AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 31/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · The pipeline system connects upstream assets to downstream facilities, and actual fractionation and transportation volumes benefit from Permian supply. This demonstrates integration utility. It does not establish superior unit costs, exclusion of rivals or protected local scarcity, so the structural advantage remains mixed.
durability · 2/4 · Installed connections and land-access agreements, some perpetual, support continuity of the infrastructure position. They do not establish durable customer captivity or pricing protection. Potential contract renegotiation or rejection in customer bankruptcy further limits confidence, without demonstrating that such erosion has actually occurred.
customer dependency · 2/4 · Observed movement of Permian supply through connected downstream assets supports customer utility and operational interdependence indirectly. Growth also reflects new processing plants, acquisitions and producer activity. The passages do not establish customers’ alternative routes, switching expenditure or exclusive commitments, preventing a strong dependency assessment.
erosion resilience · 2/4 · Permian inlet volumes increased sequentially despite temporary price-related producer curtailments, while six-month fee-based activity offset lower commodity prices. These are positive resilience outcomes. Expansion and acquisition contributions, actual supply curtailments and an export outage limit attribution to a defensible competitive position through a full cycle.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Higher LPG export fees contributed to six-month export margin alongside higher volumes, providing bounded positive service-pricing evidence. Commodity sales separately faced lower natural gas and NGL prices, with volume and hedge effects explicitly distinguished. The evidence is mixed and does not quantify comparable-service rate increases or isolate mix.
retention · 2/4 · Connected downstream throughput and growing Permian inlet volumes provide indirect evidence of continuing demand. New plants, acquisitions and producer activity also explain growth, so this cannot establish retention of a constant customer cohort. Customer departures, renewals and realized switching friction are not disclosed.
margin resilience · 3/4 · First-quarter Gathering and Processing operating margin increased despite higher operating expenses, and six-month adjusted margin improved despite lower commodity prices. Downstream contributions also increased. Adjusted operating margin excludes operating expenses; volume growth, marketing optimization and expansion explain resilience more clearly than unilateral pricing power.
contractual freedom · 1/4 · The disclosed LPSC framework requires common-carrier rates to be just, reasonable and not unreasonably discriminatory, directly constraining discretion within that scope. The passage is from the filing dated February 15, 2024; current coverage and broader negotiated repricing rights are unspecified. The weak grade applies to the disclosed constraint, not every Targa service.
Predictability82
5 consecutive published 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
- observedAnnualPeriods
- 5.00
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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. 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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; 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. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. 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 · Operating cash generation, substantial capital and acquisition outlays, actual repurchases and additional debt financing show an active but financing-dependent investment program. Completed projects demonstrate deployment outcomes. Acquisition returns and repurchase value are not established, so the evidence supports mixed discipline rather than demonstrated superior capital allocation.
incentive alignment · 3/4 · Implemented 2025 incentives include cash flow per share, return on invested capital and multiyear equity linked partly to relative TSR. Ownership-guideline compliance and an adopted recovery policy support alignment. Unvested RSUs count toward ownership, and the CFO retirement agreement includes service waivers alongside forfeitures, limiting an exceptional assessment.
execution · 3/4 · East Driver started late in the second quarter of 2026 against the earlier third-quarter expectation. Train 11 and Delaware Express also entered operation. These concrete project outcomes support strong execution. An unplanned export outage, subsequently resolved, tempers the record; comprehensive budget performance and realized project returns are absent.
governance · 2/4 · Independent compensation oversight, performed audit review and an adopted recovery policy provide accountability. Actual three-year director elections confirm a classified structure that limits annual board accountability. Shareholders approved compensation on an advisory basis, but that outcome alone does not establish exceptional governance or effectiveness of all safeguards.
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.
2025 Form 10-K, filed 2026-02-19: Business—Logistics and Transportation connections · Filed 19/02/2026
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.
Second-quarter 2026 earnings release, filed 2026-08-06: six-month Logistics and Transportation performance · Filed 06/08/2026
Leases related to land sites and rights of way provide for surface and underground access for gathering, processing and distribution assets that are located on property not owned by us.
2025 Form 10-K, filed 2026-02-19: land-site leases and rights of way · Filed 19/02/2026
These agreements expire at various dates, with varying terms, some of which are perpetual.
2025 Form 10-K, filed 2026-02-19: access-agreement terms · Filed 19/02/2026
The increase in natural gas inlet volumes in the Permian was attributable to the addition of the Pembrook II plant during the third quarter of 2025, the Bull Moose II plant during the fourth quarter of 2025, the Falcon II plant during the first quarter of 2026, the East Pembrook plant during the second quarter of 2026, continued strong producer activity and the acquisition of certain assets in the Permian Basin during the first quarter of 2026.
Second-quarter 2026 earnings release, filed 2026-08-06: year-over-year Permian volume drivers · Filed 06/08/2026
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 2026 earnings release, filed 2026-08-06: sequential Permian volumes and producer curtailments · Filed 06/08/2026
To the extent one or more of our key customers is in financial distress or commences bankruptcy proceedings, contracts with these customers may be subject to renegotiation or rejection under applicable provisions of the United States Bankruptcy Code.
2025 Form 10-K, filed 2026-02-19: customer financial distress and contract rejection risk · Filed 19/02/2026
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The increase in adjusted operating margin was due to higher marketing margin, higher pipeline transportation and fractionation margin and higher LPG export margin.
Second-quarter 2026 earnings release, filed 2026-08-06: six-month downstream adjusted operating margin drivers · Filed 06/08/2026
LPG export margin increased due to higher volumes and fees.
Second-quarter 2026 earnings release, filed 2026-08-06: six-month LPG export margin, 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).
Second-quarter 2026 earnings release, filed 2026-08-06: six-month commodity sales price, volume and hedge bridge · Filed 06/08/2026
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The increase in adjusted operating margin was primarily due to higher natural gas inlet volumes in the Permian which drove higher fee-based margin, partially offset by lower natural gas and NGL prices.
Second-quarter 2026 earnings release, filed 2026-08-06: six-month Gathering and Processing performance · Filed 06/08/2026
2025
(In millions, except operating statistics and price amounts)
Operating margin
$
703.5
$
602.2
$
101.3
17
%
Operating expenses
233.6
208.2
25.4
12
%
Adjusted operating margin
$
937.1
$
810.4
$
126.7
16
%
Operating statistics (1):
Plant natural gas inlet, MMcf/d (2) (3)
Permian Midland (4)
3,153.9
2,985.6
168.3
6
%
Permian Delaware
3,576.1
3,020.3
555.8
18
%
Total Permian
6,730.0
6,005.9
724.1
12
%
Central (5)
1,027.3
984.7
42.6
4
%
Badlands (5) (6)
127.0
136.9
(9.9
)
(7
%)
Coastal
547.1
398.8
148.3
37
%
Total
8,431.4
7,526.3
905.1
12
%
NGL production, MBbl/d (3)
Permian Midland (4)
464.7
429.5
35.2
8
%
Permian Delaware
469.6
366.4
103.2
28
%
Total Permian
934.3
795.9
First-quarter 2026 earnings release, filed 2026-05-07: Gathering and Processing results and operating statistics · Filed 07/05/2026
Adjusted Operating Margin
The Company defines adjusted operating margin for the Company’s segments as revenues less product purchases and fuel.
First-quarter 2026 earnings release, filed 2026-05-07: adjusted operating margin definition · Filed 07/05/2026
The increase in operating expenses was primarily due to higher labor and maintenance costs, and taxes in part due to system expansions, partially offset by lower compressor rental costs.
Second-quarter 2026 earnings release, filed 2026-08-06: six-month operating expense drivers · Filed 06/08/2026
LPSC regulations require that common carrier pipelines charge rates that are just and reasonable and not unreasonably discriminatory.
2023 Form 10-K, filed 2024-02-15: LPSC common-carrier rate regulation · Filed 15/02/2024
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
Second-quarter 2026 Form 10-Q, filed 2026-08-06: operating and investing cash-flow rows · Filed 06/08/2026
Cash Flows from Financing Activities
Six Months Ended June 30,
2026
2025
(In millions)
Source of Financing Activities, net
Debt, including financing costs
$
1,634.5
$
2,625.7
Repurchase of noncontrolling interests
—
(1,800.4
)
Dividends paid to common shareholders
(488.6
)
(385.6
)
Contributions from (distributions to) noncontrolling interests, net
(12.3
)
(24.2
)
Repurchases of shares and Other, net
(173.8
)
(502.3
)
Net cash provided by (used in) financing activities
$
959.8
$
(86.8
)
The change in net cash provided by (used in) financing activities was due to lower repurchases of noncontrolling interests primarily due to the Badlands Transaction in 2025 and lower repurchases of common stock, partially offset by lower proceeds from debt activity and by higher dividends paid.
Second-quarter 2026 Form 10-Q, filed 2026-08-06: six-month financing cash flows, in millions · Filed 06/08/2026
For the three and six months ended June 30, 2026, we repurchased 308,102 and 535,903 shares of our common stock at a weighted average per share price of $259.93 and $252.07 for a total net cost of $80.1 million and $135.1 million, respectively.
Second-quarter 2026 Form 10-Q, filed 2026-08-06: actual common-share repurchases · Filed 06/08/2026
| 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
2026 proxy, filed 2026-03-26: implemented 2025 incentive metrics and multiyear equity · Filed 26/03/2026
Stock owned directly by an officer or independent director as well as unvested restricted stock units will count for purposes of determining stock ownership levels.
2026 proxy, filed 2026-03-26: ownership-guideline counting rules · Filed 26/03/2026
All NEOs are compliant with our Stock Ownership Guidelines.
2026 proxy, filed 2026-03-26: named executive ownership-guideline compliance · Filed 26/03/2026
In September 2023, our Board adopted an executive incentive compensation recovery policy effective as of October 2023, to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 following implementation of final rules by the NYSE.
2026 proxy, filed 2026-03-26: adopted incentive compensation recovery policy · Filed 26/03/2026
Byers, (i) he will continue to receive his base salary during the Transition Period; (ii) his service requirement will be deemed fulfilled with respect to his outstanding 2024 restricted stock unit (“RSU”) awards, 2024 performance stock unit (“PSU”) awards and 2025 RSU awards and such awards will remain outstanding and settle in accordance with their existing terms; (iii) 2025 PSU awards and all 2026 RSU and PSU awards will be forfeited; and (iv) he will remain eligible to receive a 2026 annual incentive cash award, payable based on his target short-term incentive opportunity and the final corporate performance factor for 2026.
Form 8-K, filed 2026-08-25: CFO retirement agreement, service waivers and forfeitures · Filed 25/08/2026
Growth Projects Update
In our G&P segment, we commenced operations of our new East Driver plant in the Permian Midland late in the second quarter, ahead of schedule.
Second-quarter 2026 earnings release, filed 2026-08-06: East Driver actual startup · Filed 06/08/2026
•
East Driver plant in Permian Midland (the “East Driver plant”), expected to begin operations in the third quarter of 2026.
2025 Form 10-K, filed 2026-02-19: East Driver expected startup · Filed 19/02/2026
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.
Second-quarter 2026 earnings release, filed 2026-08-06: Train 11 and Delaware Express actual startups · 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 2026 earnings release, filed 2026-05-07: export facility outage and resolution · Filed 07/05/2026
Our Board of Directors has determined that each of the members of the Compensation Committee is (i) independent under the NYSE’s rules governing Compensation Committee membership; and (ii) a “non-employee director” under Rule 16b-3 of the Exchange Act.
2026 proxy, filed 2026-03-26: compensation committee independence · Filed 26/03/2026
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;
2026 proxy, filed 2026-03-26: performed audit committee financial-statement review · Filed 26/03/2026
1. Each of the four Class I directors that was up for re-election was elected for a term of three years expiring at the Company’s 2029 Annual Meeting of Stockholders.
Annual-meeting results Form 8-K, filed 2026-05-22: actual three-year director elections · Filed 22/05/2026
The Board proposal seeking approval, on an advisory basis, of the compensation of the Company’s named executive officers was approved.
Annual-meeting results Form 8-K, filed 2026-05-22: actual advisory compensation approval · Filed 22/05/2026
