerating
Marketing/optimizationModest gains assumed in February guidanceMaterial gas marketing opportunities expected until egress added; still conservatively forecast for back halfStronger than initial guidance

Q&A Summary

How will Waha basis trend with curtailed volumes and the interplay with marketing uplift over the year? (J.P. Morgan)
Waha is playing out as expected and will stay tight, arguably worsening before improving; relief comes from GCX expansion, Blackcomb, and Hugh Brinson toward late 2026 into 2027. Targa has takeaway capacity so constraints are price-driven, not physical, and marketing/optimization opportunities continue until egress is added.
How much of the guidance raise is marketing/wide spreads versus repeatable core volume and margin outperformance? (Wolfe Research)
It is a mix; the raise reflects significant gas marketing opportunities and incremental LPG export gains, but management kept go-forward marketing forecasts modest. The repeatable element is volume growth flowing through the integrated system, expected to ramp through 2026 and into 2027.
With six plants under construction adding over 1.5 Bcf/d (a ~25% capacity increase by early 2028), will they fill quickly as historically? (Wolfe Research)
Yes; plants are forecast to be well utilized, and FID is reached only with contracts in hand. Commercial teams typically add more volume than forecast by the time plants come online, and added capacity creates white space for producer acceleration, sour gas, and outperformance.
Are higher commodity prices/Middle East volatility changing producer conversations or planned activity? (Wells Fargo)
No dramatic change; activity remains strong and volumes are on track even with shut-ins. Sustained higher prices could create 2027-2028 tailwinds, with some producers pushing completions into the second half.
How much upside could LPG exports bring, particularly butane? (J.P. Morgan)
The Iran conflict created an additional call on butane; moving more butane co-loads product and frees dock space for incremental cargoes. Targa came in well contracted and sees a constructive environment for additional multi-year contracts and a possible inexpensive future chiller expansion.
What is the appetite to increase shareholder returns given maintained CapEx and higher EBITDA? (Goldman Sachs)
Targa will stay consistent: strong investment-grade balance sheet (3.6x leverage), continued high-return integrated investment, and increasing capital returns. In Q1 it raised the dividend 25%, bought back $55 million of stock, and closed an acquisition.

More on Targa Resources Corp.

Reported 2026-05-07 · figures from the Targa Resources Corp. Q1 2026 earnings call.

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