Targa to Build Three Plants, Pipeline in ExxonMobil Permian Deal

Targa Resources Corp (TRGP) locked in a 20-year fee-based agreement with ExxonMobil (XOM) covering the Permian's Delaware and Midland basins, the company said Tuesday. The deal commits Targa to build three new natural gas processing plants and a pipeline, raising its fiscal 2026 capital spending projection by about $500 million to $5 billion.

The agreements include new and extended acreage dedications. Beyond gathering and processing, they secure natural gas liquids volumes for downstream transportation and fractionation. Targa already works with Exxon in the Permian; the new terms deepen the partnership in the Delaware Basin, where the largest U.S. oil producer has been expanding activity.

Targa will add the Wrangler, Ranger and Ranger II plants in the Delaware Basin. Together they will handle about 825 million cubic feet per day of natural gas. They are scheduled to start in the first half of 2028. A separate project, Bull Run II, is a roughly 70-mile natural gas pipeline that will carry gas from the Delaware Basin to the Waha Hub, also targeting first-half 2028 service. Targa said it is evaluating up to five more processing facilities in the Delaware Basin and timing a new fractionation train at its Mont Belvieu complex.

To fund the buildout, Targa raised its fiscal 2026 net growth capital projection to about $5 billion from roughly $4.5 billion. The 20-year contract length is on the longer end of typical producer agreements, giving Targa unusually strong cash-flow visibility. Fee-based contracts shield midstream companies from commodity price swings, a feature that underpins the sector's appeal for income-focused investors.

Targa is a top-10 holding in the Alerian Energy Infrastructure ETF (ENFR), which tracks the Alerian Midstream Energy Select Index. That index yielded 4.5% as of August 19.

ExxonMobil carries an Alpha Score of 62 out of 100, rated Moderate, within the Energy sector.