The fourth quarter earnings release, along with the fourth quarter earnings supplement presentation for Targa Resources that accompany our call, are available on our website at targaresources.com in the investor section. 2025 was another exceptional year for Targa, with record volumes across our integrated footprint, which drove record financial performance. Permian volumes grew 11% for the year, an increase of more than 600 million cubic feet per day. Frac volumes increased more than 120,000 barrels per day, and we also had record LPG export volumes.

Our operational performance translated into a record $4.96 billion of Adjusted EBITDA, more than $800 million higher year-over-year. We are almost 2 months into 2026, and our momentum continues as we estimate another year of low double-digit Permian volume growth. Our expectations for 2026 are consistent with our previous commentary, and our outlook for 2027 and beyond has only improved. We had strong commercial success in the Permian in 2024 and 2025, adding several billion cubic feet per day of gas volumes over and above our existing volume growth from long-term acreage dedications.

Our best-in-class footprint generates significant growth opportunities as we continue to expand our system and bolt-on growth projects. This commercial success further adds to our long-term growth rate and gives us confidence in our capital program. Our returns on investment over the last several years have been best in class, and we're investing in the same types of projects that generated those attractive rates of return. So with this outlook for strong volume growth, we are announcing two new projects today.

What went well
  • 2025 was a record year for Targa, with record volumes across its integrated footprint driving record Adjusted EBITDA of $4.96 billion, more than $800 million higher year-over-year and a 20% increase over 2024.
  • Permian volumes grew 11% for the full year and averaged a record 6.65 billion cubic feet per day in the fourth quarter, up 10% from last year, while NGL transportation volumes (a record 1.05 million barrels per day), fractionation volumes (a record 1.14 million barrels per day), and LPG export volumes all set records.
  • Fourth quarter Adjusted EBITDA was $1.34 billion, a 5% sequential increase driven by higher system volumes and greater marketing optimization opportunities.
  • Marketing delivered roughly $150 million of higher-than-expected optimization benefits across 2025.
  • The company announced two new projects, the Yeti Two Delaware processing plant and its thirteenth Mont Belvieu fractionator, and ordered long lead items for two additional Permian plants, giving line of sight to an incremental 2.2 Bcf/d of processing capacity.
  • Targa repurchased $642 million of common shares during 2025 and ended the year with a net consolidated leverage ratio of approximately 3.5 times, within its 3-4 times target range.
What went wrong
  • Sharply negative Waha natural gas pricing in the fourth quarter caused some producer shut-ins, though those volumes came back onto the system.
  • In January, Winter Storm Fern reduced volumes across operations, though assets remained online and resilient.
  • Management expects Waha natural gas prices to remain volatile throughout much of 2026, and fourth quarter LPG export volumes of 13.5 million barrels per month, while up sequentially, were about 3-4% lower than a year ago, partly due to fog impacts.

Guidance Changes

MetricPeriodCurrent guidance
Adjusted EBITDAFY2026$5.4-$5.6B (+11% at midpoint vs 2025)
Growth capital spendingFY2026~$4.5B (increase)
Permian volume growthFY2026low double-digit
Multi-year average growth capital (post-Speedway)post-2027~$2.5B annually (increase, reflecting ~3 plants/year vs 2)
Run-rate Adjusted EBITDA (post-Speedway)post-2027over $6B

Performance Breakdown

MetricYoYNote
Full-year Adjusted EBITDA +20% (record $4.96B) record financial and operational performance, plus ~$150M higher-than-expected marketing optimization
Full-year Permian volumes +11% (>600 MMcf/d) strong producer activity and continued drilling across the footprint
Q4 Permian volumes +10% (record 6.65 Bcf/d) strong producer activity continued across systems
Q4 Adjusted EBITDA +5% sequentially ($1.34B) higher system volumes and greater marketing optimization opportunities
Q4 LPG export volumes -3% to -4% (13.5M bbl/month) fog impacts, though up sequentially

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Permian volume growth outlooklow double-digit growth guided for 2026 at this time last yearanother year of low double-digit growth in 2026; 2027 and beyond outlook improvedImproving
Elevated growth capital environment~$1.7B illustrative mid-cycle case (2024)~$2.5B post-Speedway, ~$4.5B in 2026Increasing
Commercial success / acreage dedicationsstrong commercial wins in 2024~350,000 dedicated acres added plus Stakeholder and two bolt-on acquisitions in 2025Expanding
Waha pricing volatilitynegative Waha pricing causing Q4 shut-insexpected to remain volatile through much of 2026, improving as egress builds by year-end exitVolatile near-term, improving long-term
Fee-based cash flow stabilitygreater than 90% fee-based; 30% commodity move = less than 2% EBITDA changeStable

Q&A Summary

What is driving Targa's resilient double-digit growth outlook for 2026 versus peers seeing retrenchment, and confidence beyond 2026?
Management cited its largest Permian footprint across both Delaware and Midland, strong producer relationships, existing customers continuing to drill, and substantial commercial success in 2024-2025 adding to an already strong growth rate on dedicated acreage. They are more positive on 2027 and beyond than they were a year ago.
Can you bridge the higher ~$2.5 billion mid-cycle CapEx figure?
The increase reflects growing off a larger base after two years of strong growth, now assuming roughly 2.5-3 plants of spending per year versus 2 previously, plus incremental field and compression spending, more residue spending, and some carbon capture investment.
How durable is the commercial success and ability to replicate it?
Even without significant additional commercial success, Targa will have strong growth for years from its millions of dedicated acres. Final investment decisions are based on contracts already in hand, not assumed future growth; further wins would be additive.
What is the medium and longer-term view on Waha pricing?
Chief Commercial Officer Bobby Muraro expects a bumpy ride similar to the last 10 years, with pipes coming online later in the year and further out in 2028, filling up over time and oscillating between tight basis and new capacity relief.
What is assumed for marketing in 2026 versus the ~$150 million 2025 benefit?
Management forecasts marketing conservatively and has not factored in material incremental gains; Waha volatility and pipeline maintenance could create additional opportunities, but they have good visibility only for the first six weeks of the year.
What would drive results to the higher end of the 2026 EBITDA range?
The two biggest variables would be stronger-than-forecast volume growth (wells coming online faster or producing more) and marketing gains across NGL, gas, and exports that exceed the conservative forecast.

More on Targa Resources Corp.

Reported 2026-02-19 · figures from the Targa Resources Corp. Q4 2025 earnings call.

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