AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 19/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Operating connections and downstream volume benefits establish utility, but scarce capacity, cost superiority and barriers to duplication remain unproven.
durability · — · Completed facilities demonstrate an operating asset base, but the catalog cannot establish how long competitive protection would last. Rival construction and customer self-supply are disclosed possibilities.
customer dependency · — · Service demand and startup utilization do not establish dependence on Targa specifically. Contract duration, switching burdens and customer alternatives are insufficiently disclosed.
erosion resilience · — · Improved operating results demonstrate business resilience, but cannot establish resilience of an unidentified moat. Actual curtailments and the export outage show exposure without proving competitive erosion.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Higher LPG export fees provide positive observed pricing evidence. First-half commodity sales nevertheless suffered a $1,309.2 million adverse price effect, partly offset by volume growth and higher condensate prices. Fee-rate magnitude, mix and persistence are undisclosed.
retention · 2/4 · Service revenue increased from $2,098.2 million in 2023 to $2,624.8 million in 2025, and reported startup utilization was high. This is indirect evidence of sustained demand, confounded by added capacity and acquisitions; customer renewals and cohort retention are unavailable.
margin resilience · 3/4 · First-half segment operating margin rose to $3,157.7 million from $2,468.9 million despite adverse commodity prices. Fee arrangements, some energy-cost pass-through and lower purchase costs support demonstrated resilience. Expansion, optimization and hedging limit attribution to pricing power.
contractual freedom · 2/4 · Certain fee rates pass through energy costs, providing contractual protection. Common-carrier rate regulation and commodity-linked percent-of-proceeds arrangements constrain discretion. General unilateral repricing rights are not disclosed.
Predictability82
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 21.90
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.65
Financial strength9
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 0.00
- interestCoverageGrade
- 35.80
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 29.85
- Net debt / operating income (x)
- 5.18
- Current ratio (x)
- 0.67
- cashInterestPaid
- 793.30
- cashInterestCoverage
- 4.94
Capital allocation77
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 15.91
- 3-year average dilution (%)
- -1.67
- 3-year average SBC / revenue (%)
- 0.44
- cashConversionGrade
- 45.72
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half operating cash flow of $2,180.8 million exceeded property and equipment cash outlays of $1,909.6 million, but acquisitions and distributions required financing. Completed projects support productive deployment; the historical impairment and litigation payment temper the record. Acquisition returns and repurchase value are unproven.
incentive alignment · 3/4 · Implemented incentives include cash flow per share, ROIC, multiyear equity and relative shareholder returns. January 2026 vesting confirms actual implementation. Clawback and hedging restrictions reinforce alignment, although executive ownership levels and effectiveness over a full cycle remain unestablished.
execution · 3/4 · Completed processing and downstream projects demonstrate delivery. East Driver commenced in the second quarter against an earlier third-quarter expectation. On-budget delivery and high startup utilization are issuer-reported achievements; the export outage, resolved early in the second quarter, tempers the record.
governance · 2/4 · Performed audit oversight, an independent compensation committee and an adopted clawback support accountability. A classified board and preferred-stock issuance authority without shareholder approval weaken shareholder control. Subsequent 2026 election and advisory-vote outcomes are not supplied.
Evidence
The Logistics and Transportation segment also includes our NGL pipeline system, which connects our gathering and processing positions in the Permian Basin, Southern Oklahoma and North Texas with our Downstream facilities in Mont Belvieu, Texas.
Segment information / operating pipeline connections · Filed 06/08/2026
Pipeline transportation and fractionation volumes benefited from higher supply volumes primarily from our Permian Gathering and Processing systems and the addition of Train 11 early in the second quarter of 2026.
Segment performance / transportation and fractionation volume drivers · Filed 06/08/2026
In our L&T segment, we commenced operations of our Train 11 fractionator in Mont Belvieu, TX and our Delaware Express NGL Pipeline expansion in the second quarter.
Growth projects update / completed downstream projects · Filed 06/08/2026
Competition for natural gas and crude oil supplies is primarily based on the location and available capacity of gathering and processing facilities, pricing arrangements, reputation, efficiency, flexibility, treating capabilities (as applicable), reliability and access to end-use markets or liquid marketing hubs.
Business / competition for gathering and processing supplies · Filed 19/02/2026
Competition for NGL supplies is primarily based on the proximity of gathering and processing facilities in relation to one or more NGL pipelines, their connectivity to NGL pipeline takeaway options, access to end-use markets or liquid marketing hubs, pricing and contractual arrangements, available capacity, reputation, efficiency, flexibility, and reliability.
Business / competition for NGL pipeline supplies · Filed 19/02/2026
Some of these competitors may expand or construct gathering, processing, storage, terminaling and transportation systems that would create additional competition for the services we provide to our customers.
Risk factors / potential competing infrastructure construction · Filed 15/02/2024
Permian inlet volumes increased more than 450 million cubic feet per day (“MMcf/d”) despite temporary curtailments by certain producer customers in response to negative Waha natural gas prices in the second quarter.
Second-quarter commentary / actual producer curtailments · Filed 06/08/2026
LPG export volumes were reduced by an unplanned outage at a portion of our export facility late in the first quarter, which was resolved early in the second quarter.
First-quarter commentary / export outage and resolution · Filed 07/05/2026
LPG export margin increased due to higher volumes and fees.
Second-quarter commentary / LPG export volumes and fees · Filed 06/08/2026
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The decrease in commodity sales reflected lower natural gas and NGL prices ($1,309.2 million) and the unfavorable impact of hedges ($244.1 million), partially offset by higher NGL, natural gas and condensate volumes ($899.6 million) and higher condensate prices ($70.5 million).
Six-month results / commodity price, volume and hedge effects · Filed 06/08/2026
F-46 The following table shows our consolidated revenues disaggregated by product and service for the periods presented: Year Ended December 31, 2025 2024 2023 Sales of commodities: Revenue recognized from contracts with customers: Natural gas $ 2,035.7 $ 1,241.1 $ 2,421.3 NGL 12,079.8 12,372.5 10,580.2 Condensate and crude oil 448.3 523.6 519.5 14,563.8 14,137.2 13,521.0 Non-customer revenue: Derivative activities - Hedge 90.9 67.8 153.4 Derivative activities - Non-hedge (1) (251.2 ) (313.2 ) 287.7 (160.3 ) (245.4 ) 441.1 Total sales of commodities 14,403.5 13,891.8 13,962.1 Fees from midstream services: Revenue recognized from contracts with customers: Gathering and processing 1,793.2 1,632.8 1,342.8 NGL transportation, fractionation and services 311.6 298.4 261.1 Storage, terminaling and export 496.8 497.9 440.7 Other 23.2 60.6 53.6 Total fees from midstream services 2,624.8 2,489.7 2,098.2 Total revenues $ 17,028.3 $ 16,381.5 $ 16,060.3 (1) Represents derivative activities that are not designated as hedging instruments under ASC 815.
Note 22 / disaggregated service revenue, 2023–2025 · Filed 19/02/2026
Key accomplishments included:
∎ Major project execution – three Permian gathering and processing plants and our LPG debottlenecking project were successfully completed on-time, on-budget and were highly utilized at start-up;
Compensation discussion / reported project completion and startup utilization · Filed 26/03/2026
The following table shows a reconciliation of reportable segment Operating margin to Income (loss) before income taxes for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Reconciliation of reportable segment operating margin to income (loss) before income taxes: Total reportable segments operating margin $ 1,680.9 $ 1,220.0 $ 3,157.7 $ 2,468.9 Other operating margin 103.1 280.5 (7.2 ) 31.7 Depreciation and amortization expense (453.1 ) (373.7 ) (879.1 ) (741.3 ) General and administrative expense (108.1 ) (95.0 ) (215.9 ) (189.5 ) Other operating income (expense) 11.7 1.8 25.9 7.1 Interest expense, net (236.6 ) (218.4 ) (464.2 ) (415.5 ) Equity earnings (loss) 7.8 5.1 16.4 10.6 Other, net (0.8 ) 1.0 (17.4 ) 1.3 Income (loss) before income taxes $ 1,004.9 $ 821.3 $ 1,616.2 $ 1,173.3 28 Item 2.
Segment information / operating margin reconciliation · Filed 06/08/2026
Logistics and Transportation adjusted operating margin consists primarily of: • service fees (including the pass-through of energy costs included in certain fee rates); • system product gains and losses; and • NGL and natural gas sales, less NGL and natural gas purchases, fuel, third-party transportation costs and the net inventory change.
MD&A / service fees and energy-cost pass-through · Filed 06/08/2026
While we have a significant level of margin that we derive from fee-based arrangements across our operations and particularly for our assets in the Downstream Business, our contract mix, along with our commodity hedging program, serves to mitigate the impact of commodity price movements on our cash flows.
MD&A / fee arrangements and commodity hedging · Filed 19/02/2026
LPSC regulations require that common carrier pipelines charge rates that are just and reasonable, and not unreasonably discriminatory.
Regulation / common-carrier rate restrictions · Filed 19/02/2026
In a declining commodity price environment, without taking into account our hedges, we will realize a reduction in cash flows under our percent-of-proceeds contracts proportionate to average price declines.
MD&A / percent-of-proceeds cash-flow exposure · Filed 19/02/2026
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2026 2025 (Unaudited) (In millions) Cash flows from operating activities Net income (loss) $ 1,265.1 $ 917.0 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Amortization in interest expense 10.0 7.9 Compensation on equity grants 41.2 34.7 Depreciation and amortization expense 879.1 741.3 Deferred income tax expense (benefit) 350.3 226.7 Equity (earnings) loss of unconsolidated affiliates (16.4 ) (10.6 ) Distributions of earnings received from unconsolidated affiliates 11.0 7.4 Risk management activities 7.2 (31.7 ) Other, net 18.9 14.0 Changes in operating assets and liabilities, net of acquisitions: Receivables and other assets (392.5 ) 319.8 Inventories 106.4 (105.4 ) Accounts payable, accrued liabilities and other liabilities (131.9 ) (352.5 ) Interest payable 32.4 44.1 Net cash provided by (used in) operating activities 2,180.8 1,812.7 Cash flows from investing activities Outlays for property, plant and equipment (1,909.6 ) (1,698.3 ) Outlays for business acquisition, net of cash acquired (1,266.3 ) — Investments in unconsolidated affiliates (5.9 ) (75.8 ) Return of capital from unconsolidated affiliates 0.9 3.7 Other, net 6.5 0.3 Net cash provided by (used in) investing activities (3,174.4 ) (1,770.1 ) Cash flows from financing activities Debt obligations: Proceeds from borrowings of commercial paper notes 53,736.3 46,656.2 Repayments of commercial paper notes (53,297.0 ) (47,119.7 ) Proceeds from borrowings under accounts receivable securitization facility 1,200.0 870.0 Repayments of accounts receivable securitization facility (749.0 ) (1,200.0 ) Proceeds from issuance of senior unsecured notes 1,498.4 3,490.7 Redemption of senior unsecured notes (687.1 ) — Principal payments of finance leases (52.1 ) (30.2 ) Costs incurred in connection with financing arrangements (15.0 ) (41.3 ) Repurchases of common stock (135.1 ) (449.2 ) Shares tendered for tax withholding obligations (33.6 ) (46.7 ) Distributions to noncontrolling interests (12.3 ) (24.2 ) Repurchase of noncontrolling interests — (1,800.4 ) Dividends paid to common shareholders (488.6 ) (385.6 ) Other, net (5.1 ) (6.4 ) Net cash provided by (used in) financing activities 959.8 (86.8 ) Net change in cash and cash equivalents (33.8 ) (44.2 ) Cash and cash equivalents, beginning of period 166.1 157.3 Cash and cash equivalents, end of period $ 132.3 $ 113.1 See notes to consolidated financial statements 7 TARGA RESOURCES CORP.
Consolidated cash flows / operating cash, investment and financing · Filed 06/08/2026
During the year ended December 31, 2021, we recorded a non-cash pre-tax impairment of $452.3 million.
Fair-value disclosures / realized 2021 impairment · Filed 15/02/2024
On April 26, 2024 as a result of the final determination of Targa’s appeal to the Texas Supreme Court related to the Splitter Agreement, we made a cash payment of $184.8 million to Vitol in satisfaction of the Texas state court judgment.
Contingencies / realized litigation payment · Filed 20/02/2025
| Proxy Statement | 2 0 2 6 A N N U A L M E E T I N G O F S T O C K H O L D E R S 26 ▪ Short-term cash incentives that for 2025 were specifically tied to adjusted EBITDA, adjusted cash flow from operations (CFFO) per share, return on invested capital, operational and commercial performance, sustainability performance and safety performance ▪ Long-term equity incentives that vest over multiple years, promote retention and long-term ownership, and have a meaningful portion tied to relative total shareholder return (TSR) performance A Compelling Growth Profile Over the Last 5 Years Targa’s performance and growth outlook provides strong momentum in 2026 and beyond Note: This graphic contains a non-GAAP measure.
Compensation discussion / implemented 2025 incentive metrics · Filed 26/03/2026
In January 2026, the following shares vested: • 9,479 shares of director grants with no shares withheld to satisfy tax withholding obligations; • 130,113 shares of RSUs with 51,815 shares withheld to satisfy tax withholding obligations; and • 325,284 shares of 2023 PSUs with 124,769 shares withheld to satisfy tax withholding obligations.
Compensation plans / January 2026 equity vesting · Filed 19/02/2026
Targa Resources Corp. | Proxy Statement | 2 0 2 6 A N N U A L M E E T I N G O F S T O C K H O L D E R S 30 Good Governance Foundation The following practices and policies in our executive compensation program promote sound compensation governance and align the interests of our shareholders and executives: What We Do What We Don’t Do Provide majority of NEO compensation in the form of performance-based, at-risk, long-term compensation Use a combination of absolute and relative performance metrics in incentive plans Maintain a comprehensive clawback policy aligned with current industry norms and recent legal requirements Complete an annual compensation risk assessment Maintain executive and director share ownership guidelines Retain an independent consultant to advise the Committee × No employment contracts × No single-trigger change-in-control severance arrangements × No single-trigger change-in-control vesting for NEO equity awards × No excise tax gross-ups × No material perquisites or supplemental benefits not generally available to other employees × No hedging or pledging of Company stock × No executive compensation practices that promote excessive risk Elements of Pay The following principle pay elements support the grounding principles of our program: Element Key Characteristics Guiding Principles Competitiveness Performance Accountability Shareholder Alignment Base Salary ▪ Annual fixed cash compensation ▪ Critical factor in attracting and retaining qualified talent Annual Incentives ▪ Annual variable cash award ▪ Tied to achievement of key financial, operational, and strategic objectives Long-Term Incentives ▪ Equity-based awards vesting over multiple years: – 50% Performance share units (PSUs) – 50% Restricted stock units (RSUs) ▪ Ties a majority of NEO compensation to creation of long-term value and encourages NEOs to build meaningful equity ownership stakes Targa Resources Corp.
Compensation governance / equity mix, ownership guidelines and trading restrictions · Filed 26/03/2026
Our policy provides that incentive-based compensation (cash or equity) paid to our current or former Section 16 officers must be recovered (unless impracticable) in the event of a restatement of the Company’s financial results that would result in such officers receiving erroneously awarded compensation.
Compensation policies / adopted clawback · Filed 26/03/2026
East Driver plant in Permian Midland (the “East Driver plant”), expected to begin operations in the third quarter of 2026.
Business / earlier East Driver startup expectation · Filed 19/02/2026
East Driver plant, a 275 MMcf/d plant in Permian Midland (the “East Driver plant”), commenced operations late in the second quarter of 2026.
Business developments / actual East Driver startup · Filed 06/08/2026
In this context, the Audit Committee: ▪ reviewed and discussed the audited financial statements in our Annual Report on Form 10-K with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements; ▪ reviewed with PricewaterhouseCoopers LLP, our independent auditors, who are responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles, their judgments as to the quality and acceptability of our accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards; ▪ received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence from the Company and its subsidiaries, and has discussed with PricewaterhouseCoopers LLP the firm’s independence; ▪ discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the accounting standards as adopted by the Public Company Accounting Oversight Board; ▪ discussed with the Company’s internal auditors and PricewaterhouseCoopers LLP the overall scope and plans for their respective audits.
Audit Committee report / performed oversight · Filed 26/03/2026
The Compensation Committee is comprised of independent, non-employee members of the Board.
Compensation Committee / actual independence · Filed 26/03/2026
Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval.
Risk factors / preferred-stock issuance authority · Filed 19/02/2026
a classified board of directors, so that only approximately one-third of our directors are elected each year;
Risk factors / classified board · Filed 19/02/2026
The increase in net cash provided by operating activities was primarily due to a decrease in payments for product purchases resulting from lower natural gas and NGL prices, partially offset by lower collections from customers resulting from lower revenues in 2026 compared to 2025, and higher payments for operating costs, hedging activities, and interest on debt.
MD&A / operating cash-flow drivers · Filed 06/08/2026
In addition, customers who are significant producers of natural gas may develop their own gathering, processing, storage, terminaling and transportation systems in lieu of using those operated by us.
Risk factors / potential customer self-supply · Filed 15/02/2024
