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What changed in Targa Resources's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Targa Resources's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+542 added−608 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-15)

Top changes in Targa Resources's 2024 10-K

542 paragraphs added · 608 removed · 452 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

217 edited+61 added−74 removed176 unchanged
Biggest changeCONSOLIDATED STATEMENTS OF CHANGES IN OWN ERS’ EQUITY AND SERIES A PREFERRED STOCK Retained Accumulated Additional Earnings Other Treasury Total Series A Common Stock Paid in (Accumulated Comprehensive Shares Noncontrolling Owners’ Preferred Shares Amount Capital Deficit) Income (Loss) Shares Amount Interests Equity Stock (In millions, except shares in thousands) Balance, December 31, 2020 228,062 $ 0.2 $ 4,839.9 $ ( 1,893.5 ) $ ( 141.8 ) 6,731 $ ( 150.9 ) $ 3,249.3 $ 5,903.2 $ 301.4 Impact of accounting standard adoption — — ( 448.3 ) — — — — — ( 448.3 ) 448.3 Compensation on equity grants — — 59.2 — — — — — 59.2 — Dividend equivalent rights — — ( 3.1 ) — — — — — ( 3.1 ) — Shares issued under compensation program 1,312 — — — — — — — — — Shares tendered for tax withholding obligations ( 397 ) — — — — 397 ( 13.2 ) — ( 13.2 ) — Repurchases of common stock ( 756 ) — — — — 756 ( 40.0 ) — ( 40.0 ) — Series A Preferred Stock dividends Dividends - $ 95.00 per share — — — ( 87.3 ) — — — — ( 87.3 ) — Dividends in excess of retained earnings — — ( 87.3 ) 87.3 — — — — — — Common stock dividends Dividends - $ 0.40 per share — — — ( 91.5 ) — — — — ( 91.5 ) — Dividends in excess of retained earnings — — ( 91.5 ) 91.5 — — — — — — Distributions to noncontrolling interests — — — — — — — ( 449.1 ) ( 449.1 ) — Contributions from noncontrolling interests — — — — — — — 15.8 15.8 — Other comprehensive income (loss) — — — — ( 89.1 ) — — — ( 89.1 ) — Net income (loss) — — — 71.2 — — — 350.9 422.1 — Balance, December 31, 2021 228,221 0.2 4,268.9 ( 1,822.3 ) ( 230.9 ) 7,884 ( 204.1 ) 3,166.9 5,178.7 749.7 Compensation on equity grants — — 57.5 — — — — — 57.5 — Dividend equivalent rights — — ( 7.1 ) — — — — — ( 7.1 ) — Shares issued under compensation program 1,834 — — — — — — — — — Shares tendered for tax withholding obligations ( 601 ) — — — — 601 ( 35.8 ) — ( 35.8 ) — Repurchases of common stock ( 3,412 ) — — — — 3,412 ( 224.8 ) — ( 224.8 ) — Series A Preferred Stock dividends Dividends - $ 47.50 per share — — — ( 30.0 ) — — — — ( 30.0 ) — Dividends in excess of retained earnings — — ( 30.0 ) 30.0 — — — — — — Deemed dividends - redemption of Series A Preferred Stock — — ( 215.5 ) — — — — — ( 215.5 ) — Common stock dividends Dividends - $ 1.40 per share — — — ( 318.3 ) — — — — ( 318.3 ) — Dividends in excess of retained earnings — — ( 318.3 ) 318.3 — — — — — — Redemption of Series A Preferred Stock — — — — — — — — — ( 749.7 ) Distributions to noncontrolling interests — — — — — — — ( 354.5 ) ( 354.5 ) — Contributions from noncontrolling interests — — — — — — — 26.1 26.1 — Repurchase of noncontrolling interests, net of tax — — ( 53.2 ) — — — — ( 857.9 ) ( 911.1 ) — Other comprehensive income (loss) — — — — 285.6 — — — 285.6 — Net income (loss) — — — 1,195.5 — — — 335.9 1,531.4 — 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 $ — See notes to consolidated financial statements.
Biggest changeCONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY AND SERIES A PREFERRED STOCK Retained Accumulated Additional Earnings Other Treasury Total Series A Common Stock Paid in (Accumulated Comprehensive Shares Noncontrolling Owners’ Preferred Shares Amount Capital Deficit) Income (Loss) Shares Amount Interests Equity Stock (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 — — 63.2 — — — — — 63.2 — Dividend equivalent rights — — — ( 3.8 ) — — — — ( 3.8 ) — Shares issued under compensation program 1,669 — — — — — — — — — Shares tendered for tax withholding obligations ( 583 ) — — — — 583 ( 56.4 ) — ( 56.4 ) — Repurchases of common stock ( 5,933 ) — — — — 5,933 ( 754.7 ) — ( 754.7 ) — Excise tax on repurchases of common stock — — — — — — ( 6.4 ) — ( 6.4 ) — Common stock dividends Dividends - $ 2.75 per share — — — ( 610.2 ) — — — — ( 610.2 ) — Distributions to noncontrolling interests — — — — — — — ( 229.0 ) ( 229.0 ) — Contributions from noncontrolling interests — — — — — — — 12.0 12.0 — Repurchase of noncontrolling interests, net of tax — — ( 32.9 ) — — — — ( 69.0 ) ( 101.9 ) — Other comprehensive income (loss) — — — — ( 58.1 ) — — — ( 58.1 ) — Net income (loss) — — — 1,312.0 — — — 241.5 1,553.5 — Balance, December 31, 2024 217,764 $ 0.2 $ 3,089.1 $ 1,190.0 $ 27.5 24,000 $ ( 1,714.4 ) $ 1,825.8 $ 4,418.2 $ — See notes to consolidated financial statements.
The table below summarizes the accounting treatment for our derivative instruments, and the impact on our consolidated financial statements: Recognition and Measurement Derivative Treatment Balance Sheet Income Statement Normal Purchases and Normal Sales Fair value not recorded Earnings recognized when volumes are physically delivered or received Mark-to-Market Recorded at fair value Change in fair value recognized currently in earnings Cash Flow Hedge Recorded at fair value with changes in fair value deferred in Accumulated Other Comprehensive Income (“AOCI”) The gain/loss on the derivative instrument is reclassified out of AOCI into earnings when the forecasted transaction occurs We will discontinue hedge accounting on a prospective basis when a hedge instrument is terminated, ceases to be highly effective or the forecasted transaction is no longer probable to occur.
The table below summarizes the accounting treatment for our derivative instruments, and the impact on our consolidated financial statements: Recognition and Measurement Derivative Treatment Balance Sheet Income Statement Normal Purchases and Normal Sales Fair value not recorded Earnings recognized when volumes are physically delivered or received Mark-to-Market Recorded at fair value Change in fair value recognized currently in earnings Cash Flow Hedge Recorded at fair value with changes in fair value deferred in Accumulated Other Comprehensive Income (“AOCI”) The gain/loss on the derivative instrument is reclassified out of AOCI into earnings when the forecasted transaction occurs We will discontinue cash flow hedge accounting on a prospective basis when a hedge instrument is terminated, ceases to be highly effective or the forecasted transaction is no longer probable to occur.
Gains and losses deferred in AOCI related to cash flow hedges for which hedge accounting has been discontinued remain deferred until the forecasted transaction occurs. If it is probable that a hedged forecasted transaction will not occur, deferred gains or losses on the hedging instrument are reclassified to earnings immediately.
Gains and losses deferred in AOCI related to cash flow hedges for which hedge accounting has been discontinued remain deferred until the forecasted transaction occurs. If it is probable that a hedged forecasted transaction will not occur, deferred gains or losses on the hedging instrument in AOCI are reclassified to earnings immediately.
As a result of the GCX Sale, we recognized a gain of $ 435.9 million in Gain (loss) from sale of equity method investment in our Consolidated Statements of Operations in 2022. See Note 7 – Investments in Unconsolidated Affiliates for further discussion on GCX Sale.
As a result of the GCX Sale, we recognized a gain of $ 435.9 million in Gain (loss) from sale of equity method investment in our Consolidated Statements of Operations in 2022. See Note 7 – Investments in Unconsolidated Affiliates for further discussion on the GCX Sale.
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 estimated fair value is net of an adjustment for credit risk based on the default probabilities as indicated by market quotes for our 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 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 and the Gulf of Mexico.
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.
Environmental Protection Agency, 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.
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.
(NYSE: TRGP) owns, operates, acquires, and develops a diversified portfolio of complementary domestic midstream infrastructure assets. In this Annual 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.
(NYSE: TRGP) owns, operates, acquires, and develops a diversified portfolio of complementary domestic infrastructure assets. In this Annual 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.
In January 2023, we completed an underwritten public offering of (i) $ 900.0 million aggregate principal amount of our 6.125 % Senior Notes due 2033 (the “ 6.125 % Notes”) and (ii) $ 850.0 million aggregate principal amount of our 6.500 % Senior Notes due 2053 (the “January 2023 6.500 % Notes”), resulting in net proceeds of approximately $ 1.7 billion.
In January 2023, we completed an underwritten public offering of (i) $ 900.0 million aggregate principal amount of our 6.125 % Senior Unsecured Notes due 2033 (the “ 6.125 % Notes”) and (ii) $ 850.0 million aggregate principal amount of our 6.500 % Senior Unsecured Notes due 2053 (the “January 2023 6.500 % Notes”), resulting in net proceeds of approximately $ 1.7 billion.
Prior to us conducting the goodwill impairment test, we complete a review of the carrying values of our long-lived assets, including property, plant and equipment and other intangible assets. If it is determined that the carrying values are not recoverable, we reduce the carrying values of the long-lived assets pursuant to our policy on property, plant and equipment.
If applicable, prior to us conducting the goodwill impairment test, we complete a review of the carrying values of our long-lived assets, including property, plant and equipment and other intangible assets. If it is determined that the carrying values are not recoverable, we reduce the carrying values of the long-lived assets pursuant to our policy on impairment of long-lived assets.
The fair value of the intangible assets was determined by applying a discounted cash flow approach, which utilized a discount rate of approximately 19 % based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets, and customer attrition rates of approximately 5 %.
The fair value of the intangible assets was determined by applying a discounted cash flow approach, which utilized a discount rate of approximately 19 % based on our estimate of the risk that a theoretical market participant would assign to the intangible assets, and customer attrition rates of approximately 5 %.
At least annually, we review the projected timing and amount of AROs and reflect revisions as an increase or decrease in the carrying amount of the liability and the basis in the underlying asset. Upon settlement, we will recognize any difference between the recorded amount and the actual settlement cost as a gain or loss.
At least annually, we review the projected timing and amount of AROs and reflect revisions as an increase or decrease in the carrying amount of the liability and the basis in the underlying asset. Upon settlement, we recognize any difference between the recorded amount and the actual settlement cost as a gain or loss.
These arrangements result in deferred revenue, which will be recognized over the periods that performance will be provided. We have certain contracts that contain provisions in which customers provide contributions in aid of construction in exchange for Targa constructing assets to fulfill the services in the contract.
These arrangements result in deferred revenue, which will be recognized over the periods that performance will be provided. We also have certain contracts that contain provisions in which customers provide contributions in aid of construction in exchange for Targa constructing assets to fulfill the services in the contract.
The value of property, plant and equipment is determined using the cost approach and is primarily comprised of Gathering and Processing assets that will be depreciated on a straight-line basis over an estimated weighted-average useful life of 20 years .
F- 20 The value of property, plant and equipment is determined using the cost approach and is primarily comprised of Gathering and Processing assets that will be depreciated on a straight-line basis over an estimated weighted-average useful life of 20 years .
The 6.125 % Notes and the January 2023 6.500 % 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 6.125 % Notes and the January 2023 6.500 % Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by our subsidiaries that guarantee the New TRGP Revolver, so long as such subsidiary guarantors satisfy certain conditions.
The 2023 6.150 % Notes and the November 2023 6.500 % 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 2023 6.150 % Notes and the November 2023 6.500 % Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by our subsidiaries that guarantee the New TRGP Revolver, so long as such subsidiary guarantors satisfy certain conditions.
The 5.200 % Notes and the 6.250 % 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 5.200 % Notes and the 6.250 % Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by our subsidiaries that guarantee the New TRGP Revolver, so long as such subsidiary guarantors satisfy certain conditions.
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.
F- 13 Fair Value Measurements 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 4.200 % Notes and the 4.950 % 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 4.200 % Notes and the 4.950 % Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by our subsidiaries that guarantee the New TRGP Revolver, so long as such subsidiary guarantors satisfy certain conditions.
The TRGP Notes are unconditionally guaranteed by certain of our subsidiaries that guarantee the TRGP Revolver. Each guarantee ranks equally in right of payment with all of such guarantor’s existing and future unsecured senior debt and other unsecured guarantees of senior debt.
The TRGP Notes are unconditionally guaranteed by certain of our subsidiaries that guarantee the New TRGP Revolver. Each guarantee ranks equally in right of payment with all of such guarantor’s existing and future unsecured senior debt and other unsecured guarantees of senior debt.
We confirm, on a quarterly basis, that there is sufficient liquidity under the TRGP Revolver to refinance outstanding borrowings of the Commercial Paper Program and such liquidity is not overcommitted for other anticipated uses.
We confirm, on a quarterly basis, that there is sufficient liquidity under the New TRGP Revolver to refinance outstanding borrowings of the Commercial Paper Program and such liquidity is not overcommitted for other anticipated uses.
We used a portion of the net proceeds from the issuance to fund the Grand Prix Transaction and the remaining proceeds for general corporate purposes, including to reduce borrowings under the TRGP Revolver and the Commercial Paper Program.
We used a portion of the net proceeds from the issuance to fund the Grand Prix Transaction and the remaining proceeds for general corporate purposes, including to reduce borrowings under the Existing TRGP Revolver and the Commercial Paper Program.
The TRGP Revolver restricts the Company’s ability to make dividends to stockholders if an event of default (as defined in the TRGP Revolver) exists or would result from such distribution.
The New TRGP Revolver restricts the Company’s ability to make dividends to stockholders if an event of default (as defined in the New TRGP Revolver) exists or would result from such distribution.
Comprehensive Income Comprehensive income includes net income and other comprehensive income (“OCI”), which includes changes in the fair value of derivative instruments that are designated as cash flow hedges .
Comprehensive Income Comprehensive income includes net income and other comprehensive income (loss) (“OCI”), which includes changes in the fair value of derivative instruments that are designated as cash flow hedges .
We determine if an arrangement is or contains a lease at inception. Leases with an initial term of twelve months or less are considered short-term leases, which are excluded from the balance sheet. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease term.
We determine if an arrangement is or contains a lease at inception. Leases with an initial term of twelve months or less are considered short-term leases, which are excluded from the balance sheet. Right-of-use assets and lease liabilities are recognized at the F- 18 commencement date based on the present value of future lease payments over the lease term.
Vitol’s lawsuit also alleges 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.
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.
We acquired a portfolio of complementary midstream infrastructure assets and associated contracts that have been integrated into our SouthTX Gathering and Processing operations, including the remaining interests in the two joint ventures in South Texas that we previously held as investments in unconsolidated affiliates and that have been consolidated beginning in the second quarter of 2022.
We acquired a portfolio of complementary midstream F- 21 infrastructure assets and associated contracts that have been integrated into our SouthTX Gathering and Processing operations, including the remaining interests in the two joint ventures in South Texas that we previously held as investments in unconsolidated affiliates and that have been consolidated beginning in the second quarter of 2022.
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.
We determined the supplemental fair value disclosures for our current and long-term debt as follows: • the Existing 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.
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.
F- 40 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.
Targa also seeks 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.
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.
For our 2023, 2022 and 2021 annual evaluations, we performed a qualitative assessment, which indicated that it is not more likely than not that the fair values of the Permian Midland and Permian Delaware reporting units were less than their carrying amounts, and therefore, a quantitative goodwill impairment test was not necessary.
For our 2024, 2023 and 2022 annual evaluations, we performed a qualitative assessment, which indicated that it is not more likely than not that the fair values of the Permian Midland and Permian Delaware reporting units were less than their carrying amounts, and therefore, a quantitative goodwill impairment test was not necessary.
As a result of the termination of the Previous TRGP Revolver and the Partnership Revolver, we recorded a loss of $ 0.8 million due to a write-off of debt issuance costs. The Partnership redeemed all of the outstanding 5.375 % Senior Notes due 2027 (the “5.375% Notes”) in March 2022 with available liquidity under the TRGP Revolver.
As a result of the termination of the Previous TRGP Revolver and the Partnership Revolver, we recorded a loss of $ 0.8 million due to a write-off of debt issuance costs. The Partnership redeemed all of the outstanding 5.375 % Senior Unsecured Notes due 2027 (the “5.375% Notes”) in March 2022 with available liquidity under the Existing TRGP Revolver.
Sales and other taxes we collect, that are both imposed on and concurrent with revenue-producing activities, are excluded from revenues. F- 16 We generally report sales revenues on a gross basis in our Consolidated Statements of Operations, as we typically act as the principal in the transactions where we receive and control commodities.
Sales and other taxes we collect, that are both imposed on and concurrent with revenue-producing activities, are excluded from revenues. We generally report sales revenues on a gross basis in our Consolidated Statements of Operations, as we typically act as the principal in the transactions where we receive and control commodities.
In general, these arrangements result in deferred revenue, which will be recognized over the contract term. F- 17 Contract Assets We classify our contract assets as receivables because we generally have an unconditional right to payment for the commodities sold or services performed at the end of the reporting period.
In general, these arrangements result in deferred revenue, which will be recognized over the contract term. We classify our contract assets as receivables because we generally have an unconditional right to payment for the commodities sold or services performed at the end of the reporting period.
A portion of the net proceeds from the issuance was used to fund the concurrent cash tender offer (the “March Tender Offer”) and the subsequent redemption of the Partnership’s 5.875 % Senior Notes due April 2026 (the “ 5.875 % Notes”), with the remainder of the net proceeds used for repayment of the outstanding borrowings under the TRGP Revolver.
A portion of the net proceeds from the issuance was used to fund the concurrent cash tender offer (the “March Tender Offer”) and the subsequent redemption of the Partnership’s 5.875 % Senior Unsecured Notes due April 2026 (the “ 5.875 % Notes”), with the remainder of the net proceeds used for repayment of the outstanding borrowings under the Existing TRGP Revolver.
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.
F- 38 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.
Note 19 – 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.
Note 18 — 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.
As a result, in accordance with the TRGP Revolver, the collateral under the TRGP Revolver was released from the liens securing our obligations thereunder.
As a result, in accordance with the Existing TRGP Revolver, the collateral under the Existing TRGP Revolver was released from the liens securing our obligations thereunder.
F- 28 The Partnership’s senior unsecured notes and associated indenture agreements restrict, among other things, (i) the Partnership’s ability and the ability of certain of its subsidiaries to incur liens and (ii) the Partnership’s ability to merge or consolidate with or sell, lease, convey, transfer or otherwise dispose of all or substantially all of its assets to another company.
The Partnership’s senior unsecured notes and associated indenture agreements restrict, among other things, (i) the Partnership’s ability and the ability of certain of its subsidiaries to incur liens and (ii) the Partnership’s ability to merge or consolidate with or sell, lease, convey, transfer or otherwise dispose of all or substantially all of its assets to another company.
In April 2022, we completed an underwritten public offering of (i) $ 750.0 million aggregate principal amount of our 4.200 % Senior Notes due 2033 (the “ 4.200 % Notes”) and (ii) $ 750.0 million aggregate principal amount of our 4.950 % Senior Notes due 2052 (the “ 4.950 % Notes”), resulting in net proceeds of approximately $ 1.5 billion.
Senior Unsecured Notes Issuances In April 2022, we completed an underwritten public offering of (i) $ 750.0 million aggregate principal amount of our 4.200 % Senior Unsecured Notes due 2033 (the “ 4.200 % Notes”) and (ii) $ 750.0 million aggregate principal amount of our 4.950 % Senior Unsecured Notes due 2052 (the “ 4.950 % Notes”), resulting in net proceeds of approximately $ 1.5 billion.
For the PSUs granted in 2021, 2022 and 2023, the TSR performance factor is determined by the Compensation Committee based on relative TSR over a cumulative three-year performance period. The Compensation Committee determines a guideline performance percentage for the performance period and the percentage may then be decreased or increased by the Compensation Committee at its discretion.
For the PSUs granted in 2022, 2023 and 2024, the TSR performance factor is determined by the Compensation Committee based on relative TSR over a cumulative three-year performance period. The Compensation Committee determines a guideline performance percentage for the performance period and the percentage may then be decreased or increased by the Compensation Committee at its discretion.
Note 2 — Basis of Presentation These accompanying financial statements and related notes present our consolidated financial position as of December 31, 2023 and 2022, and the results of operations, comprehensive income (loss), cash flows, and changes in owners’ equity for the years ended December 31, 2023, 2022 and 2021 .
Note 2 — Basis of Presentation These accompanying financial statements and related notes present our consolidated financial position as of December 31, 2024 and 2023, and the results of operations, comprehensive income (loss), cash flows, and changes in owners’ equity for the years ended December 31, 2024, 2023 and 2022 .
We recorded $ 16.9 million F- 19 of debt issuance costs related to the Term Loan Facility, the 5.200 % Notes and the 6.250 % Notes in our Consolidated Balance Sheets. See Note 8 – Debt Obligations for further details on our financing activities.
We recorded $ 16.9 million of debt issuance costs related to the Term Loan Facility, the 5.200 % Notes and the 6.250 % Notes in our Consolidated Balance Sheets. See Note 8 – Debt Obligations for further details on our financing activities.
December 31, 2023 December 31, 2022 Permian Midland $ 23.2 $ 23.2 Permian Delaware 22.0 22.0 Goodwill $ 45.2 $ 45.2 F- 23 The future cash flows and resulting fair values of these reporting units are sensitive to changes in crude oil, natural gas and NGL prices.
December 31, 2024 December 31, 2023 Permian Midland $ 23.2 $ 23.2 Permian Delaware 22.0 22.0 Goodwill $ 45.2 $ 45.2 F- 23 The future cash flows and resulting fair values of these reporting units are sensitive to changes in crude oil, natural gas and NGL prices.
The terms of these joint venture agreements do not afford us the degree of control required for consolidating them in our consolidated financial statements, but do afford us the significant influence required to employ the equity method of accounting. In April 2022, we completed the South Texas Acquisition.
The terms of these joint venture agreements do not afford us the degree of control required for consolidating the entities in our consolidated financial statements, but do afford us the significant influence required to employ the equity method of accounting. In April 2022, we completed the South Texas Acquisition.
The Company is required to pay a commitment fee equal to an applicable rate ranging from 0.125 % to 0.35 % (dependent on the Company’s Debt Rating), in each case times the actual daily unused portion of the revolving credit facility.
The Company was required to pay a commitment fee equal to an applicable rate ranging from 0.125 % to 0.35 % (dependent on the Company’s Debt Rating), in each case times the actual daily unused portion of the revolving credit facility.
During 2023, 2022 and 2021, no shares of common stock were issued under either the May 2017 EDA or the September 2018 EDA. As a result, we have $ 382.1 million and $ 750.0 million remaining under the May 2017 EDA and September 2018 EDA, respectively, as of December 31, 2023.
During 2024, 2023 and 2022, no shares of common stock were issued under either the May 2017 EDA or the September 2018 EDA. As a result, we have $ 382.1 million and $ 750.0 million remaining under the May 2017 EDA and September 2018 EDA, respectively, as of December 31, 2024.
Goodwill Goodwill is a residual intangible asset that results when the cost of an acquisition exceeds the fair value of the net identifiable assets of the acquired business. Goodwill is not subject to amortization but is tested for impairment at least annually.
F- 14 Goodwill Goodwill is a residual intangible asset that results when the cost of an acquisition exceeds the fair value of the net identifiable assets of the acquired business. Goodwill is not subject to amortization but is tested for impairment at least annually.
Revenue Recognition Our operating revenues are primarily derived from the following activities: • sales of natural gas, NGLs, condensate and crude oil; • services related to compressing, gathering, treating, and processing of natural gas; and • services related to NGL fractionation, terminaling and storage, transportation and treating.
F- 16 Revenue Recognition Our operating revenues are primarily derived from the following activities: • sales of natural gas, NGLs, condensate and crude oil; • services related to compressing, gathering, treating, and processing of natural gas; and • services related to NGL fractionation, terminaling and storage, transportation and treating.
Estimates and judgments are used in, among other things, (i) estimating unbilled revenues, product purchases and operating and general and administrative cost accruals, (ii) developing fair value assumptions, including estimates of future cash flows and discount rates, (iii) analyzing long-lived assets for possible impairment, (iv) estimating the useful lives of assets and (v) estimating contingencies, guarantees and indemnifications.
Estimates and judgments are used in, among other things, (i) estimating unbilled revenues, product purchases, property, plant and equipment, operating and general and administrative cost accruals, (ii) developing fair value assumptions, including estimates of future cash flows and discount rates, (iii) analyzing long-lived assets for possible impairment, (iv) estimating the useful lives of assets and (v) estimating contingencies, guarantees and indemnifications.
The revolving credit facility bears interest at the Company’s option at: (a) the Base Rate, which is the highest of Bank of America’s prime rate, the federal funds rate plus 0.5 % and the Term SOFR (as such term is defined in the TRGP Revolver) rate plus 1.0 % (subject in each case to a floor of 0.0 %), plus an applicable margin ranging from 0.125 % to 0.75 %, dependent on the Company’s non-credit-enhanced senior unsecured long-term debt ratings (or, if no such debt is outstanding at such time, then the corporate, issuer or similar rating with respect to the Company that has been most recently announced) (the “Debt Rating”), or (b) Term SOFR (which includes, for Term SOFR loans, a SOFR adjustment of plus 0.10 %) plus an applicable margin ranging from 1.125 % to 1.75 %, dependent on the Company’s Debt Rating.
The revolving credit facility bears interest at the Company’s option at: (a) the Base Rate (as such term is defined in the New TRGP Revolver), which is the highest of Bank of America’s prime rate, the federal funds rate plus 0.5 % and the Term SOFR (as such term is defined in the New TRGP Revolver) rate plus 1.0 % (subject in each case to a floor of 0.0 %), plus an applicable margin ranging from 0.0 % to 0.625 %, dependent on the Company’s non-credit-enhanced senior unsecured long-term debt ratings (or, if no such debt is outstanding at such time, then the corporate, issuer or similar rating with respect to the Company that has been most recently announced) (the “Debt Rating”), or (b) Term SOFR (which is subject to a floor of 0.0 % and includes, for Term SOFR loans, a SOFR adjustment of plus 0.10 %) plus an applicable margin ranging from 1.00 % to 1.625 %, dependent on the Company’s Debt Rating.
(3) The December 31, 2022 amount includes $ 171.2 million related to compressor leases from the Delaware Basin Acquisition that were subsequently amended and extended. Note 22 – Co mpensation Plans 2010 Targa Resources Corp.
(3) The December 31, 2022 amount includes $ 171.2 million related to compressor leases from the Delaware Basin Acquisition that were subsequently amended and extended. Note 21 — Co mpensation Plans 2010 Targa Resources Corp.
Our customers are typically billed on a monthly basis, or earlier, if final delivery and sale of commodities is made prior to month-end, and payment is typically due within 10 to 30 days .
F- 17 Our customers are typically billed on a monthly basis, or earlier, if final delivery and sale of commodities is made prior to month-end, and payment is typically due within 10 to 30 days .
F- 20 The results of operations attributable to the assets and liabilities acquired in the Delaware Basin Acquisition have been included in our consolidated financial statements as part of our Permian Delaware operations in the Gathering and Processing segment since the date of the acquisition.
The results of operations attributable to the assets and liabilities acquired in the Delaware Basin Acquisition have been included in our consolidated financial statements as part of our Permian Delaware operations in the Gathering and Processing segment since the date of the acquisition.
The weighted-average discount rates for operating leases and finance leases are 5.0 % and 5.0 % , respectively.
The weighted-average discount rates for operating leases and finance leases are 5.1 % and 5.0 % , respectively.
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 F- 37 related contingent features. Following the release of the collateral securing our TRGP Revolver, our derivative positions are no longer secured.
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 Existing TRGP Revolver, our derivative positions are no longer secured.
Vitol alleges 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.
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.
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): Year Ended December 31, 2023 2022 2021 Unvested restricted stock awards 1.5 — 3.3 Series A Preferred (1) — 14.9 44.3 (1) The Series A Preferred had no mandatory redemption date, but was redeemable at our election for a 5 % premium to the liquidation preference subsequent to March 16, 2022 .
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): Year Ended December 31, 2024 2023 2022 Unvested restricted stock awards 1.2 1.5 — Series A Preferred Stock (1) — — 14.9 (1) The Series A Preferred had no mandatory redemption date, but was redeemable at our election for a 5 % premium to the liquidation preference subsequent to March 16, 2022 .
The TRGP Revolver requires the Company to maintain a ratio of consolidated funded indebtedness to consolidated adjusted EBITDA (the “Consolidated Leverage Ratio”), determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, of no more than 5.50 to 1.00 .
The Existing TRGP Revolver required the Company to maintain a ratio of consolidated funded indebtedness to consolidated adjusted EBITDA (the “Consolidated Leverage Ratio”), determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, of no more than 5.50 to 1.00 .
F- 14 Asset Retirement Obligations Asset retirement obligations (“AROs”) are legal obligations associated with the retirement of tangible long-lived assets that result from their acquisition, construction, development and/or normal operation.
Asset Retirement Obligations Asset retirement obligations (“AROs”) are legal obligations associated with the retirement of tangible long-lived assets that result from their acquisition, construction, development and/or normal operation.
F- 21 In January 2022, we exercised the DevCo JV Call Right and closed on the purchase of all of Stonepeak’s interests in the DevCo JVs for $ 926.3 million (the “DevCo JV Repurchase”).
In January 2022, we exercised the DevCo JV Call Right and closed on the purchase of all of Stonepeak’s interests in the DevCo JVs for $ 926.3 million (the “DevCo JV Repurchase”).
The TRGP Revolver provides for a revolving credit facility in an initial aggregate principal amount up to $ 2.75 billion (with an option to increase such maximum aggregate principal amount by up to $ 500.0 million in the future, subject to the terms of the TRGP Revolver) and a swing line sub-facility of up to $ 100.0 million.
The Existing TRGP Revolver provided for a revolving credit facility in an initial aggregate principal amount up to $ 2.75 billion (with an option to increase such maximum aggregate principal amount by up to $ 500.0 million in the future, subject to the terms of the Existing TRGP Revolver) and a swing line sub-facility of up to $ 100.0 million.
F- 29 In November 2023, we completed an underwritten public offering of (i) $ 1.0 billion aggregate principal amount of our 6.150 % Senior Notes due 2029 (the “2023 6.150 % Notes”) and (ii) $ 1.0 billion aggregate principal amount of our 6.500 % Senior Notes due 2034 (the “November 2023 6.500 % Notes”), resulting in net proceeds of approximately $ 2.0 billion.
In November 2023, we completed an underwritten public offering of (i) $ 1.0 billion aggregate principal amount of our 6.150 % Senior Unsecured Notes due 2029 (the “2023 6.150 % Notes”) and (ii) $ 1.0 billion aggregate principal amount of our 6.500 % Senior Unsecured Notes due 2034 (the “November 2023 6.500 % Notes”), resulting in net proceeds of approximately $ 2.0 billion.
As a result of the March Tender Offer and the subsequent redemption of the 5.875% Notes, we recorded a loss due to debt extinguishment of $ 33.8 million comprised of $ 29.3 million of premiums paid and a write-off of $ 4.5 million of debt issuance costs.
As a result of the March Tender Offer and the subsequent redemption of the 5.875% Notes, we recorded a loss due to debt extinguishment of $ 33.8 million comprised of $ 29.3 million of premiums paid and a write-off of $ 4.5 million of debt issuance costs in April 2022.
See Note 4 – Acquisitions and Divestitures . (2) Includes $ 8.2 million attributable to the dividends paid upon the full redemption of Series A Preferred in 2022. (3) Includes $ 215.5 million attributable to the full redemption of Series A Preferred in 2022. See Note 11 – Preferred Stock for further discussion.
See Note 4 – Acquisitions and Divestitures . (2) Includes $ 8.2 million attributable to the dividends paid upon the full redemption of Series A Preferred in 2022. See Note 11 – Common Stock and Related Matters for further discussion. (3) Includes $ 215.5 million attributable to the full redemption of Series A Preferred in 2022.
For additional information on our revenue recognition policy, see Note 3 – Significant Accounting Policies, and for disclosures related to disaggregated revenue, see Note 23 – Segment Information.
For additional information on our revenue recognition policy, see Note 3 – Significant Accounting Policies, and for disclosures related to disaggregated revenue, see Note 22 – Segment Information.
Unaudited Pro Forma Financial Information The following unaudited pro forma summary presents the consolidated results of operations for the years ended December 31, 2022 and 2021 as if the Delaware Basin Acquisition had occurred on January 1, 2021.
Unaudited Pro Forma Financial Information The following unaudited pro forma summary presents the consolidated results of operations for the year ended December 31, 2022 as if the Delaware Basin Acquisition had occurred on January 1, 2021.
All excess tax benefits and tax deficiencies related to share-based compensation are recognized as income tax benefit or expense in our Consolidated Statements of Operations, with the tax effects of exercised or vested awards treated as discrete items in the reporting period which they occur. Excess tax benefits are classified as an operating activity.
All excess tax benefits and tax deficiencies related to share-based compensation are recognized as income tax benefit or expense in our Consolidated Statements of Operations, with the tax effects of exercised or vested awards treated as discrete items in the reporting period which they occur.
We have not designated these derivatives as hedges and record changes in fair value and cash settlements to revenues as current income.
We have not designated these derivatives as hedges and record changes in fair value and cash settlements to revenues in current earnings.
Amortization expense attributable to these assets is recorded over the periods in which we benefit from services provided to customers. For each of the years ended December 31, 2023, 2022 and 2021 amortization expense was $ 384.0 million, $ 242.2 million and $ 131.0 million, respectively.
Amortization expense attributable to these assets is recorded over the periods in which we benefit from services provided to customers. For each of the years ended December 31, 2024, 2023 and 2022 amortization expense was $ 373.2 million, $ 384.0 million and $ 242.2 million, respectively.
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.
For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations whose contract length extends into unobservable periods.
TRGP’s Senior Unsecured Notes All issues of our senior unsecured notes (the “TRGP Notes”) rank pari passu with our existing and future senior indebtedness, including debt issued under the TRGP Revolver, the Commercial Paper Program and the Term Loan Facility, and rank senior in right of payment to any of our future subordinated indebtedness.
TRGP’s Senior Unsecured Notes All issues of our senior unsecured notes (the “TRGP Notes”) rank pari passu with our existing and future senior indebtedness, including debt issued under the New TRGP Revolver and the Commercial Paper Program, and rank senior in right of payment to any of our future subordinated indebtedness.
F- 44 Unless otherwise specified, the compensation costs for the awards listed below were recognized as expenses over related vesting periods based on the grant-date fair values, reduced by forfeitures incurred. Restricted Stock Awards - Restricted stock entitles the recipient to cash dividends.
Unless otherwise specified, the compensation costs for the awards listed below were recognized as expense over related vesting periods based on the grant-date fair values, reduced by forfeitures incurred. Restricted Stock Awards - Restricted stock entitles the recipient to cash dividends.
The grantee will become vested in a number of PSUs equal to the target number awarded multiplied by the TSR performance factor, and vested PSUs will be settled by the issuance of Company common stock. The value of dividend equivalent rights will be paid in cash when the awards vest.
The grantee will become vested in a number of PSUs equal to the target number awarded multiplied by the TSR performance factor, and vested PSUs will be settled by the issuance of Company common stock. The value of DERs will be paid in cash when the awards vest.
The amount of the redemption price in excess of the carrying amount, net of tax, was $ 489.4 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.
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.
Year Ended December 31, 2022 2021 Revenues $ 21,268.9 $ 17,464.7 Net income (loss) 1,477.4 215.7 The summarized unaudited pro forma information has been calculated after applying our accounting policies and reflects adjustments for the following: • Reflects depreciation and amortization based on the fair values of property, plant and equipment and intangible assets, respectively.
Year Ended December 31, 2022 Pro Forma Revenues $ 21,268.9 Net income 1,477.4 The summarized unaudited pro forma information has been calculated after applying our accounting policies and reflects adjustments for the following: • Reflects depreciation and amortization based on the fair values of property, plant and equipment and intangible assets, respectively.
We are evaluating the effect of the amendments on our 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.
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.
Cash dividends paid for the vested awards were $ 8.3 million, $ 9.6 million and $ 8.7 million for 2023, 2022 and 2021. In relation to our equity compensation plans, we recognized $ 17.0 million and $ 6.7 million in windfall tax benefits for the years ended December 31, 2023 and 2022, respectively.
Cash dividends paid for the vested awards were $ 5.3 million, $ 8.3 million and $ 9.6 million for 2024, 2023 and 2022, respectively. In relation to our equity compensation plans, we recognized $ 14.2 million, $ 17.0 million and $ 6.7 million in windfall tax benefits for the years ended December 31, 2024, 2023 and 2022, respectively.
Note 7 – Investments in Unconsolidated Affiliates Our investments in unconsolidated affiliates consist of the following: Gathering and Processing Segment • 50 % operated ownership interest in Little Missouri 4. Logistics and Transportation Segment • 38.8 % operated ownership interest in GCF; and • 50 % operated ownership interest in Cayenne.
Note 7 — Investments in Unconsolidated Affiliates Our investments in unconsolidated affiliates consist of the following: Gathering and Processing Segment • 50 % operated ownership interest in Little Missouri 4. Logistics and Transportation Segment • 38.8 % operated ownership interest in GCF; • 50 % operated ownership interest in Cayenne; and • 17.5 % non-operated ownership interest in Blackcomb.
TRGP Credit Agreement In February 2022, the Company entered into the TRGP Revolver with Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swing Line Lender, and the other lenders party thereto.
Existing TRGP Credit Agreement In February 2022, the Company entered into the Existing TRGP Revolver with Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swing Line Lender, the Letter of Credit issuers party thereto and the lenders party thereto.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

131 edited+19 added−52 removed226 unchanged
Biggest changeWe cannot predict any future trends in the rate of inflation, or any resultant changes in monetary policy, and a significant increase in inflation, to the extent we are unable to recover higher costs through higher prices and revenues, and/or higher interest rates would negatively impact our business, financial condition and results of operations.
Biggest changeWe cannot predict any future trends in the rate of inflation and U.S. international trade policies, or any resultant changes in monetary policy, and a significant increase in inflation, to the extent we are unable to recover higher costs through higher prices and revenues, and/or higher interest rates would negatively impact our business, financial condition and results of operations. 37 Changes in future business conditions could have a negative impact on the demand for our services and could cause recorded long-lived assets to become further impaired, and our financial condition and results of operations could suffer if there is a negative impact on the demand for our services and an additional impairment of long-lived assets .
Finally, the percentage of our expected equity commodity volumes that are hedged decreases substantially over time. • If we fail to balance our purchases and sales of the commodities we handle, our exposure to commodity price risk will increase. • The amounts we pay in dividends may vary from anticipated amounts and circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. • Our future tax liability may be greater than expected if our NOL carryforwards are limited, we do not generate expected deductions, or tax authorities successfully challenge certain of our tax positions. • Changes in tax laws or the interpretation thereof or the imposition of new or increased taxes may adversely affect our financial condition, results of operations and cash flows. • Derivatives legislation and its implementing regulations could have a material adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business.
Finally, the percentage of our expected equity commodity volumes that are hedged decreases substantially over time. • If we fail to balance our purchases and sales of the commodities we handle, our exposure to commodity price risk will increase. • The amounts we pay in dividends may vary from anticipated amounts and circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business. • Our future tax liability may be greater than expected if our NOL carryforwards are limited, we do not generate expected deductions, tax authorities successfully challenge certain of our tax positions or from changes in tax laws. • Changes in tax laws or the interpretation thereof or the imposition of new or increased taxes may adversely affect our financial condition, results of operations and cash flows. • Derivatives legislation and its implementing regulations could have a material adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business.
Despite ongoing efforts to improve our ability to protect data from compromise, we may not be able to protect all of our data across our diverse systems. Our efforts to improve security and protect data may also identify previously undiscovered instances of security breaches or other cyber incidents.
Despite ongoing efforts to improve our ability to protect data from compromise, we may not be able to protect all data across our diverse systems. Our efforts to improve security and protect data may also identify previously undiscovered instances of security breaches or other cyber incidents.
In addition, any acquisitions we complete are subject to substantial risks that could adversely affect our financial condition and results of operations and reduce our ability to pay dividends to stockholders.
In addition, any acquisitions we complete are subject to substantial risks that could adversely affect our financial condition and results of operations and reduce our ability to pay dividends to stockholders.
Any growth project or acquisition involves potential risks, including, among other things: • operating a significantly larger combined organization and adding new or expanded operations; • difficulties in the assimilation of the assets and operations of the growth projects or acquired businesses, especially if the assets developed or acquired are in a new business segment and/or geographic area; • the risk that crude oil and natural gas reserves expected to support the acquired assets may not be of the anticipated magnitude or may not be developed as anticipated; • the failure to realize expected volumes, revenues, profitability or growth; 35 • the failure to realize any expected synergies and cost savings; • coordinating geographically disparate organizations, systems and facilities; • the assumption of environmental and other unknown liabilities; • limitations on rights to indemnity from the seller in an acquisition or the contractors and suppliers in growth projects; • the failure to attain or maintain compliance with environmental and other governmental regulations; • inaccurate assumptions about the overall costs of equity or debt or the tightening of capital markets and access to new capital; • the diversion of management’s and employees’ attention from other business concerns; • challenges associated with joint venture relationships and minority investments, including dependence on joint venture partners, controlling shareholders or management who may have business interests, strategies or goals that are inconsistent with ours; and • customer or key employee losses at the acquired businesses or to a competitor.
Any growth project or acquisition involves potential risks, including, among other things: • operating a significantly larger combined organization and adding new or expanded operations; • difficulties in the assimilation of the assets and operations of the growth projects or acquired businesses, especially if the assets developed or acquired are in a new business segment and/or geographic area; • the risk that crude oil and natural gas reserves expected to support the acquired assets may not be of the anticipated magnitude or may not be developed as anticipated; • the failure to realize expected volumes, revenues, profitability or growth; • the failure to realize any expected synergies and cost savings; • coordinating geographically disparate organizations, systems and facilities; • the assumption of environmental and other unknown liabilities; • limitations on rights to indemnity from the seller in an acquisition or the contractors and suppliers in growth projects; • the failure to attain or maintain compliance with environmental and other governmental regulations; 35 • inaccurate assumptions about the overall costs of equity or debt or the tightening of capital markets and access to new capital; • the diversion of management’s and employees’ attention from other business concerns; • challenges associated with joint venture relationships and minority investments, including dependence on joint venture partners, controlling shareholders or management who may have business interests, strategies or goals that are inconsistent with ours; and • customer or key employee losses at the acquired businesses or to a competitor.
We have a substantial amount of indebtedness which may adversely affect our financial position and we may still be able to incur substantially more debt, which could collectively increase the risks associated with compliance with our financial covenants. We have a substantial amount of indebtedness.
We have a substantial amount of indebtedness which may adversely affect our financial position and we may still be able to incur substantially more debt, which could collectively increase the risks associated with compliance with our financial covenants.
Notwithstanding our election to pursue aspirational targets now or in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other sustainability-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
Notwithstanding our election to pursue aspirational targets now or in the future, we may receive pressure from investors, lenders or other groups to adopt more aggressive climate or other sustainability-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
With the exception of the Driver Residue Pipeline, TPL SouthTex Transmission Company LP, Targa Midland Gas Pipeline LLC, Midland-Permian Pipeline LLC, Delaware-Permian Pipeline LLC, and Targa SouthTex Mustang Transmission Ltd., which are each subject to FERC regulation under the NGPA or limited FERC regulation under the NGA, our natural gas pipeline operations are generally exempt from FERC regulation, but FERC regulation still affects our non-FERC jurisdictional businesses and the markets for products derived from these businesses, including certain FERC reporting and posting requirements in a given year.
With the exception of the Driver Residue Pipeline, TPL SouthTex Transmission Company LP, Midland-Permian Pipeline LLC, Delaware-Permian Pipeline LLC, and Targa SouthTex Mustang Transmission Ltd., which are each subject to FERC regulation under the NGPA or limited FERC regulation under the NGA, our natural gas pipeline operations are generally exempt from FERC regulation, but FERC regulation still affects our non-FERC jurisdictional businesses and the markets for products derived from these businesses, including certain FERC reporting and posting requirements in a given year.
Risks Related to our Indebtedness • Continued increases in interest rates, due to associated Federal Reserve policies or otherwise, could adversely affect our cost of capital, which could increase our funding costs and reduce the overall profitability of our business. • We have a substantial amount of indebtedness which may adversely affect our financial position and we may still be able to incur substantially more debt, which could collectively increase the risks associated with compliance with our financial covenants. • The terms of our debt agreements may restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions, including to pay dividends to our stockholders.
Risks Related to our Indebtedness • Increases in interest rates, due to associated Federal Reserve policies or otherwise, could adversely affect our cost of capital, which could increase our funding costs and reduce the overall profitability of our business. • We have a substantial amount of indebtedness which may adversely affect our financial position and we may still be able to incur substantially more debt, which could collectively increase the risks associated with compliance with our financial covenants. • The terms of our debt agreements may restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions, including to pay dividends to our stockholders.
Supreme Court has held that GHG emissions constitute 43 a pollutant under the CAA, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources, implement New Source Performance Standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.
Supreme Court has held that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources, implement New Source Performance Standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.
For example, following Texas Governor Greg Abbott’s direction to adopt rules related to weather resiliency, in August 2022, the Texas Railroad Commission adopted the Weather Emergency Preparedness Standards rule, which requires critical gas facilities on the state’s Electricity Supply Chain Map (including gas pipelines that directly serve electricity generation) to (i) weatherize to help ensure sustained operations during a weather emergency, (ii) correct known issues that caused weather-related forced stoppages and (iii) 31 contact the Texas Railroad Commission if a facility sustains a weather-related forced stoppage during a weather emergency.
For example, following Texas Governor Greg Abbott’s direction to adopt rules related to weather resiliency, in August 2022, the Texas Railroad Commission adopted the Weather Emergency Preparedness Standards rule, which requires critical gas facilities on the state’s Electricity Supply Chain Map (including gas pipelines that directly serve electricity generation) to (i) weatherize to help ensure sustained operations during a weather emergency, (ii) correct known issues that caused weather-related forced stoppages and (iii) contact the Texas Railroad Commission if a facility sustains a weather-related forced stoppage during a weather emergency.
Risks Related to the Ownership of our Common Stock • Future sales of our common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us. • Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock. • We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Risks Related to the Ownership of our Common Stock • Future sales of our common stock could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us. • Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock. • We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Our insurance coverages may not be sufficient to cover all the losses we may experience as a result of a cyber incident. 34 The widespread outbreak of illnesses or any other public health crises that impacts operations and/or the global demand for energy commodities may have material adverse effects on our business, financial position, results of operations and/or cash flows.
Our insurance coverages may not be sufficient to cover all the losses we may experience as a result of a cyber incident. The widespread outbreak of illnesses or any other public health crises that impacts operations and/or the global demand for energy commodities may have material adverse effects on our business, financial position, results of operations and/or cash flows.
In addition, potential changes in accounting standards might cause us to revise our financial results and disclosure in the future. • We are exposed to credit risks of our customers, and any material nonpayment or nonperformance by our key customers could adversely affect our cash flow and results of operations. • Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. • Changes in future business conditions could have a negative impact on the demand for our services and could cause recorded long-lived assets to become further impaired, and our financial condition and results of operations could suffer if there is a negative impact on the demand for our services and an additional impairment of long-lived assets. • Our hedging activities may not be effective in reducing the variability of our cash flows and may, in certain circumstances, increase the variability of our cash flows.
In addition, potential changes in accounting standards might cause us to revise our financial results and disclosure in the future. • We are exposed to credit risks of our customers, and any material nonpayment or nonperformance by our key customers could adversely affect our cash flow and results of operations. • Inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. • Changes in future business conditions could have a negative impact on the demand for our services and could cause recorded long-lived assets to become further impaired, and our financial condition and results of operations could suffer if there is a negative impact on the demand for our services and an additional impairment of long-lived assets. • Our hedging activities may not be effective in reducing the variability of our cash flows and may, in certain circumstances, increase the variability of our cash flows.
Certain environmental laws impose strict, joint and several liability for 47 costs required to clean up and restore sites where hazardous substances, hydrocarbons or waste products have been released, even under circumstances where the substances, hydrocarbons or wastes have been released by a predecessor operator or the activities conducted and from which a release emanated complied with applicable law.
Certain environmental laws impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances, hydrocarbons or waste products have been released, even under circumstances where the substances, hydrocarbons or wastes have been released by a predecessor operator or the activities conducted and from which a release emanated complied with applicable law.
If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying business activities, investments or capital expenditures, acquisitions, selling assets, restructuring or refinancing debt, or seeking additional equity capital, and such results may adversely affect our ability to make cash dividends.
If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing 41 or delaying business activities, investments or capital expenditures, acquisitions, selling assets, restructuring or refinancing debt, or seeking additional equity capital, and such results may adversely affect our ability to make cash dividends.
Additionally, political, litigation, and financial risks may result in our oil and natural gas customers restricting or cancelling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products.
Additionally, potential political, litigation, and financial risks may result in our oil and natural gas customers restricting or cancelling production activities, incurring potential liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products.
Because our plant tailgate pipelines are relatively short, we treat them as “stub” lines, which are exempt from FERC’s jurisdiction under the Natural Gas Act. Targa NGL, Targa Gulf Coast, and Grand Prix Pipeline have pipelines that are considered common carrier pipelines subject to regulation by FERC under the ICA.
Because our plant tailgate pipelines are relatively short, we treat them as “stub” lines, which are exempt from FERC’s jurisdiction under the Natural Gas Act. 47 Targa NGL, Targa Gulf Coast, and Grand Prix Pipeline have pipelines that are considered common carrier pipelines subject to regulation by FERC under the ICA.
Risks Related to Regulatory Matters • Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including increasingly stringent regulations for methane or other emissions from the oil and gas sector, that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, reduce demand for the products and services we provide, and reduce our or our customers’ ability to access capital. • Increasing stakeholder and market attention to sustainability matters and disclosure obligations may impact our business. • We could incur significant costs in complying with more stringent occupational safety and health requirements. • Laws, regulations and executive orders limiting hydraulic fracturing activities could result in restrictions, delays or cancellations in drilling and completing new oil and natural gas wells by our customers, which could adversely impact our revenues by decreasing the volumes of natural gas, NGLs or crude oil through our facilities and reducing the utilization of our assets. • Our operations are subject to environmental laws and regulations and a failure to comply or an accidental release into the environment may cause us to incur significant costs and liabilities. • A change in the jurisdictional characterization of some of our assets by federal, state, tribal or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may (i) cause our revenues to decline and operating expenses to increase or (ii) delay or increase the cost of expansion projects. • Should we fail to comply with all applicable FERC-administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines. • We are or may become subject to cybersecurity and data privacy laws, regulations, litigation and directives relating to our processing of personal information. 27 Risks Related to our Results of Operations Our cash flow is affected by supply and demand for natural gas, NGL products and crude oil and by natural gas, NGL, crude oil and condensate prices, and decreases in commodity prices and/or activity levels could adversely affect our results of operations and financial condition.
Risks Related to Regulatory Matters • Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including the potential for increasingly stringent regulations for methane and other GHG emissions from the oil and gas sector, that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, reduce demand for the products and services we provide, and reduce our or our customers’ ability to access capital. • Stakeholder and market attention to sustainability matters and disclosure obligations may impact our business. • We could incur significant costs in complying with more stringent occupational safety and health requirements. • State laws and regulations limiting hydraulic fracturing activities could result in restrictions, delays or cancellations in drilling and completing new oil and natural gas wells by our customers, which could adversely impact our revenues by decreasing the volumes of natural gas, NGLs or crude oil through our facilities and reducing the utilization of our assets. • Our operations are subject to environmental laws and regulations and a failure to comply or an accidental release into the environment may cause us to incur significant costs and liabilities. • A change in the jurisdictional characterization of some of our assets by federal, state, tribal or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may (i) cause our revenues to decline and operating expenses to increase or (ii) delay or increase the cost of expansion projects. • Should we fail to comply with all applicable FERC-administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines. • We are subject to cybersecurity and data privacy laws and regulations, and we may become subject to litigation and directives relating to our processing of personal information. 27 Risks Related to our Results of Operations Our cash flow is affected by supply and demand for natural gas, NGL products and crude oil and by natural gas, NGL, crude oil and condensate prices, and decreases in commodity prices and/or activity levels could adversely affect our results of operations and financial condition.
For example, we depend on digital technologies to operate our facilities, serve our customers and record financial data. At the same time, cyber incidents, including deliberate attacks, have increased. Our technologies, systems, networks, including our operational technology systems, and those of our business partners may become the target of cyber-attacks or security breaches.
For example, we depend on digital technologies to operate our facilities, serve our customers and record financial data. At the same time, cyber incidents, including deliberate attacks, have increased. Our technologies, systems, networks, including our operational technology systems, and those of our business partners may become the target of cyberattacks or security breaches.
Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results. • Our industry is highly competitive and increased competitive pressure could adversely affect our business and operating results. • We operate in areas of high industry activity, which may affect our ability to hire, train or retain qualified personnel needed to manage and operate our business. • If third-party pipelines and other facilities interconnected to our natural gas and crude oil gathering systems, terminals and processing facilities become partially or fully unavailable to transport natural gas, NGLs and crude oil, our revenues could be adversely affected. • We typically do not obtain independent evaluations of natural gas or crude oil reserves dedicated to our gathering pipeline systems; therefore, volumes on our systems in the future could be less than we anticipate. • We do not own most of the land on which our pipelines, terminals and compression facilities are located, which could disrupt our operations. • If we lose any of our named executive officers, our business may be adversely affected. • Weather events may damage our pipelines and other facilities, limit our ability or increase the costs to operate our business and adversely impact our customers on whom we rely on for throughput as well as third party vendors from whom we receive goods, which developments could cause us to incur significant costs and adversely affect our business, results of operations and financial condition. • Our business involves many hazards and operational risks, some of which may not be insured or fully covered by insurance.
Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results. • Our industry is highly competitive and increased competitive pressure could adversely affect our business and operating results. • We operate in areas of high industry activity, which may affect our ability to hire, train or retain qualified personnel needed to manage and operate our business. • If third-party pipelines and other facilities interconnected to our natural gas and crude oil gathering systems, terminals and processing facilities or to our NGL pipelines, fractionators and storage facilities become partially or fully unavailable to transport natural gas, NGLs and crude oil, our revenues could be adversely affected. • We typically do not obtain independent evaluations of natural gas or crude oil reserves dedicated to our gathering pipeline systems; therefore, volumes on our systems in the future could be less than we anticipate. • We do not own most of the land on which our pipelines, terminals and compression facilities are located, which could disrupt our operations. • If we lose any of our named executive officers, our business may be adversely affected. • Weather events may damage our pipelines and other facilities, limit our ability or increase the costs to operate our business and adversely impact our customers on whom we rely on for throughput as well as third party vendors from whom we receive goods, which developments could cause us to incur significant costs and adversely affect our business, results of operations and financial condition. • Our business involves many hazards and operational risks, some of which may not be insured or fully covered by insurance.
Increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, rising sea levels and other extreme weather events, as well as chronic 45 shifts in temperature and precipitation patterns.
Increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, rising sea levels and other extreme weather events, as well as chronic shifts in temperature and precipitation patterns.
The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.
The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For 40 example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions.
Increasing societal expectations regarding sustainability initiatives and disclosures and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for our customers’ products and our services, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.
Societal expectations regarding sustainability initiatives and disclosures and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for our customers’ products and our services, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.
Additionally, the federal Tenth Circuit Court of Appeals has held that tribal ownership of even a very small fractional interest in an allotted land, that is, tribal land owned or at one time owned by an individual Indian landowner, bars condemnation of any interest in the allotment.
Additionally, the federal Tenth Circuit Court of Appeals has held that tribal 30 ownership of even a very small fractional interest in an allotted land, that is, tribal land owned or at one time owned by an individual Indian landowner, bars condemnation of any interest in the allotment.
Risks Related to Our Indebtedness Continued increases in interest rates, due to associated Federal Reserve policies or otherwise, could adversely affect our cost of capital, which could increase our funding costs and reduce the overall profitability of our business. We have significant exposure to increases in interest rates.
Risks Related to Our Indebtedness Increases in interest rates, due to associated Federal Reserve policies or otherwise, could adversely affect our cost of capital, which could increase our funding costs and reduce the overall profitability of our business. We have significant exposure to increases in interest rates.
A decline in the volumes on our systems could have a material adverse effect on our business, results of operations and financial condition. 30 We do not own most of the land on which our pipelines, terminals and compression facilities are located, which could disrupt our operations.
A decline in the volumes on our systems could have a material adverse effect on our business, results of operations and financial condition. We do not own most of the land on which our pipelines, terminals and compression facilities are located, which could disrupt our operations.
Our operations are subject to many hazards inherent in gathering, compressing, treating, processing, transporting, 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, including: • damage to pipelines and plants, related equipment and surrounding properties caused by hurricanes, earthquakes, tornadoes, floods, fires, extreme temperatures, and other natural disasters, explosions, cyber attacks, and acts of terrorism; • inadvertent damage from third parties, including from motor vehicles and construction, farm or utility equipment; • damage that is the result of our negligence or any of our employees’ negligence; • leaks of natural gas, NGLs, crude oil and other hydrocarbons or losses of natural gas or NGLs as a result of the malfunction of equipment or facilities; • spills or other unauthorized releases of natural gas, NGLs, crude oil, other hydrocarbons or waste materials that contaminate the environment, including soils, surface water and groundwater, and otherwise adversely impact natural resources; and • other hazards that could also result in personal injury, loss of life, pollution and/or suspension of operations.
Our operations are subject to many hazards inherent in gathering, compressing, treating, processing, transporting, 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, including: • damage to pipelines and plants, related equipment and surrounding properties caused by hurricanes, earthquakes, tornadoes, floods, fires, extreme temperatures, and other natural disasters, explosions, cyberattacks, and acts of terrorism; • inadvertent damage from third parties, including from motor vehicles and construction, farm or utility equipment; • damage that is the result of our negligence or any of our employees’ negligence; • leaks of natural gas, NGLs, crude oil and other hydrocarbons or losses of natural gas or NGLs as a result of the malfunction of equipment or facilities; • spills or other unauthorized releases of natural gas, NGLs, crude oil, other hydrocarbons or waste materials that contaminate the environment, including soils, surface water and groundwater, and otherwise adversely impact natural resources; and • other hazards that could also result in personal injury, loss of life, pollution and/or suspension of operations.
Natural gasoline is used as a blending component for certain refined petroleum products and as a feedstock used in the production of ethylene and propylene. Changes in the mandated composition of motor gasoline resulting from governmental regulation, and in demand for ethylene and propylene, could adversely affect demand for natural gasoline.
Natural gasoline is used as a blending component for certain refined petroleum products and as a feedstock used in the production of ethylene and propylene. Changes in the mandated composition of motor gasoline resulting from governmental regulation, and in demand for ethylene and propylene, could affect demand for natural gasoline.
Under these arrangements, we generally process natural gas from producers and remit to the producers an agreed percentage of the proceeds from the sale of residue gas and NGL products at market prices or a percentage of residue gas and NGL products at the tailgate of our processing facilities.
Under our percentage-of-proceeds arrangements, we generally process natural gas from producers and remit to the producers an agreed percentage of the proceeds from the sale of residue gas and NGL products at market prices or a percentage of residue gas and NGL products at the tailgate of our processing facilities.
Quantitative and Qualitative Disclosures About Market Risk.” 38 If we fail to balance our purchases and sales of the commodities we handle, our exposure to commodity price risk will increase. We may not be successful in balancing our purchases and sales of the commodities we handle.
Quantitative and Qualitative Disclosures About Market Risk.” If we fail to balance our purchases and sales of the commodities we handle, our exposure to commodity price risk will increase. We may not be successful in balancing our purchases and sales of the commodities we handle.
Increased regulatory attention to environmental justice matters at the federal and state level may also provide communities opposed to our operations with greater opportunities to challenge or delay the permitting approval process.
Regulatory attention to environmental justice matters at the federal and state level may also provide communities opposed to our operations with greater opportunities to challenge or delay the permitting approval process.
While implementing rules on certain of these laws are outstanding, both the California laws and the SEC rule, to the extent finalized, may result in increased legal, accounting and financial compliance costs for us and our suppliers and customers to comply, including the implementation of significant additional internal controls processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and board of directors.
While implementing rules on certain of these laws are outstanding, both the California laws and the SEC rule, to the extent implemented, may result in increased legal, accounting and financial compliance costs for us and our suppliers and customers to comply, including the implementation of significant additional internal controls processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and board of directors.
While our systems other than the Driver Residue Pipeline, TPL SouthTex Transmission Company LP, TPL SouthTex Pipeline Company LLC, Targa Midland Gas Pipeline LLC, 49 Midland-Permian Pipeline LLC, Delaware-Permian Pipeline LLC, and Targa SouthTex Mustang Transmission Ltd., have not been regulated by FERC under the NGA or NGPA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to FERC annual reporting and daily scheduled flow and capacity posting requirements.
While our systems other than the Driver Residue Pipeline, TPL SouthTex Transmission Company LP, TPL SouthTex Pipeline Company LLC, Midland-Permian Pipeline LLC, Delaware-Permian Pipeline LLC, and Targa SouthTex Mustang Transmission Ltd., have not been regulated by FERC under the NGA or NGPA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to FERC annual reporting and daily scheduled flow and capacity posting requirements.
Any failure by us, or a company we acquire, to comply with such laws and regulations could result in reputational harm, loss of goodwill, penalties, liabilities, remediation costs, or mandated changes in our business practices. Each has the potential to materially impact our financial condition. 50 Item 1B. Unresolve d Staff Comments. None.
Any failure by us, or a company we acquire, to comply with such laws and regulations could result in reputational harm, loss of goodwill, penalties, liabilities, remediation costs, or mandated changes in our business practices. Each has the potential to materially impact our financial condition. 49 Item 1B. Unresolve d Staff Comments None.
Further, in March 2023, the EPA issued its Good Neighbor Plan rule, which imposes emissions-related requirements on fossil fuel-fired power plants and other industrial users in 22 states, including Texas and Louisiana, which could reduce demand for our products and accelerate the transition away from oil and gas to other sources of energy.
For example, in March 2023, the EPA issued its Good Neighbor Plan rule, which imposes emissions-related requirements on fossil fuel-fired power plants and other industrial users in 22 states, including Texas and Louisiana, which could reduce demand for our products and accelerate the transition away from oil and gas to other sources of energy.
A reduction in demand for NGL products, whether because of general or industry-specific economic conditions, new government regulations, including the IRA, global competition, reduced demand by consumers for products made with NGL products (for example, reduced petrochemical demand observed due to lower activity in the automobile and construction industries), reduced demand for 28 propane or butane exports whether for price or other reasons, increased competition from petroleum-based feedstocks due to pricing differences, mild winter weather for some NGL applications or other reasons, could result in a decline in the volume of NGL products we handle or reduce the fees we charge for our services.
A reduction in demand for NGL products, whether because of general or industry-specific economic conditions, government 28 regulations, global competition, reduced demand by consumers for products made with NGL products (for example, reduced petrochemical demand observed due to lower activity in the automobile and construction industries), reduced demand for propane or butane exports whether for price or other reasons, increased competition from petroleum-based feedstocks due to pricing differences, mild winter weather for some NGL applications or other reasons, could result in a decline in the volume of NGL products we handle or reduce the fees we charge for our services.
These enhancements require a significant commitment of resources, personnel and the development and maintenance of formalized internal reporting procedures to ensure the reliability of our financial reporting.
These enhancements require a significant commitment of resources, 36 personnel and the development and maintenance of formalized internal reporting procedures to ensure the reliability of our financial reporting.
New or more stringent laws, regulations, executive orders or regulatory or ballot initiatives relating to the hydraulic fracturing process could lead to our customers reducing crude oil and natural gas drilling activities using hydraulic fracturing techniques, while increased public opposition to activities using such techniques may result in operational delays, restrictions, cessations, or increased litigation.
New or more stringent laws, regulations or regulatory or ballot initiatives relating to the hydraulic fracturing process could lead to our customers reducing crude oil and natural gas drilling activities using hydraulic fracturing techniques, while increased public opposition to activities using such techniques may result in operational delays, restrictions, cessations, or increased litigation.
Increasing attention to climate change, for example, may result in demand shifts for our or our customers’ hydrocarbon products and additional governmental investigations and private litigation against us or those customers. As part of our ongoing effort to enhance our sustainability practices, our Board of Directors has established a Sustainability Committee.
Attention to climate change, for example, may result in demand 44 shifts for our or our customers’ hydrocarbon products and additional governmental investigations and private litigation against us or those customers. As part of our ongoing effort to enhance our sustainability practices, our Board of Directors has established a Sustainability Committee.
In the event that an ownership change was to occur, utilization of our NOLs carryforwards would be subject to an annual limitation under Section 382, determined by multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in Section 382, subject to certain adjustments.
In the event that an ownership change was to occur, utilization of our NOL carryforwards would be subject to an annual limitation under Section 382, determined by multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in Section 382, subject to certain adjustments.
Additionally, many of our customers and suppliers may be subject to similar expectations and challenges, which may augment or create additional risks, including risks that may not be known to us. We could incur significant costs in complying with more stringent occupational safety and health requirements.
Many of our customers and suppliers may be subject to similar expectations and challenges, which may augment or create additional risks, including risks that may not be known to us. 45 We could incur significant costs in complying with more stringent occupational safety and health requirements.
The adoption and implementation of any international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for oil and natural gas, which could reduce demand for our services and products.
The potential adoption and implementation of international, federal or state legislation, regulations or other regulatory initiatives in the future that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products.
Furthermore, public statements with respect to sustainability matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential sustainability benefits.
Public statements with respect to sustainability matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, such as diversity initiatives, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential sustainability benefits.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), enacted in July 2010, established federal oversight and regulation of the over-the-counter derivatives market and entities, such as us, that participate in that market.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacted in July 2010, established federal oversight and regulation of the over-the-counter derivatives market and entities, such as us, that participate in that market.
Moreover, compliance with the new rules may effect the amount we owe under the IRA’s methane fee described above because compliance with EPA’s methane rules would exempt an otherwise covered facility from the requirement to pay the methane fee.
Moreover, compliance with the new rules may affect the amount we owe under the IRA’s methane fee described above because compliance with EPA’s methane rules would exempt an otherwise covered facility from the requirement to pay the methane fee.
Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. The rate of inflation in the U.S. began to increase significantly beginning in the second half of 2021.
Inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. The rate of inflation in the U.S. began to increase significantly beginning in the second half of 2021.
Laws, regulations and executive orders limiting hydraulic fracturing activities could result in restrictions, delays or cancellations in drilling and completing new oil and natural gas wells by our customers, which could adversely impact our revenues by decreasing the volumes of natural gas, NGLs or crude oil through our facilities and reducing the utilization of our assets.
State laws and regulations limiting hydraulic fracturing activities could result in restrictions, delays or cancellations in drilling and completing new oil and natural gas wells by our customers, which could adversely impact our revenues by decreasing the volumes of natural gas, NGLs or crude oil through our facilities and reducing the utilization of our assets.
Additionally, in August 2022, the IRA was signed into law, which appropriates significant federal funding for renewable energy initiatives and amends the federal Clean Air Act to impose a first-time fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production and gathering and boosting source categories.
Additionally, in August 2022, the IRA was signed into law, which appropriates significant federal funding for renewable energy initiatives and amends the CAA to impose a first-time fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production and gathering and boosting source categories.
These factors include supply and demand for these commodities, which fluctuates with changes in market and economic conditions, and other factors, including: • the impact of seasonality and weather, including severe weather conditions and other natural disasters, such as flooding, droughts and winter storms, the frequency, severity and impact of which could be increased by the effects of climate change; • general economic conditions and economic conditions impacting our primary markets, including the impact of continued inflation and rising interest rates and associated changes in monetary policy; • the economic conditions of our customers; • the level of domestic crude oil and natural gas production and consumption; • the availability of imported natural gas, liquefied natural gas, NGLs and crude oil; • actions taken by major foreign oil and gas producing nations; • the availability of local, intrastate and interstate transportation systems and storage for residue natural gas and NGLs; • the availability of domestic storage for crude oil; • the availability and marketing of competitive fuels and/or feedstocks; • the impact of energy conservation efforts and the related transition to a low carbon economy, as a result of the IRA or otherwise; • stockholder activism and activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of crude oil and natural gas; and • the extent and nature of governmental regulation and taxation, including those related to the prorationing of oil and gas production.
These factors include supply and demand for these commodities, which fluctuates with changes in market and economic conditions, and other factors, including: • the impact of seasonality and weather, including severe weather conditions and other natural disasters, such as flooding, droughts and winter storms, the frequency, severity and impact of which could be increased by the effects of climate change; • general economic conditions and economic conditions impacting our primary markets, including the impact of proposed tariffs, inflation and increases in interest rates and associated changes in monetary policy; • the economic conditions of our customers; • the level of domestic crude oil and natural gas production and consumption; • the availability of imported natural gas, liquefied natural gas, NGLs and crude oil; • actions taken by major foreign oil and gas producing nations; • the availability of local, intrastate and interstate transportation systems and storage for residue natural gas and NGLs; • the availability of domestic storage for crude oil; • the availability and marketing of competitive fuels and/or feedstocks; • the impact of energy conservation efforts, including the promotion of the transition to a low carbon economy; • stockholder activism and activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of crude oil and natural gas; and • the extent and nature of governmental regulation and taxation, including those related to the prorationing of oil and gas production.
Our technologies, systems and networks, and those of our vendors, suppliers, customers and other business partners, may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or could adversely disrupt our business operations.
Our technologies, systems and networks, and those of our vendors, suppliers, customers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or could adversely disrupt our business operations.
Under the EP Act of 2005, FERC has civil penalty authority under the NGA and NGPA to impose penalties for violations of the NGA or NGPA up to a maximum amount that is adjusted annually for inflation, which for 2024 equals approximately $1.5 million per violation per day, as well as authority to order disgorgement of profits associated with any violation.
Under the EP Act of 2005, FERC has civil penalty authority under the NGA and NGPA to impose penalties for violations of the NGA or NGPA up to a maximum amount that is adjusted annually for inflation, which for 2025 equals approximately $1.6 million per violation per day, as well as authority to order disgorgement of profits associated with any violation.
We also published our 2022 Sustainability Report, which provides updates on our performance related to certain sustainability topics and sets certain sustainability goals, such as reductions in methane intensity in line with the ONE Future goals. While we may elect to seek out various additional voluntary sustainability targets now or in the future, such targets are aspirational.
We published our 2023 Sustainability Report, which provides updates on our performance related to certain sustainability topics and sets certain sustainability goals, such as reductions in methane intensity in line with the ONE Future goals. While we may elect to seek out various additional voluntary sustainability targets now or in the future, such targets are often aspirational.
In addition, FERC has civil penalty authority under the ICA to impose penalties for violations under the ICA up to a maximum amount that is adjusted annually for inflation, which for 2024 was up to approximately $16,170 per violation per day, and failure to comply with the ICA and regulations implementing the ICA could subject us to civil penalty liability.
In addition, FERC has civil penalty authority under the ICA to impose penalties for violations under the ICA up to a maximum amount that is adjusted annually for inflation, which for 2025 was up to approximately $16,590 per violation per day, and failure to comply with the ICA and regulations implementing the ICA could subject us to civil penalty liability.
As the breadth and complexity of the technologies we use continue to grow, including as a result of the use of mobile devices, cloud services, open source software, social media and the increased reliance on devices connected to the internet, the potential risk of security breaches and cybersecurity attacks also increases.
As the breadth and complexity of the technologies we use continue to grow, including as a result of the use of artificial intelligence, mobile devices, cloud computing, open source software, social media and the increased reliance on devices connected to the internet, the potential risk of security breaches and cybersecurity attacks also increases.
Stockholders and bondholders currently invested in fossil fuel energy companies but concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.
Additionally, from time to time, certain stockholders and bondholders currently invested in fossil fuel energy companies but concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.
Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, that may limit hydraulic fracturing of oil and natural gas wells, restrict flaring and venting during natural gas production on federal properties, and ban or restrict new or existing leases for production of minerals on federal properties.
Governmental, scientific, and public concern from sources in the United States and across the world over the threat of climate change arising from GHG emissions has resulted in political risks that may limit hydraulic fracturing of oil and natural gas wells, restrict flaring and venting during natural gas production on government-owned properties, and ban or restrict new or existing leases for production of minerals on government-owned properties.
Litigation risks are also increasing, as a number of cities, local governments, and other plaintiffs have sought to bring suit against the largest oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or consumers by failing to adequately disclose those impacts.
Litigation risks exist from certain cities, local governments, and other plaintiffs who may bring suit against large oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or consumers by failing to adequately disclose those impacts.
Increasing stakeholder and market attention to sustainability matters and disclosure obligations may impact our business. Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their sustainability practices.
Stakeholder and market attention to sustainability matters and disclosure obligations may impact our business. Companies across industries face scrutiny from a variety of stakeholders related to their sustainability practices.
If our credit rating is downgraded below investment grade by both Moody’s and S&P, as defined in our ISDAs, we estimate that as of December 31, 2023, we would not be required to post collateral to any counterparties per the terms of our ISDAs.
If our credit rating was to be downgraded one notch below investment grade by both Moody’s and S&P, as defined in our ISDAs, we estimate that as of December 31, 2024, we would not be required to post collateral to any counterparties per the terms of our ISDAs.
For more information regarding regulation of our operations, see “Item 1. Business—Regulation of Operations.” Additional rules and legislation pertaining to those and other matters may be considered or adopted by FERC from time to time. We are or may become subject to cybersecurity and data privacy laws, regulations, litigation and directives relating to our processing of personal information.
Business—Regulation of Operations.” Additional rules and legislation pertaining to those and other matters may be considered or adopted by FERC from time to time. 48 We are subject to cybersecurity and data privacy laws and regulations, and we may become subject to litigation and directives relating to our processing of personal information.
Without the concurrence of joint venture participants with enough voting interests, we may be unable to cause any of our joint ventures to take or not take certain actions, even though taking or preventing those actions may be in our best interests or the particular joint venture.
Without the concurrence of joint venture participants holding sufficient voting interests, we may be unable to cause our joint ventures to take or not take certain actions, even though taking or preventing those actions may be in the best interests of the particular joint venture or us.
In response to President Biden’s executive order calling on the EPA to revisit federal regulations regarding methane, the EPA finalized more stringent methane rules for new, modified, and reconstructed facilities, known as OOOOb, as well as standards for existing sources known as OOOOc, in December 2023.
In response to President Biden’s executive order calling on the EPA to revisit federal regulations regarding methane, the EPA finalized more stringent methane rules for new, modified, and reconstructed facilities, known as OOOOb, as well as standards for existing sources known as OOOOc, in December 2023. Fines and penalties for violations of these rules can be substantial.
The methane emissions fee would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA.
The methane emissions fee began in calendar year 2024 at $900 per ton of methane, increasing to $1,200 in 2025, and $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA.
Some or all of such legislation will elevate our compliance costs over time. Our business involves collection, use, and other processing of personal information and personally identifiable information of our employees, investors, contractors, suppliers, and customer contacts.
For example, Texas has enacted data privacy legislation. Some or all of such legislation will elevate our compliance costs over time. Our business involves collection, use, and other processing of personal information and personally identifiable information of our employees, investors, contractors, suppliers, and customer contacts.
Our actual future volumes may be significantly higher or lower than we estimated at the time we entered into the derivative transactions for that period. If the actual amount is higher than we estimated, we will have greater commodity price risk than we intended.
As a result, we will continue to have direct commodity price risk to the unhedged portion. Our actual future volumes may be significantly higher or lower than we estimated at the time we entered into the derivative transactions for that period. If the actual amount is higher than we estimated, we will have greater commodity price risk than we intended.
Many states have adopted legal requirements that have imposed new or more stringent permitting, public disclosure or well construction requirements on hydraulic fracturing activities, including in states where we or our customers conduct operations. States could further elect to suspend or prohibit hydraulic fracturing activities in the future.
Hydraulic fracturing is typically regulated by state oil and gas commissions and many states have adopted legal requirements that have imposed new or more stringent permitting, public disclosure or well construction requirements on hydraulic fracturing activities, including in states where we or our customers conduct operations. States could further elect to suspend or prohibit hydraulic fracturing activities in the future.
In addition, subject to certain conditions, any joint venture owner may sell, transfer or otherwise modify its ownership interest in a joint venture, whether in a transaction involving third parties or the other joint owners.
In addition, subject to certain conditions, any joint venture owner may sell, transfer or otherwise modify its ownership interest in a joint venture, whether in a transaction involving third parties or the other joint owners. Any such transaction could result in our partnering with different or additional parties.
Although our debt agreements contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and any indebtedness incurred in compliance with these restrictions could be substantial.
Although our debt agreements contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and any indebtedness incurred in compliance with these restrictions could be substantial. If we incur additional debt, this could increase the risks associated with compliance with our financial covenants.
In addition, we have no control over producers or their drilling, completion or production decisions, which are affected by, among other things, prevailing and projected energy prices, demand for hydrocarbons, the level of reserves, geological considerations, governmental regulations, the availability of drilling rigs, other production and development costs and the availability and cost of capital.
In addition, we have no control over producers or their drilling, completion or production decisions, which are affected by, among other things, prevailing and projected energy prices, demand for hydrocarbons, the level of reserves, geological considerations, governmental regulations, the availability of drilling rigs, other production and development costs and the availability and cost of capital. 29 Fluctuations in energy prices can greatly affect production rates and investments by third parties in the development of new oil and natural gas reserves.
Any such transaction could result in our partnering with different or additional parties. 36 As is common in the midstream industry, we may operate one or more of our properties with one or more joint venture partners where we own a minority interest and/or contract with a third party to control operations.
As is common in the midstream industry, we may operate one or more of our properties with one or more joint venture partners where we own a minority interest and/or contract with a third party to control operations.
While we expect to be able to utilize our NOL carryforwards and generate deductions to offset all or a portion of our future taxable income (subject to the CAMT discussed below), in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise) or our NOL carryforwards are subject to future limitations under Section 382, our future tax liability may be greater than expected. 39 Changes in tax laws or the interpretation thereof or the imposition of new or increased taxes may adversely affect our financial condition, results of operations and cash flows.
While we expect to be able to utilize our NOL carryforwards and generate deductions to offset all or a portion of our future taxable income (subject to the CAMT discussed below), in the event that deductions are not generated as expected, one or more of our tax positions are successfully challenged by the IRS (in a tax audit or otherwise) or our NOL carryforwards are subject to future limitations under Section 382, our future tax liability may be greater than expected.
If third-party pipelines and other facilities interconnected to our natural gas and crude oil gathering systems, terminals and processing facilities become partially or fully unavailable to transport natural gas, NGLs and crude oil, our revenues could be adversely affected. We depend upon third-party pipelines, storage and other facilities that provide delivery options to and from our gathering and processing facilities.
If third-party pipelines and other facilities interconnected to our natural gas and crude oil gathering systems, terminals and processing facilities or to our NGL pipelines, fractionators and storage facilities become partially or fully unavailable to transport natural gas, NGLs and crude oil, our revenues could be adversely affected.
Risks Related to Regulatory Matters Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including increasingly stringent regulations for methane and other emissions from the oil and gas sector, that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, reduce demand for the products and services we provide, and reduce our or our customers’ ability to access capital.
The operating and financial restrictions and covenants in these debt agreements and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities. 42 Risks Related to Regulatory Matters Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including the potential for increasingly stringent regulations for methane and other GHG emissions from the oil and gas sector, that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, reduce demand for the products and services we provide, and reduce our or our customers’ ability to access capital.
Although the rate of inflation has generally declined since the second half of 2022, the rate of inflation remains higher than historical averages, and inflationary pressures 37 remain volatile and have resulted in and may result in additional increases to the costs of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise.
Although the rate of inflation has generally declined since the second half of 2022, inflationary pressures remain volatile and have resulted in and may result in additional increases to the costs of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation likewise caused the U.S.
This in turn could have an adverse effect on our business, financial condition and results of operation. 48 A change in the jurisdictional characterization of some of our assets by federal, state, tribal or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may (i) cause our revenues to decline and operating expenses to increase or (ii) delay or increase the cost of expansion projects.
A change in the jurisdictional characterization of some of our assets by federal, state, tribal or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may (i) cause our revenues to decline and operating expenses to increase or (ii) delay or increase the cost of expansion projects.
Separately, Nationwide Permit (“NWP”) 12, which is available under the Clean Water Act for certain oil and gas activities, has been subject to legal challenges and regulatory revision in recent years.
Separately, Nationwide Permit (“NWP”) 12, which is available under the Clean Water Act for certain oil and gas activities, has been subject to legal challenges and regulatory revision in recent years. The Corps has been engaged in a formal review of NWP 12 as a result of these actions.
Risks Related to our Capital Projects and Future Growth Our expansion or modification of existing assets or the construction of new assets may not result in revenue increases and are subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition.
We face risks related to major public health crises that are outside of our control and could significantly disrupt our operations and demand for our services, which could adversely affect our financial condition. 34 Risks Related to our Capital Projects and Future Growth Our expansion or modification of existing assets or the construction of new assets may not result in revenue increases and are subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition.
For example, an accidental release from one of our facilities could subject us to substantial liabilities arising from environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury, natural resource and property damages and fines or penalties for related violations of environmental laws or regulations.
For example, an accidental release from one of our facilities could subject us to substantial liabilities arising from environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury, natural resource and property damages and fines or penalties for related violations of environmental laws or regulations. 46 Moreover, stricter laws, regulations or enforcement policies could significantly increase our operational or compliance costs and the cost of any remediation that may become necessary.
Should we be targeted by any similar litigation, involvement in such a case could have adverse financial and reputational impacts and an unfavorable ruling could significantly impact our operations and adversely impact our financial condition. Additionally, our access to capital may be impacted by climate change policies.
Should we be targeted by such litigation, involvement in such a case could have adverse financial and reputational impacts and an unfavorable ruling could significantly impact our operations and adversely impact our financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDespite the security and risk management measures that we have implemented and any additional measures we may implement or adopt in the future, our facilities and systems, and those of our third-party service providers, have been and are vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts of vandalism, misdirected wire transfers, or other malicious or criminal activities.
Biggest changeDespite the security and risk management measures that we have implemented and any additional measures we may implement or adopt in the future, our facilities and systems, and those of our third-party service providers, vendors, suppliers, customers and other business partners, have been and are vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts of vandalism, misdirected wire transfers, or other malicious or criminal activities.
No Previous Material Cybersecurity Threats As of the date of this report, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
No Previous Material Cybersecurity Incidents As of the date of this report, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company.
We continue to make investments in new technologies to protect our facilities, users, and stakeholders, and to protect the personally identifiable information we maintain. 51 Board of Directors’ Oversight of Risks from Cybersecurity Risks Cybersecurity risks are overseen at the board level through the Audit Committee.
We continue to make investments in new technologies to protect our facilities, users, and stakeholders, and to protect the personally identifiable information we maintain. 50 Board of Directors’ Oversight of Risks from Cybersecurity Risks Cybersecurity risks are overseen at the board level through the Audit Committee.
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.
We acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe filed a petition for review with the Supreme Court of Texas which was denied on October 20, 2023, but we are seeking rehearing and the appeal remains pending. The cumulative amount of interest on the award through December 31, 2023, if accrued, would have been approximately $55.5 million.
Biggest changeWe 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.
Vitol’s lawsuit also alleges 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.
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.
Vitol alleges that Targa Channelview breached an agreement, dated December 27, 2015, for crude oil and condensate between Targa Channelview and Noble Americas Corp. (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.
Vitol alleged that Targa Channelview breached an agreement, dated December 27, 2015, for crude oil and condensate between Targa Channelview and Noble Americas Corp. (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.
Item 3. Legal Proceedings. On December 26, 2018, Vitol Americas Corp. (“Vitol”) filed a lawsuit in the 80 th 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.
Item 3. Legal Proceedings On December 26, 2018, Vitol Americas Corp. (“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.
Targa also seeks recovery of its attorneys’ fees and costs in the lawsuit. 52 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.
Targa also sought recovery of its attorneys’ fees and costs in the lawsuit. 51 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.
Additional information required for this item is provided in Note 18 – Contingencies, under the heading “Legal Proceedings” included in the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Annual Report, which is incorporated by reference into this item. Item 4. Mine Saf ety Disclosures. Not applicable. 53 PART II
Additional information required for this item is provided in Note 17 – Contingencies, under the heading “Legal Proceedings” included in the Notes to Consolidated Financial Statements included under Part II, Item 8 of this Annual Report, which is incorporated by reference into this item. Item 4. Mine Saf ety Disclosures Not applicable. 52 PART II
Added
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 which included cumulative interest on the award of $55.8 million to Vitol in satisfaction of the Texas state court judgment.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock price performance included in this graph is historical and not necessarily indicative of future stock price performance. 54 Year Ended December 31, 2018 2019 2020 2021 2022 2023 Targa Resources Corp. $ 100.00 $ 124.19 $ 83.58 $ 167.16 $ 240.00 $ 290.34 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 AMUS Index $ 100.00 $ 115.56 $ 86.72 $ 125.75 $ 162.92 $ 194.13 Pursuant to Instruction 7 to Item 201(e) of Regulation S-K, the above stock performance graph and related information is being furnished and is not being filed with the SEC, and as such shall not be deemed to be incorporated by reference into any filing that incorporates this Annual Report by reference.
Biggest changeYear Ended December 31, 2019 2020 2021 2022 2023 2024 Targa Resources Corp. $ 100.00 $ 67.30 $ 134.60 $ 193.25 $ 233.78 $ 490.51 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 AMUS Index $ 100.00 $ 75.04 $ 108.82 $ 140.99 $ 168.00 $ 253.25 53 Pursuant to Instruction 7 to Item 201(e) of Regulation S-K, the above stock performance graph and related information is being furnished and is not being filed with the SEC, and as such shall not be deemed to be incorporated by reference into any filing that incorporates this Annual Report by reference.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the NYSE under the symbol “TRGP.” As of December 31, 2023, there were 170 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE under the symbol “TRGP.” As of December 31, 2024, there were 154 stockholders of record of our common stock.
Recent Sales of Unregistered Equity Securities There were no sales of unregistered equity securities for the year ended December 31, 2023.
Recent Sales of Unregistered Equity Securities There were no sales of unregistered equity securities for the year ended December 31, 2024.
Stock Performance Graph The graph below compares the cumulative total return to holders of Targa Resources Corp.’s common stock, the Standard & Poor's 500 Stock Index (the “S&P 500 Index”) and the Alerian US Midstream Energy Index (the “AMUS Index”) during the period beginning on December 31, 2018 and ending on December 31, 2023.
Stock Performance Graph The graph below compares the cumulative total return to holders of Targa Resources Corp.’s common stock, the Standard & Poor's 500 Stock Index (“S&P 500”) and the Alerian US Midstream Energy Index (“AMUS”) during the period beginning on December 31, 2019 and ending on December 31, 2024.
Covenants contained in our debt agreements could limit the payment of dividends. For a discussion of restrictions on our and our subsidiaries’ ability to pay dividends or make distributions, please see Note 8 – Debt Obligations in our Consolidated Financial Statements beginning on page F-1 in this Form 10-K.
Covenants contained in our debt agreements could limit the payment of dividends. For a discussion of restrictions on our and our subsidiaries’ ability to pay dividends or make distributions, please see Note 8 – Debt Obligations in our Consolidated Financial Statements.
The performance graph was prepared based on the following assumptions: (i) $100 was invested in our common stock and in each of the indices at the beginning of the period, and (ii) dividends were reinvested on the relevant payment dates.
The performance graph was prepared based on the following assumptions: (i) $100 was invested in our common stock and in each of the indices at the beginning of the period, and (ii) dividends were reinvested on the relevant payment dates. The stock price performance included in this graph is historical and not necessarily indicative of future stock price performance.
This number does not include stockholders whose shares are held in trust by other entities. The actual number of stockholders is greater than the number of holders of record. As of February 9, 2024, there were 223,155,363 shares of common stock outstanding.
This number does not include stockholders whose shares are held in trust by other entities. The actual number of stockholders is greater than the number of holders of record. As of February 14, 2025, there were 218,106,765 shares of common stock outstanding.
(2) In the fourth quarter 2020, our board of directors approved a share repurchase program for the repurchase of up to $500 million of our outstanding common stock. In May 2023, our Board of Directors approved the 2023 Share Repurchase Program for the repurchase of up to $1.0 billion of our outstanding common stock.
See Note 21 – Compensation Plans for a discussion of our compensation plans. (2) In May 2023, our Board of Directors approved the 2023 Share Repurchase Program for the repurchase of up to $1.0 billion of our outstanding common stock.
Repurchase of Equity by Targa Resources Corp, or Affiliated Purchasers Period Total number of shares purchased (1) Average price per share Total number of shares purchased as part of publicly announced plans (2) Maximum approximate dollar value of shares that may yet be purchased under the plan (in thousands) (2) October 1, 2023 - October 31, 2023 109,772 $ 81.82 108,550 $ 801,820 November 1, 2023 - November 30, 2023 92,066 $ 87.74 91,165 $ 793,820 December 1, 2023 - December 31, 2023 275,325 $ 86.23 275,325 $ 770,080 _________________________________ (1) Includes 475,040 shares purchased under our 2023 Share Repurchase Program, as well as 2,123 shares that were withheld by us to satisfy tax withholding obligations of certain of our officers, directors and key employees that arose upon the lapse of restrictions on restricted stock.
Repurchase of Equity by Targa Resources Corp, or Affiliated Purchasers Period Total number of shares purchased (1) Average price per share Total number of shares purchased as part of publicly announced plans (2) Maximum approximate dollar value of shares that may yet be purchased under the plan (in thousands) (2) October 1, 2024 - October 31, 2024 325,129 $ 156.30 306,520 $ 1,075,390 November 1, 2024 - November 30, 2024 181,192 $ 200.06 179,702 $ 1,039,389 December 1, 2024 - December 31, 2024 124,610 $ 192.82 124,461 $ 1,015,387 _________________________________ (1) Includes 610,683 shares purchased under our 2023 Share Repurchase Program, as well as 20,248 shares that were withheld by us to satisfy tax withholding obligations of certain of our officers, directors and key employees that arose upon the lapse of restrictions on restricted stock.
During the second quarter of 2023, we exhausted the 2020 Share Repurchase Program. We are not obligated to repurchase any specific dollar amount or number of shares under the 2023 Share Repurchase Program and may discontinue the program at any time. Item 6. Reserved. 55
In July 2024, our Board of Directors approved the 2024 Share Repurchase Program for the repurchase of up to $1.0 billion of our outstanding common stock. 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. Item 6. Reserved 54

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2023 2022 (In millions) Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA, Distributable Cash Flow and Adjusted Free Cash Flow Net income (loss) attributable to Targa Resources Corp. $ 1,345.9 $ 1,195.5 Interest (income) expense, net 687.8 446.1 Income tax expense (benefit) 363.2 131.8 Depreciation and amortization expense 1,329.6 1,096.0 (Gain) loss on sale or disposition of assets (5.3 ) (9.6 ) Write-down of assets 6.9 9.8 (Gain) loss from financing activities (1) 2.1 49.6 (Gain) loss from sale of equity method investment — (435.9 ) Transaction costs related to business acquisition (2) — 23.9 Equity (earnings) loss (9.0 ) (9.1 ) Distributions (contributions) from unconsolidated affiliates, net 18.6 27.2 Compensation on equity grants 62.4 57.5 Risk management activities (275.4 ) 302.5 Noncontrolling interests adjustments (3) (3.7 ) 15.8 Litigation expense (4) 6.9 — Adjusted EBITDA $ 3,530.0 $ 2,901.1 Interest expense on debt obligations (5) (675.8 ) (447.6 ) Maintenance capital expenditures, net (6) (223.4 ) (168.1 ) Cash taxes (13.6 ) (6.7 ) Distributable Cash Flow $ 2,617.2 $ 2,278.7 Growth capital expenditures, net (6) (2,224.5 ) (1,177.2 ) Adjusted Free Cash Flow $ 392.7 $ 1,101.5 (1) Gains or losses on debt repurchases or early debt extinguishments.
Biggest changeAdjusted cash flow from operations and adjusted free cash flow are performance measures used by us and by external users of our financial statements, such as investors, commercial banks and research analysts, to assess our ability to generate cash earnings (after servicing our debt and funding capital expenditures) to be used for corporate purposes, such as payment of dividends, retirement of debt or redemption of other financing arrangements. 59 Our Non-GAAP Financial Measures The following table reconciles the non-GAAP financial measures used by management to the most directly comparable GAAP measures for the periods indicated: Year Ended December 31, 2024 2023 (In millions) Reconciliation of Net income (loss) attributable to Targa Resources Corp. to Adjusted EBITDA, Adjusted Cash Flow from Operations and Adjusted Free Cash Flow Net income (loss) attributable to Targa Resources Corp. $ 1,312.0 $ 1,345.9 Interest (income) expense, net 767.2 687.8 Income tax expense (benefit) 384.5 363.2 Depreciation and amortization expense 1,423.0 1,329.6 (Gain) loss on sale or disposition of assets (3.1 ) (5.3 ) Write-down of assets 6.2 6.9 (Gain) loss from financing activities 0.8 2.1 Equity (earnings) loss (9.4 ) (9.0 ) Distributions from unconsolidated affiliates 25.3 18.6 Compensation on equity grants 63.2 62.4 Risk management activities 164.6 (275.4 ) Noncontrolling interests adjustments (1) 3.9 (3.7 ) Litigation expense (2) 4.1 6.9 Adjusted EBITDA $ 4,142.3 $ 3,530.0 Interest expense on debt obligations (3) (752.4 ) (675.8 ) Cash taxes (17.5 ) (13.6 ) Adjusted Cash Flow from Operations $ 3,372.4 $ 2,840.6 Maintenance capital expenditures, net (4) (231.9 ) (223.4 ) Growth capital expenditures, net (4) (3,000.4 ) (2,224.5 ) Adjusted Free Cash Flow $ 140.1 $ 392.7 (1) Represents adjustments related to our subsidiaries with noncontrolling interests, including depreciation and amortization expense as well as earnings for certain plants within our WestTX joint venture not subject to noncontrolling interest.
For additional discussion on recent factors impacting our liquidity and capital resources, see “Recent Developments.” Short-term Liquidity Our principal sources of short-term liquidity consist of internally generated cash flow, borrowings available under the TRGP Revolver, as well as our right to request additional commitment increases under the TRGP Revolver, our Commercial Paper Program, the Securitization Facility, proceeds from debt and equity offerings, and joint ventures and/or asset sales.
For additional discussion on recent factors impacting our liquidity and capital resources, see “Recent Developments.” Short-term Liquidity Our principal sources of short-term liquidity consist of internally generated cash flow, borrowings available under the New TRGP Revolver, as well as our right to request additional commitment increases under the New TRGP Revolver, our Commercial Paper Program, the Securitization Facility, proceeds from debt and equity offerings, and joint ventures and/or asset sales.
On a consolidated basis, our main sources of liquidity and capital resources are internally generated cash flows from operations, borrowings under the TRGP Revolver, Commercial Paper Program, Securitization Facility, and access to debt and equity capital markets. We supplement these sources of liquidity with joint venture arrangements and proceeds from asset sales.
On a consolidated basis, our main sources of liquidity and capital resources are internally generated cash flows from operations, borrowings under the New TRGP Revolver, Commercial Paper Program, Securitization Facility, and access to debt and equity capital markets. We supplement these sources of liquidity with joint venture arrangements and proceeds from asset sales.
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. Changes in the methods or assumptions we use to calculate the fair value of our derivative instruments could have a material effect on our consolidated financial statements.
We determine the fair value of our derivative instruments using 69 present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. Changes in the methods or assumptions we use to calculate the fair value of our derivative instruments could have a material effect on our consolidated financial statements.
See the description of our accounting policies in the notes to the financial statements for additional information about our critical accounting policies and estimates. Business Acquisitions For business acquisitions, we generally recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the acquisition date.
See the description of our accounting policies in the notes to the financial statements for additional information about our critical accounting policies and estimates. Business Acquisitions For business acquisitions, we recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the acquisition date.
In an effort to reduce the volatility of our cash flows, we have entered into derivative financial instruments to hedge the commodity price associated 71 with a portion of our expected natural gas, NGL, and condensate equity volumes, future commodity purchases and sales, and transportation basis risk.
In an effort to reduce the volatility of our cash flows, we have entered into derivative financial instruments to hedge the commodity price associated with a portion of our expected natural gas, NGL, and condensate equity volumes, future commodity purchases and sales, and transportation basis risk.
Management compensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these insights into our decision-making processes. 59 Adjusted Operating Margin We define adjusted operating margin for our segments as revenues less product purchases and fuel.
Management compensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these insights into our decision-making processes. Adjusted Operating Margin We define adjusted operating margin for our segments as revenues less product purchases and fuel.
For information on our obligations with respect to these investments, as well as our obligations with respect to related letters of credit, see Note 7 – Investments in Unconsolidated Affiliates and Note 8 – Debt Obligations. Contractual Obligations We believe we have sufficient liquidity to fund our operations and meet our short-term and long-term obligations.
For information on our obligations with respect to these investments, as well as our obligations with respect to related letters of credit, see Note 7 – Investments in Unconsolidated Affiliates and Note 8 – Debt Obligations. Contractual Obligations We believe we have sufficient liquidity to fund our operations and meet our short-term and long-term cash obligations.
Adjusted EBITDA, distributable cash flow, adjusted free cash flow and adjusted operating margin (segment) are non-GAAP measures. The GAAP measures most directly comparable to these non-GAAP measures are income (loss) from operations, Net income (loss) attributable to Targa Resources Corp. and segment operating margin.
Adjusted EBITDA, adjusted cash flow from operations, adjusted free cash flow and adjusted operating margin (segment) are non-GAAP measures. The GAAP measures most directly comparable to these non-GAAP measures are income (loss) from operations, Net income (loss) attributable to Targa Resources Corp. and segment operating margin.
Risk Factors.” Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
Risk Factors.” Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
(3) Export volumes represent the quantity of NGL products delivered to third-party customers at our Galena Park Marine Terminal that are destined for international markets. 2023 Compared to 2022 The increase in adjusted operating margin was due to higher pipeline transportation and fractionation margin, higher marketing margin, and higher LPG export margin.
(3) Export volumes represent the quantity of NGL products delivered to third-party customers at our Galena Park Marine Terminal that are destined for international markets. 2024 Compared to 2023 The increase in adjusted operating margin was due to higher pipeline transportation and fractionation margin, higher marketing margin, and higher LPG export margin.
General Trends and Outlook We expect our results of operations to continue to be affected by the following key trends: commodity prices, volume throughput and demand for our products and services, contract terms and mix, the impact of our hedging activities, the cost to operate and support assets, volatile capital markets, competition and increased regulation.
General Trends and Outlook We expect our results of operations to continue to be affected by the following key trends: commodity prices, volume throughput and demand for our products and services, contract terms and mix, the impact of our hedging activities, the cost to operate and support assets, volatile capital markets and competition.
The employees supporting our operations are employees of Targa Resources LLC, a Delaware limited liability company, and a wholly-owned subsidiary of ours. 57 Volatile Capital Markets and Competition We continuously consider and enter into discussions regarding potential growth projects and acquisitions and may contemplate external funding for potential growth projects and acquisitions.
The employees supporting our operations are employees of Targa Resources LLC, a Delaware limited liability company, and a wholly-owned subsidiary of ours. 56 Volatile Capital Markets and Competition We continuously consider and enter into discussions regarding potential growth projects and acquisitions and may contemplate external funding for potential growth projects and acquisitions.
These agreements expire at various dates with varying terms, some of which are perpetual. See Note 17 - Commitments for more information. (6) Includes commitments for pipeline capacity payments for firm transportation and throughput and deficiency agreements, purchase of natural gas and NGLs, capital expenditures, operating expenses and service contracts.
These agreements expire at various dates with varying terms, some of which are perpetual. See Note 16 - Commitments for more information. (6) Includes commitments for pipeline capacity payments for firm transportation and throughput and deficiency agreements, purchase of natural gas and NGLs, capital expenditures, operating expenses and service contracts.
See Note 8 - Debt Obligations for more information. (2) Represents interest expense on long-term debt obligations based on both fixed debt interest rates and prevailing December 31, 2023 rates for floating debt. See Note 8 - Debt Obligations for more information. (3) Includes minimum payments on operating lease obligations for compressors, office space and railcars.
See Note 8 - Debt Obligations for more information. (2) Represents interest expense on long-term debt obligations based on both fixed debt interest rates and prevailing December 31, 2024 rates for floating debt. See Note 8 - Debt Obligations for more information. (3) Includes minimum payments on operating lease obligations for compressors, office space and railcars.
The factors that typically cause overall variability in our reported total working capital are: (i) our cash position; (ii) liquids inventory levels, which we closely manage, and valuation; (iii) changes in payables and accruals 66 related to major growth capital projects; (iv) changes in the fair value of the current portion of derivative contracts; (v) monthly swings in borrowings under the Securitization Facility; and (vi) major structural changes in our asset base or business operations, such as certain organic growth capital projects and acquisitions or divestitures.
The factors that typically cause overall variability in our reported total working capital are: (i) our cash position; (ii) liquids inventory levels, which we closely manage, as well as liquids valuations; (iii) changes in payables and accruals related to major growth capital projects; (iv) changes in the fair value of the current portion of derivative contracts; (v) monthly swings in borrowings under the Securitization Facility; and (vi) major structural changes in our asset base or business operations, such as certain organic growth capital projects and acquisitions or divestitures.
We believe we have sufficient access to financial resources and liquidity necessary to meet our requirements for working capital, debt service payments and capital expenditures in 2023 and beyond. For additional information regarding our financing activities, see “Item 7.
We believe we have sufficient access to financial resources and liquidity necessary to meet our requirements for working capital, debt service payments and capital expenditures in 2025 and beyond. For additional information regarding our financing activities, see “Item 7.
(2) “Illustrative Targa NGL” pricing is weighted using average quarterly prices from Mont Belvieu Non-TET monthly commercial index and represents the following composition for the periods noted: 2023: 44% ethane, 32% propane, 11% normal butane, 4% isobutane and 9% natural gasoline 2022: 43% ethane, 32% propane, 12% normal butane, 4% isobutane and 9% natural gasoline (3) Crude oil prices are based on average quarterly prices of West Texas Intermediate crude oil as measured on the NYMEX. 56 Volumes and Demand for our Services Fluctuations in energy prices can greatly affect production rates and investments by third parties in the development and production of new oil and natural gas reserves.
(2) “Illustrative Targa NGL” pricing is weighted using average quarterly prices from Mont Belvieu Non-TET monthly commercial index and represents the following composition for the periods noted: 2024: 44% ethane, 32% propane, 11% normal butane, 4% isobutane and 9% natural gasoline 2023: 44% ethane, 32% propane, 11% normal butane, 4% isobutane and 9% natural gasoline (3) Crude oil prices are based on average quarterly prices of West Texas Intermediate crude oil as measured on the NYMEX. 55 Volumes and Demand for our Services Fluctuations in energy prices can greatly affect production rates and investments by third parties in the development and production of new oil and natural gas reserves.
The majority of our debt is fixed rate borrowings; however, we have some exposure to the risk of changes in interest rates, primarily as a result of the variable rate borrowings under the TRGP Revolver, Term Loan Facility, the Securitization Facility, and the Commercial Paper Program.
The majority of our debt is fixed rate borrowings; however, we have some exposure to the risk of changes in interest rates, primarily as a result of the variable rate borrowings under the New TRGP Revolver, the Securitization Facility, and the Commercial Paper Program.
Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries Our subsidiaries that guarantee our obligations under the TRGP Revolver (the “Obligated Group”) also fully and unconditionally guarantee, jointly and severally, the payment of TRGP’s senior notes, subject to certain limited exceptions.
Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries Our subsidiaries that guaranteed our obligations under the Existing TRGP Revolver (the “Obligated Group”) also fully and unconditionally guaranteed, jointly and severally, the payment of TRGP’s senior unsecured notes, subject to certain limited exceptions.
(2) Maintenance capital expenditures, net of contributions from noncontrolling interests, were $223.4 million and $168.1 million for the years ended December 31, 2023 and 2022. The increase in total growth capital expenditures was primarily due to system expansions in the Permian region in response to forecasted production growth and higher activity levels, and expansions in our downstream business.
(2) Maintenance capital expenditures, net of contributions from noncontrolling interests, were $231.9 million and $223.4 million for the years ended December 31, 2024 and 2023. The increase in total growth capital expenditures was primarily due to system expansions in the Permian region in response to forecasted production growth and higher activity levels, and expansions in our downstream business.
See further details of our risk management program in “Item 7A. – Quantitative and Qualitative Disclosures About Market Risk.” Our Liquidity and Capital Resources As of December 31, 2023, inclusive of our consolidated joint venture accounts, we had $141.7 million of Cash and cash equivalents on our Consolidated Balance Sheets.
See further details of our risk management program in “Item 7A. – Quantitative and Qualitative Disclosures About Market Risk.” Our Liquidity and Capital Resources As of December 31, 2024, inclusive of our consolidated joint venture accounts, we had $157.3 million of Cash and cash equivalents on our Consolidated Balance Sheets.
We may incur such charges from time to time, and we believe it is useful to exclude such charges because we do not consider them reflective of our ongoing core operations and because of the generally singular nature of the claims underlying such litigation. (5) Excludes amortization of debt issuance costs.
We may incur such charges from time to time, and we believe it is useful to exclude such charges because we do not consider them reflective of our ongoing core operations and because of the generally singular nature of the claims underlying such litigation. (3) Excludes amortization of interest expense.
How We Evaluate Our Operations The profitability of our business is a function of the difference between: (i) the revenues we receive from our operations, including fee-based revenues from services and revenues from the natural gas, NGLs, crude oil and condensate we sell, and (ii) the costs associated with conducting our operations, including the costs of wellhead natural gas, crude oil and mixed NGLs that we purchase as well as operating, general and administrative costs and the impact of our commodity hedging activities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Liquidity and Capital Resources.” How We Evaluate Our Operations The profitability of our business is a function of the difference between: (i) the revenues we receive from our operations, including fee-based revenues from services and revenues from the natural gas, NGLs, crude oil and condensate we sell, and (ii) the costs associated with conducting our operations, including the costs of wellhead natural gas, crude oil and mixed NGLs that we purchase as well as operating, general and administrative costs and the impact of our commodity hedging activities.
Contracts that will be settled at future spot prices are valued using prices as of December 31, 2023. 70 (7) Includes long-term liabilities of which we are certain of the amount and timing, including certain arrangements that resulted in deferred revenue and other liabilities pertaining to accrued dividends. See Note 9 - Other Long-term Liabilities for more information.
Contracts that will be settled at future spot prices are valued using prices as of December 31, 2024. (7) Includes long-term liabilities of which we are certain of the amount and timing, including certain arrangements that resulted in deferred revenue and other liabilities pertaining to accrued dividends.
On a consolidated basis, at the end of any given month, accounts receivable and payable tied to commodity sales and purchases are relatively balanced, with receivables from customers being offset by plant settlements payable to producers.
Working Capital Working capital is the amount by which current assets exceed current liabilities. On a consolidated basis, at the end of any given month, accounts receivable and payable tied to commodity sales and purchases are relatively balanced, with receivables from customers being offset by plant settlements payable to producers.
Critical Accounting Policies and Estimates The accounting policies and estimates discussed below are considered by management to be critical to an understanding of our financial statements because their application requires the most significant judgments from management in estimating matters for financial reporting that are inherently uncertain.
See Note 9 - Other Long-term Liabilities for more information. 68 Critical Accounting Policies and Estimates The accounting policies and estimates discussed below are considered by management to be critical to an understanding of our financial statements because their application requires the most significant judgments from management in estimating matters for financial reporting that are inherently uncertain.
Logistics and Transportation adjusted operating margin consists primarily of: • service fees (including the pass-through of energy costs included in certain fee rates); • system product gains and losses; and • NGL and natural gas sales, less NGL and natural gas purchases, fuel, third-party transportation costs and the net inventory change.
Logistics and Transportation adjusted operating margin consists primarily of: • service fees (including the pass-through of energy costs included in certain fee rates); • system product gains and losses; and • NGL and natural gas sales, less NGL and natural gas purchases, fuel, third-party transportation costs and the net inventory change. 58 The adjusted operating margin impacts of mark-to-market hedge unrealized changes in fair value are reported in Other.
Cash Flow Analysis Cash Flows from Operating Activities Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions) $ 3,211.6 $ 2,380.8 $ 830.8 The primary drivers of cash flows from operating activities are (i) the collection of cash from customers from the sale of NGLs and natural gas, as well as fees for processing, gathering, export, fractionation, terminaling, storage and transportation, (ii) the payment of amounts related to the purchase of NGLs, natural gas and crude oil (iii) changes in payables and accruals related to major growth capital projects; and (iv) the payment of other expenses, primarily field operating costs, general and administrative expense and interest expense.
Cash Flow Analysis Cash Flows from Operating Activities Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions) $ 3,649.7 $ 3,211.6 $ 438.1 The primary drivers of cash flows from operating activities are: (i) the collection of cash from customers from the sale of NGLs and natural gas, as well as fees for processing, gathering, export, fractionation, terminaling, storage and transportation; (ii) the payment of amounts related to the purchase of NGLs and natural gas; and (iii) the payment of other expenses, primarily field operating costs, general and administrative expense and interest expense.
We define adjusted free cash flow as distributable cash flow less growth capital expenditures, net of contributions from noncontrolling interest and net contributions to investments in unconsolidated affiliates.
We define adjusted free cash flow as adjusted cash flow from operations less maintenance capital expenditures (net of any reimbursements of project costs) and growth capital expenditures, net of contributions from noncontrolling interest and including contributions to investments in unconsolidated affiliates.
Quantitative and Qualitative Disclosures about Market Risk — Commodity Price Risk.” The following table presents selected average annual and quarterly industry index prices for natural gas, selected NGL products and crude oil for the periods presented: Natural Gas $/MMBtu (1) Illustrative Targa NGL $/gal (2) Crude Oil $/Bbl (3) 2023 4th Quarter $ 2.88 $ 0.60 $ 78.33 3rd Quarter 2.54 0.62 82.18 2nd Quarter 2.09 0.56 73.75 1st Quarter 3.45 0.70 76.11 2023 Average 2.74 0.62 77.59 2022 4th Quarter $ 6.27 $ 0.72 $ 82.63 3rd Quarter 8.19 0.94 91.64 2nd Quarter 7.17 1.09 108.42 1st Quarter 4.92 1.04 94.38 2022 Average 6.64 0.95 94.27 (1) Natural gas prices are based on average first of month prices from Henry Hub Inside FERC commercial index prices.
Quantitative and Qualitative Disclosures about Market Risk — Commodity Price Risk.” The following table presents selected average annual and quarterly industry index prices for natural gas, selected NGL products and crude oil for the periods presented: Natural Gas $/MMBtu (1) Illustrative Targa NGL $/gal (2) Crude Oil $/Bbl (3) 2024 4th Quarter $ 2.80 $ 0.65 $ 69.40 3rd Quarter 2.16 0.59 78.71 2nd Quarter 1.89 0.61 79.97 1st Quarter 2.24 0.65 75.61 2024 Average 2.27 0.63 75.92 2023 4th Quarter $ 2.88 $ 0.60 $ 78.33 3rd Quarter 2.54 0.62 82.18 2nd Quarter 2.09 0.56 73.75 1st Quarter 3.45 0.70 76.11 2023 Average 2.74 0.62 77.59 (1) Natural gas prices are based on average first of month prices from Henry Hub Inside FERC commercial index prices.
The increase in depreciation and amortization expense is primarily due to the acquisition of certain assets in the Delaware Basin and the impact of system expansions on our asset base, partially offset by the shortening of depreciable lives of certain assets that were idled in 2022.
The increase in depreciation and amortization expense is primarily due to the impact of system expansions on our asset base, partially offset by the shortening of depreciable lives of certain assets that were idled in 2023. The increase in general and administrative expense is primarily due to higher compensation and benefits and professional fees.
The price is calculated using total commodity sales plus the hedge gain/loss as the numerator and total sales volume as the denominator, net of fees. 64 The following table presents the realized commodity hedge gain (loss) attributable to our equity volumes that are included in the adjusted operating margin of the Gathering and Processing segment: Year Ended December 31, 2023 Year Ended December 31, 2022 (In millions, except volumetric data and price amounts) Volume Settled Price Spread (1) Gain (Loss) Volume Settled Price Spread (1) Gain (Loss) Natural gas (BBtu) 63.2 $ 1.22 $ 77.4 74.8 $ (2.13 ) $ (159.2 ) NGL (MMgal) 680.3 0.07 49.9 717.6 (0.30 ) (213.0 ) Crude oil (MBbl) 2.4 (6.92 ) (16.6 ) 2.2 (31.73 ) (69.8 ) $ 110.7 $ (442.0 ) (1) The price spread is the differential between the contracted derivative instrument pricing and the price of the corresponding settled commodity transaction. 2023 Compared to 2022 The increase in adjusted operating margin was due to higher natural gas inlet volumes and higher fees resulting in increased margin predominantly in the Permian, partially offset by lower commodity prices.
The following table presents the realized commodity hedge gain (loss) attributable to our equity volumes that are included in the adjusted operating margin of the Gathering and Processing segment: Year Ended December 31, 2024 Year Ended December 31, 2023 (In millions, except volumetric data and price amounts) Volume Settled Price Spread (1) Gain (Loss) Volume Settled Price Spread (1) Gain (Loss) Natural gas (BBtu) 43.7 $ 1.92 $ 84.1 63.2 $ 1.22 $ 77.4 NGL (MMgal) 449.8 0.04 15.8 680.3 0.07 49.9 Crude oil (MBbl) 2.1 (2.05 ) (4.3 ) 2.4 (6.92 ) (16.6 ) $ 95.6 $ 110.7 (1) The price spread is the differential between the contracted derivative instrument pricing and the price of the corresponding settled commodity transaction. 2024 Compared to 2023 The increase in adjusted operating margin was predominantly due to higher natural gas inlet volumes which drove higher fee-based income in the Permian, partially offset by lower natural gas and condensate prices.
The increase in operating expenses is primarily due to higher labor, maintenance and rental costs due to increased activity and system expansions, the acquisition of certain assets in the Delaware Basin and South Texas, and inflation. See “—Results of Operations—By Reportable Segment” for additional information on a segment basis.
The increase in operating expenses is primarily due to higher labor, maintenance, rental and chemical costs as a result of increased activity and system expansions, partially offset by lower taxes. See “—Results of Operations—By Reportable Segment” for additional information on a segment basis.
Cash Flows from Financing Activities Year Ended December 31, 2023 2022 (In millions) Source of Financing Activities, net Debt, including financing costs $ 1,300.0 $ 4,651.5 Redemption of Series A Preferred Stock — (965.2 ) Repurchase of noncontrolling interests (1,118.9 ) (926.3 ) Dividends (427.3 ) (379.7 ) Contributions from (distributions to) noncontrolling interests (212.4 ) (290.3 ) Repurchase of shares (429.5 ) (260.6 ) Net cash provided by (used in) financing activities $ (888.1 ) $ 1,829.4 The change in net cash provided by (used in) financing activities was primarily due to lower borrowings of debt, higher repurchases of noncontrolling interests and higher repurchases of common stock, partially offset by the redemption of all of our Series A Preferred in 2022 and higher distributions to noncontrolling interests prior to the Grand Prix Transaction.
Cash Flows from Financing Activities Year Ended December 31, 2024 2023 (In millions) Source of Financing Activities, net Debt, including financing costs $ 1,149.9 $ 1,300.0 Repurchase of noncontrolling interests (112.9 ) (1,118.9 ) Dividends (615.5 ) (427.3 ) Contributions from (distributions to) noncontrolling interests (220.6 ) (212.4 ) Repurchase of shares (813.7 ) (429.5 ) Net cash provided by (used in) financing activities $ (612.8 ) $ (888.1 ) The decrease in net cash used in financing activities was due to lower repurchases of noncontrolling interests primarily due to the Grand Prix Transaction in 2023, partially offset by higher repurchases of common stock, higher dividends paid and lower borrowings of debt in 2024.
We used a portion of the net proceeds to repay $1.0 billion in borrowings under the Term Loan Facility and the remaining net proceeds for general corporate purposes, including to repay borrowings under the Commercial Paper Program.
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.
In August 2023, the Partnership amended the Securitization Facility to decrease the size of the Securitization Facility from $800.0 million to $600.0 million and to extend the termination date of the Securitization Facility to August 29, 2024. A portion of our capital resources are allocated to letters of credit to satisfy certain counterparty credit requirements.
In August 2024, the Partnership amended the Securitization Facility to, among other things, extend the termination date of the Securitization Facility to August 29, 2025. A portion of our capital resources are allocated to letters of credit to satisfy certain counterparty credit requirements.
The significant level of margin we derive from fee-based arrangements across our operations and particularly in our Downstream Business combined with our hedging arrangements helps to mitigate our exposure to commodity price movements. For additional information regarding our hedging activities, see “Item 7A.
While we have a significant level of margin that we derive from fee-based arrangements across our operations and particularly for our assets in the Downstream Business, our contract mix, along with our commodity hedging program, serves to mitigate the impact of commodity price movements on our cash flows. For additional information regarding our hedging activities, see “Item 7A.
As of December 31, 2023, we had $22.3 million in letters of credit outstanding under the TRGP Revolver. The letters of credit also reflect certain counterparties’ views of our financial condition and ability to satisfy our performance obligations, as well as commodity prices and other factors. Working Capital Working capital is the amount by which current assets exceed current liabilities.
As of December 31, 2024, we had $17.6 million in letters of credit outstanding under the Existing TRGP Revolver. The letters of credit also reflect certain 64 counterparties’ views of our financial condition and ability to satisfy our performance obligations, as well as commodity prices and other factors.
(2) Includes financial advisory, legal and other professional fees, and other one-time transaction costs. (3) Noncontrolling interest portion of depreciation and amortization expense. (4) Litigation expense includes charges related to litigation resulting from the major winter storm in February 2021 that we consider outside the ordinary course of our business and/or not reflective of our ongoing core operations.
(2) Litigation expense includes charges related to litigation resulting from the major winter storm in February 2021 that we consider outside the ordinary course of our business and/or not reflective of our ongoing core operations.
Our short-term liquidity on a consolidated basis as of December 31, 2023, was: Consolidated Total (In millions) Cash on hand (1) $ 141.7 Total availability under the Securitization Facility 600.0 Total availability under the TRGP Revolver and Commercial Paper Program 2,750.0 3,491.7 Less: Outstanding borrowings under the Securitization Facility (575.0 ) Outstanding borrowings under the TRGP Revolver and Commercial Paper Program (175.0 ) Outstanding letters of credit under the TRGP Revolver (22.3 ) Total liquidity $ 2,719.4 (1) Includes cash held in our consolidated joint venture accounts.
Our short-term liquidity on a consolidated basis as of February 18, 2025 was: Consolidated Total (In millions) Cash on hand (1) $ 254.5 Total availability under the Securitization Facility 600.0 Total availability under the New TRGP Revolver and Commercial Paper Program 3,500.0 4,354.5 Outstanding borrowings under the Securitization Facility (600.0 ) Outstanding borrowings under the New TRGP Revolver and Commercial Paper Program (881.0 ) Outstanding letters of credit under the New TRGP Revolver (9.4 ) Total liquidity $ 2,864.1 (1) Includes cash held in our consolidated joint venture accounts.
Other potential capital resources associated with our existing arrangements include our right to request an additional $500.0 million in commitment increases under the TRGP Revolver, subject to the terms therein. The TRGP Revolver matures on February 17, 2027.
Other potential capital resources associated with our existing arrangements include our right to request an additional $500.0 million in commitment increases under the New TRGP Revolver, subject to the terms therein. The New TRGP Revolver matures on February 18, 2030. The maturity date is extendable, subject to the lenders’ consent, by one year up to two times.
Changes in the prices of the commodities we hedge impact our derivative settlements as well as our margin deposit requirements on unsettled futures contracts. 67 The increase in net cash provided by operations was primarily due to higher settlements for hedge transactions and a decrease in payments for product purchases and fuel, partially offset by lower collections from customers.
Changes in the prices of the commodities we hedge impact our derivative settlements as well as our margin deposit requirements on unsettled futures contracts. 65 The increase in net cash provided by operating activities was primarily due to higher collections from customers resulting from increased revenues during 2024 compared to 2023, partially offset by an increase in payments for product purchases and fuel, lower settlements on our hedging transactions, an increase in interest payments, and a nonrecurring one-time payment associated with the Splitter Agreement ruling.
The increase in natural gas inlet volumes in the Permian was attributable to the acquisition of certain assets in the Delaware Basin during the third quarter of 2022, the addition of the Legacy I and Red Hills VI plants during the third quarter of 2022, the Legacy II plant during the first quarter of 2023, the Greenwood plant during the fourth quarter of 2023, and continued strong producer activity.
The increase in natural gas inlet volumes was attributable to the addition of the Legacy II plant during the first quarter of 2023, the Midway plant during the second quarter of 2023, the Greenwood I and Wildcat II plants during the fourth quarter of 2023, the Roadrunner II plant during the second quarter of 2024, the Greenwood II plant during the fourth quarter of 2024, and continued strong producer activity.
Compliance with Debt Covenants As of December 31, 2023, both we and the Partnership were in compliance with the covenants contained in our various debt agreements.
Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.” Compliance with Debt Covenants As of December 31, 2024, both we and the Partnership were in compliance with the covenants contained in our various debt agreements.
As part of monitoring the efficiency of our operations, we measure the difference between the volume of natural gas received at the wellhead or central delivery points on our gathering systems and the volume received at the inlet of our processing plants as an indicator of fuel consumption and line loss.
This information is tracked through our processing plants and Downstream Business facilities to determine customer settlements for sales and volume related fees for service and helps us increase efficiency and reduce fuel consumption. 57 As part of monitoring the efficiency of our operations, we measure the difference between the volume of natural gas received at the wellhead or central delivery points on our gathering systems and the volume received at the inlet of our processing plants as an indicator of fuel consumption and line loss.
Logistics and Transportation Segment Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions, except operating statistics) Operating margin $ 1,948.7 $ 1,456.3 $ 492.4 34% Operating expenses 332.0 300.2 31.8 11% Adjusted operating margin $ 2,280.7 $ 1,756.5 $ 524.2 30% Operating statistics MBbl/d (1): NGL pipeline transportation volumes (2) 635.5 488.6 146.9 30% Fractionation volumes 798.1 731.7 66.4 9% Export volumes (3) 365.2 314.5 50.7 16% NGL sales 1,019.8 866.3 153.5 18% (1) Segment operating statistics include intersegment amounts, which have been eliminated from the consolidated presentation.
Logistics and Transportation Segment Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions, except operating statistics) Operating margin $ 2,355.1 $ 1,948.7 $ 406.4 21% Operating expenses 362.3 332.0 30.3 9% Adjusted operating margin $ 2,717.4 $ 2,280.7 $ 436.7 19% Operating statistics MBbl/d (1): NGL pipeline transportation volumes (2) 800.8 635.5 165.3 26% Fractionation volumes 936.1 798.1 138.0 17% Export volumes (3) 423.6 365.2 58.4 16% NGL sales 1,159.1 1,019.8 139.3 14% (1) Segment operating statistics include intersegment amounts, which have been eliminated from the consolidated presentation.
These include: (i) throughput volumes, facility efficiencies and fuel consumption, (ii) operating expenses, (iii) capital expenditures and (iv) the following non-GAAP measures: adjusted EBITDA, distributable cash flow, adjusted free cash flow and adjusted operating margin (segment). 58 Throughput Volumes, Facility Efficiencies and Fuel Consumption Our profitability is impacted by our ability to add new sources of natural gas supply and crude oil supply to offset the natural decline of existing volumes from oil and natural gas wells that are connected to our gathering and processing systems.
Throughput Volumes, Facility Efficiencies and Fuel Consumption Our profitability is impacted by our ability to add new sources of natural gas supply and crude oil supply to offset the natural decline of existing volumes from oil and natural gas wells that are connected to our gathering and processing systems.
We may enter into interest rate hedges with the intent to mitigate the impact of changes in interest rates on cash flows. As of December 31, 2023, we did not have any interest rate hedges.
We may enter into interest rate hedges with the intent to mitigate the impact of changes in interest rates on cash flows. As of December 31, 2024, we did not have any interest rate hedges. In August 2024, we completed an underwritten public offering of the 5.500% Notes, resulting in net proceeds of approximately $990.1 million.
(6) Represents capital expenditures, net of contributions from noncontrolling interests and includes net contributions to investments in unconsolidated affiliates. 61 Consolidated Results of Operations The following table and discussion is a summary of our consolidated results of operations: Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions) Revenues: Sales of commodities $ 13,962.1 $ 19,066.0 $ (5,103.9 ) (27 %) Fees from midstream services 2,098.2 1,863.8 234.4 13 % Total revenues 16,060.3 20,929.8 (4,869.5 ) (23 %) Product purchases and fuel 10,676.4 16,882.1 (6,205.7 ) (37 %) Operating expenses 1,077.9 912.8 165.1 18 % Depreciation and amortization expense 1,329.6 1,096.0 233.6 21 % General and administrative expense 348.7 309.7 39.0 13 % Other operating (income) expense 1.5 0.2 1.3 NM Income (loss) from operations 2,626.2 1,729.0 897.2 52 % Interest expense, net (687.8 ) (446.1 ) (241.7 ) 54 % Equity earnings (loss) 9.0 9.1 (0.1 ) (1 %) Gain (loss) from financing activities (2.1 ) (49.6 ) 47.5 96 % Gain (loss) from sale of equity method investment — 435.9 (435.9 ) (100 %) Other, net (2.8 ) (15.1 ) 12.3 81 % Income tax (expense) benefit (363.2 ) (131.8 ) (231.4 ) 176 % Net income (loss) 1,579.3 1,531.4 47.9 3 % Less: Net income (loss) attributable to noncontrolling interests 233.4 335.9 (102.5 ) (31 %) Net income (loss) attributable to Targa Resources Corp. 1,345.9 1,195.5 150.4 13 % Premium on repurchase of noncontrolling interests, net of tax 510.1 53.2 456.9 NM Dividends on Series A Preferred Stock — 30.0 (30.0 ) (100 %) Deemed dividends on Series A Preferred Stock — 215.5 (215.5 ) (100 %) Net income (loss) attributable to common shareholders $ 835.8 $ 896.8 $ (61.0 ) (7 %) Financial data: Adjusted EBITDA (1) $ 3,530.0 $ 2,901.1 $ 628.9 22 % Distributable cash flow (1) 2,617.2 2,278.7 338.5 15 % Adjusted free cash flow (1) 392.7 1,101.5 (708.8 ) (64 %) (1) Adjusted EBITDA, distributable cash flow and adjusted free cash flow are non-GAAP financial measures and are discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–How We Evaluate Our Operations.” NM Due to a low denominator, the noted percentage change is disproportionately high and as a result, considered not meaningful. 2023 Compared to 2022 The decrease in commodity sales reflects lower NGL, natural gas and condensate prices ($9,255.7 million), partially offset by higher NGL, natural gas and condensate volumes ($2,951.9 million) and the favorable impact of hedges ($1,195.8 million).
(4) Represents capital expenditures, net of contributions from noncontrolling interests and includes contributions to investments in unconsolidated affiliates. 60 Consolidated Results of Operations The following table and discussion is a summary of our consolidated results of operations: Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions) Revenues: Sales of commodities $ 13,891.8 $ 13,962.1 $ (70.3 ) (1 %) Fees from midstream services 2,489.7 2,098.2 391.5 19 % Total revenues 16,381.5 16,060.3 321.2 2 % Product purchases and fuel 10,703.0 10,676.4 26.6 — Operating expenses 1,175.6 1,077.9 97.7 9 % Depreciation and amortization expense 1,423.0 1,329.6 93.4 7 % General and administrative expense 384.9 348.7 36.2 10 % Other operating (income) expense (0.4 ) 1.5 (1.9 ) NM Income (loss) from operations 2,695.4 2,626.2 69.2 3 % Interest expense, net (767.2 ) (687.8 ) (79.4 ) 12 % Equity earnings (loss) 9.4 9.0 0.4 4 % Gain (loss) from financing activities (0.8 ) (2.1 ) 1.3 62 % Other, net 1.2 (2.8 ) 4.0 NM Income tax (expense) benefit (384.5 ) (363.2 ) (21.3 ) 6 % Net income (loss) 1,553.5 1,579.3 (25.8 ) (2 %) Less: Net income (loss) attributable to noncontrolling interests 241.5 233.4 8.1 3 % Net income (loss) attributable to Targa Resources Corp. 1,312.0 1,345.9 (33.9 ) (3 %) Premium on repurchase of noncontrolling interests, net of tax 32.9 510.1 (477.2 ) (94 %) Net income (loss) attributable to common shareholders $ 1,279.1 $ 835.8 $ 443.3 53 % Financial data: Adjusted EBITDA (1) $ 4,142.3 $ 3,530.0 $ 612.3 17 % Adjusted cash flow from operations (1) 3,372.4 2,840.6 531.8 19 % Adjusted free cash flow (1) 140.1 392.7 (252.6 ) (64 %) (1) Adjusted EBITDA, adjusted cash flow from operations and adjusted free cash flow are non-GAAP financial measures and are discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–How We Evaluate Our Operations.” NM Due to a low denominator, the noted percentage change is disproportionately high and as a result, considered not meaningful. 2024 Compared to 2023 Commodity sales are relatively flat reflecting lower natural gas and condensate prices ($1,242.8 million) and the unfavorable impact of hedges ($686.5 million), offset by higher NGL, natural gas and condensate volumes ($1,607.2 million), and higher NGL prices ($251.6 million).
Results of Operations—By Reportable Segment Our operating margins by reportable segment are: Gathering and Processing Logistics and Transportation Other (In millions) Year Ended: December 31, 2023 $ 2,082.2 $ 1,948.7 $ 275.5 December 31, 2022 1,981.0 1,456.3 (302.4 ) 63 Gathering and Processing Segment Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions, except operating statistics and price amounts) Operating margin $ 2,082.2 $ 1,981.0 $ 101.2 5 % Operating expenses 746.6 611.8 134.8 22 % Adjusted operating margin $ 2,828.8 $ 2,592.8 $ 236.0 9 % Operating statistics (1): Plant natural gas inlet, MMcf/d (2) (3) Permian Midland (4) 2,535.2 2,223.6 311.6 14 % Permian Delaware (5) 2,526.5 1,536.1 990.4 64 % Total Permian 5,061.7 3,759.7 1,302.0 35 % SouthTX (6) 367.4 276.5 90.9 33 % North Texas 205.9 187.0 18.9 10 % SouthOK (6) 385.0 406.8 (21.8 ) (5 %) WestOK 207.1 208.7 (1.6 ) (1 %) Total Central 1,165.4 1,079.0 86.4 8 % Badlands (6) (7) 130.0 134.9 (4.9 ) (4 %) Total Field 6,357.1 4,973.6 1,383.5 28 % Coastal 541.1 537.6 3.5 1 % Total 6,898.2 5,511.2 1,387.0 25 % NGL production, MBbl/d (3) Permian Midland (4) 367.7 321.7 46.0 14 % Permian Delaware (5) 321.6 188.6 133.0 71 % Total Permian 689.3 510.3 179.0 35 % SouthTX (6) 40.9 31.2 9.7 31 % North Texas 24.0 21.2 2.8 13 % SouthOK (6) 43.1 47.6 (4.5 ) (9 %) WestOK 12.5 14.6 (2.1 ) (14 %) Total Central 120.5 114.6 5.9 5 % Badlands (6) 15.5 16.1 (0.6 ) (4 %) Total Field 825.3 641.0 184.3 29 % Coastal 39.2 32.0 7.2 23 % Total 864.5 673.0 191.5 28 % Crude oil, Badlands, MBbl/d 105.5 117.6 (12.1 ) (10 %) Crude oil, Permian, MBbl/d 27.4 29.5 (2.1 ) (7 %) Natural gas sales, BBtu/d (3) 2,685.8 2,383.4 302.4 13 % NGL sales, MBbl/d (3) 495.8 439.8 56.0 13 % Condensate sales, MBbl/d 18.5 15.5 3.0 19 % Average realized prices (8): Natural gas, $/MMBtu 1.94 5.21 (3.27 ) (63 %) NGL, $/gal 0.46 0.75 (0.29 ) (39 %) Condensate, $/Bbl 74.35 88.26 (13.91 ) (16 %) (1) Segment operating statistics include the effect of intersegment amounts, which have been eliminated from the consolidated presentation.
Results of Operations—By Reportable Segment Our operating margins by reportable segment are: Gathering and Processing Logistics and Transportation Other (In millions) Year Ended: December 31, 2024 $ 2,312.4 $ 2,355.1 $ (164.6 ) December 31, 2023 2,082.2 1,948.7 275.5 Gathering and Processing Segment Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions, except operating statistics and price amounts) Operating margin $ 2,312.4 $ 2,082.2 $ 230.2 11 % Operating expenses 814.6 746.6 68.0 9 % Adjusted operating margin $ 3,127.0 $ 2,828.8 $ 298.2 11 % Operating statistics (1): Plant natural gas inlet, MMcf/d (2) (3) Permian Midland (4) 2,933.1 2,535.2 397.9 16 % Permian Delaware 2,837.3 2,526.5 310.8 12 % Total Permian 5,770.4 5,061.7 708.7 14 % SouthTX 325.9 367.4 (41.5 ) (11 %) North Texas 186.9 205.9 (19.0 ) (9 %) SouthOK (5) 351.7 385.0 (33.3 ) (9 %) WestOK 212.8 207.1 5.7 3 % Total Central 1,077.3 1,165.4 (88.1 ) (8 %) Badlands (5) (6) 136.3 130.0 6.3 5 % Total Field 6,984.0 6,357.1 626.9 10 % Coastal 449.6 541.1 (91.5 ) (17 %) Total 7,433.6 6,898.2 535.4 8 % NGL production, MBbl/d (3) Permian Midland (4) 428.4 367.7 60.7 17 % Permian Delaware 359.9 321.6 38.3 12 % Total Permian 788.3 689.3 99.0 14 % SouthTX (5) 32.8 40.9 (8.1 ) (20 %) North Texas 22.6 24.0 (1.4 ) (6 %) SouthOK (5) 35.0 43.1 (8.1 ) (19 %) WestOK 15.1 12.5 2.6 21 % Total Central 105.5 120.5 (15.0 ) (12 %) Badlands (5) 16.6 15.5 1.1 7 % Total Field 910.4 825.3 85.1 10 % Coastal 35.8 39.2 (3.4 ) (9 %) Total 946.2 864.5 81.7 9 % Crude oil, Badlands, MBbl/d 106.6 105.5 1.1 1 % Crude oil, Permian, MBbl/d 27.9 27.4 0.5 2 % Natural gas sales, BBtu/d (3) 2,780.5 2,685.8 94.7 4 % NGL sales, MBbl/d (3) 558.2 495.8 62.4 13 % Condensate sales, MBbl/d 19.3 18.5 0.8 4 % Average realized prices (7): Natural gas, $/MMBtu 0.67 1.94 (1.27 ) (65 %) NGL, $/gal 0.46 0.46 — — Condensate, $/Bbl 73.35 74.35 (1.00 ) (1 %) (1) Segment operating statistics include the effect of intersegment amounts, which have been eliminated from the consolidated presentation.
Operating results for the WestTX undivided interest assets are presented on a pro-rata net basis in our reported financials. (5) Includes operations from the acquisition of certain assets in the Delaware Basin for the period effective August 1, 2022. (6) Operations include facilities that are not wholly owned by us.
(4) Permian Midland includes operations in WestTX, of which we own a 72.8% undivided interest, and other plants that are owned 100% by us. Operating results for the WestTX undivided interest assets are presented on a pro-rata net basis in our reported financials. (5) Operations include facilities that are not wholly owned by us.
The following is a summary of our material future contractual obligations: Contractual Obligations: Total Within 12 Months (in millions) Long-term debt obligations (1) $ 12,209.4 $ — Interest on debt obligations (2) 7,109.8 695.7 Operating leases (3) 88.3 25.5 Finance leases (4) 332.1 57.5 Land site lease and rights of way (5) 297.4 8.5 Purchase obligations (6) 3,014.8 1,800.7 Other long-term liabilities (7) 122.6 17.0 Total $ 23,174.4 $ 2,604.9 (1) Represents scheduled future maturities of long-term debt obligation.
The following is a summary of our material future contractual obligations: Contractual Obligations: Total Within 12 Months (in millions) Long-term debt obligations (1) $ 13,664.9 $ — Interest on debt obligations (2) 7,031.9 758.3 Operating leases (3) 134.1 22.2 Finance leases (4) 335.3 70.3 Land site lease and rights of way (5) 333.1 9.3 Purchase obligations (6) 2,736.9 1,316.3 Other long-term liabilities (7) 123.2 17.9 Total $ 24,359.4 $ 2,194.3 (1) Represents scheduled future maturities of long-term debt obligation and excludes the Securitization Facility.
Other Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions) Operating margin $ 275.5 $ (302.4 ) $ 577.9 Adjusted operating margin $ 275.5 $ (302.4 ) $ 577.9 65 Other contains the results of commodity derivative activity mark-to-market gains/losses related to derivative contracts that were not designated as cash flow hedges.
The increase in operating expenses was due to higher system volumes, higher compensation and benefits, higher taxes, higher repairs and maintenance and the addition of two trains during 2024. 63 Other Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions) Operating margin $ (164.6 ) $ 275.5 $ (440.1 ) Adjusted operating margin $ (164.6 ) $ 275.5 $ (440.1 ) Other contains the results of commodity derivative activity mark-to-market gains/losses related to derivative contracts that were not designated as cash flow hedges.
SouthTX operating statistics include the impact of the South Texas Acquisition for the period effective April 21, 2022. For more information regarding our joint ventures and jointly owned facilities, see “Item 1. Business—Our Business Operations.” (7) Badlands natural gas inlet represents the total wellhead volume and includes the Targa volumes processed at the Little Missouri 4 plant.
For more information regarding our joint ventures and jointly owned facilities, see “Item 1. Business—Our Business Operations.” (6) Badlands natural gas inlet represents the total wellhead volume and includes the Targa volumes processed at the LM4 plant. (7) Average realized prices, net of fees, include the effect of realized commodity hedge gain/loss attributable to our equity volumes.
Future growth capital expenditures may vary based on investment opportunities. We expect that 2024 maintenance capital expenditures, net of noncontrolling interests, will be approximately $225 million. Off-Balance Sheet Arrangements As of December 31, 2023, there were $248.1 million in surety bonds outstanding related to various performance obligations.
The increase in total maintenance capital expenditures was primarily due to our growing infrastructure footprint. Future capital expenditures may vary based on investment opportunities and maintenance capital requirements. Off-Balance Sheet Arrangements As of December 31, 2024, there were $73.8 million in surety bonds outstanding related to various performance obligations.
The increase in fees from midstream services is primarily due to higher gas gathering and processing fees including the impact of the acquisition of certain assets in the Delaware Basin and South Texas, and higher export volumes, partially offset by lower transportation and fractionation fees.
The increase in fees from midstream services is primarily due to higher gas gathering and processing fees, higher transportation and fractionation fees, and higher export volumes. Product purchases and fuel are relatively flat reflecting higher NGL and natural gas volumes, offset by lower natural gas prices.
Significant intercompany balances and activity for the Obligated Group with other related parties, including our non-guarantor subsidiaries (referred to as “affiliates”), are presented separately in the following supplemental summarized combined financial information. 68 Summarized Combined Balance Sheet and Statement of Operations information for the Obligated Group as of the end of the most recent period presented follows: Summarized Combined Balance Sheet Information December 31, 2023 December 31, 2022 (In millions) ASSETS Current assets $ 966.3 $ 1,425.4 Current assets - affiliates 11.2 6.0 Long-term assets 15,267.6 14,398.8 Long-term assets - affiliates — 10.5 Total assets $ 16,245.1 $ 15,840.7 LIABILITIES AND OWNERS’ EQUITY Current liabilities $ 2,107.9 $ 2,169.6 Current liabilities - affiliates 26.2 28.0 Long-term liabilities 13,278.8 11,503.4 Targa Resources Corp. stockholders’ equity 832.2 2,139.7 Total liabilities and owners’ equity $ 16,245.1 $ 15,840.7 Summarized Combined Statement of Operations Information Year Ended Year Ended December 31, 2023 December 31, 2022 (In millions) Revenues $ 15,737.0 $ 20,477.0 Operating income (loss) 2,134.2 1,108.3 Net income (loss) 1,100.1 909.0 Dividends on Series A Preferred — 30.0 Common Stock Dividends The following table details the dividends declared and/or paid by us to common shareholders for 2023: 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) December 31, 2023 February 15, 2024 $ 112.8 $ 111.6 $ 1.2 $ 0.50000 September 30, 2023 November 15, 2023 113.0 111.5 1.5 0.50000 June 30, 2023 August 15, 2023 113.6 111.8 1.8 0.50000 March 31, 2023 May 15, 2023 114.7 113.0 1.7 0.50000 Preferred Dividends Series A Preferred Redemption In May 2022, we redeemed in full all of our issued and outstanding shares of Series A Preferred at a redemption price of $1,050.00 per share, plus $8.87 per share, which is the amount of accrued and unpaid dividends from April 1, 2022 up to, but not including, the redemption date of May 3, 2022.
Significant intercompany balances and activity for the Obligated Group with other related parties, including our non-guarantor subsidiaries (referred to as “affiliates”), are presented separately in the following supplemental summarized combined financial information. 66 Summarized Combined Balance Sheet and Statement of Operations information for the Obligated Group as of the end of the most recent period presented follows: Summarized Combined Balance Sheet Information December 31, 2024 December 31, 2023 (In millions) ASSETS Current assets $ 986.9 $ 966.3 Current assets - affiliates 1.1 11.2 Long-term assets 16,574.0 15,267.6 Total assets $ 17,562.0 $ 16,245.1 LIABILITIES AND OWNERS’ EQUITY (DEFICIT) Current liabilities $ 2,763.0 $ 2,107.9 Current liabilities - affiliates 36.7 26.2 Long-term liabilities 15,120.9 13,278.8 Targa Resources Corp. stockholders’ equity (deficit) (358.6 ) 832.2 Total liabilities and owners’ equity (deficit) $ 17,562.0 $ 16,245.1 Summarized Combined Statement of Operations Information Year Ended December 31, 2024 2023 (In millions) Revenues $ 15,939.3 $ 15,737.0 Operating income 2,031.3 2,134.2 Net income 888.7 1,100.1 Common Stock Dividends The following table details the dividends declared and/or paid by us to common shareholders for 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) December 31, 2024 February 14, 2025 $ 165.1 $ 163.6 $ 1.5 $ 0.75000 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 The actual amount we declare as dividends in the future depends on our consolidated financial condition, results of operations, cash flow, the level of our capital expenditures, future business prospects, compliance with our debt covenants and any other matters that our Board of Directors deems relevant. 67 Capital Expenditures The following table details cash outlays for capital projects for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (In millions) Capital expenditures: Growth (1) $ 2,950.1 $ 2,211.0 Maintenance (2) 241.7 232.6 Gross capital expenditures 3,191.8 2,443.6 Change in capital project payables and accruals, net (226.0 ) (58.2 ) Cash outlays for capital projects $ 2,965.8 $ 2,385.4 (1) Growth capital expenditures, net of contributions from noncontrolling interests and including contributions to investments in unconsolidated affiliates, were $3,000.4 million and $2,224.5 million for the years ended December 31, 2024 and 2023.
Distributable Cash Flow and Adjusted Free Cash Flow We define distributable cash flow as adjusted EBITDA less cash interest expense on debt obligations, cash tax (expense) benefit and maintenance capital expenditures (net of any reimbursements of project costs).
Adjusted Cash Flow from Operations and Adjusted Free Cash Flow We define adjusted cash flow from operations as adjusted EBITDA less cash interest expense on debt obligations and cash taxes.
The increase in operating expenses was due to higher system volumes, higher compensation and benefits, higher repairs and maintenance and higher taxes.
The increase in operating expenses was primarily due to higher volumes and multiple plant additions in the Permian.
To date, our debt balances and our subsidiaries’ debt balances have not adversely affected our operations, ability to grow or ability to repay or refinance indebtedness. For additional information about our debt-related transactions, see Note 8 - Debt Obligations to our consolidated financial statements. For information about our interest rate risk, see “Item 7A.
For information about our debt obligations, see Note 8 – Debt Obligations to our consolidated financial statements. For information about our interest rate risk, see “Item 7A.
Cash Flows from Investing Activities Year Ended December 31, 2023 2022 2023 vs. 2022 (In millions) $ (2,400.8 ) $ (4,149.7 ) $ 1,748.9 The decrease in net cash used in investing activities was primarily due to higher outlays for the acquisition of certain assets in the Delaware Basin and South Texas in 2022, partially offset by proceeds from the GCX Sale in 2022 and higher outlays for property, plant and equipment in 2023 primarily related to construction activities in the Permian region and Mont Belvieu, Texas.
Cash Flows from Investing Activities Year Ended December 31, 2024 2023 2024 vs. 2023 (In millions) $ (3,021.3 ) $ (2,400.8 ) $ (620.5 ) The increase in net cash used in investing activities was due to higher outlays for major growth capital projects in 2024 primarily related to construction activities in the Permian region and Mont Belvieu, Texas.
These cash flow estimates require us to make judgments and assumptions related to operating and cash flow results, economic obsolescence, the business climate, contractual, legal and other factors.
These cash flow estimates require us to make judgments and assumptions related to operating and cash flow results, economic obsolescence, the business climate, contractual, legal and other factors. If the carrying amount exceeds the expected future undiscounted cash flows, we recognize a non-cash pre-tax impairment charge equal to the excess of net book value over fair value.
Working capital as of December 31, 2023 increased $143.8 million compared to December 31, 2022. The increase was primarily due to lower net borrowing on the Securitization Facility and lower net liabilities for hedging activities, partially offset by higher accounts payable related to capital spending on growth projects.
The decrease was primarily due to higher accounts payable related to capital spending on growth projects, higher product purchases and fuel payables resulting from higher NGL volumes and prices, and higher net liabilities for hedging activities, partially offset by higher receivables resulting from higher NGL volumes and prices, and a lower outstanding balance on the Securitization Facility.
For all volume statistics presented, the numerator is the total volume sold during the period and the denominator is the number of calendar days during the period. (2) Plant natural gas inlet represents our undivided interest in the volume of natural gas passing through the meter located at the inlet of a natural gas processing plant, other than Badlands.
For all volume statistics presented, the numerator is the total volume sold during the period and the denominator is the number of calendar days during the period.
The premium on repurchase of noncontrolling interests, net of tax is primarily due to the Grand Prix Transaction in 2023 and the purchase of all of Stonepeak Infrastructure Partners’ interests in our development company joint ventures in 2022.
The increase in income tax expense is primarily due to the release of state valuation allowance in 2023. 61 The premium on repurchase of noncontrolling interests, net of tax is primarily due to the CBF Acquisition in 2024 and the Grand Prix Transaction in 2023.
Pipeline transportation and fractionation volumes benefited from higher supply volumes primarily from our Permian Gathering and Processing systems and higher fees. Marketing margin increased due to greater optimization opportunities. LPG Export margin increased due to the completion of the expansion during the third quarter of 2023 resulting in higher volumes and fees.
Pipeline transportation and fractionation volumes benefited from higher supply volumes primarily from our Permian Gathering and Processing systems, the addition of Train 9 during the second quarter of 2024, the in-service of the Daytona NGL Pipeline during the third quarter of 2024, and the addition of Train 10 during the fourth quarter of 2024.
(3) Plant natural gas inlet volumes and gross NGL production volumes include producer take-in-kind volumes, while natural gas sales and NGL sales exclude producer take-in-kind volumes. (4) Permian Midland includes operations in WestTX, of which we own a 72.8% undivided interest, and other plants that are owned 100% by us.
(2) Plant natural gas inlet represents our undivided interest in the volume of natural gas passing through the meter located at the inlet of a natural gas processing plant, other than Badlands. 62 (3) Plant natural gas inlet volumes and gross NGL production volumes include producer take-in-kind volumes, while natural gas sales and NGL sales exclude producer take-in-kind volumes.
We also monitor the volumes of NGLs received, stored, fractionated and delivered across our logistics assets. This information is tracked through our processing plants and Downstream Business facilities to determine customer settlements for sales and volume related fees for service and helps us increase efficiency and reduce fuel consumption.
We also monitor the volumes of NGLs received, stored, fractionated and delivered across our logistics assets.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Liquidity and Capital Resources.” Increased Regulation Additional regulation in various areas has the potential to materially impact our operations and financial condition.
Added
These include: (i) throughput volumes, facility efficiencies and fuel consumption, (ii) operating expenses, (iii) capital expenditures and (iv) the following non-GAAP measures: adjusted EBITDA, adjusted cash flow from operations, adjusted free cash flow and adjusted operating margin (segment).
Removed
For example, increased regulation of hydraulic fracturing used by producers and increased GHG emission regulations may cause reductions in supplies of natural gas, NGLs and crude oil from producers.
Added
The year ended December 31, 2024 includes $55.8 million of interest expense associated with the Splitter Agreement ruling.
Removed
Please read “Laws and regulations regarding hydraulic fracturing could result in restrictions, delays or cancellations in drilling and completing new oil and natural gas wells by our customers, which could adversely impact our revenues by decreasing the volumes of natural gas, NGLs or crude oil through our facilities and reducing the utilization of our assets” , “Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change (including legislation or regulation to address climate change) that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide,” and “Increasing stakeholder and market attention to sustainability matters and disclosure obligations may impact our business” under Item 1A. of this Annual Report.
Added
The increase in interest expense, net, is due to recognition of cumulative interest on a 2024 legal ruling associated with the Splitter Agreement and higher borrowings, partially offset by higher capitalized interest. Higher capitalized interest is due to system expansions and higher interest rates. See Note 17 – Contingencies for additional information related to the legal ruling.
Removed
Similarly, the forthcoming rules and regulations of the CFTC may limit our ability or increase the cost to use derivatives, which could create more volatility and less predictability in our results of operations.
Added
The price is calculated using total commodity sales plus the hedge gain/loss as the numerator and total sales volume as the denominator, net of fees.
Removed
The adjusted operating margin impacts of mark-to-market hedge unrealized changes in fair value are reported in Other.
Added
Marketing margin increased due to greater optimization opportunities. LPG export margin increased due to higher volumes as we benefited from the completion of the export expansion project during the third quarter of 2023 and the Houston Ship Channel allowing night-time vessel transits, partially offset by maintenance and required inspections.
Removed
Distributable cash flow and adjusted free cash flow are performance measures used by us and by external users of our financial statements, such as investors, commercial banks and research analysts, to assess our ability to generate cash earnings (after servicing our debt and funding capital expenditures) to be used for corporate purposes, such as payment of dividends, retirement of debt or redemption of other financing arrangements. 60 Our Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measures used by management to the most directly comparable GAAP measures for the periods indicated.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe NGL hedges cover specific NGL products based upon the expected equity NGL composition. We believe this strategy avoids uncorrelated risks resulting from employing hedges on crude oil or other petroleum products as “proxy” hedges of NGL prices.
Biggest changeWe believe this strategy avoids uncorrelated risks resulting from employing hedges on crude oil or other petroleum products as “proxy” hedges of NGL prices. The fair values of our natural gas and NGL hedges are based on published index prices for 70 delivery at various locations, which closely approximate the actual natural gas and NGL delivery points.
In an effort to reduce the variability of our cash flows, as of December 31, 2023, we have hedged the commodity price associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from our 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.
In an effort to reduce the variability of our cash flows, as of December 31, 2024, we have hedged the commodity price associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from our 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.
Crude oil, NGL and natural gas prices are volatile. In an effort to reduce the variability of our cash flows, we have entered into derivative instruments to hedge the commodity price associated with a portion of our expected natural gas, NGL and condensate equity volumes, future commodity purchases and sales, and transportation basis risk through 2027.
Crude oil, NGL and natural gas prices are volatile. In an effort to reduce the variability of our cash flows, we have entered into derivative instruments to hedge the commodity price associated with a portion of our expected natural gas, NGL and condensate equity volumes, future commodity purchases and sales, and transportation basis risk through 2028.
In the event of a counterparty default, we may sustain a loss and our cash receipts could be negatively impacted. We have master netting provisions in the ISDAs with our derivative counterparties.
In the event of a counterparty default, we may sustain a loss and our cash receipts could be negatively impacted. We have master netting provisions in the ISDA agreements with our derivative counterparties.
A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact our consolidated annual interest expense by $12.5 million based on our December 31, 2023 debt balances. Counterparty Credit Risk We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties.
A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact our consolidated annual interest expense by $14.6 million based on our December 31, 2024 debt balances. 71 Counterparty Credit Risk We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties.
These netting provisions allow us to net settle asset and liability positions with the same counterparties within the same Targa entity, and would reduce our maximum loss due to counterparty credit risk by $32.2 million as of December 31, 2023.
These netting provisions allow us to net settle asset and liability positions with the same counterparties within the same Targa entity, and would reduce our maximum loss due to counterparty credit risk by $13.4 million as of December 31, 2024.
The range of losses attributable to our individual counterparties as of December 31, 2023 would be between $0.2 million and $21.6 million, depending on the counterparty in default. Customer Credit Risk We extend credit to customers and other parties in the normal course of business.
The range of losses attributable to our individual counterparties as of December 31, 2024 would be between $0.0 million and $3.8 million, depending on the counterparty in default. Customer Credit Risk We extend credit to customers and other parties in the normal course of business.
During the years ended December 31, 2023 and 2022, our operating revenues increased (decreased) by $441.1 million and $(754.7) million as a result of transactions accounted for as derivatives.
During the years ended December 31, 2024 and 2023, our operating revenues increased (decreased) by $(245.4) million and $441.1 million as a result of transactions accounted for as derivatives.
The following table shows the effect of hypothetical price movements on the estimated fair value of our derivative instruments as of December 31, 2023: Fair Value Result of 10% Price Decrease Result of 10% Price Increase (In millions) Natural gas $ 12.9 $ 43.2 $ (17.3 ) NGLs 59.0 124.4 (6.2 ) Crude oil 2.5 24.4 (19.3 ) Total $ 74.4 $ 192.0 $ (42.8 ) The table above contains all derivative instruments outstanding as of the stated date for the purpose of hedging commodity price risk, which we are exposed to due to our equity volumes and future commodity purchases and sales, as well as basis differentials related to our gas transportation arrangements.
The following table shows the effect of hypothetical price movements on the estimated fair value of our derivative instruments as of December 31, 2024: Fair Value Result of 10% Price Decrease Result of 10% Price Increase (In millions) Natural gas $ (162.8 ) $ (105.6 ) $ (219.9 ) NGLs (20.4 ) 33.1 (74.0 ) Crude oil 11.0 51.7 (29.7 ) Total $ (172.2 ) $ (20.8 ) $ (323.6 ) The table above contains all derivative instruments outstanding as of the stated date for the purpose of hedging commodity price risk, which we are exposed to due to our equity volumes and future commodity purchases and sales, as well as basis differentials related to our gas transportation arrangements.
We have an active credit management process, which is focused on controlling loss exposure due to bankruptcies or other liquidity issues of counterparties. Our allowance for credit losses was $2.5 million and $2.2 million as of December 31, 2023 and December 31, 2022, respectively.
We have an active credit management process, which is focused on controlling loss exposure due to bankruptcies or other liquidity issues of counterparties. Our allowance for credit losses was $2.5 million as of both December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, no customer comprised 10% or greater of our consolidated revenues. 72
A majority of these commodity price hedges are documented pursuant to a ISDA with customized credit and legal terms. The principal counterparties (or, if applicable, their guarantors) have investment grade credit ratings.
A portion of our condensate sales are hedged using crude oil hedges that are based on the NYMEX futures contracts for West Texas Intermediate light, sweet crude. A majority of these commodity price hedges are documented pursuant to a ISDA with customized credit and legal terms. The principal counterparties (or, if applicable, their guarantors) have investment grade credit ratings.
The estimated fair value of our risk management position has moved from a net liability position of $255.8 million at December 31, 2022 to a net asset position of $74.4 million at December 31, 2023.
The estimated fair value of our risk management position has moved from a net asset position of $74.4 million at December 31, 2023 to a net liability position of $172.2 million at December 31, 2024. The net liability position on our derivative contracts is primarily attributable to unfavorable movement in natural gas forward basis prices.
Forward commodity prices have decreased relative to the fixed prices on our derivative contracts, creating the net asset position. 73 Interest Rate Risk We are exposed to the risk of changes in interest rates, primarily as a result of variable rate borrowings under the TRGP Revolver, the Commercial Paper Program, the Securitization Facility, and the Term Loan Facility.
Interest Rate Risk We are exposed to the risk of changes in interest rates, primarily as a result of variable rate borrowings under the New TRGP Revolver, the Commercial Paper Program and the Securitization Facility. As of December 31, 2024, we do not have any interest rate hedges.
We intend to continue to manage our exposure to commodity prices in the future by entering into derivative transactions using swaps, collars, purchased puts (or floors), futures or other derivative instruments as market conditions permit. 72 When entering into new hedges, we intend to generally match the NGL product composition and the NGL and natural gas delivery points to those of our physical equity volumes.
We may buy calls in connection with swap positions to create a price floor with upside. We intend to continue to manage our exposure to commodity prices in the future by entering into derivative transactions using swaps, collars, purchased puts (or floors), futures or other derivative instruments as market conditions permit.
As of December 31, 2023, we do not have any interest rate hedges. However, we may enter into interest rate hedges in the future with the intent to mitigate the impact of changes in interest rates on cash flows.
However, we may enter into interest rate hedges in the future with the intent to mitigate the impact of changes in interest rates on cash flows. To the extent that interest rates increase, interest expense for the New TRGP Revolver, the Commercial Paper Program and the Securitization Facility will also increase.
Removed
We may buy calls in connection with swap positions to create a price floor with upside.
Added
When entering into new hedges, we intend to generally match the NGL product composition and the NGL and natural gas delivery points to those of our physical equity volumes. The NGL hedges cover specific NGL products based upon the expected equity NGL composition.
Removed
The fair values of our natural gas and NGL hedges are based on published index prices for delivery at various locations, which closely approximate the actual natural gas and NGL delivery points. A portion of our condensate sales are hedged using crude oil hedges that are based on the NYMEX futures contracts for West Texas Intermediate light, sweet crude.
Added
As of December 31, 2024, we had $1.5 billion in outstanding variable rate borrowings.
Removed
To the extent that interest rates increase, interest expense for the TRGP Revolver, the Commercial Paper Program, the Securitization Facility and the Term Loan Facility will also increase. As of December 31, 2023, we had $1.3 billion in outstanding variable rate borrowings.
Removed
No customer comprised 10% or greater of our consolidated revenues during the years ended December 31, 2023 and 2022, respectively.

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