Targa expands ExxonMobil pact with $5B Permian buildout

Targa Resources locked in 20-year fee-based agreements with ExxonMobil across the Permian Basin, adding three processing plants and a new pipeline under a $5 billion 2026 capital plan.

Targa Resources Corp. signed 20-year fee-based midstream agreements with ExxonMobil across the Permian Basin and raised its 2026 growth capital estimate to about $5 billion for three new processing plants and a residue pipeline.

"Our track record has positioned us as an attractive partner, and a provider of exceptional execution and reliability for our producer customers," said Matt Meloy, chief executive officer at Targa. "We expect this expansion of our strategic relationship with ExxonMobil to meaningfully add to Targa's strong growth rate well into the next decade."

The agreements add significant new acreage dedications for integrated gathering, processing, treating, NGL transportation and fractionation through 2046, and extend existing Permian Midland fee-floor agreements to the same horizon. Both basins carry 20-year NGL dedications to Targa's logistics and transportation systems. The three new Permian Delaware plants — Wrangler, Ranger and Ranger II — add about 825 million cubic feet per day of combined capacity, with service targeted for the first half of 2028.

The expansion deepens Targa's position as the largest gatherer and processor in the Permian, where second-quarter volumes reached a record 7.2 billion cubic feet per day, up 14 percent from a year earlier. The company is evaluating up to five additional processing plants and the timing of an extra fractionation train in Mont Belvieu.

Bull Run II adds takeaway to Waha

Targa also announced Bull Run II, a roughly 70-mile natural gas pipeline that will move residue from the new plants to the Waha Hub, backed by take-or-pay commitments and expected to begin operations in the first half of 2028. The pipeline addresses the constrained gas egress that has periodically pushed Waha prices below zero and forced producers to shut in output. During the second quarter, Targa said 200 million to 400 million cubic feet per day of gas was shut in behind its Permian systems on any given day with weak Waha prices, though most price-driven curtailments had returned by July.

Capital plan rises as volumes hit records

The updated $5 billion growth capital estimate for 2026 incorporates the new Delaware plants, incremental field capital and the Bull Run II pipeline, up from the roughly $4.5 billion the company guided in February. Targa reported second-quarter adjusted EBITDA of $1.603 billion, up 38 percent year over year, and now expects full-year 2026 adjusted EBITDA toward the top end of its $5.7 billion to $5.9 billion range. Permian volumes rose about 450 million cubic feet per day quarter over quarter, roughly two plants' worth of gas, while NGL transportation hit a record 1.1 million barrels per day and fractionation reached 1.2 million barrels per day.

The company's downstream buildout continues with Train 11 fractionator online and Trains 12 and 13 on track, the Speedway NGL pipeline expansion slated for the third quarter of 2027, and an LPG export expansion to about 19 million barrels per month also due in the third quarter of 2027. Targa holds a 17.5 percent equity interest in the Blackcomb and Traverse natural gas pipelines, which are on track for the fourth quarter of 2026 and mid-2027 respectively.

The ExxonMobil agreements give Targa long-term visibility for its growth projects at a time when the company is spending heavily to keep pace with producer activity. Targa repurchased about $80 million of stock in the second quarter at an average price of $259.93 per share and declared a quarterly dividend of $1.25, up 25 percent from a year earlier. Its pro forma consolidated leverage ratio stood at about 3.4 times at the end of June, within its 3 to 4 times target range.

This article is for informational purposes only and does not constitute investment advice.