Item 1. Financial Statements.

TARGA RESOURCES CORP.

CONSOLIDATED B****ALANCE SHEETS

	September 30, 2024				December 31, 2023
	(Unaudited)
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	127.2			$	141.7
Trade receivables, net of allowances of $2.5 million and $2.5 million at September 30, 2024 and December 31, 2023		1,301.2				1,471.0
Inventories		414.9				371.5
Assets from risk management activities		75.0				111.9
Other current assets		109.9				98.5
Total current assets		2,028.2				2,194.6
Property, plant and equipment, net		17,425.2				15,806.4
Intangible assets, net		2,070.7				2,350.6
Long-term assets from risk management activities		35.3				33.3
Investments in unconsolidated affiliates		177.3				146.3
Other long-term assets		167.1				140.6
Total assets	$	21,903.8			$	20,671.8
LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Accounts payable	$	1,467.9			$	1,574.9
Accrued liabilities		320.7				281.7
Interest payable		113.2				229.6
Liabilities from risk management activities		72.2				54.0
Current debt obligations		653.3				620.7
Total current liabilities		2,627.3				2,760.9
Long-term debt		13,601.4				12,333.2
Long-term liabilities from risk management activities		82.9				16.8
Deferred income taxes, net		793.7				535.8
Other long-term liabilities		340.0				415.1
Contingencies (see Note 12)
Owners’ equity:
Targa Resources Corp. stockholders’ equity:
Common Stock ($0.001 par value, 450,000,000 shares authorized as of September 30, 2024 and December 31, 2023)		0.2				0.2
Issued Outstanding
September 30, 2024 241,697,875 218,328,522
December 31, 2023 240,095,699 222,611,259
Additional paid-in capital		3,106.2				3,058.8
Retained earnings (deficit)		1,004.7				492.0
Accumulated other comprehensive income (loss)		65.1				85.6
Treasury stock, at cost (23,369,353 shares as of September 30, 2024 and 17,484,440 shares as of December 31, 2023)		(1,602.3	)			(896.9	)
Total Targa Resources Corp. stockholders’ equity		2,573.9				2,739.7
Noncontrolling interests		1,884.6				1,870.3
Total owners’ equity		4,458.5				4,610.0
Total liabilities and owners’ equity	$	21,903.8			$	20,671.8

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEM****ENTS OF OPERATIONS

	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
	(Unaudited)
	(In millions, except per share amounts)
Revenues:
Sales of commodities	$	3,217.0			$	3,374.3			$	10,126.2			$	10,314.0
Fees from midstream services		634.8				522.3				1,850.0				1,506.8
Total revenues		3,851.8				3,896.6				11,976.2				11,820.8
Costs and expenses:
Product purchases and fuel		2,365.0				2,690.0				7,780.4				7,777.9
Operating expenses		301.0				277.7				869.7				808.4
Depreciation and amortization expense		355.4				331.3				1,044.5				988.2
General and administrative expense		102.6				90.0				287.4				253.4
Other operating (income) expense		(0.4	)			2.5				(0.7	)			2.0
Income (loss) from operations		728.2				505.1				1,994.9				1,990.9
Other income (expense):
Interest expense, net		(184.9	)			(175.1	)			(589.5	)			(509.8	)
Equity earnings (loss)		2.2				3.0				7.9				6.2
Gain (loss) from financing activities		—				—				(0.8	)			—
Other, net		(0.4	)			(0.1	)			1.1				(4.9	)
Income (loss) before income taxes		545.1				332.9				1,413.6				1,482.4
Income tax (expense) benefit		(97.0	)			(53.9	)			(274.1	)			(260.7	)
Net income (loss)		448.1				279.0				1,139.5				1,221.7
Less: Net income (loss) attributable to noncontrolling interests		60.7				59.0				178.5				175.4
Net income (loss) attributable to Targa Resources Corp.		387.4				220.0				961.0				1,046.3
Premium on repurchase of noncontrolling interests, net of tax		—				—				—				490.7
Net income (loss) attributable to common shareholders	$	387.4			$	220.0			$	961.0			$	555.6
Net income (loss) per common share - basic	$	1.76			$	0.97			$	4.32			$	2.44
Net income (loss) per common share - diluted	$	1.75			$	0.97			$	4.30			$	2.43
Weighted average shares outstanding - basic		219.0				223.8				221.0				225.2
Weighted average shares outstanding - diluted		220.0				225.1				222.0				226.5

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF C****OMPREHENSIVE INCOME (LOSS)

		Three Months Ended September 30,
		2024												2023
		Pre-Tax				Related Income Tax				After Tax				Pre-Tax				Related Income Tax				After Tax
		(Unaudited)
		(In millions)
Net income (loss)										$	448.1											$	279.0
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value		$	99.9			$	(22.9	)			77.0			$	(153.8	)		$	34.9				(118.9	)
Settlements reclassified to revenues			(30.2	)			6.9				(23.3	)			(22.2	)			5.0				(17.2	)
Other comprehensive income (loss)			69.7				(16.0	)			53.7				(176.0	)			39.9				(136.1	)
Comprehensive income (loss)											501.8												142.9
Less: Comprehensive income (loss) attributable to noncontrolling interests											60.7												59.0
Comprehensive income (loss) attributable to Targa Resources Corp.										$	441.1											$	83.9

		Nine Months Ended September 30,
		2024												2023
		Pre-Tax				Related Income Tax				After Tax				Pre-Tax				Related Income Tax				After Tax
		(Unaudited)
		(In millions)
Net income (loss)										$	1,139.5											$	1,221.7
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value		$	32.7			$	(7.5	)			25.2			$	39.6			$	(9.0	)			30.6
Settlements reclassified to revenues			(59.3	)			13.6				(45.7	)			(117.2	)			26.6				(90.6	)
Other comprehensive income (loss)			(26.6	)			6.1				(20.5	)			(77.6	)			17.6				(60.0	)
Comprehensive income (loss)											1,119.0												1,161.7
Less: Comprehensive income (loss) attributable to noncontrolling interests											178.5												175.4
Comprehensive income (loss) attributable to Targa Resources Corp.										$	940.5											$	986.3

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN O****WNERS’ EQUITY

											Retained			Accumulated
								Additional			Earnings			Other			Treasury									Total
		Common Stock						Paid in			(Accumulated			Comprehensive			Shares						Noncontrolling			Owners’
		Shares			Amount			Capital			Deficit)			Income (Loss)			Shares			Amount			Interests			Equity
		(Unaudited)
		(In millions, except shares in thousands)
Balance, June 30, 2024			219,170		$	0.2		$	3,088.5		$	783.9		$	11.4			22,097		$	**(**1,416.5	)	$	1,881.5		$	4,349.0
Compensation on equity grants			—			—			17.7			—			—			—			—			—			17.7
Dividend equivalent rights			—			—			—			(1.0	)		—			—			—			—			(1.0	)
Shares issued under compensation program			431			—			—			—			—			—			—			—			—
Shares tendered for tax withholding obligations			(122	)		—			—			—			—			122			(16.6	)		—			(16.6	)
Repurchases of common stock			(1,150	)		—			—			—			—			1,150			(167.9	)		—			(167.9	)
Excise tax on repurchases of common stock			—			—			—			—			—			—			(1.3	)		—			(1.3	)
Common stock dividends
Dividends - $0.75 per share			—			—			—			(165.6	)		—			—			—			—			(165.6	)
Distributions to noncontrolling interests			—			—			—			—			—			—			—			(60.6	)		(60.6	)
Contributions from noncontrolling interests			—			—			—			—			—			—			—			3.0			3.0
Other comprehensive income (loss)			—			—			—			—			53.7			—			—			—			53.7
Net income (loss)			—			—			—			387.4			—			—			—			60.7			448.1
Balance, September 30, 2024			218,329		$	0.2		$	3,106.2		$	1,004.7		$	65.1			23,369		$	**(**1,602.3	)	$	1,884.6		$	4,458.5

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY

											Retained			Accumulated
								Additional			Earnings			Other			Treasury									Total
		Common Stock						Paid in			(Accumulated			Comprehensive			Shares						Noncontrolling			Owners’
		Shares			Amount			Capital			Deficit)			Income (Loss)			Shares			Amount			Interests			Equity
		(Unaudited)
		(In millions, except shares in thousands)
Balance, June 30, 2023			224,052		$	0.2		$	3,045.8		$	199.5		$	130.8			15,160		$	**(**701.1	)	$	1,865.0		$	4,540.2
Compensation on equity grants			—			—			15.7			—			—			—			—			—			15.7
Dividend equivalent rights			—			—			—			(0.9	)		—			—			—			—			(0.9	)
Shares issued under compensation program			876			—			—			—			—			—			—			—			—
Shares tendered for tax withholding obligations			(263	)		—			—			—			—			263			(21.6	)		—			(21.6	)
Repurchases of common stock			(1,584	)		—			—			—			—			1,584			(132.0	)		—			(132.0	)
Excise tax on repurchases of common stock			—			—			—			—			—			—			(1.1	)		—			(1.1	)
Common stock dividends
Dividends - $0.50 per share			—			—			—			(113.1	)		—			—			—			—			(113.1	)
Distributions to noncontrolling interests			—			—			—			—			—			—			—			(56.5	)		(56.5	)
Contributions from noncontrolling interests			—			—			—			—			—			—			—			4.2			4.2
Other comprehensive income (loss)			—			—			—			—			(136.1	)		—			—			—			(136.1	)
Net income (loss)			—			—			—			220.0			—			—			—			59.0			279.0
Balance, September 30, 2023			223,081		$	0.2		$	3,061.5		$	305.5		$	**(**5.3	)		17,007		$	**(**855.8	)	$	1,871.7		$	4,377.8

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY

											Retained			Accumulated
								Additional			Earnings			Other			Treasury									Total
		Common Stock						Paid in			(Accumulated			Comprehensive			Shares						Noncontrolling			Owners’
		Shares			Amount			Capital			Deficit)			Income (Loss)			Shares			Amount			Interests			Equity
		(Unaudited)
		(In millions, except shares in thousands)
Balance, December 31, 2023			222,611		$	0.2		$	3,058.8		$	492.0		$	85.6			17,484		$	**(**896.9	)	$	1,870.3		$	4,610.0
Compensation on equity grants			—			—			47.4			—			—			—			—			—			47.4
Dividend equivalent rights			—			—			—			(2.8	)		—			—			—			—			(2.8	)
Shares issued under compensation program			1,603			—			—			—			—			—			—			—			—
Shares tendered for tax withholding obligations			(563	)		—			—			—			—			563			(53.3	)		—			(53.3	)
Repurchases of common stock			(5,322	)		—			—			—			—			5,322			(646.7	)		—			(646.7	)
Excise tax on repurchases of common stock			—			—			—			—			—			—			(5.4	)		—			(5.4	)
Common stock dividends
Dividends - $2.00 per share			—			—			—			(445.5	)		—			—			—			—			(445.5	)
Distributions to noncontrolling interests			—			—			—			—			—			—			—			(173.2	)		(173.2	)
Contributions from noncontrolling interests			—			—			—			—			—			—			—			9.0			9.0
Other comprehensive income (loss)			—			—			—			—			(20.5	)		—			—			—			(20.5	)
Net income (loss)			—			—			—			961.0			—			—			—			178.5			1,139.5
Balance, September 30, 2024			218,329		$	0.2		$	3,106.2		$	1,004.7		$	65.1			23,369		$	**(**1,602.3	)	$	1,884.6		$	4,458.5

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY

											Retained			Accumulated
								Additional			Earnings			Other			Treasury									Total
		Common Stock						Paid in			(Accumulated			Comprehensive			Shares						Noncontrolling			Owners’
		Shares			Amount			Capital			Deficit)			Income (Loss)			Shares			Amount			Interests			Equity
		(Unaudited)
		(In millions, except shares in thousands)
Balance, December 31, 2022			226,042		$	0.2		$	3,702.3		$	**(**626.8	)	$	54.7			11,897		$	**(**464.7	)	$	2,316.5		$	4,982.2
Compensation on equity grants			—			—			45.7			—			—			—			—			—			45.7
Dividend equivalent rights			—			—			(2.3	)		(0.9	)		—			—			—			—			(3.2	)
Shares issued under compensation program			2,149			—			—			—			—			—			—			—			—
Shares tendered for tax withholding obligations			(714	)		—			—			—			—			714			(55.4	)		—			(55.4	)
Repurchases of common stock			(4,396	)		—			—			—			—			4,396			(333.1	)		—			(333.1	)
Excise tax on repurchases of common stock			—			—			—			—			—			—			(2.6	)		—			(2.6	)
Common stock dividends
Dividends - $1.35 per share			—			—			—			(306.6	)		—			—			—			—			(306.6	)
Dividends in excess of retained earnings			—			—			(193.5	)		193.5			—			—			—			—			—
Distributions to noncontrolling interests			—			—			—			—			—			—			—			(170.0	)		(170.0	)
Contributions from noncontrolling interests			—			—			—			—			—			—			—			7.1			7.1
Repurchase of noncontrolling interests, net of tax			—			—			(490.7	)		—			—			—			—			(457.3	)		(948.0	)
Other comprehensive income (loss)			—			—			—			—			(60.0	)		—			—			—			(60.0	)
Net income (loss)			—			—			—			1,046.3			—			—			—			175.4			1,221.7
Balance, September 30, 2023			223,081		$	0.2		$	3,061.5		$	305.5		$	**(**5.3	)		17,007		$	**(**855.8	)	$	1,871.7		$	4,377.8

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

CONSOLIDATED STATEM****ENTS OF CASH FLOWS

		Nine Months Ended September 30,
		2024				2023
		(Unaudited)
		(In millions)
Cash flows from operating activities
Net income (loss)		$	1,139.5			$	1,221.7
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization in interest expense			10.9				9.8
Compensation on equity grants			47.4				45.7
Depreciation and amortization expense			1,044.5				988.2
(Gain) loss on sale or disposition of assets			(2.7	)			(3.9	)
Write-downs of assets			4.0				6.0
Accretion of asset retirement obligations			4.2				4.5
Deferred income tax expense (benefit)			264.1				252.1
Equity (earnings) loss of unconsolidated affiliates			(7.9	)			(6.2	)
Distributions of earnings received from unconsolidated affiliates			15.2				9.6
Risk management activities			86.3				(294.3	)
(Gain) loss from financing activities			0.8				—
Changes in operating assets and liabilities, net of acquisitions:
Receivables and other assets			239.4				197.2
Inventories			(47.2	)			(134.1	)
Accounts payable, accrued liabilities and other liabilities			(360.3	)			30.6
Interest payable			(116.4	)			(73.0	)
Net cash provided by operating activities			2,321.8				2,253.9
Cash flows from investing activities
Outlays for property, plant and equipment			(2,238.9	)			(1,665.4	)
Proceeds from sale of assets			2.9				2.9
Investments in unconsolidated affiliates			(39.8	)			(14.9	)
Return of capital from unconsolidated affiliates			1.4				4.5
Other, net			(0.6	)			(0.9	)
Net cash used in investing activities			(2,275.0	)			(1,673.8	)
Cash flows from financing activities
Debt obligations:
Repayments of credit facilities			—				(290.0	)
Proceeds from borrowings of commercial paper notes			59,651.0				47,077.8
Repayments of commercial paper notes			(58,875.0	)			(46,936.5	)
Repayment of term loan facility			(500.0	)			—
Proceeds from borrowings under accounts receivable securitization facility			775.0				103.1
Repayments of accounts receivable securitization facility			(750.0	)			(343.1	)
Proceeds from issuance of senior notes			999.4				1,717.0
Principal payments of finance leases			(36.2	)			(31.3	)
Costs incurred in connection with financing arrangements			(9.9	)			(5.0	)
Repurchase of shares			(700.0	)			(388.5	)
Contributions from noncontrolling interests			9.0				7.1
Distributions to noncontrolling interests			(172.7	)			(163.5	)
Repurchase of noncontrolling interests			(1.3	)			(1,091.9	)
Dividends paid to common shareholders			(450.6	)			(314.8	)
Net cash used in financing activities			(61.3	)			(659.6	)
Net change in cash and cash equivalents			(14.5	)			(79.5	)
Cash and cash equivalents, beginning of period			141.7				219.0
Cash and cash equivalents, end of period		$	127.2			$	139.5

See notes to consolidated financial statements.

TARGA RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Except as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in millions of dollars.

Note 1 — Organizati****on and Operations

Our Organization

Targa Resources Corp. (NYSE: TRGP) is a publicly traded Delaware corporation formed in October 2005. Targa is a leading provider of midstream services and is one of the largest independent infrastructure companies in North America. We own, operate, acquire, and develop a diversified portfolio of complementary domestic midstream infrastructure assets.

In this Quarterly Report, unless the context requires otherwise, references to “we,” “us,” “our,” “the Company,” “Targa” or “TRGP” are intended to mean our consolidated business and operations. TRGP controls the general partner of and owns all of the outstanding common units representing limited partner interests in Targa Resources Partners LP, referred to herein as the “Partnership”. Targa consolidates the Partnership and its subsidiaries under GAAP, and the accompanying consolidated financial statements have been prepared under the rules and regulations of the SEC. Targa’s consolidated financial statements include differences from the consolidated financial statements of the Partnership. The most noteworthy differences are:

the inclusion of the TRGP senior revolving credit facility and term loan facility;

the inclusion of the TRGP senior notes;

the inclusion of the TRGP commercial paper notes; and

the impacts of TRGP’s treatment as a corporation for U.S. federal income tax purposes.

Our Operations

The Company is primarily engaged in the business of:

gathering, compressing, treating, processing, transporting, and purchasing and selling natural gas;

transporting, storing, fractionating, treating, and purchasing and selling NGLs and NGL products, including services to LPG exporters; and

gathering, storing, terminaling, and purchasing and selling crude oil.

See Note 16 – Segment Information for certain financial information regarding our business segments.

Note 2 — Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by GAAP. Therefore, this information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report. The information furnished herein reflects all adjustments that are, in the opinion of management, of a normal recurring nature and considered necessary for a fair statement of the results of the interim periods reported. All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Note 3 — Significant Accounting Policies

The accounting policies that we follow are set forth in Note 3 – Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Annual Report. Other than the updates noted below, there were no significant updates or revisions to our accounting policies during the nine months ended September 30, 2024.

Recently issued accounting pronouncements not yet adopted

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss. Additionally, the amendments require annual disclosure of the title and position of the CODM and how that individual uses the reported measure(s) of segment profit or loss in assessing segment performance and how to allocate resources.

These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The disclosures required in the amendments apply retrospectively to all prior periods presented in the financial statements. We are evaluating the effect of the amendments on our notes to consolidated financial statements and expect to disclose the required information for fiscal years beginning in the Annual Report on Form 10-K for the year ended December 31, 2024 and for interim periods beginning in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. The impact of the adoption will be limited to disclosure in the notes to consolidated financial statements.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, (i) specific categories of income taxes in the rate reconciliation, and (ii) a disaggregation of income taxes paid by federal, state, and foreign taxes.

These amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied prospectively with retrospective application permitted. We are evaluating the effect of the amendments on our notes to consolidated financial statements and expect to disclose the required information beginning in the Annual Report on Form 10-K for the year ended December 31, 2025. The impact of the adoption will be limited to disclosure in the notes to consolidated financial statements.

Disaggregation - Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Comprehensive income (Topic 220): Disaggregation of Income Statement Expenses. The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, in tabular format in the footnotes to the financial statements, disaggregated information about specific categories underlying certain income statement expense line items that contain any of the following expense categories (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization, and (v) depletion. Additionally, the amendments require disclosure of the total amount of selling expenses and an annual disclosure of the definition of selling expenses.

These amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosures may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. We are evaluating the effect of the amendments on our notes to consolidated financial statements and expect to disclose the required information for fiscal years beginning in the Annual Report on Form 10-K for the year ended December 31, 2027 and for interim periods beginning in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2028. The impact of the adoption will be limited to disclosure in the notes to consolidated financial statements.

Note 4 — J****oint Ventures and Acquisitions

In January 2023, we completed the acquisition of Blackstone Energy Partners’ 25% interest in the Grand Prix Joint Venture (the “Grand Prix Transaction”) for aggregate consideration of $1.05 billion in cash and a final closing adjustment of $41.9 million. Following the closing of the Grand Prix Transaction, we own 100% of the interest in Grand Prix. The change in our ownership interests was accounted for as an equity transaction representing the acquisition of noncontrolling interests. The amount of the redemption price in excess of the carrying amount, net of tax, was $490.7 million, which was accounted for as a premium on repurchase of noncontrolling interests, and resulted in a reduction to Net income (loss) attributable to common shareholders.

On July 31, 2024, we entered into an agreement with the WPC Joint Venture (“WPC”) to move forward with the Blackcomb Pipeline (“Blackcomb”). Blackcomb is designed to transport up to 2.5 Bcf/d of natural gas through approximately 365 miles of 42-inch pipeline from the Permian Basin in West Texas to the Agua Dulce area in South Texas, and is expected to be in service in the second half of 2026, pending the receipt of customary regulatory and other approvals. Blackcomb is a joint venture owned 70.0% by WPC, 17.5% by Targa, and 12.5% by MPLX LP. WPC is a joint venture owned 50.6% by WhiteWater, 30.4% by MPLX LP, and 19.0% by Enbridge Inc. We apply the equity method of accounting for Blackcomb. During the third quarter of 2024, we made an initial capital contribution of $12.8 million to Blackcomb.

Note 5 — Property, Plant and Equipment and Intangible Assets

		September 30, 2024				December 31, 2023				Estimated Useful Lives (In Years)
Gathering systems		$	11,333.2			$	10,858.3			5 to 20
Processing and fractionation facilities			8,898.0				8,285.5			5 to 25
Terminaling and storage facilities			1,454.5				1,403.9			5 to 25
Transportation assets			4,093.6				3,294.0			10 to 50
Other property, plant and equipment			480.7				430.5			3 to 50
Land			187.0				185.0			—
Construction in progress			1,803.9				1,456.1			—
Finance lease right-of-use assets			381.5				351.9			5 to 14
Property, plant and equipment			28,632.4				26,265.2
Accumulated depreciation, amortization and impairment			(11,207.2	)			(10,458.8	)
Property, plant and equipment, net		$	17,425.2			$	15,806.4
Intangible assets			4,378.0				4,378.0			10 to 20
Accumulated amortization and impairment			(2,307.3	)			(2,027.4	)
Intangible assets, net		$	2,070.7			$	2,350.6

During the three and nine months ended September 30, 2024, depreciation expense was $262.1 million and $764.6 million, respectively. During the three and nine months ended September 30, 2023, depreciation expense was $235.3 million and $700.2 million, respectively.

Intangible Assets

Intangible assets consist of customer contracts and customer relationships acquired in prior business combinations. The fair values of these acquired intangible assets were determined at the dates of acquisition based on the present values of estimated future cash flows. Amortization expense attributable to these assets is recorded over the periods in which we benefit from services provided to customers.

During the three and nine months ended September 30, 2024, amortization expense was $93.3 million and $279.9 million, respectively. During the three and nine months ended September 30, 2023, amortization expense was $96.0 million and $288.0 million, respectively.

The estimated annual amortization expense for intangible assets is approximately $373.2 million, $326.0 million, $279.8 million, $252.2 million and $234.0 million for each of the years 2024 through 2028, respectively.

Note 6 — De****bt Obligations

		September 30, 2024				December 31, 2023
Current:
Partnership accounts receivable securitization facility, due August 2025 (1)		$	600.0			$	575.0
Finance lease liabilities			53.3				45.7
Current debt obligations			653.3				620.7
Long-term:
Term loan facility, variable rate, due July 2025 (2)			—				500.0
TRGP senior revolving credit facility, variable rate, due February 2027 (3)			951.0				175.0
Senior unsecured notes issued by TRGP:
5.200% fixed rate, due July 2027			750.0				750.0
6.150% fixed rate, due March 2029			1,000.0				1,000.0
4.200% fixed rate, due February 2033			750.0				750.0
6.125% fixed rate, due March 2033			900.0				900.0
6.500% fixed rate, due March 2034			1,000.0				1,000.0
5.500% fixed rate, due February 2035			1,000.0				—
4.950% fixed rate, due April 2052			750.0				750.0
6.250% fixed rate, due July 2052			500.0				500.0
6.500% fixed rate, due February 2053			850.0				850.0
Unamortized discount			(29.7	)			(29.5	)
Senior unsecured notes issued by the Partnership: (4)
6.500% fixed rate, due July 2027			705.2				705.2
5.000% fixed rate, due January 2028			700.3				700.3
6.875% fixed rate, due January 2029			679.3				679.3
5.500% fixed rate, due March 2030			949.6				949.6
4.875% fixed rate, due February 2031			1,000.0				1,000.0
4.000% fixed rate, due January 2032			1,000.0				1,000.0
			13,455.7				12,179.9
Debt issuance costs, net of amortization			(91.6	)			(90.8	)
Finance lease liabilities			237.3				244.1
Long-term debt			13,601.4				12,333.2
Total debt obligations		$	14,254.7			$	12,953.9
Irrevocable standby letters of credit: (3)
Letters of credit outstanding under the TRGP senior revolving credit facility		$	15.5			$	22.3

(1)

In August 2024, the Partnership amended its $600.0 million accounts receivable securitization facility (the “Securitization Facility”) to extend the termination date of the Securitization Facility to August 29, 2025. As of September 30, 2024, the Partnership had $600.0 million of qualifying receivables under the Securitization Facility, resulting in no availability.

(2)

On May 21, 2024, we repaid the remaining balance and subsequently terminated the $1.5 billion unsecured term loan facility due July 2025 (“Term Loan Facility”). As a result of the repayment, we recorded a loss due to debt extinguishment of $0.8 million.

(3)

We maintain an unsecured commercial paper note program (the “Commercial Paper Program”), the borrowings of which are supported through maintaining a minimum available borrowing capacity under our $2.75 billion TRGP senior revolving credit facility (the “TRGP Revolver”) equal to the aggregate amount outstanding under the Commercial Paper Program. As of September 30, 2024, the TRGP Revolver had no borrowings outstanding and the Commercial Paper Program had $951.0 million borrowings outstanding, resulting in approximately $1.8 billion of available liquidity, after accounting for outstanding letters of credit.

(4)

We guarantee all of the Partnership’s outstanding senior unsecured notes.

The following table shows the range of interest rates and weighted average interest rate incurred on our variable-rate debt obligations during the nine months ended September 30, 2024:

		Range of Interest Rates Incurred		Weighted Average Interest Rate Incurred
TRGP Revolver and Commercial Paper Program		5.4% - 6.2%		6.0%
Securitization Facility		5.7% - 6.4%		6.2%
Term Loan Facility		6.7% - 6.8%		6.7%

Compliance with Debt Covenants

As of September 30, 2024, we were in compliance with the covenants contained in our various debt agreements.

Senior Unsecured Notes Issuance

In August 2024, we completed an underwritten public offering of $1.0 billion aggregate principal amount of our 5.500% Senior Notes due 2035 (the “5.500% Notes”), resulting in net proceeds of approximately $990.1 million. The 5.500% Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by our subsidiaries that guarantee the TRGP Revolver, so long as such subsidiary guarantors satisfy certain conditions. The 5.500% Notes were issued pursuant to the Indenture, dated as of April 6, 2022, as supplemented by that certain Ninth Supplemental Indenture, dated as of August 9, 2024, among us, each subsidiary guarantor and U.S. Bank Trust Company, National Association, as trustee. We used the net proceeds from the issuance to repay borrowings under the Commercial Paper Program, a portion of which were incurred to repay the remaining balance under the Term Loan Facility, and for general corporate purposes.

Note 7 — Other Long-term Liabilities

Other long-term liabilities are comprised of the following:

		September 30, 2024				December 31, 2023
Deferred revenue		$	119.3			$	248.8
Asset retirement obligations			135.5				103.0
Operating lease liabilities			80.9				56.5
Other liabilities			4.3				6.8
Total other long-term liabilities		$	340.0			$	415.1

Deferred Revenue

We have certain long-term contractual arrangements for which we have received consideration that we are not yet able to recognize as revenue. The resulting deferred revenue will be recognized once all conditions for revenue recognition have been met.

Deferred revenue as of September 30, 2024 and December 31, 2023, was $119.3 million and $248.8 million, respectively. Deferred revenue as of December 31, 2023 included $129.0 million in payments received from Vitol Americas Corp. (“Vitol”) (formerly known as Noble Americas Corp.), a subsidiary of Vitol US Holding Co., in 2016, 2017, and 2018 as part of an agreement (the “Splitter Agreement”) related to the construction and operation of a crude oil and condensate splitter. In December 2018, Vitol elected to terminate the Splitter Agreement. As a result of a legal ruling in April 2024, the $129.0 million in payments from Vitol were reclassified to Accrued liabilities on our Consolidated Balance Sheets during the first quarter of 2024. On April 26, 2024, we made a cash payment of $184.8 million which included cumulative interest on the award of $55.8 million to Vitol in satisfaction of the Texas state court judgment. See Note 12 – Contingencies for further details.

Deferred revenue includes nonmonetary consideration received in a 2015 amendment to a gas gathering and processing agreement and consideration received for other construction activities of facilities connected to our systems. Deferred revenue also includes contributions in aid of construction received from customers for which revenue is recognized over the expected contract term.

The following table shows the components of deferred revenue:

		September 30, 2024				December 31, 2023
Contributions in aid of construction		$	89.3			$	86.4
Gas contract amendment			28.0				29.8
Splitter agreement			—				129.0
Other			2.0				3.6
Total deferred revenue		$	119.3			$	248.8

The following table shows the changes in deferred revenue:

Balance at December 31, 2023		$	248.8
Additions			13.9
Reclassification to accrued liabilities			(129.0	)
Revenue recognized			(14.4	)
Balance at September 30, 2024		$	119.3

Note 8 — Common Sto****ck and Related Matters

Common Share Repurchase Program

In October 2020, our Board of Directors approved a share repurchase program (the “2020 Share Repurchase Program”) for the repurchase of up to $500.0 million of our outstanding common stock. During the second quarter of 2023, we exhausted the 2020 Share Repurchase Program.

In May 2023, our Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”) for the repurchase of up to $1.0 billion of our outstanding common stock. In July 2024, our Board of Directors approved a new share repurchase program (the “2024 Share Repurchase Program” and, together with the 2023 Share Repurchase Program, the “Share Repurchase Programs”) for the repurchase of up to $1.0 billion of our outstanding common stock. The amount authorized under the 2024 Share Repurchase Program was in addition to the amount remaining under the 2023 Share Repurchase Program. We are not obligated to repurchase any specific dollar amount or number of shares under the Share Repurchase Programs and may discontinue these programs at any time.

For the three and nine months ended September 30, 2024, we repurchased 1,150,107 shares and 5,322,367 shares of our common stock at a weighted average per share price of $146.02 and $121.50 for a total net cost of $167.9 million and $646.7 million, respectively. For the three and nine months ended September 30, 2023, we repurchased 1,583,317 shares and 4,395,519 shares of our common stock at a weighted average per share price of $83.38 and $75.77 for a total net cost of $132.0 million and $333.1 million, respectively.

As of September 30, 2024, there was $1.1 billion remaining under the Share Repurchase Programs.

Common Stock Dividends

In April 2024, we declared an increase to our common dividend to $0.75 per common share, or $3.00 per common share annualized effective for the first quarter of 2024.

The following table details the dividends declared and/or paid by us to common shareholders for the nine months ended September 30, 2024:

Three Months Ended		Date Paid or To Be Paid		Total Common Dividends Declared				Amount of Common Dividends Paid or To Be Paid				Dividends on Share-Based Awards				Dividends Declared per Share of Common Stock
(In millions, except per share amounts)
September 30, 2024		November 15, 2024		$	165.2			$	163.5			$	1.7			$	0.75000
June 30, 2024		August 15, 2024			166.1				164.3				1.8				0.75000
March 31, 2024		May 15, 2024			168.1				166.3				1.8				0.75000
December 31, 2023		February 15, 2024			112.8				111.6				1.2				0.50000

Note 9 — Earnings per Common Share

In March 2023, the Compensation Committee amended the Restricted Stock Units Grant Agreements that govern the Restricted Stock Unit awards (“RSUs”) that vest no later than three years following the RSUs’ grant date. The amendment resulted in quarterly cash dividend payments to RSU holders beginning with the common stock dividend paid in May 2023. As the amended RSUs and certain four-year retention awards participate in nonforfeitable dividends with the common equity owners of the Company, they are considered participating securities.

We calculate earnings per share using the two-class method. Earnings are allocated to common stock and participating securities based on the amount of dividends paid in the current period plus an allocation of the undistributed earnings to the extent that each security participates in earnings.

The following table sets forth a reconciliation of net income and weighted average shares outstanding used in computing basic and diluted net income per common share:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
		(In millions, except per share amounts)
Net income (loss) attributable to Targa Resources Corp.		$	387.4			$	220.0			$	961.0			$	1,046.3
Less: Premium on repurchase of noncontrolling interests, net of tax (1)			—				—				—				490.7
Net income (loss) attributable to common shareholders			387.4				220.0				961.0				555.6
Less: Participating share-based earnings (2)			2.9				2.2				7.4				5.1
Net income (loss) allocated to common shareholders for basic earnings per share		$	384.5			$	217.8			$	953.6			$	550.5
Weighted average shares outstanding - basic			219.0				223.8				221.0				225.2
Dilutive effect of unvested stock awards			1.0				1.3				1.0				1.3
Weighted average shares outstanding - diluted			220.0				225.1				222.0				226.5
Net income (loss) available per common share - basic		$	1.76			$	0.97			$	4.32			$	2.44
Net income (loss) available per common share - diluted		$	1.75			$	0.97			$	4.30			$	2.43

(1)

Represents premium paid on the Grand Prix Transaction. See Note 4 – Joint Ventures and Acquisitions.

(2)

Represents the distributed and undistributed earnings of the Company attributable to the participating securities. The dilutive effect of the reallocation of participating securities to diluted net income attributable to common shareholders was immaterial.

The following potential common stock equivalents are excluded from the determination of diluted earnings per share because the inclusion of such shares would have been anti-dilutive (in millions on a weighted-average basis):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Unvested restricted stock awards			1.0				1.4				1.2				1.6

Note 10 — Derivative Instru****ments and Hedging Activities

The primary purpose of our commodity risk management activities is to manage our exposure to commodity price risk and reduce volatility in our operating cash flow due to fluctuations in commodity prices. We have entered into derivative instruments to hedge the commodity price risks associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from percent-of-proceeds processing arrangements, (ii) future commodity purchases and sales in our Logistics and Transportation segment and (iii) natural gas transportation basis risk in our Logistics and Transportation segment. The hedge positions associated with (i) and (ii) above will move favorably in periods of falling commodity prices and unfavorably in periods of rising commodity prices and are primarily designated as cash flow hedges for accounting purposes.

The hedges generally match the NGL product composition and the NGL delivery points of our physical equity volumes. Our natural gas hedges are a mixture of specific gas delivery points and Henry Hub. The NGL hedges may be transacted as specific NGL hedges or as baskets of ethane, propane, normal butane, isobutane and natural gasoline based upon our expected equity NGL composition. We believe this approach avoids uncorrelated risks resulting from employing hedges on crude oil or other petroleum products as “proxy” hedges of NGL prices. Our natural gas and NGL hedges are settled using published index prices for delivery at various locations.

We hedge a portion of our condensate equity volumes using crude oil hedges that are based on the NYMEX futures contracts for West Texas Intermediate light, sweet crude, which approximates the prices received for condensate. This exposes us to a market differential risk if the NYMEX futures do not move in exact parity with the sales price of our underlying condensate equity volumes.

We also enter into derivative instruments to help manage other short-term commodity-related business risks and take advantage of market opportunities. We have not designated these derivatives as hedges and record changes in fair value and cash settlements to revenues as current income.

At September 30, 2024, the notional volumes of our commodity derivative contracts were:

Commodity	Instrument	Unit	2024			2025			2026			2027			2028
Natural Gas	Swaps	MMBtu/d		87,760			79,198			77,317			6,301			—
Natural Gas	Basis Swaps	MMBtu/d		673,152			390,014			242,500			188,329			37,500
NGL	Swaps	Bbl/d		39,229			27,964			25,494			1,538			—
NGL	Futures	Bbl/d		48,130			10,953			—			—			—
Condensate	Swaps	Bbl/d		7,097			7,437			7,749			482			—

Our derivative contracts are subject to netting arrangements that permit our contracting subsidiaries to net cash settle offsetting asset and liability positions with the same counterparty within the same Targa entity. The master netting provisions reduced our maximum loss due to counterparty credit risk by $9.7 million as of September 30, 2024. The range of losses attributable to our individual counterparties would be between $0.2 million and $11.2 million, depending on the counterparty in default. We record derivative assets and liabilities on our Consolidated Balance Sheets on a gross basis, without considering the effect of master netting arrangements.

The following schedules reflect the fair value of our derivative instruments and their location on our Consolidated Balance Sheets as well as pro forma reporting assuming that we reported derivatives subject to master netting agreements on a net basis:

				Fair Value as of September 30, 2024								Fair Value as of December 31, 2023
		Balance Sheet		Derivative				Derivative				Derivative				Derivative
		Location		Assets				Liabilities				Assets				Liabilities
Derivatives designated as hedging instruments
Commodity contracts		Current		$	68.3			$	(14.2	)		$	103.5			$	(16.4	)
		Long-term			32.3				(6.2	)			29.0				(3.0	)
Total derivatives designated as hedging instruments				$	100.6			$	(20.4	)		$	132.5			$	(19.4	)
Derivatives not designated as hedging instruments
Commodity contracts		Current		$	6.7			$	(58.0	)		$	8.4			$	(37.6	)
		Long-term			3.0				(76.7	)			4.3				(13.8	)
Total derivatives not designated as hedging instruments				$	9.7			$	(134.7	)		$	12.7			$	(51.4	)
Total current position				$	75.0			$	(72.2	)		$	111.9			$	(54.0	)
Total long-term position					35.3				(82.9	)			33.3				(16.8	)
Total derivatives				$	110.3			$	(155.1	)		$	145.2			$	(70.8	)

The pro forma impact of reporting derivatives on our Consolidated Balance Sheets on a net basis is as follows:

			Gross Presentation												Pro Forma Net Presentation
September 30, 2024			Asset				Liability				Collateral				Asset				Liability
Current Position
	Counterparties with offsetting positions or collateral		$	65.6			$	(72.2	)		$	7.5			$	17.9			$	(17.0	)
	Counterparties without offsetting positions - assets			9.4				—				—				9.4				—
	Counterparties without offsetting positions - liabilities			—				—				—				—				—
				75.0				(72.2	)			7.5				27.3				(17.0	)
Long-Term Position
	Counterparties with offsetting positions or collateral			29.9				(80.1	)			10.8				7.3				(46.7	)
	Counterparties without offsetting positions - assets			5.4				—				—				5.4				—
	Counterparties without offsetting positions - liabilities			—				(2.8	)			—				—				(2.8	)
				35.3				(82.9	)			10.8				12.7				(49.5	)
Total Derivatives
	Counterparties with offsetting positions or collateral			95.5				(152.3	)			18.3				25.2				(63.7	)
	Counterparties without offsetting positions - assets			14.8				—				—				14.8				—
	Counterparties without offsetting positions - liabilities			—				(2.8	)			—				—				(2.8	)
			$	110.3			$	(155.1	)		$	18.3			$	40.0			$	(66.5	)
			Gross Presentation												Pro Forma Net Presentation
December 31, 2023			Asset				Liability				Collateral				Asset				Liability
Current Position
	Counterparties with offsetting positions or collateral		$	111.7			$	(54.0	)		$	3.6			$	69.2			$	(7.9	)
	Counterparties without offsetting positions - assets			0.2				—				—				0.2				—
	Counterparties without offsetting positions - liabilities			—				—				—				—				—
				111.9				(54.0	)			3.6				69.4				(7.9	)
Long-Term Position
	Counterparties with offsetting positions or collateral			31.7				(16.8	)			(0.1	)			17.0				(2.2	)
	Counterparties without offsetting positions - assets			1.6				—				—				1.6				—
	Counterparties without offsetting positions - liabilities			—				—				—				—				—
				33.3				(16.8	)			(0.1	)			18.6				(2.2	)
Total Derivatives
	Counterparties with offsetting positions or collateral			143.4				(70.8	)			3.5				86.2				(10.1	)
	Counterparties without offsetting positions - assets			1.8				—				—				1.8				—
	Counterparties without offsetting positions - liabilities			—				—				—				—				—
			$	145.2			$	(70.8	)		$	3.5			$	88.0			$	(10.1	)

Some of our hedges are futures contracts executed through brokers that clear the hedges through an exchange. We maintain a margin deposit with the brokers in an amount sufficient to cover the fair value of our open futures positions. The margin deposit is considered collateral, which is located within Other current assets on our Consolidated Balance Sheets and is not offset against the fair value of our derivative instruments. Our derivative instruments other than our futures contracts are executed under International Swaps and Derivatives Association agreements (“ISDAs”), which govern the key terms with our counterparties. Our ISDAs contain credit-risk related contingent features. Following the release of the collateral securing our TRGP Revolver, our derivative positions are no longer secured. As of September 30, 2024, we have outstanding net derivative positions that contain credit-risk related contingent features that are in a net liability position of $62.2 million. We have not been required to post any collateral related to these positions due to our credit rating. If our credit rating was to be downgraded one notch below investment grade by both Moody’s Ratings and Standard & Poor’s Financial Services LLC, as defined in our ISDAs, we estimate that as of September 30, 2024, we would not be required to post collateral to any counterparties and that no counterparty could request immediate, full settlement per the terms of our ISDAs.

The fair value of our derivative instruments, depending on the type of instrument, was determined by the use of present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. The estimated fair value of our derivative instruments was a net liability of $44.8 million as of September 30, 2024. The estimated fair value is net of an adjustment for credit risk based on the default probabilities as indicated by market quotes for the counterparties’ credit default swap rates. The credit risk adjustment was immaterial for all periods presented. Our futures contracts that are cleared through an exchange are margined daily and do not require any credit adjustment.

The following tables reflect amounts recorded in Other comprehensive income (loss) (“OCI”) and amounts reclassified from OCI to revenue for the periods indicated:

		Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
Derivatives in Cash Flow		Three Months Ended September 30,								Nine Months Ended September 30,
Hedging Relationships		2024				2023				2024				2023
Commodity contracts		$	99.9			$	(153.8	)		$	32.7			$	39.6

		Gain (Loss) Reclassified from OCI into Income (Effective Portion)
		Three Months Ended September 30,								Nine Months Ended September 30,
Location of Gain (Loss)		2024				2023				2024				2023
Revenues		$	30.2			$	22.2			$	59.3			$	117.2

Based on valuations as of September 30, 2024, we expect to reclassify commodity hedge-related deferred gains of $76.8 million included in accumulated other comprehensive income (loss) into earnings before income taxes through the end of 2027, with $50.7 million of gains to be reclassified over the next twelve months.

Our consolidated earnings are also affected by the use of the mark-to-market method of accounting for derivative instruments that do not qualify for hedge accounting or that have not been designated as hedges. The changes in fair value of these instruments are recorded on the balance sheet and through earnings rather than being deferred until the anticipated transaction settles. The use of mark-to-market accounting for financial assets and liabilities (“financial instruments”) can cause non-cash earnings volatility due to changes in the underlying commodity price indices. For the three and nine months ended September 30, 2024, the unrealized mark-to-market losses are primarily attributable to unfavorable movements in natural gas forward basis prices, as compared to our positions.

		Location of Gain (Loss)		Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated		Recognized in Income on		Three Months Ended September 30,								Nine Months Ended September 30,
as Hedging Instruments		Derivatives		2024				2023				2024				2023
Commodity contracts		Revenue		$	(64.3	)		$	(7.0	)		$	(185.0	)		$	316.2

See Note 11 – Fair Value Measurements and Note 16 – Segment Information for additional disclosures related to derivative instruments and hedging activities.

Note 11 — Fair V****alue Measurements

Under GAAP, our Consolidated Balance Sheets reflect a mixture of measurement methods for financial instruments. Derivative financial instruments are reported at fair value on our Consolidated Balance Sheets. Other financial instruments are reported at historical cost or amortized cost on our Consolidated Balance Sheets. The following are additional qualitative and quantitative disclosures regarding fair value measurements of financial instruments.

Fair Value of Derivative Financial Instruments

Our derivative instruments consist of financially settled commodity swaps, futures, option contracts and fixed-price forward commodity contracts with certain counterparties. We determine the fair value of our derivative instruments using present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. We have consistently applied these valuation techniques in all periods presented and we believe we have obtained the most accurate information available for the types of derivative instruments we hold.

The fair values of our derivative instruments are sensitive to changes in forward pricing on natural gas, NGLs and crude oil. The derivatives at September 30, 2024, represent a net liability position of $44.8 million, and reflects the present value, adjusted for counterparty credit risk, of the amount we expect to receive or pay in the future on our derivative instruments. If forward pricing on natural gas, NGLs and crude oil were to increase by 10%, the result would be a fair value reflecting a net liability of $197.6 million. If forward pricing on natural gas, NGLs and crude oil were to decrease by 10%, the result would be a fair value reflecting a net asset of $108.1 million.

Fair Value of Other Financial Instruments

Due to their cash or near-cash nature, the carrying value of other financial instruments included in working capital (i.e., cash and cash equivalents, accounts receivable, accounts payable) approximates their fair value. Long-term debt is primarily the other financial instrument for which carrying value could vary significantly from fair value. We determined the supplemental fair value disclosures for our long-term debt as follows:

the TRGP Revolver, commercial paper notes, Securitization Facility and Term Loan Facility are based on carrying value, which approximates fair value as their interest rates are based on prevailing market rates; and

the TRGP senior unsecured notes and the Partnership’s senior unsecured notes are based on quoted market prices derived from trades of the debt.

Fair Value Hierarchy

We categorize the inputs to the fair value measurements of financial assets and liabilities at each balance sheet reporting date using a three-tier fair value hierarchy that prioritizes the significant inputs used in measuring fair value:

Level 1 – observable inputs such as quoted prices in active markets;

Level 2 – inputs other than quoted prices in active markets that we can directly or indirectly observe to the extent that the markets are liquid for the relevant settlement periods; and

Level 3 – unobservable inputs in which little or no market data exists, therefore we must develop our own assumptions.

The following table shows a breakdown by fair value hierarchy category for (i) financial instruments measurements included on our Consolidated Balance Sheets at fair value, and (ii) supplemental fair value disclosures for other financial instruments:

		September 30, 2024
		Carrying				Fair Value
		Value				Total				Level 1				Level 2				Level 3
Financial Instruments Recorded on Our Consolidated Balance Sheets at Fair Value:
Assets from commodity derivative contracts (1)		$	109.6			$	109.6			$	—			$	109.6			$	—
Liabilities from commodity derivative contracts (1)			154.4				154.4				—				154.4				—
Financial Instruments Recorded on Our Consolidated Balance Sheets at Carrying Value:
Cash and cash equivalents			127.2				127.2				—				—				—
TRGP Revolver and Commercial Paper Program			951.0				951.0				—				951.0				—
TRGP Senior unsecured notes			7,470.3				7,777.7				—				7,777.7				—
Partnership’s Senior unsecured notes			5,034.4				5,015.6				—				5,015.6				—
Securitization Facility			600.0				600.0				—				600.0				—

		December 31, 2023
		Carrying				Fair Value
		Value				Total				Level 1				Level 2				Level 3
Financial Instruments Recorded on Our Consolidated Balance Sheets at Fair Value:
Assets from commodity derivative contracts (1)		$	144.6			$	144.6			$	—			$	144.6			$	—
Liabilities from commodity derivative contracts (1)			70.2				70.2				—				70.2				—
Financial Instruments Recorded on Our Consolidated Balance Sheets at Carrying Value:
Cash and cash equivalents			141.7				141.7				—				—				—
TRGP Revolver and Commercial Paper Program			175.0				175.0				—				175.0				—
TRGP Senior unsecured notes			6,470.5				6,598.7				—				6,598.7				—
Term Loan Facility			500.0				500.0				—				500.0				—
Partnership’s Senior unsecured notes			5,034.4				4,945.1				—				4,945.1				—
Securitization Facility			575.0				575.0				—				575.0				—

(1)

The fair value of derivative contracts in this table is presented on a different basis than the Consolidated Balance Sheets presentation as disclosed in Note 10 – Derivative Instruments and Hedging Activities. The above fair values reflect the total value of each derivative contract taken as a whole, whereas the Consolidated Balance Sheets presentation is based on the individual maturity dates of estimated future settlements. As such, an individual contract could have both an asset and liability position when segregated into its current and long-term portions for Consolidated Balance Sheets classification purposes.

Additional Information Regarding Level 3 Fair Value Measurements Included on Our Consolidated Balance Sheets

We have historically reported certain of our swaps and option contracts at fair value using Level 3 inputs due to such derivatives not having observable market prices or implied volatilities for substantially the full term of the derivative asset or liability. For valuations that include both observable and unobservable inputs, if the unobservable input was determined to be significant to the overall inputs, the entire valuation was categorized in Level 3. This included derivatives valued using indicative price quotations whose contract length extends into unobservable periods.

The fair value of these swaps was determined using a discounted cash flow valuation technique based on a commodity forward curve. For these derivatives, the primary input to the valuation model was the commodity forward curve, which was based on observable or public data sources and extrapolated when observable prices were not available.

The significant unobservable inputs used in the fair value measurements of our Level 3 derivatives were the forward natural gas liquids pricing curves, for which a significant portion of the derivative’s term is beyond available forward pricing. As of September 30, 2024 and December 31, 2023, we had no derivative contracts categorized as Level 3.

Note 12 — Contingenci****es

Legal Proceedings

We and the Partnership are parties to various legal, administrative and regulatory proceedings that have arisen in the ordinary course of our business. We and the Partnership are also parties to various proceedings with governmental environmental agencies, including, but not limited to the U.S. Environmental Protection Agency (the “EPA”), Texas Commission on Environmental Quality, Oklahoma Department of Environmental Quality, New Mexico Environment Department, Louisiana Department of Environmental Quality and North Dakota Department of Environmental Quality, which assert monetary sanctions for alleged violations of environmental regulations, including air emissions, discharges into the environment and reporting deficiencies, related to events that have arisen at certain of our facilities in the ordinary course of our business.

On December 26, 2018, Vitol filed a lawsuit in the 80th District Court of Harris County (the “District Court”), Texas against Targa Channelview LLC, then a subsidiary of the Company (“Targa Channelview”), seeking recovery of $129.0 million in payments made to Targa Channelview, additional monetary damages, attorneys’ fees and costs. Vitol alleged that Targa Channelview breached the Splitter Agreement, which provided for Targa Channelview to construct a crude oil and condensate splitter (the “Splitter”) adjacent to a barge dock owned by Targa Channelview to provide services contemplated by the Splitter Agreement. In January 2018, Vitol acquired Noble Americas Corp. and on December 23, 2018, Vitol voluntarily elected to terminate the Splitter Agreement claiming that Targa Channelview failed to timely achieve start-up of the Splitter. Vitol’s lawsuit also alleged Targa Channelview made a series of misrepresentations about the capability of the barge dock that would service crude oil and condensate volumes to be processed by the Splitter and Splitter products. Vitol sought return of $129.0 million in payments made to Targa Channelview prior to the start-up of the Splitter, as well as additional damages. On the same date that Vitol filed its lawsuit, Targa Channelview filed a lawsuit against Vitol seeking a judicial determination that Vitol’s sole and exclusive remedy was Vitol’s voluntarily termination of the Splitter Agreement and, as a result, Vitol was not entitled to the return of any prior payments under the Splitter Agreement or other damages as alleged. Targa also sought recovery of its attorneys’ fees and costs in the lawsuit.

On October 15, 2020, the District Court awarded Vitol $129.0 million (plus interest) following a bench trial. In addition, the District Court awarded Vitol $10.5 million in damages for losses and demurrage on crude oil that Vitol purchased for start-up efforts. The Company appealed the award in the Fourteenth Court of Appeals in Houston, Texas. In October 2020, we sold Targa Channelview but, under the agreements governing the sale, we retained the liabilities associated with the Vitol proceedings. On September 13, 2022, the Fourteenth Court of Appeals upheld the trial court’s judgment in part with regard to the return of Vitol’s prior payments, but modified the judgment to delete Vitol’s ability to recover any damages related to losses or demurrage on crude oil. We filed a petition for review with the Supreme Court of Texas, which was denied on October 20, 2023. We then filed a petition for rehearing with the Supreme Court of Texas, which was denied on April 19, 2024. As a result of the April 2024 ruling, the $129.0 million in payments from Vitol were reclassified from Other long-term liabilities to Accrued liabilities on our Consolidated Balance Sheets during the first quarter of 2024.

The cumulative interest on the award of $55.8 million was recorded in Interest expense, net on our Consolidated Statement of Operations for the nine months ended September 30, 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. See Note 7 – Other Long-term Liabilities.

On July 24, 2023, we received a Notice of Violation (“NOV”) from the New Mexico Environment Department, Air Quality Bureau, relating to alleged air permit violations between August 1, 2021 and June 30, 2022 by Lucid Energy Delaware, LLC, an entity we subsequently acquired in July 2022 and whose assets are now integrated into Targa Northern Delaware LLC, a wholly-owned subsidiary

of the Company. We have been engaging with the New Mexico Environment Department to resolve this matter. Although this matter is ongoing and management cannot predict its ultimate outcome, we do not expect that any expenditures related to this matter will be material to our consolidated financial statements.

On October 26, 2023, we received a final judgment in a lawsuit alleging a breach of contract related to the major winter storm in February 2021. The damages awarded against us are approximately $6.9 million, not including pre-judgment interest. Both parties are appealing the judgment.

We were named as defendants in other breach of contract cases related to force majeure events arising during the major winter storm in February 2021. While it is not possible to predict the total ultimate losses with respect to these cases, we believe that aggregate losses up to $10.0 million are reasonably possible.

In April 2024, we received an NOV from the EPA and a request for the production of documents from the United States Attorney’s Office for North Dakota relating to alleged violations of the Clean Air Act at certain Targa Badlands LLC compressor stations. The NOV and subpoena stem from inspections the EPA conducted at the compressor stations on June 15, 2023, and from subsequent records reviews. We are engaged with the EPA to resolve the NOV. In October 2024, we began negotiations with the U.S. Attorney’s Office with respect to resolution of a single-count information alleging a violation of the Clean Air Act related to untimely installation of monitoring equipment at one compressor station, which carries a maximum fine of $500,000. Although these matters are ongoing, and we cannot predict their ultimate outcome, we do not expect resolution of these matters will be material to our consolidated financial statements.

Note 13 — Revenue

Fixed consideration allocated to remaining performance obligations

The following table presents the estimated minimum revenue related to unsatisfied performance obligations at the end of the reporting period and is comprised of fixed consideration primarily attributable to contracts with minimum volume commitments, for which a guaranteed amount of revenue can be calculated. These contracts are comprised primarily of gathering and processing, fractionation, export, terminaling and storage agreements, with remaining contract terms ranging from 1 to 15 years.

			2024				2025				2026 and after
Fixed consideration to be recognized as of September 30, 2024			$	116.9			$	433.1			$	2,444.8

Based on the optional exemptions that we elected to apply, the amounts presented in the table above exclude remaining performance obligations for (i) variable consideration for which the allocation exception is met and (ii) contracts with an original expected duration of one year or less.

For disclosures related to disaggregated revenue, see Note 16 – Segment Information.

Note 14 — Income Taxes

We record income taxes using an estimated annual effective tax rate and recognize specific events discretely as they occur. Our effective tax rate for the three and nine months ended September 30, 2024 is lower than the U.S. corporate statutory rate of 21% primarily due to income allocated to noncontrolling interests that is not taxable to the Company and stock compensation windfall, partially offset by state income taxes. Our effective tax rate for the three and nine months ended September 30, 2023 was lower than the U.S. corporate statutory rate of 21% primarily due to the release of a portion of our state valuation allowances, stock compensation windfall and income allocated to noncontrolling interests that is not taxable to the Company.

We regularly evaluate the realizable tax benefits of deferred tax assets and record a valuation allowance, if required, based on an estimate of the amount of deferred tax assets that we believe does not meet the more-likely-than-not criteria of being realized. As of September 30, 2024 and December 31, 2023, our valuation allowance was $7.1 million.

We are subject to tax in the U.S. and various state jurisdictions and we are subject to periodic audits and reviews by taxing authorities. As of September 30, 2024, Internal Revenue Service (“IRS”) examinations are currently in process for the 2019, 2020 and 2022 taxable years of certain wholly-owned and consolidated subsidiaries that are treated as partnerships for U.S. federal income tax purposes. We are responding to information requests from the IRS with respect to these audits. We do not expect there to be any audit adjustments that would materially change our taxable income.

The U.S. Department of the Treasury and the IRS have issued guidance on the application of the corporate alternative minimum tax (the “CAMT”), including proposed regulations issued in September 2024, which may be relied upon until final regulations are issued. Based on our interpretation of the Inflation Reduction Act of 2022 (the “IRA”), the CAMT and related guidance, and several operational, economic, accounting and regulatory assumptions, we do not anticipate qualifying as an “applicable corporation” in the near term, but we are likely to become an applicable corporation in a subsequent tax year. If we become an applicable corporation and our CAMT liability is greater than our regular U.S. federal income tax liability for any particular tax year, the CAMT liability would effectively accelerate our future U.S. federal income tax obligations, reducing our cash available for distribution in that year, but provide an offsetting credit against our regular U.S. federal income tax liability for the future. As a result, our current expectation is that the impact of the CAMT is limited to timing differences in future tax years. Given the complexities of the IRA and CAMT, we will continue to monitor and evaluate the potential future impact to our financial statements.

Note 15 — Supplemental Cash Flow Information

	Nine Months Ended September 30,
	2024					2023
Cash:
Interest paid, net of capitalized interest (1)	$		694.9			$		574.1
Income taxes (received) paid, net			9.7					9.5
Non-cash investing activities:
Impact of capital expenditure accruals on property, plant and equipment, net	$		79.4			$		76.8
Non-cash financing activities:
Changes in accrued distributions to noncontrolling interests	$		0.5			$		6.5

(1)

Interest capitalized on major projects was $50.1 million and $29.2 million for the nine months ended September 30, 2024 and 2023.

Note 16 — Segm****ent Information

We operate in two primary segments: (i) Gathering and Processing, and (ii) Logistics and Transportation (also referred to as the Downstream Business). Our reportable segments include operating segments that have been aggregated based on the nature of the products and services provided.

Our Gathering and Processing segment includes assets used in the gathering and/or purchase and sale of natural gas produced from oil and gas wells, removing impurities and processing this raw natural gas into merchantable natural gas by extracting NGLs; and assets used for the gathering and terminaling and/or purchase and sale of crude oil. The Gathering and Processing segment’s assets are located in the Permian Basin of West Texas and Southeast New Mexico (including the Midland, Central and Delaware Basins); the Eagle Ford Shale in South Texas; the Barnett Shale in North Texas; the Anadarko, Ardmore, and Arkoma Basins in Oklahoma (including the SCOOP and STACK) and South Central Kansas; the Williston Basin in North Dakota (including the Bakken and Three Forks plays); and the onshore and near offshore regions of the Louisiana Gulf Coast.

Our Logistics and Transportation segment includes the activities and assets necessary to convert mixed NGLs into NGL products and also includes other assets and value-added services such as transporting, storing, fractionating, terminaling, and marketing of NGLs and NGL products, including services to LPG exporters and certain natural gas supply and marketing activities in support of our other businesses. The Logistics and Transportation segment also includes Grand Prix, which connects our gathering and processing positions in the Permian Basin, Southern Oklahoma and North Texas with our Downstream facilities in Mont Belvieu, Texas. Our Downstream facilities are located predominantly in Mont Belvieu and Galena Park, Texas, and in Lake Charles, Louisiana.

Other contains the unrealized mark-to-market gains/losses related to derivative contracts that were not designated as cash flow hedges. Elimination of inter-segment transactions are reflected in the corporate and eliminations column.

Reportable segment information is shown in the following tables:

		Three Months Ended September 30, 2024
		Gathering and Processing				Logistics and Transportation				Other				Corporate and Eliminations				Total
Revenues
Sales of commodities		$	247.8			$	2,986.9			$	(17.7	)		$	—			$	3,217.0
Fees from midstream services			431.9				202.9				—				—				634.8
			679.7				3,189.8				(17.7	)			—				3,851.8
Intersegment revenues
Sales of commodities			884.7				27.8				—				(912.5	)			—
Fees from midstream services			2.3				6.8				—				(9.1	)			—
			887.0				34.6				—				(921.6	)			—
Revenues		$	1,566.7			$	3,224.4			$	(17.7	)		$	(921.6	)		$	3,851.8
Operating margin (1)		$	584.3			$	619.2			$	(17.7	)
Other financial information:
Total assets (2)		$	13,201.9			$	8,525.3			$	1.5			$	175.1			$	21,903.8
Goodwill		$	45.2			$	—			$	—			$	—			$	45.2
Capital expenditures		$	485.3			$	251.9			$	—			$	10.3			$	747.5

		Three Months Ended September 30, 2023
		Gathering and Processing				Logistics and Transportation				Other				Corporate and Eliminations				Total
Revenues
Sales of commodities		$	231.3			$	3,176.5			$	(33.5	)		$	—			$	3,374.3
Fees from midstream services			337.4				184.9				—				—				522.3
			568.7				3,361.4				(33.5	)			—				3,896.6
Intersegment revenues
Sales of commodities			1,298.8				49.0				—				(1,347.8	)			—
Fees from midstream services			0.6				11.5				—				(12.1	)			—
			1,299.4				60.5				—				(1,359.9	)			—
Revenues		$	1,868.1			$	3,421.9			$	(33.5	)		$	(1,359.9	)		$	3,896.6
Operating margin (1)		$	505.0			$	457.4			$	(33.5	)
Other financial information:
Total assets (2)		$	12,405.7			$	7,568.0			$	7.8			$	208.1			$	20,189.6
Goodwill		$	45.2			$	—			$	—			$	—			$	45.2
Capital expenditures		$	421.5			$	229.7			$	—			$	3.8			$	655.0

		Nine Months Ended September 30, 2024
		Gathering and Processing				Logistics and Transportation				Other				Corporate and Eliminations				Total
Revenues
Sales of commodities		$	774.7			$	9,437.8			$	(86.3	)		$	—			$	10,126.2
Fees from midstream services			1,236.5				613.5				—				—				1,850.0
			2,011.2				10,051.3				(86.3	)			—				11,976.2
Intersegment revenues
Sales of commodities			2,888.2				100.5				—				(2,988.7	)			—
Fees from midstream services			0.3				20.8				—				(21.1	)			—
			2,888.5				121.3				—				(3,009.8	)			—
Revenues		$	4,899.7			$	10,172.6			$	(86.3	)		$	(3,009.8	)		$	11,976.2
Operating margin (1)		$	1,713.4			$	1,699.0			$	(86.3	)
Other financial information:
Total assets (2)		$	13,201.9			$	8,525.3			$	1.5			$	175.1			$	21,903.8
Goodwill		$	45.2			$	—			$	—			$	—			$	45.2
Capital expenditures		$	1,359.2			$	954.3			$	—			$	10.4			$	2,323.9

		Nine Months Ended September 30, 2023
		Gathering and Processing				Logistics and Transportation				Other				Corporate and Eliminations				Total
Revenues
Sales of commodities		$	787.1			$	9,232.6			$	294.3			$	—			$	10,314.0
Fees from midstream services			979.7				527.1				—				—				1,506.8
			1,766.8				9,759.7				294.3				—				11,820.8
Intersegment revenues
Sales of commodities			3,621.8				210.2				—				(3,832.0	)			—
Fees from midstream services			1.7				32.9				—				(34.6	)			—
			3,623.5				243.1				—				(3,866.6	)			—
Revenues		$	5,390.3			$	10,002.8			$	294.3			$	(3,866.6	)		$	11,820.8
Operating margin (1)		$	1,545.9			$	1,394.4			$	294.3
Other financial information:
Total assets (2)		$	12,405.7			$	7,568.0			$	7.8			$	208.1			$	20,189.6
Goodwill		$	45.2			$	—			$	—			$	—			$	45.2
Capital expenditures		$	1,081.7			$	645.0			$	—			$	15.5			$	1,742.2

(1)

Operating margin is calculated by subtracting Product purchases and fuel and Operating expenses from Revenues.

(2)

Assets in the Corporate and Eliminations column primarily include tax-related assets, cash, prepaids and debt issuance costs for our revolving credit facility.

The following table shows our consolidated revenues disaggregated by product and service for the periods presented:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Sales of commodities:
Revenue recognized from contracts with customers:
Natural gas		$	168.4			$	606.0			$	821.7			$	1,835.9
NGL			2,959.5				2,635.4				9,024.7				7,651.6
Condensate and crude oil			123.2				117.7				405.5				393.1
			3,251.1				3,359.1				10,251.9				9,880.6
Non-customer revenue:
Derivative activities - Hedge			30.2				22.2				59.3				117.2
Derivative activities - Non-hedge (1)			(64.3	)			(7.0	)			(185.0	)			316.2
			(34.1	)			15.2				(125.7	)			433.4
Total sales of commodities			3,217.0				3,374.3				10,126.2				10,314.0
Fees from midstream services:
Revenue recognized from contracts with customers:
Gathering and processing			426.4				333.3				1,218.0				966.3
NGL transportation, fractionation and services			72.8				71.1				221.5				190.5
Storage, terminaling and export			122.0				102.2				362.3				302.3
Other			13.6				15.7				48.2				47.7
Total fees from midstream services			634.8				522.3				1,850.0				1,506.8
Total revenues		$	3,851.8			$	3,896.6			$	11,976.2			$	11,820.8

(1)

Represents derivative activities that are not designated as hedging instruments under ASC 815.

The following table shows a reconciliation of reportable segment Operating margin to Income (loss) before income taxes for the periods presented:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Reconciliation of reportable segment operating margin to income (loss) before income taxes:
Gathering and Processing operating margin		$	584.3			$	505.0			$	1,713.4			$	1,545.9
Logistics and Transportation operating margin			619.2				457.4				1,699.0				1,394.4
Other operating margin			(17.7	)			(33.5	)			(86.3	)			294.3
Depreciation and amortization expense			(355.4	)			(331.3	)			(1,044.5	)			(988.2	)
General and administrative expense			(102.6	)			(90.0	)			(287.4	)			(253.4	)
Other operating income (expense)			0.4				(2.5	)			0.7				(2.0	)
Interest expense, net			(184.9	)			(175.1	)			(589.5	)			(509.8	)
Equity earnings (loss)			2.2				3.0				7.9				6.2
Gain (loss) from financing activities			—				—				(0.8	)			—
Other, net			(0.4	)			(0.1	)			1.1				(5.0	)
Income (loss) before income taxes		$	545.1			$	332.9			$	1,413.6			$	1,482.4