The third quarter earnings release and a supplement presentation that accompany our call are available on our website at targaresources.com. We had another outstanding quarter with record adjusted EBITDA driven by record volumes across our footprint. With three quarters completed, we now expect our full year 2025 adjusted EBITDA will be around the top end of our previously provided guidance range. Our Permian volumes grew more than 340 million cu ft per day and nearly 700 million cu ft per day compared to this time last year.
Our Permian growth is driving additional NGL volumes through our integrated system, as NGL volumes increased about 180,000 bbl per day compared to this time last year. Incrementally, the customer success we achieved in 2024 has started to show up in our volumes, some this year, but really adding to our longer-term confidence of continued Permian volume growth. Also, our previously announced Forza natural gas pipeline in the Delaware had a successful open season, and we are moving ahead with that project. We continue to expect meaningful long-term growth in Permian gas and NGL volumes across our footprint.
We have a lot of projects in progress, which means growth capital is elevated in 2025 and 2026, and these attractive investments will drive significant increases in adjusted EBITDA. Once these projects are online, we expect our downstream capital spending will be significantly lower for years to come, driving a substantial increase in free cash flow. This expected increase in free cash flow will be durable, meaning even if we are in a stronger growth environment driving elevated spending on the G&P side, our downstream spending should still be modest. So in late 2027, our downstream NGL capital is expected to be significantly lower than today's, and our adjusted EBITDA is expected to be much higher than today's.
| Metric | Period | Current guidance |
|---|---|---|
| Full year 2025 adjusted EBITDA | FY2025 | Around the top end of $4.65B-$4.85B (Raised toward top end) |
| Permian volume growth | FY2025 | At least 10% growth |
| Permian volume growth | 2026 | Strong low double-digit growth |
| Net growth capital spending | FY2025 | Approximately $3.3 billion |
| Net maintenance capital spending | FY2025 | $250 million |
| Annual common dividend | FY2026 | $5 per share (recommended) (+25%) |
| Metric | YoY | Note |
|---|---|---|
| Adjusted EBITDA | +19% (and +10% sequentially) | Record Permian NGL transportation and fractionation volumes generating higher margin across G&P and L&T segments |
| Permian natural gas inlet volumes | +11% (record 6.6 Bcf/d) | Materialized second-half volume ramp from producers and continued commercial success |
| NGL pipeline transportation volumes | Record 1.02 million bbl/d | Permian growth driving additional NGL volumes through the integrated system |
| Fractionation volumes | Record 1.13 million bbl/d (+17% sequentially) | Fracs fully back online after planned maintenance in Q1/Q2; system essentially full |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Permian volume growth | Forecast a big back-half ramp at start of year | Ramp materialized; at least 10% growth in 2025, low double-digit expected in 2026 | Strengthening |
| Downstream free cash flow inflection | — | Speedway and LPG export expansion online late 2027, after which downstream capex drops significantly and free cash flow grows durably | Improving |
| Intra-basin residue / gas takeaway strategy | — | Building out residue capabilities to manage tight Permian egress until new takeaway arrives in 2026, at returns comparable to rest of business | Expanding |
| Sour gas position | Implemented sour gas strategy many years ago as first mover | More than 2.5 Bcf/d sour capacity and seven AGI wells; growing sour production as competitors try to enter | Strengthening |
| Capital return | All-of-the-above approach with opportunistic buybacks | 25% dividend increase plus continued opportunistic repurchases; 40%-50% payout over multiple years | Improving |