Targa Resources Corp. Q1 FY2025 earnings call

• Matt Meloy highlighted Targa's positioning for success across changing environments, record adjusted EBITDA despite winter weather, share repurchases of nearly $215M, managing tariff impacts, and strong producer drilling programs. - Jen Kneale detailed Permian volumes rebounding, Pembrook II plant online in Q3 2025, NGL volumes rebounding, LPG export strength, and managing project costs. - Will Byers discussed adjusted EBITDA growth, debt offering, liquidity, $2.6B - $2.8B net growth capital spending for 2025, $250M net maintenance capital spending, share repurchases, and 33% dividend increase.

Gathering and Processing: Permian natural gas inlet volumes averaged over 6 billion cubic feet per day during the first quarter, an 11% increase from a year ago. Adjusted EBITDA driven by higher Permian volumes. Logistics and Transportation: NGL pipeline transportation volumes averaged 844,000 barrels per day and fractionation volumes averaged 980,000 barrels per day during the first quarter, impacted by winter weather. Delaware Express NGL transportation pipeline on track for completion in Q3 2026. LPG Export: LPG loadings averaged 13.4 million barrels per month during the first quarter. LPG export debottleneck expansion expected in Q4 2025, larger expansion online in Q3 2027.

• Full year 2025 adjusted EBITDA expected in the range of $4.65 billion to $4.85 billion. - Net growth capital spending for 2025 expected in the range of $2.6 billion to $2.8 billion, with net maintenance capital spending of $250 million. - Continued opportunistic share repurchases and a 33% increase in the common dividend for Q1 2025 relative to 2024.

• Global tariff impacts could have a low-single-digit percentage potential impact on budgeted project costs. - Commodity price volatility may affect producer drilling programs and overall volume growth.

Q: With oil price volatility, how does Targa differ from others in terms of customers and Permian position?

A: Jen Kneale stated Targa has the best G&P footprint in Permian Midland and Delaware Basins, with best rock, well-capitalized producers, and multi-year drilling programs, differentiating it.

Q: Elaborate on CapEx 2026 relative to 2025 and buybacks?

A: Jen Kneale said a strong balance sheet allows investment and lever pulling, with 2026 growth capital projects like new processing plants, and activity levels driving Cadence of growth capital spend.

Q: How is Targa benefiting from volatility in marketing?

A: Matt Meloy said growing footprint creates more monetization opportunities in gas and NGL marketing, with sequential beat in first quarter.

Q: Thoughts on buybacks in volatile macro?

A: Matt Meloy said buybacks are opportunistic, with strong balance sheet allowing repurchases when dislocations occur.

Q: Demand for Traverse pipeline and partnership with MPLX and Enbridge?

A: Bobby Muraro said there's demand growth into South Texas and KD market, with pipeline FID and good commercialization, partnership evolving with exposure to large producers.

Q: Small-scale bolt-on deals?

A: Matt Meloy said Targa will evaluate bolt-ons if they meet return criteria, with primary focus on organic growth.

Q: Permian volume growth protection in weak macro?

A: Jen Kneale said commercial agreements and new plants starting up provide protection, with producer drilling programs unchanged so far.

Q: Q1 results and unit margins?

A: Will Byers said stronger results were due to contract mix, customer activity, and higher margin contracts.

Q: Customer composition?

A: Jen Kneale said working with biggest, best, well-capitalized producers across Permian.

Q: LPG export competitive landscape?

A: Scott Pryor said it starts with wellhead, homegrown NGLs from Permian feeding into systems, with brownfield projects competitive.

Q: CapEx downside projection?

A: Matt Meloy said after major downstream projects, if gas volumes flat, CapEx could step down to ~$300M.

Q: Plant ramping in softer macro?

A: Matt Meloy said Midland plants fill quickly, Delaware plants depend on production growth and producer plans.

Q: Pembro II pull-forward and volume expectations?

A: Jen Kneale said it's due to faster construction than forecasted.

Q: Permian production in flat oil environment?

A: Pat McDonie said gas production could grow 2% - 3% annually in flat oil environment.

Q: Hedging position and additional hedges?

A: Jen Kneale said they continue to add hedges, disciplined in hedging program.

Q: Producer response to crude oil prices?

A: Jen Kneale said producers have mixed responses, but larger producers have multi-year drilling programs underway with no changes yet