Targa's $5B 2026 capex includes three new Permian gas plants backed by ExxonMobil dedications through 2046, locking in long-term volume growth for the midstream gas operator.
Alpha Score of 53 reflects moderate overall profile with strong momentum, poor value, moderate quality, moderate sentiment.
Targa Resources Corp. locked in 20-year fee-based agreements with ExxonMobil covering gathering, processing, treating, NGL transportation and fractionation across the Permian Delaware and Midland basins, the company said Wednesday. The deal adds new acreage dedications in both basins through 2046 and extends existing fee-floor agreements in the Midland.
The agreements feed into Targa's existing infrastructure and projects under construction. Planned expansions will add capacity. CEO Matt Meloy said the company is "excited to meaningfully expand" the relationship. Targa is the largest gatherer and processor in the Permian, Meloy noted.
To handle expected volume growth, Targa approved three new natural gas processing plants in the Permian Delaware: Wrangler, Ranger and a third plant, Ranger II. Combined capacity is about 825 million cubic feet per day. They are expected online in the first half of 2028. The company also plans a 70-mile natural gas pipeline, Bull Run II, connecting the new plants to the Waha hub, with take-or-pay commitments. That pipeline also targets first-half 2028 startup.
Targa said it is evaluating up to five additional processing plants and an additional fractionation train at Mont Belvieu.
Targa raised its fiscal 2026 growth capital estimate to roughly $5.0 billion, incorporating the new plants and associated field capital. The midstream operator carries an AlphaScala Score of 53 out of 100, labeled Mixed.
Meloy said the expanded strategic relationship with ExxonMobil "will meaningfully add to Targa's strong growth rate well into the next decade" and "bolster our outlook for durable and growing adjusted free cash flow."
The new agreements lock in long-term volume for Targa's wellhead-to-water network. The company's existing infrastructure in the Delaware and Midland basins can handle the incremental flows without disproportionate capital strain, the company said.
The three plants and the Bull Run II pipeline are scheduled to begin commercial service in the first half of 2028. For context, peer midstream company Western Midstream recently raised its 2026 EBITDA outlook, reflecting similar growth momentum in the basin.
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