Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~Yes~~ ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ~~Yes~~ ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July ~~29, 2022,~~31, 2023, there were ~~226,557,413~~223,712,284 shares of the registrant’s common stock, $0.001 par value, outstanding.

Targa Resources Corp.’s (together with its subsidiaries, including Targa Resources Partners LP (the “Partnership”), “we,” “us,” “our,” “Targa,” “TRGP,” or the “Company”) reports, filings and other public announcements may from time to time contain statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements.” You can typically identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, by the use of forward-looking statements, such as “may,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast” and other similar words.

All statements that are not statements of historical facts, including statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.

These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Known risks and uncertainties include, but are not limited to, the following risks and uncertainties:

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022~~2023 (“Quarterly Report”) will prove to be accurate. Some of these and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described in our Annual Report. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events or otherwise.

As generally used in the energy industry and in this Quarterly Report, the identified terms have the following meanings:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
	(Unaudited)												(Unaudited)
	(In millions, except per share amounts)												(In millions, except per share amounts)
Revenues:
Sales of commodities	$	5,624.2		$	3,091.6		$	10,190.3		$	6,459.3		$	2,914.6		$	5,624.2		$	6,939.7		$	10,190.3
Fees from midstream services		431.6			324.3			824.6			589.4			489.1			431.6			984.5			824.6
Total revenues		6,055.8			3,415.9			11,014.9			7,048.7			3,403.7			6,055.8			7,924.2			11,014.9
Costs and expenses:
Product purchases and fuel		5,047.3			2,709.0			9,251.5			5,545.3			2,068.9			5,047.3			5,088.0			9,251.5
Operating expenses		215.8			184.8			399.3			355.8			272.6			215.8			530.7			399.3
Depreciation and amortization expense		269.9			211.9			479.0			428.0			332.1			269.9			656.9			479.0
General and administrative expense		71.0			63.7			138.0			125.1			81.0			71.0			163.4			138.0
Other operating (income) expense		(0.1	)		0.7			(0.6	)		4.6			—			(0.1	)		(0.6	)		(0.6	)
Income (loss) from operations		451.9			245.8			747.7			589.9			649.1			451.9			1,485.8			747.7
Other income (expense):
Interest expense, net		(81.2	)		(94.8	)		(174.7	)		(193.2	)		(166.6	)		(81.2	)		(334.7	)		(174.7	)
Equity earnings (loss)		1.4			12.8			7.0			24.6			3.4			1.4			3.2			7.0
Gain (loss) from financing activities		(33.8	)		(1.9	)		(49.6	)		(16.6	)		—			(33.8	)		—			(49.6	)
Gain (loss) from sale of equity method investment		435.9			—			435.9			—			—			435.9			—			435.9
Other, net		0.5			0.1			—			0.2			(2.0	)		0.5			(4.9	)		—
Income (loss) before income taxes		774.7			162.0			966.3			404.9			483.9			774.7			1,149.4			966.3
Income tax (expense) benefit		(87.1	)		(6.6	)		(110.1	)		(21.6	)		(96.4	)		(87.1	)		(206.7	)		(110.1	)
Net income (loss)		687.6			155.4			856.2			383.3			387.5			687.6			942.7			856.2
Less: Net income (loss) attributable to noncontrolling interests		91.2			99.2			171.8			180.7			58.2			91.2			116.4			171.8
Net income (loss) attributable to Targa Resources Corp.		596.4			56.2			684.4			202.6			329.3			596.4			826.3			684.4
Premium on repurchase of noncontrolling interests, net of tax		—			—			53.1			—			—			—			490.7			53.1
Dividends on Series A Preferred Stock		8.2			21.8			30.0			43.7			—			8.2			—			30.0
Deemed dividends on Series A Preferred Stock		215.5			—			215.5			—			—			215.5			—			215.5
Net income (loss) attributable to common shareholders	$	372.7		$	34.4		$	385.8		$	158.9		$	329.3		$	372.7		$	335.6		$	385.8

Net income (loss) per common share - basic	$	1.64		$	0.15		$	1.69		$	0.70		$	1.44		$	1.64		$	1.47		$	1.69
Net income (loss) per common share - diluted	$	1.61		$	0.15		$	1.66		$	0.69		$	1.44		$	1.61		$	1.46		$	1.66
Weighted average shares outstanding - basic		227.8			228.6			228.1			228.5			225.6			227.8			226.0			228.1
Weighted average shares outstanding - diluted		231.7			231.3			232.0			230.9			226.8			231.7			227.3			232.0

	Three Months Ended June 30,
	2022									2021
	Pre-Tax			Related Income Tax			After Tax			Pre-Tax			Related Income Tax			After Tax
	(Unaudited)
	(In millions)
Net income (loss)							$	687.6								$	155.4
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value	$	25.2		$	(5.7	)		19.5		$	(232.6	)	$	55.7			(176.9	)
Settlements reclassified to revenues		157.7			(35.2	)		122.5			53.6			(12.7	)		40.9
Other comprehensive income (loss)		182.9			(40.9	)		142.0			(179.0	)		43.0			(136.0	)
Comprehensive income (loss)								829.6									19.4
Less: Comprehensive income (loss) attributable to noncontrolling interests								91.2									99.2
Comprehensive income (loss) attributable to Targa Resources Corp.							$	738.4								$	(79.8	)

	Six Months Ended June 30,																		Three Months Ended June 30,
	2022									2021									2023									2022
	Pre-Tax			Related Income Tax			After Tax			Pre-Tax			Related Income Tax			After Tax			Pre-Tax			Related Income Tax			After Tax			Pre-Tax		Related Income Tax			After Tax
	(Unaudited)																		(Unaudited)
	(In millions)																		(In millions)
Net income (loss)							$	856.2								$	383.3								$	387.5							$	687.6
Other comprehensive income (loss):
Commodity hedging contracts:
Change in fair value	$	(362.1	)	$	80.9			(281.2	)	$	(404.2	)	$	95.9			(308.3	)	$	109.6		$	(25.3	)		84.3		$	25.2	$	(5.7	)		19.5
Settlements reclassified to revenues		303.5			(67.8	)		235.7			203.4			(47.7	)		155.7			(49.8	)		11.5			(38.3	)		157.7		(35.2	)		122.5
Other comprehensive income (loss)		(58.6	)		13.1			(45.5	)		(200.8	)		48.2			(152.6	)		59.8			(13.8	)		46.0			182.9		(40.9	)		142.0
Comprehensive income (loss)								810.7									230.7									433.5								829.6
Less: Comprehensive income (loss) attributable to noncontrolling interests								171.8									180.7									58.2								91.2
Comprehensive income (loss) attributable to Targa Resources Corp.							$	638.9								$	50.0								$	375.3							$	738.4

CONSOLIDATED STATEMENTS OF CHANGES IN ~~OWNERS'~~OWNERS’ EQUITY AND SERIES A PREFERRED STOCK

Retained

Accumulated

Additional

Earnings

Other

Treasury

Total

Series A

Common Stock

Paid in

(Accumulated

Comprehensive

Shares

Noncontrolling

Owner's

Preferred

Shares

Amount

Capital

Deficit)

Income (Loss)

Shares

Amount

Interests

Equity

Stock

(Unaudited)

(In millions, except shares in thousands)

Balance, March 31, 2022

228,181

$
0.2

$
4,125.8

$
(1,734.3
)

$
(418.4
)

9,019

$
(276.3
)

$
2,320.3

$
4,017.3

$
749.7

Compensation on equity grants

—

—

13.8

—

—

—

—

—

13.8

—

Distribution equivalent rights

—

—

(1.7
)

—

—

—

—

—

(1.7
)

—

Shares issued under compensation program

4

—

—

—

—

—

—

—

—

—

Shares tendered for tax withholding obligations

(1
)

—

—

—

—

1

—

—

—

—

Repurchases of common stock

(1,122
)

—

—

—

—

1,122

(74.1
)

—

(74.1
)

—

Series A Preferred Stock dividends

Dividends - $23.75 per share

—

—

—

(8.2
)

—

—

—

—

(8.2
)

—

Dividends in excess of retained earnings

—

—

(8.2
)

8.2

—

—

—

—

—

—

Deemed dividends - repurchase of Series A Preferred Stock

—

—

(215.5
)

—

—

—

—

—

(215.5
)

—

Common stock dividends

Dividends - $0.35 per share

—

—

—

(79.8
)

—

—

—

—

(79.8
)

—

Dividends in excess of retained earnings

—

—

(79.8
)

79.8

—

—

—

—

—

—

Repurchase of Series A Preferred Stock

—

—

—

—

—

—

—

—

—

(749.7
)
Distributions to noncontrolling interests

—

—

—

—

—

—

—

(86.6
)

(86.6
)

—

Contributions from noncontrolling interests

—

—

—

—

—

—

—

6.1

6.1

—

Other comprehensive income (loss)

—

—

—

—

142.0

—

—

—

142.0

—

Net income (loss)

—

—

—

596.4

—

—

—

91.2

687.6

—

Balance, June 30, 2022

227,062

$
0.2

$
3,834.4

$
(1,137.9
)

$
(276.4
)

10,142

$
(350.4
)

$
2,331.0

$
4,400.9

$
—

CONSOLIDATED STATEMENTS OF CHANGES IN ~~OWNERS'~~OWNERS’ EQUITY AND SERIES A PREFERRED STOCK

								Retained			Accumulated
					Additional			Earnings			Other			Treasury								Total			Series A										Retained			Accumulated
	Common Stock				Paid in			(Accumulated			Comprehensive			Shares					Noncontrolling			Owner's			Preferred							Additional			Earnings			Other			Treasury								Total			Series A
	Shares		Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Interests			Equity			Stock		Common Stock					Paid in			(Accumulated			Comprehensive			Shares					Noncontrolling			Owners’			Preferred
	(Unaudited)																										Shares			Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Interests			Equity			Stock
	(In millions, except shares in thousands)																										(Unaudited)
Balance, March 31, 2021		228,655	$	0.2	$	4,361.5		$	(1,747.1	)	$	(158.4	)		7,016	$	(159.5	)	$	3,225.7		$	5,522.4		$	749.7
																											(In millions, except shares in thousands)
Balance, March 31, 2022																												228,181		$	0.2	$	4,125.8		$	(1,734.3	)	$	(418.4	)		9,019	$	(276.3	)	$	2,320.3		$	4,017.3		$	749.7
Compensation on equity grants		—		—		15.0			—			—			—		—			—			15.0			—		—			—		13.8			—			—			—		—			—			13.8			—
Distribution equivalent rights		—		—		(1.0	)		—			—			—		—			—			(1.0	)		—
Dividend equivalent rights																												—			—		(1.7	)		—			—			—		—			—			(1.7	)		—
Shares issued under compensation program																												4			—		—			—			—			—		—			—			—			—
Shares tendered for tax withholding obligations																												(1	)		—		—			—			—			1		—			—			—			—
Repurchases of common stock																												(1,122	)		—		—			—			—			1,122		(74.1	)		—			(74.1	)		—
Series A Preferred Stock dividends
Dividends - $23.75 per share		—		—		—			(21.8	)		—			—		—			—			(21.8	)		—
Dividends - $23.75 per share																												—			—		—			(8.2	)		—			—		—			—			(8.2	)		—
Dividends in excess of retained earnings		—		—		(21.8	)		21.8			—			—		—			—			—			—		—			—		(8.2	)		8.2			—			—		—			—			—			—
Deemed dividends - repurchase of Series A Preferred Stock																												—			—		(215.5	)		—			—			—		—			—			(215.5	)		—
Common stock dividends
Dividends - $0.10 per share		—		—		—			(22.9	)		—			—		—			—			(22.9	)		—
Dividends - $0.35 per share																												—			—		—			(79.8	)		—			—		—			—			(79.8	)		—
Dividends in excess of retained earnings		—		—		(22.9	)		22.9			—			—		—			—			—			—		—			—		(79.8	)		79.8			—			—		—			—			—			—
Repurchase of Series A Preferred Stock																												—			—		—			—			—			—		—			—			—			(749.7	)
Distributions to noncontrolling interests		—		—		—			—			—			—		—			(116.7	)		(116.7	)		—		—			—		—			—			—			—		—			(86.6	)		(86.6	)		—
Contributions from noncontrolling interests		—		—		—			—			—			—		—			2.1			2.1			—		—			—		—			—			—			—		—			6.1			6.1			—
Other comprehensive income (loss)		—		—		—			—			(136.0	)		—		—			—			(136.0	)		—		—			—		—			—			142.0			—		—			—			142.0			—
Net income (loss)		—		—		—			56.2			—			—		—			99.2			155.4			—		—			—		—			596.4			—			—		—			91.2			687.6			—
Balance, June 30, 2021		228,655	$	0.2	$	4,330.8		$	(1,690.9	)	$	(294.4	)		7,016	$	(159.5	)	$	3,210.3		$	5,396.5		$	749.7
Balance, June 30, 2022																												227,062		$	0.2	$	3,834.4		$	(1,137.9	)	$	(276.4	)		10,142	$	(350.4	)	$	2,331.0		$	4,400.9		$	—

CONSOLIDATED STATEMENTS OF CHANGES IN ~~OWNERS'~~OWNERS’ EQUITY AND SERIES A PREFERRED STOCK

									Retained			Accumulated
						Additional			Earnings			Other			Treasury								Total			Series A											Retained			Accumulated
	Common Stock					Paid in			(Accumulated			Comprehensive			Shares					Noncontrolling			Owner's			Preferred								Additional			Earnings			Other		Treasury								Total			Series A
	Shares			Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Interests			Equity			Stock			Common Stock					Paid in			(Accumulated			Comprehensive		Shares					Noncontrolling			Owners’			Preferred
	(Unaudited)																												Shares			Amount		Capital			Deficit)			Income (Loss)		Shares		Amount			Interests			Equity			Stock
	(In millions, except shares in thousands)																												(Unaudited)
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
																													(In millions, except shares in thousands)
Balance, December 31, 2022																														226,042		$	0.2	$	3,702.3		$	(626.8	)	$	54.7		11,897	$	(464.7	)	$	2,316.5		$	4,982.2		$	—
Compensation on equity grants		—			—		27.3			—			—			—		—			—			27.3			—			—			—		30.0			—			—		—		—			—			30.0			—
Distribution equivalent rights		—			—		(3.4	)		—			—			—		—			—			(3.4	)		—
Dividend equivalent rights																														—			—		(2.3	)		—			—		—		—			—			(2.3	)		—
Shares issued under compensation program		1,099			—		—			—			—			—		—			—			—			—			1,273			—		—			—			—		—		—			—			—			—
Shares tendered for tax withholding obligations		(398	)		—		—			—			—			398		(22.5	)		—			(22.5	)		—			(451	)		—		—			—			—		451		(33.9	)		—			(33.9	)		—
Repurchases of common stock		(1,860	)		—		—			—			—			1,860		(123.8	)		—			(123.8	)		—			(2,812	)		—		—			—			—		2,812		(201.0	)		—			(201.0	)		—
Series A Preferred Stock dividends
Dividends - $47.50 per share		—			—		—			(30.0	)		—			—		—			—			(30.0	)		—
Excise tax on repurchases of common stock																														—			—		—			—			—		—		(1.5	)		—			(1.5	)		—
Common stock dividends
Dividends - $0.85 per share																														—			—		—			(193.5	)		—		—		—			—			(193.5	)		—
Dividends in excess of retained earnings		—			—		(30.0	)		30.0			—			—		—			—			—			—			—			—		(193.5	)		193.5			—		—		—			—			—			—
Deemed dividends - repurchase of Series A Preferred Stock		—			—		(215.5	)		—			—			—		—			—			(215.5	)		—
Common stock dividends
Dividends - $0.70 per share		—			—		—			(159.8	)		—			—		—			—			(159.8	)		—
Dividends in excess of retained earnings		—			—		(159.8	)		159.8			—			—		—			—			—			—
Repurchase of Series A Preferred Stock		—			—		—			—			—			—		—			—			—			(749.7	)
Distributions to noncontrolling interests		—			—		—			—			—			—		—			(158.8	)		(158.8	)		—			—			—		—			—			—		—		—			(113.5	)		(113.5	)		—
Contributions from noncontrolling interests		—			—		—			—			—			—		—			9.0			9.0			—			—			—		—			—			—		—		—			2.9			2.9			—
Repurchase of noncontrolling interests, net of tax		—			—		(53.1	)		—			—			—		—			(857.9	)		(911.0	)		—			—			—		(490.7	)		—			—		—		—			(457.3	)		(948.0	)		—
Other comprehensive income (loss)		—			—		—			—			(45.5	)		—		—			—			(45.5	)		—			—			—		—			—			76.1		—		—			—			76.1			—
Net income (loss)		—			—		—			684.4			—			—		—			171.8			856.2			—			—			—		—			826.3			—		—		—			116.4			942.7			—
Balance, June 30, 2022		227,062		$	0.2	$	3,834.4		$	(1,137.9	)	$	(276.4	)		10,142	$	(350.4	)	$	2,331.0		$	4,400.9		$	—
Balance, June 30, 2023																														224,052		$	0.2	$	3,045.8		$	199.5		$	130.8		15,160	$	(701.1	)	$	1,865.0		$	4,540.2		$	—

CONSOLIDATED STATEMENTS OF CHANGES IN ~~OWNERS'~~OWNERS’ EQUITY AND SERIES A PREFERRED STOCK

									Retained			Accumulated
						Additional			Earnings			Other			Treasury								Total			Series A										Retained			Accumulated
	Common Stock					Paid in			(Accumulated			Comprehensive			Shares					Noncontrolling			Owner's			Preferred							Additional			Earnings			Other			Treasury								Total			Series A
	Shares			Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Interests			Equity			Stock		Common Stock					Paid in			(Accumulated			Comprehensive			Shares					Noncontrolling			Owners’			Preferred
	(Unaudited)																											Shares			Amount		Capital			Deficit)			Income (Loss)			Shares		Amount			Interests			Equity			Stock
	(In millions, except shares in thousands)																											(Unaudited)
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
																												(In millions, except shares in thousands)
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		—			—		29.9			—			—			—		—			—			29.9			—		—			—		27.3			—			—			—		—			—			27.3			—
Distribution equivalent rights		—			—		(1.3	)		—			—			—		—			—			(1.3	)		—
Dividend equivalent rights																													—			—		(3.4	)		—			—			—		—			—			(3.4	)		—
Shares issued under compensation program		878			—		—			—			—			—		—			—			—			—		1,099			—		—			—			—			—		—			—			—			—
Shares tendered for tax withholding obligations		(285	)		—		—			—			—			285		(8.6	)		—			(8.6	)		—		(398	)		—		—			—			—			398		(22.5	)		—			(22.5	)		—
Repurchases of common stock																													(1,860	)		—		—			—			—			1,860		(123.8	)		—			(123.8	)		—
Series A Preferred Stock dividends
Dividends - $47.50 per share		—			—		—			(43.7	)		—			—		—			—			(43.7	)		—
Dividends - $47.50 per share																													—			—		—			(30.0	)		—			—		—			—			(30.0	)		—
Dividends in excess of retained earnings		—			—		(43.7	)		43.7			—			—		—			—			—			—		—			—		(30.0	)		30.0			—			—		—			—			—			—
Deemed dividends - repurchase of Series A Preferred Stock																													—			—		(215.5	)		—			—			—		—			—			(215.5	)		—
Common stock dividends
Dividends - $0.20 per share		—			—		—			(45.7	)		—			—		—			—			(45.7	)		—
Dividends - $0.70 per share																													—			—		—			(159.8	)		—			—		—			—			(159.8	)		—
Dividends in excess of retained earnings		—	��		—		(45.7	)		45.7			—			—		—			—			—			—		—			—		(159.8	)		159.8			—			—		—			—			—			—
Repurchase of Series A Preferred Stock																													—			—		—			—			—			—		—			—			—			(749.7	)
Distributions to noncontrolling interests		—			—		—			—			—			—		—			(223.8	)		(223.8	)		—		—			—		—			—			—			—		—			(158.8	)		(158.8	)		—
Contributions from noncontrolling interests		—			—		—			—			—			—		—			4.1			4.1			—		—			—		—			—			—			—		—			9.0			9.0			—
Repurchase of noncontrolling interests, net of tax																													—			—		(53.1	)		—			—			—		—			(857.9	)		(911.0	)		—
Other comprehensive income (loss)		—			—		—			—			(152.6	)		—		—			—			(152.6	)		—		—			—		—			—			(45.5	)		—		—			—			(45.5	)		—
Net income (loss)		—			—		—			202.6			—			—		—			180.7			383.3			—		—			—		—			684.4			—			—		—			171.8			856.2			—
Balance, June 30, 2021		228,655		$	0.2	$	4,330.8		$	(1,690.9	)	$	(294.4	)		7,016	$	(159.5	)	$	3,210.3		$	5,396.5		$	749.7
Balance, June 30, 2022																													227,062		$	0.2	$	3,834.4		$	(1,137.9	)	$	(276.4	)		10,142	$	(350.4	)	$	2,331.0		$	4,400.9		$	—


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
	(Unaudited)						(Unaudited)
	(In millions)						(In millions)
Cash flows from operating activities
Net income (loss)	$	856.2		$	383.3		$	942.7		$	856.2
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization in interest expense		4.3			5.3			6.4			4.3
Compensation on equity grants		27.3			29.9			30.0			27.3
Depreciation and amortization expense		479.0			428.0			656.9			479.0
(Gain) loss on sale or disposition of assets		(1.6	)		(0.2	)		(3.2	)		(1.6	)
Write-downs of assets		1.0			4.7			2.6			1.0
Accretion of asset retirement obligations		2.2			2.0			3.1			2.2
Deferred income tax expense (benefit)		105.8			20.3			199.0			105.8
Equity (earnings) loss of unconsolidated affiliates		(7.0	)		(24.6	)		(3.2	)		(7.0	)
Distributions of earnings received from unconsolidated affiliates		7.3			42.2			4.8			7.3
Risk management activities		182.7			68.2			(327.7	)		182.7
(Gain) loss from financing activities		49.6			16.6			—			49.6
(Gain) loss from sale of equity method investment		(435.9	)		—			—			(435.9	)
Changes in operating assets and liabilities, net of acquisitions:
Receivables and other assets		(250.9	)		31.1			512.7			(250.9	)
Inventories		(51.2	)		126.2			89.2			(51.2	)
Accounts payable, accrued liabilities and other liabilities		421.6			166.1			(319.9	)		421.6
Interest payable		(6.7	)		4.5			53.2			(6.7	)
Net cash provided by operating activities		1,383.7			1,303.6			1,846.6			1,383.7
Cash flows from investing activities
Outlays for property, plant and equipment		(419.5	)		(198.9	)		(1,073.7	)		(419.5	)
Outlays for asset acquisition, net of cash acquired		(203.7	)		—			—			(203.7	)
Proceeds from sale of assets		2.3			0.7			1.9			2.3
Investments in unconsolidated affiliates		(1.5	)		(0.4	)		(6.2	)		(1.5	)
Proceeds from sale of equity method investment		857.0			—			—			857.0
Return of capital from unconsolidated affiliates		13.8			11.7			4.0			13.8
Other, net		—			1.0			(0.6	)		—
Net cash provided by (used in) investing activities		248.4			(185.9	)		(1,074.6	)		248.4
Cash flows from financing activities
Debt obligations:
Proceeds from borrowings under credit facilities		3,425.0			480.0			—			3,425.0
Repayments of credit facilities		(2,875.0	)		(1,145.0	)		(290.0	)		(2,875.0	)
Proceeds from borrowings of commercial paper notes								28,982.8			—
Repayments of commercial paper notes								(29,331.5	)		—
Proceeds from borrowings under accounts receivable securitization facility		380.0			530.0			51.0			380.0
Repayments of accounts receivable securitization facility		(130.0	)		(520.0	)		(303.1	)		(130.0	)
Proceeds from issuance of senior notes		1,493.6			1,000.0			1,717.1			1,493.6
Redemption of senior notes		(1,473.2	)		(1,132.0	)		—			(1,473.2	)
Principal payments of finance leases		(6.7	)		(6.2	)		(20.7	)		(6.7	)
Costs incurred in connection with financing arrangements		(27.0	)		(9.6	)		(4.1	)		(27.0	)
Repurchase of shares		(146.3	)		(8.6	)		(234.9	)		(146.3	)
Contributions from noncontrolling interests		9.0			4.1			2.9			9.0
Distributions to noncontrolling interests		(176.7	)		(251.5	)		(99.6	)		(176.7	)
Repurchase of noncontrolling interests		(926.3	)		—			(1,091.9	)		(926.3	)
Repurchase of Series A Preferred Stock		(965.2	)		—
Redemption of Series A Preferred Stock								—			(965.2	)
Dividends paid to common and Series A Preferred shareholders		(217.8	)		(92.7	)		(199.6	)		(217.8	)
Net cash provided by (used in) financing activities		(1,636.6	)		(1,151.5	)		(821.6	)		(1,636.6	)
Net change in cash and cash equivalents		(4.5	)		(33.8	)		(49.6	)		(4.5	)
Cash and cash equivalents, beginning of period		158.5			242.8			219.0			158.5
Cash and cash equivalents, end of period	$	154.0		$	209.0		$	169.4		$	154.0

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

The accounting policies that we follow are set forth in Note 3 – Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Annual Report. Other than the updates noted below, there were no significant updates or revisions to our accounting policies during the six months ended June 30, ~~2022.~~2023.

During the three and six months ended June 30, 2023, depreciation expense was $236.1 million and $464.9 million, respectively. During the three and six months ended June 30, 2022, depreciation expense was ~~$241.9~~$241.9 million and ~~$423.0~~$423.0 million, respectively. ~~During the three and six months ended June 30, 2021, depreciation expense was $179.1 million and $362.5 million, respectively.~~

We review and evaluate our long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, including changes to our estimates that could have an impact on our assessment of asset recoverability. NaN impairments of long-lived assets were recorded for the first half of 2022 and 2021.

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

The estimated annual amortization expense for intangible assets is approximately ~~$112.0~~$384.0 million, ~~$106.8~~$373.2 million, ~~$103.0~~$326.0 million, ~~$99.9~~$279.8 million and ~~$97.6~~$252.2 million for each of the years ~~2022~~2023 through ~~2026,~~2027, respectively.

Note 6 — Debt Obligations

June 30, 2022

Balance at December 31, 2021

$
1,094.8

Amortization

(56.0
)
Balance at June 30, 2022

$
1,038.8

~~Note 6 – Investments in Unconsolidated Affiliates~~


	June 30, 2023			December 31, 2022
Current:
Partnership accounts receivable securitization facility, due September 2023 (1)	$	547.9		$	800.0
Finance lease liabilities		38.1			34.3
Current debt obligations		586.0			834.3

Long-term:
Term loan facility, variable rate, due July 2025		1,500.0			1,500.0
TRGP senior revolving credit facility, variable rate, due February 2027 (2)		660.0			1,298.7
Senior unsecured notes issued by TRGP:
5.200% fixed rate, due July 2027		750.0			750.0
4.200% fixed rate, due February 2033		750.0			750.0
6.125% fixed rate, due March 2033		900.0			—
4.950% fixed rate, due April 2052		750.0			750.0
6.250% fixed rate, due July 2052		500.0			500.0
6.500% fixed rate, due February 2053		850.0			—
Unamortized discount		(40.8	)		(8.4	)
Senior unsecured notes issued by the Partnership: (3)
6.500% fixed rate, due July 2027		705.2			705.2
5.000% fixed rate, due January 2028		700.3			700.3
6.875% fixed rate, due January 2029		679.3			679.3
5.500% fixed rate, due March 2030		949.6			949.6
4.875% fixed rate, due February 2031		1,000.0			1,000.0
4.000% fixed rate, due January 2032		1,000.0			1,000.0
		11,653.6			10,574.7
Debt issuance costs, net of amortization		(65.6	)		(65.6	)
Finance lease liabilities		224.8			193.0
Long-term debt		11,812.8			10,702.1
Total debt obligations	$	12,398.8		$	11,536.4
Irrevocable standby letters of credit: (2)
Letters of credit outstanding under the TRGP senior revolving credit facility	$	18.8		$	33.2
	$	18.8		$	33.2

(1)

The Partnership’s accounts receivable securitization facility (the “Securitization Facility”) provides up to $800.0 million of borrowing capacity. As of June 30, ~~2022,~~2023, the Partnership had $547.9 million of qualifying receivables.

(2)

We maintain an unsecured commercial paper note program (the “Commercial Paper Program”), the borrowings of which are supported through maintaining a minimum available borrowing capacity under our $~~investments~~2.75 billion TRGP senior revolving credit facility (the “TRGP Revolver”) equal to the aggregate amount outstanding under the Commercial Paper Program. As of June 30, 2023, the TRGP Revolver had no borrowings outstanding and the Commercial Paper Program had $660.0 million borrowings outstanding, resulting in ~~unconsolidated affiliates consist~~approximately $2.1 billion of available liquidity, after accounting for outstanding letters of credit.

(3)

We guarantee all of the ~~following:~~

~~Gathering and Processing Segment~~

•

a 50~~% operated ownership interest in Little Missouri 4 LLC (“Little Missouri 4”).~~

Partnership’s outstanding senior unsecured notes.

~~Logistics and Transportation Segment~~

•

a ~~38.8% operated ownership interest in Gulf Coast Fractionators (“GCF”); and~~

•

a 50% ~~operated~~ ~~ownership interest in Cayenne Pipeline LLC (“Cayenne”).~~

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 closed on the Southcross Acquisition for $201.9 million, subject to customary closing adjustments. We expect to make a final closing adjustment payment of approximately $4 million in the third quarter of 2022.~~ Prior to closing the Southcross Acquisition, we had 2 operated joint ventures in South Texas: a 75% interest in T2 LaSalle Gathering Company L.L.C. (“T2 LaSalle”) and a 50% interest in T2 Eagle Ford Gathering Company L.L.C. (“T2 Eagle Ford” and, together with T2 Lasalle, the “T2 Joint Ventures”). Following the closing of the Southcross Acquisition, we own 100% of the interest in the T2 Joint Ventures.

In May 2022, we completed the GCX Sale for $857.0 million. Prior to the GCX Sale, we owned a 25% non-operated ownership interest in GCX. Following the announcement of the GCX Sale in February 2022, we ceased recognizing equity earnings (loss) due to the terms of the sales agreement. 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 during the three and six months ended June 30, 2022.

~~See Note 4 – Joint Ventures, Acquisitions and Divestitures for further discussion of the T2 Joint Ventures and GCX.~~

~~The following table shows the activity related to our investments in unconsolidated affiliates:~~

Balance at December 31, 2021

Equity Earnings (Loss)

Cash Distributions

Disposition/
Consolidation

Contributions

Balance at June 30, 2022

GCX

$
421.0

$
5.7

$
(14.3
)

$
(412.4
)

$
—

$
—

Little Missouri 4

98.1

1.6

(6.0
)

—

—

93.7

GCF (1)

28.8

(1.6
)

—

—

1.5

28.7

T2 Eagle Ford (2)

21.9

(0.6
)

(0.8
)

(20.5
)

—

—

T2 LaSalle (2)

4.2

(0.3
)

—

(3.9
)

—

—

Cayenne

12.5

2.2

—

—

—

14.7

Total

$
586.5

$
7.0

$
(21.1
)

$
(436.8
)

$
1.5

$
137.1

~~(1)~~

~~Targa assumed operatorship of GCF in the first half of 2021.~~

~~(2)~~

~~Following the closing of the Southcross Acquisition in April 2022, the T2 Joint Ventures are 100% owned and consolidated by Targa.~~

~~Note 7 — Debt Obligations~~

June 30, 2022

December 31, 2021

Current:

Partnership accounts receivable securitization facility, due April 2023 (1)

$
400.0

$
150.0

Finance lease liabilities

14.6

12.8

Current debt obligations

414.6

162.8

Long-term:

TRGP senior revolving credit facility, variable rate, due February 2027 (2)

550.0

0

Senior unsecured notes issued by TRGP:

4.200% fixed rate, due February 2033

750.0

0

Unamortized discount

(1.4
)

0

4.950% fixed rate, due April 2052

750.0

0

Unamortized discount

(5.0
)

0

Senior unsecured notes issued by the Partnership: (3)

5.875% fixed rate, due April 2026 (4)

0

963.2

5.375% fixed rate, due February 2027 (5)

0

468.1

6.500% fixed rate, due July 2027

705.2

705.2

5.000% fixed rate, due January 2028

700.3

700.3

6.875% fixed rate, due January 2029

679.3

679.3

5.500% fixed rate, due March 2030

949.6

949.6

4.875% fixed rate, due February 2031

1,000.0

1,000.0

4.000% fixed rate, due January 2032

1,000.0

1,000.0

7,078.0

6,465.7

Debt issuance costs, net of amortization

(51.4
)

(45.0
)
Finance lease liabilities

19.6

13.7

Long-term debt (6)

7,046.2

6,434.4

Total debt obligations

$
7,460.8

$
6,597.2

Irrevocable standby letters of credit: (2)

Letters of credit outstanding under the TRGP senior revolving credit facility

$
44.8

$
0

Letters of credit outstanding under the Partnership senior
secured revolving credit facility

0

71.3

$
44.8

$
71.3

~~(1)~~

As of June 30, 2022, the Partnership had $400.0 million of qualifying receivables under its $400.0 million accounts receivable securitization facility (“Securitization Facility”), resulting in 0 availability.

~~(2)~~

In February 2022, we entered into a new $2.75 billion TRGP senior revolving credit facility, (the “TRGP Revolver”) which matures in February 2027. In connection with our entry into the TRGP Revolver, we terminated our previous TRGP senior secured revolving credit facility (the “Previous TRGP Revolver”) and the Partnership’s senior secured revolving credit facility (the “Partnership Revolver”). As of June 30, 2022, availability under the TRGP Revolver was $2.2 billion. As of December 31, 2021, we had no balance outstanding under the Previous TRGP Revolver or the Partnership Revolver.

~~(3)~~

~~As of February 2022, we guarantee all of the Partnership’s outstanding senior unsecured notes.~~

~~(4)~~

~~In April 2022, the Partnership redeemed all of the outstanding 5.875% Senior Notes due 2026 (the “5.875% Notes”).~~

~~(5)~~

~~In March 2022, the Partnership redeemed all of the outstanding 5.375% Senior Notes due 2027 (the “5.375% Notes”) with the available liquidity under the TRGP Revolver.~~

~~(6)~~

In July 2022, we completed an underwritten public offering of (i) $750.0 million aggregate principal amount of our 5.200% Senior Notes due 2027 (the “5.200% Notes”) and (ii) $500.0 million aggregate principal amount of our 6.250% Senior Notes due 2052 (the “6.250% Notes”), resulting in net proceeds of approximately $1.2 billion.

The following table shows the range of interest rates and weighted average interest rate incurred on our variable-rate debt obligations during the six months ended June 30, ~~2022:~~2023:


		Range of Interest Rates Incurred		Weighted Average Interest Rate Incurred
TRGP Revolver	and Commercial Paper Program	~~1.5% - 3.1%~~	5.2% - 6.0%	~~2.1%~~	5.6%
Securitization Facility		~~1.1% - 1.7%~~	5.2% - 5.9%	~~1.4%~~	5.5%
Term Loan Facility		5.8% - 6.6%		6.2%

Compliance with Debt Covenants

As of June 30, ~~2022,~~2023, we were in compliance with the covenants contained in our various debt agreements.

In February 2022, we and certain of our subsidiaries entered into a parent guarantee whereby each party to the agreement unconditionally guarantees, jointly and severally, the payment of all of the obligations of the Partnership and Targa Resources Partners Finance Corporation (together with the Partnership, the “Partnership Issuers”) under the respective indentures governing the Partnership Issuers’ senior unsecured notes. As of June 30, ~~2022, $5.0~~2023, $5.0 billion of the Partnership Issuers’ senior unsecured notes was outstanding.

Debt Obligations

~~TRGP Revolver~~Commercial Paper Program

In ~~February~~ 2022, we ~~entered into~~established 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. 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 toCommercial Paper Program. Under the terms of the ~~TRGP Revolver), including a swing line sub-facility~~Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of upless than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to $100.0 million. The TRGP Revolver matures on February 17, 2027. In connection with our entry into the TRGP Revolver, we terminated the Previous TRGP Revolver and the Partnership Revolver. In February 2022, TRGP and the Partnership received a corporate investment grade credit rating from Standard & Poor’s Financial Services LLC (“S&P”) and Fitch Ratings Inc., and in March 2022, the Partnership received a corporate investment grade credit rating from Moody’s Investors Service, Inc. (“Moody’s”). As a result, in accordancetime, with the ~~TRGP Revolver, the collateral~~maximum aggregate face or principal amount outstanding at any one time not to exceed $2.75 billion. We maintain a minimum available borrowing capacity under the TRGP Revolver ~~was released from~~equal to the ~~liens securing~~aggregate amount outstanding under the Commercial Paper Program as support. The Commercial Paper Program is guaranteed by each subsidiary that guarantees the TRGP Revolver. The commercial paper notes are presented in Long-term debt on our ~~obligations thereunder.~~ ~~As a result of the termination of the Previous TRGP Revolver and the Partnership Revolver, we recorded a loss due to debt extinguishment of $0.8 million.~~Consolidated Balance Sheets.

~~Partnership’s Accounts Receivable Securitization Facility~~

In April 2022, the Partnership amended the Securitization Facility to, among other things, extend the facility termination date to April 19, 2023 and replace the LIBOR-based interest rate option with SOFR-based interest rate options, including term SOFR and daily simple SOFR.

Senior Unsecured Notes ~~Redemptions and~~ Issuances

In ~~March 2022, the Partnership redeemed all of the outstanding 5.375%~~ Notes at a redemption price equal to $1,026.88 for each $1,000 principal amount of 5.375% Notes redeemed, plus accrued and unpaid interest to, but not including, March 30, 2022, or a maximum combined aggregate redemption price (exclusive of accrued and unpaid interest) of $480.7 million. The 5.375% Notes were redeemed with available liquidity under the TRGP Revolver. As a result of the redemption of the 5.375% Notes, we recorded a loss due to debt extinguishment of $15.0 million comprised of $12.6 million of premiums paid and a write-off of $2.4 million of debt issuance costs.

~~In April 2022,~~January 2023, we completed an underwritten public offering of (i) ~~$750.0~~$900.0 million aggregate principal amount of our ~~4.200%~~6.125% Senior Notes due 2033 (the ~~“4.200%~~“6.125% Notes”) and (ii) ~~$750.0~~$850.0 million aggregate principal amount of our ~~4.950%~~6.500% Senior Notes due ~~2052~~2053 (the ~~“4.950%~~“6.500% Notes”), resulting in net proceeds of approximately ~~$1.5~~$1.7 billion. The ~~4.200%~~6.125% Notes and the ~~4.950%~~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 ~~4.200%~~6.125% Notes and the ~~4.950%~~6.500% Notes were issued pursuant to the Indenture, dated as of April 6, 2022, as supplemented by that certain ~~First~~Fifth Supplemental Indenture, dated as of ~~April 6, 2022,~~January 3, 2023, among us, ~~such~~each subsidiary ~~guarantors~~guarantor and U.S. Bank Trust Company, National Association, as trustee.

A We used a portion of the net proceeds from the issuance ~~was used~~ to fund the ~~concurrent cash tender offer (the “March Tender Offer”)~~Grand Prix Transaction and the ~~subsequent redemption payment of the Partnership’s 5.875% Notes, with the remainder of the net~~remaining proceeds ~~used~~ for ~~repayment of the outstanding~~general corporate purposes, including to reduce borrowings under the TRGP ~~Revolver. As a result of the March Tender Offer~~Revolver 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.Commercial Paper Program.

In the future, we or the Partnership may redeem, purchase or exchange certain of our and the Partnership’s outstanding debt through redemption calls, cash purchases and/or exchanges for other debt, in open market purchases, privately negotiated transactions or otherwise. Such calls, repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be ~~material~~material.

In March 2022, we filed with the SEC a universal shelf registration statement on Form S-3 that registers the issuance and sale of certain debt and equity securities from time to time in one or more offerings (the “March 2022 Shelf”). The March 2022 Shelf will expire in March 2025. See Note ~~10 – Common Stock and Related Matters.~~

~~The following table summarizes payment obligations as of June 30, 2022, for debt instruments after giving effect to the debt extinguishments detailed above:~~

In July 2022, we completed an underwritten public offering of (i) $750.0 million in aggregate principal amount of our 5.200% Notes and (ii) $500.0 million in aggregate principal amount of our 6.250% Notes, resulting in net proceeds of approximately $1.2 billion. 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 were issued pursuant to the Indenture, dated as of April 6, 2022, as supplemented by that certain Third Supplemental Indenture, dated as of July 7 ~~2022, among us, such subsidiary guarantors and U.S. Bank Trust Company, National Association, as trustee. We used the net proceeds from the issuance to fund a portion of the Lucid Acquisition~~.

In July 2022, we entered into the Term Loan Agreement with Mizuho Bank, Ltd. (“Mizuho”) as the Administrative Agent and a lender, and other lenders party thereto (the “Term Loan Facility”). The Term Loan Facility provides for a ~~three-year, $1.5 billion unsecured term loan facility. The Term Loan Facility matures in~~ ~~July 2025. We used the proceeds from the Term Loan Facility to fund a portion of the Lucid Acquisition.~~

~~The Term Loan Facility bears interest at the Company’s option at: (a) the Base Rate (as defined in the~~ ~~Term Loan Facility), which is the highest of the (i) federal funds rate plus 0.5%, (ii) Mizuho’s prime rate, and (iii) the Term SOFR (as defined in the~~ ~~Term Loan Facility~~) 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 plus 0.10% plus an applicable margin ranging from 1.125% to 1.75% dependent on the Debt Rating.

~~Our obligations under the Term Loan Facility are guaranteed by substantially all material wholly-owned domestic restricted subsidiaries of the Company, including the Partnership.~~

The Term Loan Facility requires the Company to maintain a Consolidated Leverage Ratio (as defined in the Term Loan Facility), 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. For any four-fiscal-quarter-period during which a material acquisition or disposition occurs, the total leverage ratio will be determined on a pro forma basis as though such event had occurred as of the first day of such four-fiscal-quarter-period.

The Term Loan Facility limits the Company’s ability to make dividends to stockholders if an event of default (as defined in the Term Loan Facility) exists or would result from such distribution. In addition, the Term Loan Facility contains various covenants that may limit, among other things, the Company’s ability to incur subsidiary indebtedness, grant liens, make investments, merge or consolidate, and engage in transactions with affiliates.

In July 2022, we established an unsecured commercial paper note program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to time, with the maximum aggregate face or principal amount outstanding at any one time not to exceed $2.75 billion. The Commercial Paper Program is guaranteed by each subsidiary that guarantees the TRGP Revolver. We had 0 amounts outstanding under the Commercial Paper Program as of July 29, 2022.

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

Deferred revenue as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, was ~~$169.4~~$200.1 million and ~~$171.8~~$198.8 million, respectively, which includes ~~$129.0~~$129.0 million of payments received from Vitol Americas Corp. (“Vitol”) (formerly known as Noble Americas Corp.), a subsidiary of Vitol US Holding Co., in 2016, 2017, and 2018 as part of an agreement (the “Splitter Agreement”) related to the construction and operation of a crude oil and condensate splitter. In December 2018, Vitol elected to terminate the Splitter Agreement. The Splitter Agreement provides that the first three annual payments are ours if Vitol elects to terminate, which Vitol disputes. The timing of revenue recognition related to the Splitter Agreement deferred revenue is dependent on the outcome of current litigation with Vitol. See Note 12 – Contingencies.

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

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

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

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

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

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

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

Our derivative contracts are subject to netting arrangements that permit our contracting subsidiaries to net cash settle offsetting asset and liability positions with the same counterparty within the same Targa entity. We record derivative assets and liabilities on our Consolidated Balance Sheets on a gross basis, without considering the effect of master netting arrangements.

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

		Gross Presentation								Pro Forma Net Presentation
June 30, 2022		Asset		Liability			Collateral			Asset		Liability
																	Gross Presentation								Pro Forma Net Presentation
June 30, 2023															June 30, 2023		Asset		Liability			Collateral			Asset		Liability
Current Position	Current Position														Current Position
	Counterparties with offsetting positions or collateral	$	78.9	$	(425.5	)	$	(4.7	)	$	3.1	$	(354.4	)	Counterparties with offsetting positions or collateral		$	180.1	$	(51.1	)	$	(56.4	)	$	79.2	$	(6.6	)
	Counterparties without offsetting positions - assets		1.9		—			—			1.9		—		Counterparties without offsetting positions - assets			14.1		—			—			14.1		—
	Counterparties without offsetting positions - liabilities		—		—			—			—		—		Counterparties without offsetting positions - liabilities			—		—			—			—		—
			80.8		(425.5	)		(4.7	)		5.0		(354.4	)				194.2		(51.1	)		(56.4	)		93.3		(6.6	)
Long-Term Position	Long-Term Position														Long-Term Position
	Counterparties with offsetting positions or collateral		17.5		(197.6	)		13.8			0.1		(166.4	)	Counterparties with offsetting positions or collateral			41.8		(24.1	)		1.4			22.1		(3.0	)
	Counterparties without offsetting positions - assets		3.0		—			—			3.0		—		Counterparties without offsetting positions - assets			6.7		—			—			6.7		—
	Counterparties without offsetting positions - liabilities		—		(34.7	)		—			—		(34.7	)	Counterparties without offsetting positions - liabilities			—		—			—			—		—
			20.5		(232.3	)		13.8			3.1		(201.1	)				48.5		(24.1	)		1.4			28.8		(3.0	)
Total Derivatives	Total Derivatives														Total Derivatives
	Counterparties with offsetting positions or collateral		96.4		(623.1	)		9.1			3.2		(520.8	)	Counterparties with offsetting positions or collateral			221.9		(75.2	)		(55.0	)		101.3		(9.6	)
	Counterparties without offsetting positions - assets		4.9		—			—			4.9		—		Counterparties without offsetting positions - assets	��		20.8		—			—			20.8		—
	Counterparties without offsetting positions - liabilities		—		(34.7	)		—			—		(34.7	)	Counterparties without offsetting positions - liabilities			—		—			—			—		—
		$	101.3	$	(657.8	)	$	9.1		$	8.1	$	(555.5	)			$	242.7	$	(75.2	)	$	(55.0	)	$	122.1	$	(9.6	)

		Gross Presentation								Pro Forma Net Presentation							Gross Presentation								Pro Forma Net Presentation
December 31, 2021		Asset		Liability			Collateral			Asset		Liability
December 31, 2022															December 31, 2022		Asset		Liability			Collateral			Asset		Liability
Current Position	Current Position														Current Position
	Counterparties with offsetting positions or collateral	$	39.2	$	(241.9	)	$	5.0		$	0.3	$	(198.0	)	Counterparties with offsetting positions or collateral		$	162.2	$	(316.7	)	$	12.2		$	27.2	$	(169.5	)
	Counterparties without offsetting positions - assets		3.9		—			—			3.9		—		Counterparties without offsetting positions - assets			17.7		—			—			17.7		—
	Counterparties without offsetting positions - liabilities		—		(16.3	)		—			—		(16.3	)	Counterparties without offsetting positions - liabilities			—		(3.4	)		—			—		(3.4	)
			43.1		(258.2	)		5.0			4.2		(214.3	)				179.9		(320.1	)		12.2			44.9		(172.9	)
Long-Term Position	Long-Term Position														Long-Term Position
	Counterparties with offsetting positions or collateral		7.4		(95.1	)		3.1			—		(84.6	)	Counterparties with offsetting positions or collateral			24.5		(137.4	)		22.4			7.3		(97.8	)
	Counterparties without offsetting positions - assets		0.3		—			—			0.3		��		Counterparties without offsetting positions - assets			—		—			—			—		—
	Counterparties without offsetting positions - liabilities		—		(14.2	)		—			—		(14.2	)	Counterparties without offsetting positions - liabilities			—		(2.7	)		—			—		(2.7	)
			7.7		(109.3	)		3.1			0.3		(98.8	)				24.5		(140.1	)		22.4			7.3		(100.5	)
Total Derivatives	Total Derivatives														Total Derivatives
	Counterparties with offsetting positions or collateral		46.6		(337.0	)		8.1			0.3		(282.6	)	Counterparties with offsetting positions or collateral			186.7		(454.1	)		34.6			34.5		(267.3	)
	Counterparties without offsetting positions - assets		4.2		—			—			4.2		—		Counterparties without offsetting positions - assets			17.7		—			—			17.7		—
	Counterparties without offsetting positions - liabilities		—		(30.5	)		—			—		(30.5	)	Counterparties without offsetting positions - liabilities			—		(6.1	)		—			—		(6.1	)
		$	50.8	$	(367.5	)	$	8.1		$	4.5	$	(313.1	)			$	204.4	$	(460.2	)	$	34.6		$	52.2	$	(273.4	)

Some of our hedges are futures contracts executed through brokers that clear the hedges through an exchange. We maintain a margin deposit with the brokers in an amount sufficient to cover the fair value of our open futures positions. The margin deposit is considered collateral, which is located within Other current assets on our Consolidated Balance Sheets and is not offset against the fair value of our derivative instruments. Our derivative instruments other than our futures contracts are executed under International Swaps and Derivatives Association (“ISDA”) agreements, which govern the key terms with our counterparties. Our ISDA agreements contain credit-risk related contingent features. Following the release of the collateral securing our TRGP Revolver, our derivative positions are no longer secured. As of June 30, ~~2022,~~2023, we have outstanding net derivative positions that contain credit-risk related contingent features that are in a net liability position of ~~($555.5)~~$9.6 million. We have not been required to post any collateral related to these positions due to our credit rating. If our credit rating was to be downgraded one notch below investment grade by both Moody’s Investors Service, Inc. and ~~S&P,~~Standard & Poor’s Financial Services LLC, as defined in our ISDAs, we estimate that as of June 30, ~~2022,~~2023, we would not be required to post ~~$69.6 million of~~ collateral to certain counterparties per the terms of our ISDAs.

The fair value of our derivative instruments, depending on the type of instrument, was determined by the use of present value methods or standard option valuation models with assumptions about commodity prices based on those observed in underlying markets. The estimated fair value of our derivative instruments was a net ~~liability~~asset of ~~($556.5)~~$167.5 million as of June 30, ~~2022.~~2023. The estimated fair value is net of an adjustment for credit risk based on the default probabilities as indicated by market quotes for the counterparties’ credit default swap rates. The credit risk adjustment was immaterial for all periods presented. Our futures contracts that are cleared through an exchange are margined daily and do not require any credit adjustment.

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

Based on valuations as of June 30, ~~2022,~~2023, we expect to reclassify commodity hedge-related deferred ~~losses~~gains of ~~($362.6)~~$161.8 million included in accumulated other comprehensive income (loss) into earnings before income taxes through the end of ~~2025,~~2026, with ~~($263.3)~~$125.8 million of ~~losses~~gains to be reclassified over the next twelve months.

Our consolidated earnings are also affected by the use of the mark-to-market method of accounting for derivative instruments that do not qualify for hedge accounting or that have not been designated as hedges. The changes in fair value of these instruments are recorded on the balance sheet and through earnings rather than being deferred until the anticipated transaction settles. The use of mark-to-market accounting for financial ~~instruments~~assets and liabilities (“financial instruments”) can cause non-cash earnings volatility due to changes in the underlying commodity price indices. For the three and six months ended June 30, ~~2022,~~2023, the unrealized mark-to-market ~~losses~~gains are primarily attributable to ~~unfavorable~~favorable movements in natural gas forward prices, as compared to our positions.

See Note 1311 – Fair Value Measurements and Note 1816 – Segment Information for additional disclosures related to derivative instruments and hedging activities.

Note 1311 — Fair Value Measurements

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

Fair Value of Derivative Financial Instruments

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

The fair values of our derivative instruments are sensitive to changes in forward pricing on natural gas, NGLs and crude oil. The financial position of these derivatives at June 30, ~~2022,~~2023, a net ~~liability~~asset position of ~~($556.5)~~$167.5 million, reflects the present value, adjusted for counterparty credit risk, of the amount we expect to receive or pay in the future on our derivative contracts. If forward pricing on natural gas, NGLs and crude oil were to increase by 10%, the result would be a fair value reflecting a net ~~liability~~asset of ~~($791.3)~~$36.6 million. If forward pricing on natural gas, NGLs and crude oil were to decrease by 10%, the result would be a fair value reflecting a net ~~liability~~asset of ~~($321.7)~~$299.2 million.

Fair Value of Other Financial Instruments

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

•

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

•

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

•

~~the~~ ~~TRGP~~ ~~Revolver and Securitization Facility are based on carrying value, which approximates fair value as their interest rates are based on prevailing market rates; and~~

•

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

Fair Value Hierarchy

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

•

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

•

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

•

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

•

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

•

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

•

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

The following table shows a breakdown by fair value hierarchy category for ~~(1)~~(i) financial instruments measurements included on our Consolidated Balance Sheets at fair value, and ~~(2)~~(ii) supplemental fair value disclosures for other financial instruments:


	June 30, 2023
	Carrying		Fair Value
	Value		Total		Level 1		Level 2		Level 3
Financial Instruments Recorded on Our Consolidated Balance Sheets at Fair Value:
Assets from commodity derivative contracts (1)	$	241.7	$	241.7	$	—	$	241.7	$	—
Liabilities from commodity derivative contracts (1)		74.2		74.2		—		74.2		—
Financial Instruments Recorded on Our Consolidated Balance Sheets at Carrying Value:
Cash and cash equivalents		169.4		169.4		—		—		—
TRGP Revolver and Commercial Paper Program		660.0		660.0		—		660.0		—
TRGP Senior unsecured notes		4,459.2		4,269.3		—		4,269.3		—
Term Loan Facility		1,500.0		1,500.0		—		1,500.0		—
Partnership’s Senior unsecured notes		5,034.4		4,776.8		—		4,776.8		—
Securitization Facility		547.9		547.9		—		547.9		—


	December 31, 2022
	Carrying		Fair Value
	Value		Total		Level 1		Level 2		Level 3
Financial Instruments Recorded on Our Consolidated Balance Sheets at Fair Value:
Assets from commodity derivative contracts (1)	$	201.6	$	201.6	$	—	$	201.6	$	—
Liabilities from commodity derivative contracts (1)		457.4		457.4		—		457.4		—
Financial Instruments Recorded on Our Consolidated Balance Sheets at Carrying Value:
Cash and cash equivalents		219.0		219.0		—		—		—
TRGP Revolver and Commercial Paper Program		1,298.7		1,298.7		—		1,298.7		—
TRGP Senior unsecured notes		2,741.6		2,452.6		—		2,452.6		—
Term Loan Facility		1,500.0		1,500.0		—		1,500.0		—
Partnership’s Senior unsecured notes		5,034.4		4,711.3		—		4,711.3		—
Securitization Facility		800.0		800.0		—		800.0		—

June 30, 2022

Carrying

Fair Value

Value

Total

Level 1

Level 2

Level 3

Financial Instruments Recorded on Our
Consolidated Balance Sheets at Fair Value:

Assets from commodity derivative contracts (1)

$
99.6

$
99.6

$
0

$
99.6

$
0

Liabilities from commodity derivative contracts (1)

656.1

656.1

0

656.1

0

Financial Instruments Recorded on Our
Consolidated Balance Sheets at Carrying Value:

Cash and cash equivalents

154.0

154.0

0

0

0

TRGP Revolver

550.0

550.0

0

550.0

0

TRGP Senior unsecured notes

1,493.6

1,321.1

0

1,321.1

0

Partnership's Senior unsecured notes

5,034.4

4,761.5

0

4,761.5

0

Securitization Facility

400.0

400.0

0

400.0

0

(1)

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

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

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

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

The significant unobservable inputs used in the fair value measurements of our Level 3 derivatives were (i) the forward natural gas liquids pricing curves, for which a significant portion of the derivative’s term is beyond available forward pricing, and (ii) implied volatilities, which are unobservable as a result of inactive natural gas liquids options trading. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had 0no derivative contracts categorized as Level 3.

We operate in 2two primary segments: (i) Gathering and Processing, and (ii) Logistics and Transportation (also referred to as the Downstream Business). Our reportable segments include operating segments that have been aggregated based on the nature of the products and services provided.

Our Gathering and Processing segment includes assets used in the gathering and/or purchase and sale of natural gas produced from oil and gas wells, removing impurities and processing this raw natural gas into merchantable natural gas by extracting NGLs; and assets used for the gathering and terminaling and/or purchase and sale of crude oil. The Gathering and Processing ~~segment's~~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.

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

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

Reportable segment information is shown in the following tables:


	Three Months Ended June 30, 2023
	Gathering and Processing		Logistics and Transportation		Other		Corporate and Eliminations			Total
Revenues
Sales of commodities	$	268.0	$	2,494.7	$	151.9	$	—		$	2,914.6
Fees from midstream services		321.6		167.5		—		—			489.1
		589.6		2,662.2		151.9		—			3,403.7
Intersegment revenues
Sales of commodities		976.0		83.0		—		(1,059.0	)		—
Fees from midstream services		0.6		10.9		—		(11.5	)		—
		976.6		93.9		—		(1,070.5	)		—
Revenues	$	1,566.2	$	2,756.1	$	151.9	$	(1,070.5	)	$	3,403.7
Operating margin (1)	$	502.5	$	408.0	$	151.9
Other financial information:
Total assets (2)	$	12,316.5	$	6,890.4	$	13.4	$	241.5		$	19,461.8
Goodwill	$	45.2	$	—	$	—	$	—		$	45.2
Capital expenditures	$	390.7	$	238.7	$	—	$	3.5		$	632.9


	Three Months Ended June 30, 2022
	Gathering and Processing			Logistics and Transportation		Other			Corporate and Eliminations			Total
Revenues
Sales of commodities	$	261.9		$	5,366.8	$	(4.5	)	$	—		$	5,624.2
Fees from midstream services		251.6			180.0		—			—			431.6
		513.5			5,546.8		(4.5	)		—			6,055.8
Intersegment revenues
Sales of commodities		2,656.6			131.6		—			(2,788.2	)		—
Fees from midstream services		(0.5	)		12.0		—			(11.5	)		—
		2,656.1			143.6		—			(2,799.7	)		—
Revenues	$	3,169.6		$	5,690.4	$	(4.5	)	$	(2,799.7	)	$	6,055.8
Operating margin (1)	$	474.7		$	322.3	$	(4.5	)
Other financial information:
Total assets (2)	$	8,227.9		$	6,940.5	$	0.8		$	165.1		$	15,334.3
Goodwill	$	45.2		$	—	$	—		$	—		$	45.2
Capital expenditures	$	196.7		$	42.6	$	—		$	4.4		$	243.7


	Six Months Ended June 30, 2023
	Gathering and Processing		Logistics and Transportation		Other		Corporate and Eliminations			Total
Revenues
Sales of commodities	$	555.8	$	6,056.2	$	327.7	$	—		$	6,939.7
Fees from midstream services		642.1		342.4		—		—			984.5
		1,197.9		6,398.6		327.7		—			7,924.2
Intersegment revenues
Sales of commodities		2,323.0		161.2		—		(2,484.2	)		—
Fees from midstream services		1.1		21.7		—		(22.8	)		—
		2,324.1		182.9		—		(2,507.0	)		—
Revenues	$	3,522.0	$	6,581.5	$	327.7	$	(2,507.0	)	$	7,924.2
Operating margin (1)	$	1,040.9	$	937.1	$	327.7
Other financial information:
Total assets (2)	$	12,316.5	$	6,890.4	$	13.4	$	241.5		$	19,461.8
Goodwill	$	45.2	$	—	$	—	$	—		$	45.2
Capital expenditures	$	660.2	$	415.3	$	—	$	11.7		$	1,087.2


	Six Months Ended June 30, 2022
	Gathering and Processing			Logistics and Transportation		Other			Corporate and Eliminations			Total
Revenues
Sales of commodities	$	396.4		$	9,976.6	$	(182.7	)	$	—		$	10,190.3
Fees from midstream services		462.2			362.4		—			—			824.6
		858.6			10,339.0		(182.7	)		—			11,014.9
Intersegment revenues
Sales of commodities		4,687.2			255.8		—			(4,943.0	)		—
Fees from midstream services		(0.2	)		22.6		—			(22.4	)		—
		4,687.0			278.4		—			(4,965.4	)		—
Revenues	$	5,545.6		$	10,617.4	$	(182.7	)	$	(4,965.4	)	$	11,014.9
Operating margin (1)	$	872.3		$	674.5	$	(182.7	)
Other financial information:
Total assets (2)	$	8,227.9		$	6,940.5	$	0.8		$	165.1		$	15,334.3
Goodwill	$	45.2		$	—	$	—		$	—		$	45.2
Capital expenditures	$	329.7		$	67.8	$	—		$	8.7		$	406.2

Three Months Ended June 30, 2022

Gathering and Processing

Logistics and Transportation

Other

Corporate
and
Eliminations

Total

Revenues

Sales of commodities

$
261.9

$
5,366.8

$
(4.5
)

$
—

$
5,624.2

Fees from midstream services

251.6

180.0

—

—

431.6

513.5

5,546.8

(4.5
)

—

6,055.8

Intersegment revenues

Sales of commodities

2,656.6

131.6

—

(2,788.2
)

—

Fees from midstream services

(0.5
)

12.0

—

(11.5
)

—

2,656.1

143.6

—

(2,799.7
)

—

Revenues

$
3,169.6

$
5,690.4

$
(4.5
)

$
(2,799.7
)

$
6,055.8

Operating margin (1)

$
474.7

$
322.3

$
(4.5
)

Other financial information:

Total assets (2)

$
8,253.4

$
6,915.0

$
0.8

$
165.1

$
15,334.3

Goodwill

$
45.2

$
—

$
—

$
—

$
45.2

Capital expenditures

$
196.7

$
42.6

$
—

$
4.4

$
243.7

(1)

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

(2)

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

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

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“Annual Report”), as well as the unaudited consolidated financial statements and notes hereto included in this Quarterly Report on Form 10-Q.

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

To provide these services, we operate in two primary segments: (i) Gathering and Processing, and (ii) Logistics and Transportation (also referred to as the Downstream Business).

Our Logistics and Transportation segment includes the activities and assets necessary to convert mixed NGLs into NGL products and also includes other assets and value-added services such as transporting, storing, fractionating, terminaling, and marketing of NGLs and NGL products, including services to LPG exporters and certain natural gas supply and marketing activities in support of our other businesses. The Logistics and Transportation segment also includes the Grand Prix NGL Pipeline (“Grand Prix”), which connects our gathering and processing positions in the Permian Basin, Southern Oklahoma and North Texas with our Downstream facilities in Mont Belvieu, Texas. ~~The associated assets are generally connected to and supplied in part by our Gathering and Processing segment and, except for the pipelines and smaller terminals,~~Our Downstream facilities are located predominantly in Mont Belvieu and Galena Park, Texas, and in Lake Charles, Louisiana.

Other contains the unrealized mark-to-market gains/losses related to derivative contracts that were not designated as cash flow hedges.

In ~~August 2021, in~~ response to increasing production and to meet the infrastructure needs of producers ~~we announced~~and our downstream customers, our major expansion projects include the ~~construction of a new 275 MMcf/d cryogenic natural gas processing plant in~~ following:

Permian Midland ~~(the “Legacy plant”). The Legacy plant is expected to begin operations late in the third quarter of 2022.~~Processing Expansions

In January 2023, we completed the acquisition of ~~noncontrolling interests. The amount of~~Blackstone Energy Partners’ 25% interest in the redemption price in excess of the carrying amount, net of tax was $53.1 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. In addition, the DevCo JV Repurchase resulted in an $857.9 million reduction of Noncontrolling interests on our Consolidated Balance Sheets.

~~In April 2022, we closed on the bolt-on acquisition of Southcross Energy Operating LLC and its subsidiaries (“Southcross”~~Grand Prix Joint Venture (the “Grand Prix Transaction”) for ~~a purchase price of $201.9 million (the “Southcross Acquisition”), subject to customary closing adjustments. We expect to make~~approximately $1.05 billion in cash and paid a final closing adjustment ~~payment~~ of ~~approximately $4 million in~~$41.9 million. Following the ~~third quarter~~closing of ~~2022. We acquired a portfolio~~the Grand Prix Transaction, we own 100% of ~~complementary midstream infrastructure assets and associated contracts that have been integrated into our SouthTX Gathering and Processing operations,~~Grand Prix, including the ~~remaining interests in the two operated joint ventures in South Texas that we previously held as investments in unconsolidated affiliates~~Daytona NGL Pipeline. For further details on our acquisitions and ~~have been prospectively consolidated beginning in the second quarter of 2022. See~~divestitures, see Note 4 - ~~Joint Ventures,~~ Acquisitions and Divestitures ~~and Note 6 - Investments in Unconsolidated Affiliates~~ to our Consolidated Financial ~~Statements~~Statements..

In ~~May 2022,~~April 2023, we ~~completed~~declared an increase to our common dividend to $0.50 per common share or $2.00 per common share annualized effective for the ~~sale~~first quarter of Targa GCX Pipeline LLC to a third party for $857.0 million (the “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 during2023.

On July 29, 2022, we closed on the acquisition of Lucid Energy Delaware, LLC (“Lucid”) from Riverstone Holdings LLC and Goldman Sachs Asset Management for approximately $3.55 billion in cash (the “Lucid Acquisition”), subject to customary closing adjustments. Lucid provides natural gas gathering, treating, and processing services in the Delaware Basin, and owns and operates 1,050 miles of natural gas pipelines and approximately 1.4 billion cubic feet per day (“Bcf/d”) of cryogenic natural gas processing capacity in service or under construction located primarily in Eddy and Lea counties of New Mexico. Lucid’s Delaware Basin assets are integrated into our Permian Delaware operations.

~~During the second quarter of 2022,~~2023, we repurchased ~~1,121,925~~2,088,062 shares and 2,812,202 shares of our common stock at a weighted average per share price of ~~$66.07~~$71.37 and $71.49 for a total net cost of ~~$74.1 million. From July 1 through July 29, 2022, we repurchased 512,336 shares~~$149.0 million and $201.0 million, respectively.

In October 2020, our Board of Directors approved a share repurchase program (the “2020 Share Repurchase Program”) for the repurchase of up to $500.0 million of our outstanding common ~~stock at~~stock. In May 2023, our Board of Directors authorized a ~~weighted average price of $58.57 for a total net cost of $30.0 million. There was $214.7 million remaining under our $500 million~~new $1.0 billion common share repurchase program ~~as of July 29, 2022.~~

~~In May 2022, we redeemed~~(the “2023 Share Repurchase Program” and, together with the 2020 Share Repurchase Program, the “Share Repurchase Programs”). The amount authorized under the 2023 Share Repurchase Program was 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~~addition to the amount ~~of accrued and unpaid dividends from April 1, 2022 up to, but not including,~~remaining under the redemption date of May 3, 2022. The difference between the consideration paid of $973.4 million (including unpaid dividends of $8.2 million) and the net carrying value of the shares redeemed was $223.7 million, of which $215.5 million was recorded as deemed dividends in our Consolidated Statements of Operations in2020 Share Repurchase Program. During the second quarter of ~~2022. Following~~2023, we exhausted the ~~redemption, we have no Series A~~2020 Share Repurchase

~~Preferred outstanding and all rights of the holders of shares of Series A Preferred were terminated. See Note 9 - Preferred Stock to our Consolidated Financial Statements.~~

In February 2022, we entered into a Credit Agreement with Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swing Line Lender, and the other lenders party thereto (the “TRGP Revolver”). 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 $500.0Program. There was $942.7 million in the future, subject to the terms of the TRGP Revolver), including a swing line sub-facility of up to $100.0 million. The TRGP Revolver matures on February 17, 2027. In connection with our entry into the TRGP Revolver, we terminated our previous TRGP senior secured revolving credit facility (the “Previous TRGP Revolver”) and the Partnership’s senior secured revolving credit facility (the “Partnership Revolver”). In February 2022, TRGP and the Partnership received a corporate investment grade credit rating from Standard & Poor’s Financial Services LLC (“S&P”) and Fitch Ratings Inc. (“Fitch”), and in March 2022, the Partnership received a corporate investment grade credit rating from Moody’s Investors Service, Inc. (“Moody’s”). As a result, in accordance with the TRGP Revolver, the collateralremaining under the ~~TRGP Revolver was released from the liens securing our obligations thereunder.~~ ~~As a result of the termination of the Previous TRGP Revolver and the Partnership Revolver, we recorded a loss due to debt extinguishment of $0.8 million.~~

In February 2022, we and certain of our subsidiaries entered into a parent guarantee whereby each party to the agreement unconditionally guarantees, jointly and severally, the payment of all of the obligations of the Partnership and Targa Resources Partners Finance Corporation (together with the Partnership, the “Partnership Issuers”) under the respective indentures governing the Partnership Issuers’ senior unsecured notes. As2023 Share Repurchase Program as of June 30, ~~2022, $5.0 billion~~2023. We may discontinue the 2023 Share Repurchase Program at any time and are not obligated to repurchase any specific dollar amount or number of ~~the Partnership Issuers’ senior unsecured notes was outstanding.~~shares thereunder.

In March 2022, the Partnership redeemed all of the outstanding 5.375% Senior Notes due 2027 (the “5.375% Notes”) with available liquidity under the TRGP Revolver. As a result of the redemption of the 5.375% Notes, we recorded a loss due to debt extinguishment of $15.0 million comprised of $12.6 million of premiums paid and a write-off of $2.4 million of debt issuance costs.

~~In April 2022,~~January 2023, we completed an underwritten public offering of (i) ~~$750.0~~$900.0 million in aggregate principal amount of our ~~4.200%~~6.125% Senior Notes due 2033 (the ~~“4.200%~~“6.125% Notes”) and (ii) ~~$750.0~~$850.0 million in aggregate principal amount of our ~~4.950%~~6.500% Senior Notes due ~~2052~~2053 (the ~~“4.950%~~“6.500% Notes”), resulting in net proceeds of approximately ~~$1.5~~$1.7 billion. AWe used a portion of the net proceeds from the issuance ~~was used~~ to fund the ~~concurrent cash tender offer~~Grand Prix Transaction and the remaining net proceeds for general corporate purposes, including to reduce borrowings under our $2.75 billion TRGP senior revolving credit facility (the ~~“March Tender Offer”~~“TRGP Revolver”) and the subsequent redemption payment of the Partnership’s 5.875% Senior Notes due 2026 (the “5.875% Notes”), with the remainder of the net proceeds used for repayment of the outstanding borrowings under the TRGP Revolver. 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, the Partnership amended the $400.0 million accounts receivable securitization facility (“Securitization Facility”) to, among other things, extend the facility termination date to April 19, 2023 and replace the LIBOR-based interest rate option with SOFR-based interest rate options, including term SOFR and daily simple SOFR.

~~In July 2022, we completed an underwritten public offering of (i) $750.0 million in aggregate principal amount of~~ our 5.200% Senior Notes due 2027 (the “5.200% Notes”) and (ii) $500.0 million in aggregate principal amount of our 6.250% Senior Notes due 2052 (the “6.250% Notes”), resulting in net proceeds of approximately $1.2 billion. We used the net proceeds from the issuance to fund a portion of the Lucid Acquisition.

In July 2022, we entered into the Term Loan Agreement with Mizuho Bank, Ltd. as the Administrative Agent and a lender, and other lenders party thereto (the “Term Loan Facility”). The Term Loan Facility provides for a three-year, $1.5 billion unsecured term loan facility. The Term Loan Facility matures in July 2025. We used the proceeds to fund a portion of the Lucid Acquisition.

~~In July 2022, we established an~~ unsecured commercial paper note program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to time, with the maximum aggregate face or principal amount outstanding at any one time not to exceed $2.75 billion. The Commercial Paper Program is guaranteed by each subsidiary that guarantees the TRGP Revolver. We had no amounts outstanding under the Commercial Paper Program as of July 29, 2022.

For additional information about our recent debt-related transactions, see Note 76 - Debt Obligations to our Consolidated Financial Statements.

~~In January 2022, the~~ As of June 30, 2023, Internal Revenue Service (“IRS”) notified us that it will examine Targa’s net operating loss (“NOL”) carryback previously claimed under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The CARES Act was signed into law on March 27, 2020 and provided corporate taxpayers an expanded five-year NOL carryback period for losses generatedexaminations are currently in tax years 2018 through 2020. We received a cash refund of approximately $44 million related to the CARES Act provisions in 2020. We have responded to information requests from the IRS and do not anticipate material changes in prior year taxable income.

On October 6, 2021 and April 7, 2022, we received notice from the IRS that it intends to audit three direct and indirectly wholly-owned subsidiaries of the Company (Targa Resources Partners LP, Targa Downstream LLC and Targa Midstream Services LLC) treated as partnerships for federal tax purposesprocess for the 2019 and 2020 taxable years of certain wholly-owned and consolidated subsidiaries that are treated as partnerships for U.S federal income tax ~~years.~~purposes. We are responding to the information requests from the IRS onwith respect to these audits. ~~The Company is~~We are not aware of any potential audit findings that would give rise to adjustments to taxable income and ~~does~~do not anticipate material changes related to these audits.

On ~~January 20,~~August 16, 2022, ~~FERC issued~~President Biden signed into law the IRA which, among other things, introduced a corporate alternative minimum tax (the “CAMT”), imposed a 1% excise tax on stock buybacks, and provided tax incentives to promote clean energy. Under the CAMT, a 15% minimum tax will be imposed on certain financial statement income of “applicable corporations.” The IRA treats a corporation as an ~~order on rehearing of its December 17, 2020 Order Establishing Index Level~~applicable corporation in any taxable year in which the ~~Commission reduced the oil pricing index factor for oil pipelines to use~~“average annual adjusted financial statement income” of such corporation for the three taxable year period ending prior to such taxable year exceeds $1.0 billion. The 1% excise tax on stock buybacks is accrued in the current ~~five-year period. As a result,~~year for payment with the ~~ceiling levels computed for July 1, 2021 to June 30,~~first quarterly excise tax return of the subsequent year.

On December 27, 2022, IRS Notice 2023-7 (the “Notice”) was issued by the U.S. Department of the Treasury and the ~~resulting rates~~IRS. The Notice provides guidance on the application of the CAMT which may be relied upon until final regulations are released. Based on our interpretation of the IRA, the CAMT and related guidance, and a number of operational, economic, accounting and regulatory assumptions, including the safe harbor provided for ~~certain of Targa’s liquids pipelines were recomputed to account~~in the Notice, the company should not qualify as an “applicable corporation” for ~~the reduced index factor.~~2023.

For a discussion of recent accounting pronouncements that will affect us, see “Recent Accounting Pronouncements” included within Note 3 – Significant Accounting Policies to our Consolidated Financial Statements.

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. Because commodity price movements tend to impact both revenues and costs, increases or decreases in our revenues alone are not necessarily indicative of increases or decreases in our profitability. Our contract portfolio, the prevailing pricing environment for crude oil, natural gas and NGLs, the impact of our commodity hedging program and its ability to mitigate exposure to commodity price movements, and the volumes of crude oil, natural gas and NGL throughput on our systems are important factors in determining our profitability. Our profitability is also affected by the NGL content in gathered wellhead natural gas, supply and demand for our products and services, utilization of our assets and changes in our customer mix.

Our profitability is also impacted by fee-based contracts. Our growing capital expenditures for pipelines and gathering and processing assets underpinned by fee-based margin, expansion of our Downstream facilities, continued focus on adding fee-based margin to our existing and future gathering and processing contracts, as well as third-party acquisitions of businesses and assets, will continue to increase the number of our contracts that are fee-based. Fixed fees for services such as gathering and processing, transportation,

fractionation, storage, terminaling and crude oil gathering are not directly tied to changes in market prices for commodities. Nevertheless, a change in market dynamics such as available commodity throughput does affect ~~profitability~~profitability..

Management uses a variety of financial measures and operational measurements to analyze our performance. These include: ~~(1)~~(i) throughput volumes, facility efficiencies and fuel consumption, ~~(2)~~(ii) operating expenses, ~~(3)~~(iii) capital expenditures and ~~(4)~~(iv) the following non-GAAP measures: adjusted EBITDA, distributable cash flow, adjusted free cash flow and adjusted operating margin (segment).

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. This is achieved by connecting new wells and adding new volumes in existing areas of production, as well as by capturing crude oil and natural gas supplies currently gathered by third parties. Similarly, our profitability is impacted by our ability to add new sources of mixed NGL supply, connected by third-party transportation and Grand Prix, to our Downstream Business fractionation facilities and at times to our

export facilities. We fractionate NGLs generated by our gathering and processing plants, as well as by contracting for mixed NGL supply from third-party facilities.

In addition, we seek to increase adjusted operating margin by limiting volume losses, reducing fuel consumption and by increasing efficiency. With our gathering systems’ extensive use of remote monitoring capabilities, we monitor the volumes received at the wellhead or central delivery points along our gathering systems, the volume of natural gas received at our processing plant inlets and the volumes of NGLs and residue natural gas recovered by our processing plants. 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.

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. We also track the difference between the volume of natural gas received at the inlet of the processing plant and the NGLs and residue gas produced at the outlet of such plant to monitor the fuel consumption and recoveries of our facilities. Similar tracking is performed for our crude oil gathering and logistics assets and our NGL pipelines. These volume, recovery and fuel consumption measurements are an important part of our operational efficiency analysis and safety programs.

Operating expenses are costs associated with the operation of specific assets. Labor, contract services, repair and maintenance and ad valorem taxes comprise the most significant portion of our operating expenses. These expenses remain relatively stable and independent of the volumes through our systems, but may increase with system expansions and will fluctuate depending on the scope of the activities performed during a specific period.

Our capital expenditures are classified as growth capital expenditures and maintenance capital expenditures. Growth capital expenditures improve the service capability of the existing assets, extend asset useful lives, increase capacities from existing levels, add capabilities, and reduce costs or enhance revenues. Maintenance capital expenditures are those expenditures that are necessary to maintain the service capability of our existing assets, including the replacement of system components and equipment, which are worn, obsolete or completing their useful life and expenditures to remain in compliance with environmental laws and regulations.

Capital spending associated with growth and maintenance projects is closely monitored. Return on investment is analyzed before a capital project is approved, spending is closely monitored throughout the development of the project, and the subsequent operational performance is compared to the assumptions used in the economic analysis performed for the capital investment approval.

We utilize non-GAAP measures to analyze our performance. 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. These non-GAAP measures should not be considered as an alternative to GAAP measures and have important limitations as analytical tools. Investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because our non-GAAP measures exclude some, but not all, items that affect income and segment operating margin, and

are defined differently by different companies within our industry, our definitions may not be comparable with similarly titled measures of other companies, thereby diminishing their utility. 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.

We define adjusted operating margin for our segments as revenues less product purchases and fuel. It is impacted by volumes and commodity prices as well as by our contract mix and commodity hedging program.

The adjusted operating margin impacts of mark-to-market hedge unrealized changes in fair value are reported in Other.

Adjusted operating margin for our segments provides useful information to investors because it is used as a supplemental financial measure by management and by external users of our financial statements, including investors and commercial banks, to assess:

Management reviews adjusted operating margin and operating margin for our segments monthly as a core internal management process. We believe that investors benefit from having access to the same financial measures that management uses in evaluating our operating results. The reconciliation of our adjusted operating margin to the most directly comparable GAAP measure is presented under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – By Reportable Segment.”

We define adjusted EBITDA as Net income (loss) attributable to Targa Resources Corp. before interest, income taxes, depreciation and amortization, and other items that we believe should be adjusted consistent with our core operating performance. The adjusting items are detailed in the adjusted EBITDA reconciliation table and its footnotes. Adjusted EBITDA is used as a supplemental financial measure by us and by external users of our financial statements such as investors, commercial banks and others to measure the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and pay dividends to our investors.

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). 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. 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.

The following tables reconcile the non-GAAP financial measures used by management to the most directly comparable GAAP measures for the periods indicated:

The following table and discussion is a summary of our consolidated results of operations:

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022 vs. 2021

2022

2021

2022 vs. 2021

(In millions)

Revenues:

Sales of commodities
$
5,624.2

$
3,091.6

$
2,532.6

82
%

$
10,190.3

$
6,459.3

$
3,731.0

58
%
Fees from midstream services

431.6

324.3

107.3

33
%

824.6

589.4

235.2

40
%
Total revenues

6,055.8

3,415.9

2,639.9

77
%

11,014.9

7,048.7

3,966.2

56
%
Product purchases and fuel

5,047.3

2,709.0

2,338.3

86
%

9,251.5

5,545.3

3,706.2

67
%
Operating expenses

215.8

184.8

31.0

17
%

399.3

355.8

43.5

12
%
Depreciation and amortization expense

269.9

211.9

58.0

27
%

479.0

428.0

51.0

12
%
General and administrative expense

71.0

63.7

7.3

11
%

138.0

125.1

12.9

10
%
Other operating (income) expense

(0.1
)

0.7

(0.8
)

(114
%)

(0.6
)

4.6

(5.2
)

(113
%)
Income (loss) from operations

451.9

245.8

206.1

84
%

747.7

589.9

157.8

27
%
Interest expense, net

(81.2
)

(94.8
)

13.6

14
%

(174.7
)

(193.2
)

18.5

10
%
Equity earnings (loss)

1.4

12.8

(11.4
)

(89
%)

7.0

24.6

(17.6
)

(72
%)
Gain (loss) from financing activities

(33.8
)

(1.9
)

(31.9
)

NM

(49.6
)

(16.6
)

(33.0
)

199
%
Gain (loss) from sale of equity method investment

435.9

—

435.9

100
%

435.9

—

435.9

100
%
Other, net

0.5

0.1

0.4

NM

—

0.2

(0.2
)

(100
%)
Income tax (expense) benefit

(87.1
)

(6.6
)

(80.5
)

NM

(110.1
)

(21.6
)

(88.5
)
NM

Net income (loss)

687.6

155.4

532.2

NM

856.2

383.3

472.9

123
%
Less: Net income (loss) attributable to noncontrolling interests

91.2

99.2

(8.0
)

(8
%)

171.8

180.7

(8.9
)

(5
%)
Net income (loss) attributable to Targa Resources Corp.

596.4

56.2

540.2

NM

684.4

202.6

481.8

238
%
Premium on repurchase of noncontrolling interests, net of tax

—

—

—

—

53.1

—

53.1

100
%
Dividends on Series A Preferred Stock

8.2

21.8

(13.6
)

(62
%)

30.0

43.7

(13.7
)

(31
%)
Deemed dividends on Series A Preferred Stock

215.5

—

215.5

100
%

215.5

—

215.5

100
%
Net income (loss) attributable to common shareholders
$
372.7

$
34.4

$
338.3

NM

$
385.8

$
158.9

$
226.9

143
%
Financial data:

Adjusted EBITDA (1)
$
666.4

$
460.0

$
206.4

45
%

$
1,292.1

$
975.7

$
316.4

32
%
Distributable cash flow (1)

533.4

339.5

193.9

57
%

1,028.2

737.0

291.2

40
%
Adjusted free cash flow (1)

334.1

256.1

78.0

30
%

707.5

592.6

114.9

19
%
(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.

Three Months Ended June 30, ~~2022~~2023 Compared to Three Months Ended June 30, ~~2021~~2022

The ~~increase~~decrease in commodity sales reflects ~~higher~~lower NGL, natural gas and condensate prices ($~~2,506.1 million) and higher NGL and natural gas volumes ($98.0~~3,412.8 million), partially offset by higher natural gas, condensate and NGL volumes ($331.5 million) and the ~~unfavorable~~favorable impact of hedges ($~~66.5~~371.7 million).

The increase in fees from midstream services is primarily due to higher gas gathering and processing fees ~~and transportation and fractionation fees.~~including the impact of the acquisition of certain assets in the Delaware Basin, partially offset by lower export volumes.

The ~~increase~~decrease in product purchases and fuel reflects ~~higher~~lower NGL, natural gas and condensate prices, ~~and~~partially offset by higher ~~NGL and~~ natural gas, condensate and NGL volumes.

See “—Results of Operations—By Reportable Segment” for additional information on a segment basis.

The increase in depreciation and amortization expense is primarily due to the ~~impact~~acquisition of ~~system expansions on our asset base and~~certain assets in the Delaware Basin, partially offset by the shortening of the depreciable lives of certain assets that ~~have been, or will be, idled.~~were idled in 2022.

The increase in general and administrative expense is primarily due to higher compensation and benefits, insurance costs and professional fees.

The ~~decrease~~increase in interest expense, net is ~~primarily~~ due to higher ~~non-cash interest income related to a decrease~~net borrowings primarily for the acquisition of certain assets in the ~~mandatorily redeemable preferred~~Delaware Basin and the Grand Prix Transaction, and higher interest ~~liability.~~

~~The decrease in equity earnings is primarily due to~~rates on the ~~GCX Sale and lower earnings from our investment in Little Missouri 4 LLC,~~Partnership’s accounts receivable securitization facility (the “Securitization Facility”), partially offset by ~~lower losses~~higher capitalized interest resulting from our investments in T2 Eagle Ford Gathering Company L.L.C., Gulf Coast Fractionators and T2 LaSalle Gathering Company L.L.C. See Note 4 – Joint Ventures, Acquisitions and Divestitures to our Consolidated Financial Statements for further discussion.higher growth capital investments.

During 2022, the Partnership redeemed ~~the~~its 5.875% Senior Notes due 2026 (the “5.875% Notes”) resulting in a net loss from financing activities. During 2021, the Partnership redeemed the 4.250% Senior Notes due 2023 (the “4.250% Notes”), resulting in a net loss from financing activities. See Note 7 – Debt Obligations for further discussion.

During 2022, we completed the sale of Targa GCX ~~Sale~~Pipeline LLC to a third party (the “GCX Sale”) resulting in a gain from sale of an equity method investment. ~~See Note 4 – Joint Ventures, Acquisitions and Divestitures for further discussion.~~

The increase in income tax expense is primarily due to ~~an increase in pre-tax book income, partially offset by~~ a ~~larger~~smaller release of the valuation allowance in ~~2022~~2023 compared to ~~2021.~~2022, partially offset by a decrease in pre-tax book income.

~~During 2022, we redeemed~~The decrease in net income (loss) attributable to noncontrolling interests is primarily due to the Grand Prix Transaction and lower earnings allocated to our joint venture partner in WestTX.

The decrease in dividends on Series A Preferred Stock (“Series A Preferred”) is due to the full redemption of all of our issued and outstanding shares of Series A Preferred. The difference between the consideration paid of $973.4 million (including unpaid dividends of $8.2 million) and the net carrying value of the shares redeemed was $223.7 million, of which $215.5 million was recorded as deemed dividends. Dividends on Series A Preferred ~~decreased as a result of the redemption. See Note 9 – Preferred Stock for further discussion.~~in May 2022.

Six Months Ended June 30, ~~2022~~2023 Compared to Six Months Ended June 30, ~~2021~~2022

The ~~increase~~decrease in commodity sales reflects lower NGL, natural gas and condensate prices ($5,197.2 million), partially offset by higher NGL, natural gas and condensate ~~prices~~volumes ($~~3,890.3~~1,028.9 million) and ~~higher NGL and natural gas volumes ($100.0 million), partially offset by~~ the ~~unfavorable~~favorable impact of hedges ($~~254.5~~917.7 million).

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, partially offset by lower transportation and fractionation ~~fees and export volumes.~~fees.

The ~~increase~~decrease in product purchases and fuel reflects lower NGL, natural gas and condensate prices, partially offset by higher NGL, natural gas and condensate ~~prices and higher NGL and natural gas~~ volumes.

The increase in operating expenses ~~was due to higher labor and maintenance costs~~is primarily due to increased activity and system expansions, the acquisition of certain assets in the Delaware Basin and ~~inflation, partially offset by lower taxes~~South Texas, and ~~the impact of a major winter storm that affected regions across Texas, New Mexico, Oklahoma and Louisiana during the first quarter of 2021.~~higher costs attributable to inflation.

See “—Results of Operations—By Reportable Segment” for additional information on a segment basis.

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, ~~and~~partially offset by the shortening of ~~the~~ depreciable lives of certain assets that ~~have been, or will be,~~were idled ~~partially offset by a lower depreciable base associated with assets that were impaired during the fourth quarter of 2021.~~in 2022.

The increase in general and administrative expense is primarily due to higher compensation and benefits, insurance costs and professional fees.

The ~~decrease~~increase in interest expense, net is ~~primarily~~ due to higher ~~non-cash interest income related to a decrease~~net borrowings primarily for the acquisition of certain assets in the ~~mandatorily redeemable preferred interest liability, lower~~Delaware Basin and the Grand Prix Transaction, and higher interest rates on ~~debt and higher capitalized interest.~~

~~The decrease in equity earnings is primarily due to~~ the ~~GCX Sale and lower earnings from our investment in Little Missouri 4 LLC,~~Securitization Facility, partially offset by ~~lower losses~~higher capitalized interest resulting from our investments in T2 Eagle Ford Gathering Company L.L.C., Gulf Coast Fractionators and T2 LaSalle Gathering Company L.L.C. See Note 4 – Joint Ventures, Acquisitions and Divestitures to our Consolidated Financial Statements for further discussion.higher growth capital investments.

During 2022, we terminated the ~~Previous~~previous TRGP ~~Revolver~~senior secured revolving credit facility and the ~~Partnership Revolver.~~Partnership’s senior secured revolving credit facility. In addition, the Partnership redeemed ~~the~~its 5.375% Senior Notes due 2027 and 5.875% Notes. These transactions resulted in a net loss from financing activities. During 2021, the Partnership redeemed its 5.125% Senior Notes due 2025 and the 4.250% Notes. In addition, Targa Pipeline Partners LP redeemed its 4.750% Senior Notes due 2021 and the 5.875% Senior Notes due 2023. These transactions resulted in a net loss from financing activities. See Note 7 – Debt Obligations for further discussion.

During 2022, we completed the GCX Sale resulting in a gain from sale of an equity method investment. ~~See Note 4 – Joint Ventures, Acquisitions and Divestitures for further discussion.~~

The increase in income tax expense is primarily due to an increase in pre-tax book income ~~partially offset by~~and a ~~larger~~smaller release of the valuation allowance in ~~2022~~2023 compared to ~~2021.~~2022.

The premium on repurchase of noncontrolling interests, net of tax is 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 decrease in dividends on Series A Preferred is due to the full redemption of all of our issued and outstanding shares of Series A Preferred. The difference between the consideration paid of $973.4 million (including unpaid dividends of $8.2 million) and the net carrying value of the shares redeemed was $223.7 million, of which $215.5 million was recorded as deemed dividends. Dividends on Series A Preferred ~~decreased as a result of the redemption. See Note 9 – Preferred Stock for further discussion.~~in May 2022.

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022 vs. 2021

2022

2021

2022 vs. 2021

(In millions, except operating statistics and price amounts)

Operating margin
$

474.7

$

301.2

$

173.5

58
%

$

872.3

$

576.6

$

295.7

51
%
Operating expenses

141.4

115.1

26.3

23
%

258.0

220.5

37.5

17
%
Adjusted operating margin
$

616.1

$

416.3

$

199.8

48
%

$

1,130.3

$

797.1

$

333.2

42
%
Operating statistics (1):

Plant natural gas inlet, MMcf/d (2),(3)

Permian Midland (4)

2,132.0

1,929.7

202.3

10
%

2,103.7

1,794.7

309.0

17
%
Permian Delaware

993.3

836.2

157.1

19
%

985.1

787.2

197.9

25
%
Total Permian

3,125.3

2,765.9

359.4

3,088.8

2,581.9

506.9

SouthTX (5)

271.2

194.9

76.3

39
%

216.9

185.7

31.2

17
%
North Texas

175.3

181.4

(6.1
)

(3
%)

175.3

178.4

(3.1
)

(2
%)
SouthOK (5)

460.4

411.4

49.0

12
%

434.0

393.4

40.6

10
%
WestOK

212.0

212.5

(0.5
)

—

207.2

207.6

(0.4
)

—

Total Central

1,118.9

1,000.2

118.7

1,033.4

965.1

68.3

Badlands (5) (6)

129.4

143.4

(14.0
)

(10
%)

127.2

139.1

(11.9
)

(9
%)
Total Field

4,373.6

3,909.5

464.1

4,249.4

3,686.1

563.3

Coastal

553.6

616.6

(63.0
)

(10
%)

577.7

634.5

(56.8
)

(9
%)

Total

4,927.2

4,526.1

401.1

9
%

4,827.1

4,320.6

506.5

12
%
NGL production, MBbl/d (3)

Permian Midland (4)

310.6

279.4

31.2

11
%

305.7

258.4

47.3

18
%
Permian Delaware

135.8

111.7

24.1

22
%

132.8

104.1

28.7

28
%
Total Permian

446.4

391.1

55.3

438.5

362.5

76.0

SouthTX (5)

33.5

25.8

7.7

30
%

26.9

21.7

5.2

24
%
North Texas

19.6

20.4

(0.8
)

(4
%)

19.4

19.8

(0.4
)

(2
%)
SouthOK (5)

55.8

50.4

5.4

11
%

53.1

47.1

6.0

13
%
WestOK

16.6

17.0

(0.4
)

(2
%)

15.8

16.5

(0.7
)

(4
%)
Total Central

125.5

113.6

11.9

115.2

105.1

10.1

Badlands (5)

14.7

16.2

(1.5
)

(9
%)

14.7

15.9

(1.2
)

(8
%)
Total Field

586.6

520.9

65.7

568.4

483.5

84.9

Coastal

36.7

35.7

1.0

3
%

36.9

37.8

(0.9
)

(2
%)

Total

623.3

556.6

66.7

12
%

605.3

521.3

84.0

16
%
Crude oil, Badlands, MBbl/d

111.8

138.9

(27.1
)

(20
%)

117.2

137.6

(20.4
)

(15
%)
Crude oil, Permian, MBbl/d

28.8

36.7

(7.9
)

(22
%)

29.7

35.8

(6.1
)

(17
%)
Natural gas sales, BBtu/d (3)

2,277.1

2,207.5

69.6

3
%

2,202.1

2,082.4

119.7

6
%
NGL sales, MBbl/d (3)

440.4

391.9

48.5

12
%

432.7

370.5

62.2

17
%
Condensate sales, MBbl/d

15.7

15.2

0.5

3
%

15.0

15.2

(0.2
)

(1
%)
Average realized prices - inclusive of hedges (7):

Natural gas, $/MMBtu

6.12

2.45

3.67

150
%

5.15

2.48

2.67

108
%
NGL, $/gal

0.89

0.51

0.38

75
%

0.84

0.49

0.35

71
%
Condensate, $/Bbl

103.10

59.06

44.04

75
%

90.06

52.97

37.09

70
%
(1)

Segment operating statistics include the effect of intersegment amounts, which have been eliminated from the consolidated presentation. 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 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:

Three Months Ended June 30, 2022

Three Months Ended June 30, 2021

(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)

16.7

$
(3.29
)

$
(54.9
)

18.1

$
(0.71
)

$
(12.8
)
NGL (MMgal)

164.4

(0.47
)

(77.9
)

133.8

(0.18
)

(24.4
)
Crude oil (MBbl)

0.5

(51.00
)

(25.5
)

0.5

(12.69
)

(6.7
)

$
(158.3
)

$
(43.9
)
(1)

The price spread is the differential between the contracted derivative instrument pricing and the price of the corresponding settled commodity transaction.

~~(1)~~

~~The price spread is the differential between the contracted derivative instrument pricing and the price of the corresponding settled commodity transaction.~~

Six Months Ended June 30, 2022

Six Months Ended June 30, 2021

(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)

34.2

$
(2.52
)

$
(86.1
)

36.1

$
(0.72
)

$
(26.0
)
NGL (MMgal)

334.8

(0.47
)

(155.8
)

269.6

(0.17
)

(46.9
)
Crude oil (MBbl)

1.0

(45.20
)

(45.2
)

1.1

(8.32
)

(8.9
)

$
(287.1
)

$
(81.8
)

~~(1)~~

~~The price spread is the differential between the contracted derivative instrument pricing and the price of the corresponding settled commodity transaction.~~

Three Months Ended June 30, ~~2022~~2023 Compared to Three Months Ended June 30, ~~2021~~2022

The increase in adjusted operating margin was due to higher ~~realized commodity prices,~~ natural gas inlet volumes and higher fees resulting in increased margin predominantly in the ~~Permian.~~Permian, partially offset by lower commodity prices. The increase in natural gas inlet volumes in the Permian was attributable to ~~increased producer activity and~~ the ~~addition~~acquisition of ~~a new 200 MMcf/d cryogenic natural gas processing plant~~certain assets in ~~Permian Midland (the “Heim Plant”)~~the Delaware Basin during the third quarter of ~~2021.~~2022, the addition of the Legacy I and Red Hills VI plants during the third quarter of 2022 and the Legacy II plant late in the first quarter of 2023, and continued strong producer activity. Natural gas inlet volumes in the Central region increased primarily due to the acquisition of certain assets in South Texas during the second quarter of 2022 and increased producer activity.

The increase in operating expenses was predominantly due to the acquisition of certain assets in the Delaware Basin. Additionally, higher volumes in the Permian, the addition of the Legacy I, Red Hills VI, Legacy II and Midway plants, and inflation impacts resulted in increased costs.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 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 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 and the Legacy II plant late in the first quarter of 2023, and continued strong producer activity. Natural gas inlet volumes in the Central region increased due to the acquisition of certain assets in South Texas during the second quarter of 2022 and increased producer activity. ~~The decrease in volumes in the Badlands was attributable to the impacts of winter weather, while lower volumes in the Coastal region were due to continued low producer activity.~~

The increase in operating expenses was due to higher activity levels in the Permian, the addition of the Heim Plant in the third quarter of 2021, the acquisition of certain assets in South Texas in the second quarter of 2022 and inflation impacts, which resulted in increased labor costs, materials and chemicals.

~~Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021~~

~~The increase in adjusted operating margin was due to higher realized commodity prices, natural gas inlet volumes and fees resulting in increased margin~~ predominantly in the Permian. The increase in natural gas inlet volumes in the Permian was attributable to increased producer activity and the addition of the Heim Plant during the third quarter of 2021. Natural gas inlet volumes in the Central region increased due to the acquisition of certain assets in South Texas ~~during~~and the ~~second quarter of 2022 and increased producer activity. The decrease in~~Delaware Basin. Additionally, higher volumes ~~in the Badlands was attributable to the impacts of winter weather, while lower volumes in the Coastal region were due to continued low producer activity.~~

~~The increase in operating expenses was due to higher activity levels~~ in the Permian, the addition of the ~~Heim Plant in the third quarter of 2021, the acquisition of certain assets in South Texas in the second quarter of 2022~~Legacy I, Red Hills VI and Legacy II plants, and inflation impacts ~~which~~ resulted in increased ~~labor costs, materials and chemicals.~~costs.

Logistics and Transportation Segment


	Three Months Ended June 30,								Six Months Ended June 30,
	2023		2022		2023 vs. 2022				2023		2022		2023 vs. 2022
	(In millions, except operating statistics)
Operating margin	$	408.0	$	322.3	$	85.7		27%	$	937.1	$	674.5	$	262.6		39%
Operating expenses		82.5		74.4		8.1		11%		159.0		141.3		17.7		13%
Adjusted operating margin	$	490.5	$	396.7	$	93.8		24%	$	1,096.1	$	815.8	$	280.3		34%
Operating statistics MBbl/d (1):
NGL pipeline transportation volumes (2)		620.7		492.3		128.4		26%		579.0		476.1		102.9		22%
Fractionation volumes		794.4		737.2		57.2		8%		776.7		720.1		56.6		8%
Export volumes (3)		303.2		342.6		(39.4	)	(12%)		338.1		341.7		(3.6	)	(1%)
NGL sales		947.0		906.9		40.1		4%		977.1		890.0		87.1		10%

(1)

Segment operating statistics include intersegment amounts, which have been eliminated from the consolidated presentation. 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)

Represents the total quantity of mixed NGLs that earn a transportation 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.

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022 vs. 2021

2022

2021

2022 vs. 2021

(In millions, except operating statistics)

Operating margin
$

322.3

$

291.4

$

30.9

11%

$

674.5

$

640.1

$

34.4

5%

Operating expenses

74.4

70.7

3.7

5%

141.3

136.5

4.8

4%

Adjusted operating margin
$

396.7

$

362.1

$

34.6

10%

$

815.8

$

776.6

$

39.2

5%

Operating statistics MBbl/d (1):

NGL pipeline transportation volumes (2)

492.3

391.7

100.6

26%

476.1

367.2

108.9

30%

Fractionation volumes

737.2

643.7

93.5

15%

720.1

595.0

125.1

21%

Export volumes (3)

342.6

340.6

2.0

1%

341.7

312.1

29.6

9%

NGL sales

906.9

833.8

73.1

9%

890.0

830.6

59.4

7%

~~(1)~~

Segment operating statistics include intersegment amounts, which have been eliminated from the consolidated presentation. 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)~~

~~Represents the total quantity of mixed NGLs that earn a transportation 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.~~

Three Months Ended June 30, ~~2022~~2023 Compared to Three Months Ended June 30, ~~2021~~2022

The increase in adjusted operating margin was due to higher pipeline transportation and fractionation ~~volumes,~~margin and higher marketing margin, partially offset by ~~lower marketing margin and~~ lower LPG export margin. Pipeline transportation and fractionation volumes benefited from higher supply volumes primarily from our Permian Gathering and Processing ~~systems.~~systems and higher fees. Marketing margin ~~decreased~~increased due to ~~fewer~~greater optimization opportunities. LPG export margin decreased ~~primarily~~ due to ~~higher fuel and power costs, partially offset by higher fees.~~ lower volumes.

The increase in operating expenses was primarily due to higher ~~repairs~~equipment rentals and ~~maintenance.~~higher compensation and benefits.

Six Months Ended June 30, ~~2022~~2023 Compared to Six Months Ended June 30, ~~2021~~2022

The increase in adjusted operating margin was due to higher marketing margin, higher pipeline transportation and fractionation ~~volumes~~margin and higher LPG export margin. Marketing margin ~~partially offset by lower marketing margin.~~increased due to greater optimization opportunities. Pipeline transportation and fractionation volumes benefited from higher supply volumes primarily from our Permian Gathering and Processing ~~systems.~~systems and higher fees. LPG export margin increased primarily due to ~~higher volumes and fees, partially offset by higher~~lower fuel and power costs. ~~Higher optimization margin attributable to the winter storm resulted in higher marketing margin in 2021.~~

The increase in operating expenses was ~~primarily~~ due to higher ~~repairs~~compensation and ~~maintenance, partially offset by lower taxes.~~benefits, higher taxes and higher equipment rentals.

Other


	Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,							Six Months Ended June 30,
	2022			2021			2022 vs. 2021		2022			2021			2022 vs. 2021			2023		2022			2023 vs. 2022		2023		2022			2023 vs. 2022
	(In millions)																	(In millions)
Operating margin	$	(4.5	)	$	(70.5	)	$	66.0	$	(182.7	)	$	(69.1	)	$	(113.6	)	$	151.9	$	(4.5	)	$	156.4	$	327.7	$	(182.7	)	$	510.4
Adjusted operating margin	$	(4.5	)	$	(70.5	)	$	66.0	$	(182.7	)	$	(69.1	)	$	(113.6	)	$	151.9	$	(4.5	)	$	156.4	$	327.7	$	(182.7	)	$	510.4

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. We have entered into derivative instruments to hedge the commodity price associated with a portion of our future commodity purchases and sales and natural gas transportation basis risk within our Logistics and Transportation segment. See further details of our risk management program in ~~“Item~~“Item 3. – Quantitative and Qualitative Disclosures About Market Risk.”

Our Liquidity and Capital Resources

As of June 30, ~~2022,~~2023, inclusive of our consolidated joint venture accounts, we had ~~$154.0~~$169.4 million of Cash and cash equivalents on our Consolidated Balance Sheets. We believe our cash positions, our cash flows from operating activities, our free cash flow after dividends and remaining borrowing capacity on our credit facilities (discussed below in “Short-term Liquidity”) are adequate to allow us to manage our day-to-day cash requirements and anticipated obligations as discussed further below.

Our liquidity and capital resources are managed on a consolidated basis. ~~We have the ability to access the Partnership’s liquidity as well as the ability to contribute capital to the Partnership.~~

On a consolidated basis, our ability to finance our operations, including funding capital expenditures and acquisitions, meeting our indebtedness obligations, refinancing or repaying our indebtedness, meeting our collateral requirements and to pay dividends declared by our ~~board~~Board of ~~directors~~Directors will depend on our ability to generate cash in the future. Our ability to generate cash is subject to a number of factors, some of which are beyond our control. These include commodity prices and ongoing efforts to manage operating costs and maintenance capital expenditures, as well as general economic, financial, competitive, legislative, regulatory and other factors. For additional discussion on recent factors impacting our liquidity and capital resources, please see “Recent Developments.”

We are entitled to the entirety of distributions made by the Partnership on its equity interests. The actual amount we declare as dividends 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.

On a consolidated basis, our main sources of liquidity and capital resources are internally generated cash flows from operations, borrowings under the TRGP Revolver, ~~and~~Commercial Paper Program, the 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. For companies involved in hydrocarbon production, transportation and other oil and gas related services, the capital markets have experienced and may continue to experience volatility. Our exposure to adverse credit conditions includes our credit facilities, cash investments, hedging abilities, customer performance risks and counterparty performance risks.

Short-term Liquidity

Our short-term liquidity on a consolidated basis as of ~~July 29, 2022,~~June 30, 2023, was:


	Consolidated Total
	(In millions)
Cash on hand (1)	$	169.4
Total availability under the Securitization Facility		547.9
Total availability under the TRGP Revolver and Commercial Paper Program		2,750.0
		3,467.3

Less: Outstanding borrowings under the Securitization Facility		(547.9	)
Outstanding borrowings under the TRGP Revolver and Commercial Paper Program		(660.0	)
Outstanding letters of credit under the TRGP Revolver		(18.8	)
Total liquidity	$	2,240.6

Consolidated Total

(In millions)

Cash on hand (1)

$
178.7

Total availability under the TRGP Revolver

2,750.0

Total availability under the Securitization Facility

400.0

3,328.7

Less: Outstanding borrowings under the TRGP Revolver

(1,600.0
)
Outstanding borrowings under the Securitization Facility

(400.0
)
Outstanding letters of credit under the TRGP Revolver

(61.6
)
Total liquidity

$
1,267.1

(1)

Includes cash held in our consolidated joint venture accounts.

~~(1)~~

~~Includes cash held in our consolidated joint venture accounts.~~

Other potential capital resources associated with our existing arrangements includes 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.

A portion of our capital resources are allocated to letters of credit to satisfy certain counterparty credit requirements. As of June 30, ~~2022,~~2023, we had ~~$44.8~~$18.8 million letters of credit outstanding under the TRGP Revolver. They reflect certain counterparties’ views of our financial condition and ability to satisfy our performance obligations, as well as commodity prices and other factors.

In July 2022, we established the Commercial Paper Program. Under the terms of the Commercial Paper Program, we may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to time, with the maximum aggregate face or principal amount outstanding at any one time not to exceed $2.75 billion. The Commercial Paper Program is guaranteed by each subsidiary that guarantees the TRGP Revolver. We had no amounts outstanding under the Commercial Paper Program as of July 29, 2022.

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. 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;~~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.

Working capital as of June 30, ~~2022~~ ~~decreased $460.6~~2023 increased $118.3 million compared to December 31, ~~2021.~~ 2022. The ~~decrease~~increase was primarily due to ~~higher~~lower net borrowings on the Securitization Facility and lower net liabilities for hedging activities, partially offset by lower NGL Inventory and lower net receivables and product purchases and fuel payables as a result of higher commodity prices, higher net borrowing on the Securitization Facility and an increase in the current liability position of our derivative contracts, partially offset by higher receivables resulting from ~~higher~~lower commodity prices.

Based on our anticipated levels of operations and absent any disruptive events, we believe that our internally generated cash flow, borrowings available under the TRGP Revolver, ~~Securitization Facility, Term Loan Facility and~~ Commercial Paper Program, Securitization Facility, and proceeds from debt and equity offerings, as well as joint ventures and/or asset sales, should provide sufficient resources to finance our operations, capital expenditures, long-term debt obligations, collateral requirements and quarterly cash dividends for at least the next twelve months.

Long-term Financing

Our long-term financing consists of potentially raising funds through long-term debt obligations, the issuance of common stock, preferred stock, or joint venture arrangements.

In February 2022, we 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. 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, including a swing line sub-facility of up to $100.0 million. The TRGP Revolver matures in February 2027. In February 2022, TRGP and the Partnership received a corporate investment grade credit rating from S&P and Fitch, and in March 2022, the Partnership received a corporate investment grade credit rating from Moody’s. As a result, in accordance with the TRGP Revolver, the collateral under the TRGP Revolver was released from the liens securing our obligations thereunder. ~~In connection with our entry into the TRGP Revolver, we terminated the Previous TRGP Revolver and the Partnership Revolver.~~ ~~As a result of the termination of the Previous TRGP Revolver and the Partnership Revolver, we recorded a loss due to debt extinguishment of $0.8 million.~~

In ~~February 2022,~~January 2023, we, ~~and~~along with certain of our subsidiaries entered into a parent guarantee whereby each party to the agreement unconditionally guarantees, jointly and severally, the payment of all of the obligations of the Partnership Issuers under the respective indentures governing the Partnership Issuers’ senior unsecured notes. As of June 30, 2022, $5.0 billion of the Partnership Issuers’ senior unsecured notes was outstanding.

~~In March 2022, the Partnership redeemed all of the outstanding~~ 5.375% Notes with available liquidity under the TRGP Revolver. As a result of the redemption of the 5.375% Notes, we recorded a loss due to debt extinguishment of $15.0 million comprised of $12.6 million of premiums paid and a write-off of $2.4 million of debt issuance costs.

~~In April 2022, we~~as guarantors thereto, completed an underwritten public offering of ~~$750.0 million aggregate principal amount of our 4.200%~~the 6.125% Notes and ~~$750.0 million aggregate principal amount of our 4.950%~~the 6.500% Notes, resulting in net proceeds of approximately ~~$1.5~~$1.7 billion. AWe used a portion of the net proceeds from the issuance ~~was used~~ to fund the ~~concurrent March Tender Offer~~Grand Prix Transaction and the ~~subsequent redemption payment of the Partnership’s 5.875% Notes, with the remainder of the net~~remaining proceeds ~~used~~ for ~~repayment of the outstanding~~general corporate purposes, including to reduce borrowings under the TRGP ~~Revolver. As a result of the March Tender Offer~~Revolver 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.

Commercial Paper Program.

~~In July 2022, we entered into the Term Loan Facility with~~ ~~Mizuho Bank, Ltd.~~ as the Administrative Agent and a lender, and other lenders party thereto. The Term Loan Facility provides for a three-year, $1.5 billion unsecured term loan facility. The Term Loan Facility matures in July 2025. We used the proceeds to fund a portion of the Lucid Acquisition.

In the future, we or the Partnership may redeem, purchase or exchange certain of our and the Partnership’s outstanding debt through redemption calls, cash purchases and/or exchanges for other debt, in open market purchases, privately negotiated transactions or otherwise. Such calls, repurchases, exchanges or redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

~~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. The difference between the consideration paid of $973.4 million (including unpaid dividends of $8.2 million) and the net carrying value of the shares redeemed was $223.7 million, of which $215.5 million was recorded as deemed dividends in our Consolidated Statements of Operations in the second quarter of 2022. Following the redemption, we have no Series A Preferred outstanding and all rights of the holders of shares of Series A Preferred were terminated. See Note 9 - Preferred Stock to our Consolidated Financial Statements.

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 76 - Debt Obligations to our Consolidated Financial Statements. For information about our interest rate risk, see “Item 3. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”

Compliance with Debt Covenants

As of June 30, ~~2022,~~2023, both we and the Partnership were in compliance with the covenants contained in our various debt agreements.

Cash Flow

Cash Flows from Operating Activities


Six Months Ended June 30,	Six Months Ended June 30,					Six Months Ended June 30,
2022		2021		2022 vs. 2021
2023						2023	2022		2023 vs. 2022
(In millions)	(In millions)					(In millions)
$	1,383.7	$	1,303.6	$	80.1	1,846.6	$	1,383.7	$	462.9

The primary drivers of cash flows from operating activities ~~are~~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,~~transportation; (ii) the payment of amounts related to the purchase of NGLs, natural gas and crude ~~oil~~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. In addition, we use derivative instruments to manage our exposure to commodity price risk. Changes in the prices of the commodities we hedge impact our derivative settlements as well as our margin deposit requirements on unsettled futures contracts.

The increase in net cash provided by operations was primarily due to higher ~~commodity prices, resulting in higher collections from customers, partially offset by an increase~~settlements for hedge transactions and a decrease in payments for product purchases and fuel, ~~and hedge transactions.~~offset by lower collections from customers.

Cash Flows from Investing Activities


Six Months Ended June 30,	Six Months Ended June 30,						Six Months Ended June 30,
2022		2021			2022 vs. 2021
2023							2023		2022		2023 vs. 2022
(In millions)	(In millions)						(In millions)
$	248.4	$	(185.9	)	$	434.3	(1,074.6	)	$	248.4	$	(1,323.0	)

The change in net cash provided by (used in) investing activities was primarily due to higher outlays for property, plant and equipment in 2023 resulting from construction activities in the Permian region and Mont Belvieu, Texas, whereas in 2022 we received proceeds from the GCX Sale, partially offset by ~~higher outlays for property, plant and equipment resulting from construction activities of the Legacy, Legacy II, Midway and Greenwood plants and~~ outlays for the ~~Southcross Acquisition.~~acquisition of certain assets in South Texas.

Cash Flows from Financing Activities


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
	(In millions)						(In millions)
Source of Financing Activities, net
Debt, including financing costs	$	786.7		$	(802.8	)	$	801.5		$	786.7
Repurchase of Series A Preferred Stock		(965.2	)		—
Redemption of Series A Preferred Stock								—			(965.2	)
Repurchase of noncontrolling interests		(926.3	)		—			(1,091.9	)		(926.3	)
Dividends and distributions		(217.8	)		(92.7	)
Dividends								(199.6	)		(217.8	)
Contributions from (distributions to) noncontrolling interests		(167.7	)		(247.4	)		(96.7	)		(167.7	)
Repurchase of shares		(146.3	)		(8.6	)		(234.9	)		(146.3	)
Net cash provided by (used in) financing activities	$	(1,636.6	)	$	(1,151.5	)	$	(821.6	)	$	(1,636.6	)

The ~~increase~~decrease in net cash used in financing activities was primarily due to ~~the redemption~~lower distributions to noncontrolling interests in 2023, whereas in 2022 we redeemed all of ~~the~~our Series A Preferred, ~~Stock and~~partially offset by higher repurchases of ~~non-controlling~~noncontrolling interests ~~in the DevCo JVs~~ and common stock ~~during 2022. Additionally, higher dividends and distributions were paid~~ in ~~2022 due to the increase in our common stock dividends from $0.10 to $0.35 per common share in January 2022. These were partially offset by net borrowings of debt in 2022,~~2023 as compared to ~~net repayments of debt in 2021.~~2022.

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.

In lieu of providing separate financial statements for the Obligated Group, we have presented the following supplemental summarized Combined Balance Sheet and Statement of Operations information for the Obligated Group based on Rule 13-01 of the SEC’s Regulation S-X.

All significant intercompany items among the Obligated Group have been eliminated in the supplemental summarized combined financial information. TheObligated Group’s investment balances in our non-guarantor subsidiaries have been excluded from the supplemental summarized combined financial information.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.

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
		June 30, 2022			December 31, 2021				June 30, 2023		December 31, 2022
		(In millions)							(In millions)
ASSETS	ASSETS							ASSETS
Current assets		$	936.3		$	832.9			$	964.1	$	1,425.4
Current assets - affiliates			58.2			24.4				1.2		6.0
Long-term assets			6,405.7			6,253.9				14,749.3		14,398.8
Long-term assets - affiliates			10.5			10.5				10.5		10.5
Total assets		$	7,410.7		$	7,121.7			$	15,725.1	$	15,840.7

LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS' EQUITY
LIABILITIES AND OWNERS’ EQUITY								LIABILITIES AND OWNERS’ EQUITY
Current liabilities		$	1,955.7		$	1,525.6			$	1,684.9	$	2,169.6
Current liabilities - affiliates			220.5			195.8				22.3		28.0
Long-term liabilities			7,656.4			6,875.5				12,590.1		11,503.4
Series A Preferred			—			749.7
Targa Resources Corp. stockholders' equity			(2,421.9	)		(2,224.9	)
Total liabilities and owners' equity		$	7,410.7		$	7,121.7
Targa Resources Corp. stockholders’ equity										1,427.8		2,139.7
Total liabilities and owners’ equity									$	15,725.1	$	15,840.7

Summarized Combined Statement of Operations Information
		Six Months Ended			Year Ended				Six Months Ended		Year Ended
		June 30, 2022			December 31, 2021				June 30, 2023		December 31, 2022
		(In millions)							(In millions)
Revenues		$	11,206.3		$	16,900.5			$	7,761.4	$	20,477.0
Operating income (loss)			(19.5	)		5.7				1,249.5		1,108.3
Net income (loss)			157.3			(371.0	)			714.2		909.0
Dividends on Series A Preferred			30.0			87.3				—		30.0

Common Stock Dividends

The following table details the dividends on common stock declared and/or paid by us for the six months ended June 30, ~~2022:~~2023:

Three Months Ended

Date Paid or
To Be Paid

Total Common
Dividends Declared

Amount of Common
Dividends Paid or
To Be Paid

Accrued
Dividends (1)

Dividends Declared per Share of Common Stock

(In millions, except per share amounts)

June 30, 2022

August 15, 2022
$

80.7

$

79.3

$

1.4

$

0.35000

March 31, 2022

May 16, 2022

81.2

79.8

1.4

0.35000

December 31, 2021

February 15, 2022

81.4

80.1

1.3

0.35000


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)
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
December 31, 2022	February 15, 2023			80.5			79.3			1.2			0.35000

~~(1)~~

~~Represents accrued dividends on restricted stock and restricted stock units that are payable upon vesting.~~

~~Preferred Dividends~~

~~Prior to~~The actual amount we declare as dividends in the ~~redemption~~future depends on our consolidated financial condition, results of operations, cash flow, the level of our ~~Series A Preferred in May 2022,~~capital expenditures, future business prospects, compliance with our ~~Series A Preferred had a liquidation value~~ debt covenants and any other matters that our Board of $1,000 per share and bore a cumulative 9.5% fixed dividend payable quarterly 45 days after the end of each fiscal quarter. During the three and six months ended June 30, 2022, we paid $30.0 million and $51.8 million of dividends to preferred shareholders.Directors deems relevant.

~~Series A Preferred Redemption~~42

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. The difference between the consideration paid of $973.4 million (including unpaid dividends of $8.2 million) and the net carrying value of the shares redeemed was $223.7 million, of which $215.5 million was recorded as deemed dividends in our Consolidated Statements of Operations in the second quarter of 2022. Following the redemption, we have no Series A Preferred outstanding and all rights of the holders of shares of Series A Preferred were terminated. See Note 9 - Preferred Stock to our Consolidated Financial Statements.

Capital Expenditures

The following table details cash outlays for capital projects for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


	Six Months Ended June 30,
	2023			2022
	(In millions)
Capital expenditures:
Growth (1)	$	994.7		$	326.3
Maintenance (2)		92.5			79.9
Gross capital expenditures		1,087.2			406.2
Change in capital project payables and accruals, net		(13.5	)		13.3
Cash outlays for capital projects	$	1,073.7		$	419.5

Six Months Ended June 30,

2022

2021

(In millions)

Capital expenditures:

Growth (1)

$
326.3

$
151.8

Maintenance (2)

79.9

47.2

Gross capital expenditures

406.2

199.0

Transfers from materials and supplies inventory to property, plant and equipment

—

(0.4
)
Change in capital project payables and accruals, net

13.3

0.3

Cash outlays for capital projects

$
419.5

$
198.9

(1)

Growth capital expenditures, net of contributions from noncontrolling interests and including net contributions to investments in unconsolidated affiliates, were $994.9 million and $320.7 million for the six months ended June 30, 2023 and 2022.

(2)

Maintenance capital expenditures, net of contributions from noncontrolling interests, were $88.0 million and $77.4 million for the six months ended June 30, 2023 and 2022.

~~(1)~~

Growth capital expenditures, net of contributions from noncontrolling interests and including net contributions to investments in unconsolidated affiliates, were $320.7 million and $144.4 million for the six months ended June 30, 2022 and 2021.

~~(2)~~

~~Maintenance capital expenditures, net of contributions from noncontrolling interests, were $77.4 million and $43.2 million for the six months ended June 30, 2022 and 2021.~~

The increase in total growth capital expenditures was primarily due to system expansions in the Permian region in response to forecasted production growth and ~~increasing~~higher activity ~~levels.~~levels, and expansions in our downstream business. The increase in total maintenance capital expenditures was primarily due to our growing infrastructure footprint.

With our announced natural gas processing additions currently under construction in the ~~August 2022 announcements of~~Permian region, coupled with the construction of ~~the Greenwood plant in Permian Midland~~our Daytona NGL Pipeline and Train 9 ~~fractionator~~and Train 10 fractionators in Mont Belvieu, we currently estimate that in ~~2022~~2023 we will invest between ~~$1.0~~$2.0 to ~~$1.1~~$2.2 billion in net growth capital expenditures for announced projects. Future growth capital expenditures may vary based on investment opportunities. We expect that ~~2022~~2023 maintenance capital expenditures, net of noncontrolling interests, will be approximately ~~$150~~ $175 million.

Off-Balance Sheet Arrangements

As of June 30, ~~2022,~~2023, there were ~~$70.2~~$245.6 million in surety bonds outstanding related to various performance obligations. These are in place to support various performance obligations as required by (i) statutes within the regulatory jurisdictions where we operate, and (ii) counterparty support. Obligations under these surety bonds are not normally called, as we typically comply with the underlying performance requirement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our principal market risks are our exposure to changes in commodity prices, particularly to the prices of natural gas, NGLs and crude oil, changes in interest rates, as well as nonperformance by our customers.

Risk Management

We evaluate counterparty risks related to our commodity derivative contracts and trade credit. All of our commodity derivatives are with major financial institutions or major energy companies. Should any of these financial counterparties not perform, we may not realize the benefit of some of our hedges under lower commodity prices, which could have a material adverse effect on our results of operations. We sell our natural gas, NGLs and condensate to a variety of purchasers. Non-performance by a trade creditor could result in losses.

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. Market conditions may also impact our ability to enter into future commodity derivative contracts.

Commodity Price Risk

A portion of our revenues are derived from percent-of-proceeds contracts under which we receive a portion of the proceeds from the sale of commodities as payment for services. The prices of natural gas, NGLs and crude oil are subject to fluctuations in response to changes in supply, demand, market uncertainty and a variety of additional factors beyond our control. We monitor these risks and enter into hedging transactions designed to mitigate the impact of commodity price fluctuations on our business. Cash flows from a derivative instrument designated as a hedge are classified in the same category as the cash flows from the item being hedged.

The primary purpose of our commodity risk management activities is to hedge some of the exposure to commodity price risk and reduce fluctuations in our operating cash flow due to fluctuations in commodity prices. In an effort to reduce the variability of our cash flows, as of June 30, ~~2022,~~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. We hedge a higher percentage of our expected equity volumes in the current year compared to future years, for which we hedge incrementally lower percentages of expected equity volumes. We also enter into commodity financial instruments to help manage other short-term commodity-related business risks of our ongoing operations and in conjunction with marketing opportunities available to us in the operations of our logistics and transportation assets. With swaps, we typically receive an agreed fixed price for a specified notional quantity of commodities and we pay the hedge counterparty a floating price for that same quantity based upon published index prices. Since we receive from our customers substantially the same floating index price from the sale of the underlying physical commodity, these transactions are designed to effectively lock-in the agreed fixed price in advance for the volumes hedged. In order to avoid having a greater volume hedged than our actual equity volumes, we typically limit our use of swaps to hedge the prices of less than our expected equity volumes. We utilize purchased puts (or floors) and calls (or caps) to hedge additional expected equity commodity volumes without creating volumetric risk. 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.

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. We 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 value 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.

A majority of these commodity price hedges are documented pursuant to a standard International ~~Swap Dealers~~Swaps and Derivatives Association (“ISDA”) form with customized credit and legal terms. The principal counterparties (or, if applicable, their guarantors) have investment grade credit ratings. While we have no current obligation to post cash, letters of credit or other additional collateral to secure these hedges so long as we maintain our current credit rating, we could be obligated to post collateral to secure the hedges in the event of an adverse change in our creditworthiness where a counterparty’s exposure to our credit increases over the term of the hedge as a result of higher commodity prices. A purchased put (or floor) transaction does not expose our counterparties to credit risk, as we have no obligation to make future payments beyond the premium paid to enter into the transaction; however, we are exposed to the risk of default by the counterparty, which is the risk that the counterparty will not honor its obligation under the put transaction.

We also enter into commodity price hedging transactions using futures contracts on futures exchanges. Exchange traded futures are subject to exchange margin requirements, so we may have to increase our cash deposit due to a rise in natural gas, NGL or crude oil prices. Unlike bilateral hedges, we are not subject to counterparty credit risks when using futures on futures exchanges.

These contracts may expose us to the risk of financial loss in certain circumstances. Generally, our hedging arrangements provide us protection on the hedged volumes if prices decline below the prices at which these hedges are set. If prices rise above the prices at which they have been hedged, we will receive less revenue on the hedged volumes than we would receive in the absence of hedges (other than with respect to purchased calls).

To analyze the risk associated with our derivative instruments, we utilize a sensitivity analysis. The sensitivity analysis measures the change in fair value of our derivative instruments based on a hypothetical 10% change in the underlying commodity prices, but does not reflect the impact that the same hypothetical price movement would have on the related hedged items. The financial statement impact on the fair value of a derivative instrument resulting from a change in commodity price would normally be offset by a corresponding gain or loss on the hedged item under hedge accounting. The fair values of our derivative instruments are also influenced by changes in market volatility for option contracts and the discount rates used to determine the present values.

The following table shows the effect of hypothetical price movements on the estimated fair value of our derivative instruments as of June 30, ~~2022:~~2023:


	Fair Value			Result of 10% Price Decrease			Result of 10% Price Increase			Fair Value		Result of 10% Price Decrease		Result of 10% Price Increase
	(In millions)									(In millions)
Natural gas	$	(265.5	)	$	(176.4	)	$	(354.6	)	$	28.2	$	67.1	$	(10.8	)
NGLs		(209.7	)		(101.4	)		(318.0	)		132.2		201.0		64.1
Crude oil		(81.3	)		(43.9	)		(118.7	)		7.1		31.1		(16.7	)
Total	$	(556.5	)	$	(321.7	)	$	(791.3	)	$	167.5	$	299.2	$	36.6

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.

Our operating revenues ~~decreased~~increased (decreased) by ~~($176.7)~~$195.0 million and ~~($110.2)~~ $(176.7) million during the three months ended June 30, 2023 and 2022, respectively, and ~~2021 and ($499.6)~~$418.2 million and ~~($245.0)~~$(499.6) million during the six months ended June 30, 2023 and 2022, ~~and 2021,~~respectively, as a result of transactions accounted for as derivatives. The estimated fair value of our risk management position has moved from a net liability position of ~~($316.7)~~$255.8 million at December 31, ~~2021~~2022 to ~~($556.5)~~a net asset position of $167.5 million at June 30, ~~2022. Forward commodity prices have moved unfavorably relative to the fixed prices on our derivative contracts, creating this net liability position.~~2023.

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, which we closed in July 2022 to fund a portion of the Lucid Acquisition.~~Facility. As of June 30, ~~2022,~~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. 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 June 30, ~~2022,~~2023, we had ~~$950.0 million~~$2.7 billion in outstanding variable rate borrowings. A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact our consolidated annual interest expense by ~~$9.5~~$27.1 million based on our June 30, ~~2022~~2023 debt balances.

Counterparty Credit Risk

We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. The credit exposure related to commodity derivative instruments is represented by the fair value of the asset position (i.e. the fair value of expected future receipts) at the reporting date. Our futures contracts have limited credit risk since they are cleared through an exchange and are margined daily. Should the creditworthiness of one or more of the counterparties decline, our ability to mitigate nonperformance risk is limited to a counterparty agreeing to either a voluntary termination and subsequent cash settlement or a novation of the derivative contract to a third party. 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 ~~International Swap Dealers Association~~ISDA agreements with our derivative counterparties. These netting provisions allow us to net settle asset and liability positions with the same counterparties within the same Targa ~~entity. As of June 30, 2022,~~entity, and would reduce our maximum loss due to counterparty credit risk ~~was immaterial.~~by $49.4 million as of June 30, 2023. The range of losses attributable to our individual counterparties as of June 30, ~~2022~~2023 would be between ~~$2.7~~$0.4 million and ~~$5.5~~$35.1 million, depending on the counterparty in default.

Customer Credit Risk

We extend credit to customers and other parties in the normal course of business. We have established various procedures to manage our credit exposure, including performing initial and subsequent credit risk analyses, setting maximum credit limits and terms and requiring credit enhancements when necessary. We use credit enhancements including (but not limited to) letters of credit, prepayments, parental guarantees and rights of offset to limit credit risk to ensure that our established credit criteria are followed and financial loss is mitigated or minimized.

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 doubtful accounts was ~~$0.1~~$2.5 million and $2.2 million as of ~~both~~ June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. ~~Changes in the allowance for doubtful accounts were not material for~~

During the three and six months ended June 30, ~~2022.~~

No2023 and 2022, no customer comprised 10% or greater of our consolidated ~~revenues during the three and six months ended June 30, 2022 and 2021, respectively~~.revenues.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design and effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered in this Quarterly Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, ~~2022,~~ 2023, the design and operation of our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and (ii) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting ~~that occurred~~ during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting, during our most recent fiscal quarter.~~reporting.

PART II – OTHER INFORMATION

Item 1. 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. 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. In January 2018, Vitol acquired Noble Americas Corp. and on December 23, 2018, Vitol voluntarily elected to terminate the Splitter Agreement claiming that Targa Channelview failed to timely achieve start-up of the Splitter. Vitol’s lawsuit also 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 seeks return of $129.0 million in payments made to Targa Channelview prior to the start-up of the Splitter, as well as additional damages. On the same date that Vitol filed its lawsuit, Targa Channelview filed a lawsuit against Vitol seeking a judicial determination that Vitol’s sole and exclusive remedy was Vitol’s voluntarily termination of the Splitter Agreement and, as a result, Vitol was not entitled to the return of any prior payments under the Splitter Agreement or other damages as alleged. Targa also 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. The Company ~~has filed an appeal challenging~~appealed the award ~~and the appeal is currently pending~~ in the Fourteenth Court of Appeals in Houston, Texas.

In October 2020, we sold Targa Channelview but, under the agreements governing the sale, we retained the liabilities associated with the Vitol proceedings. On September 13, 2022, the Fourteenth Court of Appeals upheld the trial court’s judgment in part with regard to the return of Vitol’s prior payments, but modified the judgment to delete Vitol’s ability to recover any damages related to losses or demurrage on crude oil. We have filed a petition for review with the Supreme Court of Texas, and the appeal remains pending. The cumulative amount of interest on the award through June 30, 2023, if accrued, would have been approximately $49.1 million.

Additional information required for this item is provided in Note 1412 – Contingencies, under the heading “Legal Proceedings” included in the Notes to Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report, which is incorporated by reference into this item.

Item 1A. Risk Factors.

For an in-depth discussion of our risk factors, see “Part I—Item 1A. Risk Factors” of our Annual ~~Report in addition to the risk factor discussed below.~~Report. All of these risks and uncertainties ~~including the risk discussed below,~~ could adversely affect our business, financial condition and/or results of operations.

~~Changes in tax laws or the imposition of new or increased taxes may adversely affect our financial condition, results of operations and cash flows.~~

U.S. federal and state level legislation is periodically proposed that would, if enacted into law, make significant changes to tax laws and could materially impact our tax obligations, financial condition, results of operations and cash flows including cash available for distributions and other uses.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities.

None.

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)
April 1, 2023 - April 30, 2023		119,434	$	75.81		118,704	$	82,751
May 1, 2023 - May 31, 2023		504,438	$	69.41		504,355	$	1,047,744
June 1, 2023 - June 30, 2023		1,465,733	$	71.69		1,465,003	$	942,722

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)

April 1, 2022 - April 30, 2022

193,044

$
77.74

192,931

$
303,840.1

May 1, 2022 - May 31, 2022

359,207

$
69.26

358,783

$
278,991.7

June 1, 2022 - June 30, 2022

571,136

$
60.12

570,211

$
244,714.8

(1)

Includes 2,088,062 shares repurchased under the Share Repurchase Programs, as well as 1,543 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.

(2)

In the fourth quarter of 2020, our Board of Directors approved the 2020 Share Repurchase Program for the repurchase of up to $500.0 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. During the second quarter of 2023, we exhausted the 2020 Share Repurchase Program. We may discontinue the 2023 Share Repurchase Program at any time and are not obligated to repurchase any specific dollar amount or number of shares thereunder.

~~(1)~~

Includes 1,121,925 shares repurchased under our $500 million common share repurchase program, as well as 1,462 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.

~~(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. We may discontinue this share repurchase program at any time and are not obligated to repurchase any specific dollar amount or number of shares.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.


Number		Description

~~2.1~~3.1		Purchase and Sale Agreement, dated as of June 16, 2022 by and among Lucid Energy Group II Holdings, LLC, Lasso Acquiror LLC and Lucid Energy Group II LLC (incorporated by reference to Exhibit 2.1 to Targa Resources Corp.’s Current Report on Form 8-K filed June 17, 2022 (File No. 001-34991)).

~~3.1~~		Amended and Restated Certificate of Incorporation of Targa Resources Corp. (incorporated by reference to Exhibit 3.1 to Targa Resources Corp.’s Current Report on Form 8-K filed December 16, 2010 (File No. 001-34991)).

3.2		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Targa Resources Corp. (incorporated by reference to Exhibit 3.1 to Targa Resources Corp.’s Current Report on Form 8-K filed May 26, 2021 (File No. 001-34991)).

3.3		Certificate of Designations of Series A Preferred Stock of Targa Resources Corp., filed with the Secretary of State of the State of Delaware on March 16, 2016 (incorporated by reference to Exhibit 3.1 to Targa Resources Corp.’s Current Report on Form 8-K/A filed March 17, 2016 (File No. 001-34991)).

3.4		Second Amended and Restated Bylaws of Targa Resources Corp. (incorporated by reference to Exhibit 3.4 to Targa Resources Corp.’s Quarterly Report on Form 10-Q filed on May 5, 2022 (File No. 001-34991)).

4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Targa Resources Corp.’s Registration Statement on Form S-1/A filed November 12, 2010 (File No. 333-169277)).

4.2		Sixth Supplemental Indenture, dated as of April ~~6, 2022,~~12, 2023, among Targa Resources Corp., as issuer, the guarantors named therein and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit ~~4.1~~4.4 to Targa Resources Corp.’s ~~Current~~Quarterly Report on Form ~~8-K~~10-Q filed ~~April 6, 2022~~May 4, 2023 (File No. 001-34991)).

4.3		First Supplemental Indenture, dated as of April 6, 2022, among Targa Resources Corp., as issuer, the guarantors named therein and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to Targa Resources Corp.’s Current Report on Form 8-K filed April 6, 2022 (File No. 001-34991)).

~~4.4~~		~~Form of Notes (included in Exhibit 4.3 hereto) (incorporated by reference to Exhibit 4.3 to Targa Resources Corp.’s Current Report on Form 8-K filed April 6, 2022 (File No. 001-34991)).~~

~~4.5~~		Third Supplemental Indenture, dated as of July 7, 2022, among Targa Resources Corp., as issuer, the guarantors named therein and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.2 to Targa Resources Corp.’s Current Report on Form 8-K filed July 7, 2022 (File No. 001-34991)).

~~4.6~~		~~Form of Notes (included in Exhibit 4.6 hereto) (incorporated by reference to Exhibit 4.3 to Targa Resources Corp.’s Current Report on Form 8-K filed July 7, 2022 (File No. 001-34991)).~~

10.1*		Supplemental Indenture dated ~~June 17, 2022~~April 12, 2023 to Indenture dated October 17, 2017 among the Guaranteeing Subsidiary, Targa Resources Partners LP, Targa Resources Partners Finance Corporation, the other Subsidiary Guarantors and U.S. Bank National ~~Association.~~Association (incorporated by reference to Exhibit 4.5 to Targa Resources Corp.’s Quarterly Report on Form 10-Q filed May 4, 2023 (File No. 001-34991)).

10.2*4.4		Supplemental Indenture dated ~~June 17, 2022~~April 12, 2023 to Indenture dated January 17, 2019 among the Guaranteeing Subsidiary, Targa Resources Partners LP, Targa Resources Partners Finance Corporation, the other Subsidiary Guarantors and U.S. Bank National ~~Association.~~Association (incorporated by reference to Exhibit 4.6 to Targa Resources Corp.’s Quarterly Report on Form 10-Q filed May 4, 2023 (File No. 001-34991)).

~~Number~~		~~Description~~

10.3*4.5		Supplemental Indenture dated ~~June 17, 2022~~April 12, 2023 to Indenture dated November 27, 2019 among the Guaranteeing Subsidiary, Targa Resources Partners LP, Targa Resources Partners Finance Corporation, the other Subsidiary Guarantors and U.S. Bank National ~~Association.~~Association (incorporated by reference to Exhibit 4.7 to Targa Resources Corp.’s Quarterly Report on Form 10-Q filed May 4, 2023 (File No. 001-34991)).

10.4*4.6		Supplemental Indenture dated ~~June 17, 2022~~April 12, 2023 to Indenture dated August 18, 2020 among the Guaranteeing Subsidiary, Targa Resources Partners LP, Targa Resources Partners Finance Corporation, the other Subsidiary Guarantors and U.S. Bank National ~~Association.~~Association (incorporated by reference to Exhibit 4.8 to Targa Resources Corp.’s Quarterly Report on Form 10-Q filed May 4, 2023 (File No. 001-34991)).

10.5*4.7		Supplemental Indenture dated ~~June 17, 2022~~April 12, 2023 to Indenture dated February 2, 2021 among the Guaranteeing Subsidiary, Targa Resources Partners LP, Targa Resources Partners Finance Corporation, the other Subsidiary Guarantors and U.S. Bank National ~~Association.~~

~~10.6~~		~~Second Supplemental Indenture dated as of June 22, 2022, among Targa Resources Corp., as issuer, the guarantors named therein and U.S. Bank Trust Company, National~~ Association ~~as trustee~~ (incorporated by reference to Exhibit 4.9 to Targa Resources Corp.’s ~~Post-Effective Amendment No. 1 to Form S-3 filed June 22, 2022 (Registration No. 333-263730)).~~

~~10.7~~		Twelfth Amendment to Receivables Purchase Agreement, dated April 19, 2022, by and among Targa Receivables LLC, as seller, Targa Resources Partners LP, as servicer, the various conduit purchasers, committed purchasers, purchaser agents and LC participants party thereto and PNC Bank, National Association, as administrator and LC Bank (incorporated by reference to Exhibit 10.1 to Targa Resources Corp.’s CurrentQuarterly Report on Form ~~8-K~~10-Q filed ~~April 22, 2022~~May 4, 2023 (File No. 001-34991)).

~~10.8~~10.1*		~~Term Loan Agreement, dated as of July 12, 2022, among~~Second Amended and Restated Targa Resources Corp.~~, Mizuho Bank, Ltd.,~~ 2010 Stock Incentive Plan, as ~~administrative agent~~amended and ~~a lender, and the other lenders parties thereto (incorporated by reference to Exhibit 10.1 to Targa Resources Corp.’s Current Report on Form 8-K filed July 12, 2022 (File No. 001-34991)).~~restated effective August 1, 2023.

22.1*		List of Subsidiary Guarantors.


Number		Description
31.1*		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

104*		The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, formatted in Inline XBRL (included with Exhibit 101 attachments).

*	~~Filed herewith~~

**	~~Furnished herewith~~

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan or arrangement

SIGNATURES

~~Management contract or compensatory plan or arrangement~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Targa Resources Corp.
	(Registrant)

Date: August ~~4, 2022~~3, 2023	By:	/s/ Jennifer R. Kneale
		Jennifer R. Kneale
		Chief Financial Officer
		(Principal Financial Officer)


Delaware		20-3701075
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

811 Louisiana ~~St,~~ Street, Suite 2100, Houston, Texas		77002
(Address of principal executive offices)		(Zip Code)



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock	TRGP	New York Stock Exchange


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements			4

Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022			4

Consolidated Statements of Operations for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022			5

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022			6

Consolidated Statements of Changes in ~~Owners'~~Owners’ Equity and Series A Preferred Stock for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022			7

Consolidated Statements of Cash Flows for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022			11

Notes to Consolidated Financial Statements			12

Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations			3028

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4943

Item 4. Controls and Procedures			5245

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			5347

Item 1A. Risk Factors			5347

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5347

Item 3. Defaults Upon Senior Securities			5447

Item 4. Mine Safety Disclosures			5448

Item 5. Other Information			5448

Item 6. Exhibits			5448

SIGNATURES

Signatures			5650


Bbl		Barrels (equal to 42 U.S. gallons)
BBtu		Billion British thermal units
Bcf		Billion cubic feet
Btu		British thermal units, a measure of heating value
/d		Per day
FERC		Federal Energy Regulatory Commission
GAAP		Accounting principles generally accepted in the United States of America
gal		U.S. gallons
~~LIBOR~~LPG		~~London Inter-Bank Offered Rate~~Liquefied petroleum gas
~~LPG~~MBbl		~~Liquefied petroleum gas~~Thousand barrels
~~MBbl~~MMBbl		~~Thousand~~Million barrels
~~MMBbl~~MMBtu		~~Million barrels~~
~~MMBtu~~		Million British thermal units
MMcf		Million cubic feet
MMgal		Million U.S. gallons
NGL(s)		Natural gas liquid(s)
NYMEX		New York Mercantile Exchange
NYSE		New York Stock Exchange
SCOOP		South Central Oklahoma Oil Province
SOFR		Secured Overnight Financing Rate
STACK		Sooner Trend, Anadarko, Canadian and Kingfisher


		June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
		(Unaudited)						(Unaudited)
		(In millions)						(In millions)
ASSETS	ASSETS							ASSETS
Current assets:
Cash and cash equivalents		$	154.0		$	158.5		$	169.4		$	219.0
Trade receivables, net of allowances of $0.1 million and $0.1 million at June 30, 2022 and December 31, 2021			1,612.6			1,331.9
Trade receivables, net of allowances of $2.5 million and $2.2 million at June 30, 2023 and December 31, 2022									988.1			1,408.4
Inventories			202.2			153.4			312.3			393.8
Assets from risk management activities			80.8			43.1			194.2			179.9
Other current assets			114.5			82.9			64.8			155.5
Total current assets			2,164.1			1,769.8			1,728.8			2,356.6
Property, plant and equipment, net			11,878.3			11,667.7			14,890.4			14,214.6
Intangible assets, net			1,038.8			1,094.8			2,542.6			2,734.6
Long-term assets from risk management activities			20.5			7.7			48.5			24.5
Investments in unconsolidated affiliates			137.1			586.5			131.8			131.3
Other long-term assets			95.5			81.7			119.7			98.4
Total assets		$	15,334.3		$	15,208.2		$	19,461.8		$	19,560.0

LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS' EQUITY
LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS’ EQUITY								LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS’ EQUITY
Current liabilities:
Accounts payable		$	1,901.0		$	1,402.3		$	1,173.3		$	1,448.8
Accrued liabilities			255.2			272.2			283.0			289.5
Distributions payable			25.3			64.5
Interest payable			131.8			138.5			227.2			174.0
Liabilities from risk management activities			425.5			258.2			51.1			320.1
Current debt obligations			414.6			162.8			586.0			834.3
Total current liabilities			3,153.4			2,298.5			2,320.6			3,066.7
Long-term debt			7,046.2			6,434.4			11,812.8			10,702.1
Long-term liabilities from risk management activities			232.3			109.3			24.1			140.1
Deferred income taxes, net			213.4			136.0			405.1			327.7
Other long-term liabilities			288.1			301.6			359.0			341.2
Contingencies (see Note 14)
Series A Preferred 9.5% Stock, $1,000 per share liquidation preference (1,200,000 shares authorized, 0 and 919,300 shares issued and outstanding as of June 30, 2022 and December 31, 2021), net of discount (see Note 9)			0			749.7
Owners' equity:
Targa Resources Corp. stockholders' equity:
Common stock ($0.001 par value, 450,000,000 shares authorized as of June 30, 2022 and December 31, 2021)			0.2			0.2
Contingencies (see Note 12)
Series A Preferred 9.5% Stock, $1,000 per share liquidation preference (1,200,000 shares authorized, zero shares issued and outstanding as of June 30, 2023 and December 31, 2022), net of discount									—			—
Owners’ equity:
Targa Resources Corp. stockholders’ equity:
Common stock ($0.001 par value, 450,000,000 shares authorized as of June 30, 2023 and December 31, 2022)									0.2			0.2
Issued Outstanding
June 30, 2022 237,204,119 227,062,130
December 31, 2021 236,105,293 228,221,122
Preferred stock ($0.001 par value, after designation of Series A Preferred Stock: 98,800,000 shares authorized, 0 shares issued and outstanding)			0			0
June 30, 2023 239,212,098 224,052,233
December 31, 2022 237,939,058 226,042,229
Preferred stock ($0.001 par value, after designation of Series A Preferred Stock: 98,800,000 shares authorized, zero shares issued and outstanding)									—			—
Additional paid-in capital			3,834.4			4,268.9			3,045.8			3,702.3
Retained earnings (deficit)			(1,137.9	)		(1,822.3	)		199.5			(626.8	)
Accumulated other comprehensive income (loss)			(276.4	)		(230.9	)		130.8			54.7
Treasury stock, at cost (10,141,989 shares as of June 30, 2022 and 7,884,171 shares as of December 31, 2021)			(350.4	)		(204.1	)
Total Targa Resources Corp. stockholders' equity			2,069.9			2,011.8
Treasury stock, at cost (15,159,865 shares as of June 30, 2023 and 11,896,829 shares as of December 31, 2022)									(701.1	)		(464.7	)
Total Targa Resources Corp. stockholders’ equity									2,675.2			2,665.7
Noncontrolling interests			2,331.0			3,166.9			1,865.0			2,316.5
Total owners' equity			4,400.9			5,178.7
Total liabilities, Series A Preferred Stock and owners' equity		$	15,334.3		$	15,208.2
Total owners’ equity									4,540.2			4,982.2
Total liabilities, Series A Preferred Stock and owners’ equity								$	19,461.8		$	19,560.0


☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	June 30, 2022			December 31, 2021			Estimated Useful Lives (In Years)	June 30, 2023			December 31, 2022			Estimated Useful Lives (In Years)
Gathering systems	$	9,542.9		$	9,318.2		5 to 20	$	10,655.5		$	10,403.1		5 to 20
Processing and fractionation facilities		6,508.0			6,388.8		5 to 25		7,784.2			7,421.2		5 to 25
Terminaling and storage facilities		1,335.1			1,313.8		5 to 25		1,341.3			1,341.6		5 to 25
Transportation assets		2,737.8			2,671.0		10 to 50		3,066.3			2,919.3		10 to 50
Other property, plant and equipment		336.5			340.9		3 to 50		401.4			387.6		3 to 50
Land		169.1			160.8		—		178.9			163.3		—
Construction in progress		525.2			347.0		—		1,266.9			1,011.0		—
Finance lease right-of-use assets		65.7			55.6		5 to 7		311.1			266.1		5 to 14
Property, plant and equipment		21,220.3			20,596.1				25,005.6			23,913.2
Accumulated depreciation, amortization and impairment		(9,342.0	)		(8,928.4	)			(10,115.2	)		(9,698.6	)
Property, plant and equipment, net	$	11,878.3		$	11,667.7			$	14,890.4		$	14,214.6

Intangible assets		2,497.6			2,642.9		10 to 20		4,378.0			4,379.7		10 to 20
Accumulated amortization and impairment		(1,458.8	)		(1,548.1	)			(1,835.4	)		(1,645.1	)
Intangible assets, net	$	1,038.8		$	1,094.8			$	2,542.6		$	2,734.6


	June 30, 2023
Balance at beginning of period	$	2,734.6
Amortization		(192.0	)
Balance at end of period	$	2,542.6

	June 30, 2022
Balance at December 31, 2021	$	1,094.8
Amortization		(56.0	)
Balance at June 30, 2022	$	1,038.8

	Balance at December 31, 2021		Equity Earnings (Loss)			Cash Distributions			Disposition/ Consolidation			Contributions		Balance at June 30, 2022
GCX	$	421.0	$	5.7		$	(14.3	)	$	(412.4	)	$	—	$	—
Little Missouri 4		98.1		1.6			(6.0	)		—			—		93.7
GCF (1)		28.8		(1.6	)		—			—			1.5		28.7
T2 Eagle Ford (2)		21.9		(0.6	)		(0.8	)		(20.5	)		—		—
T2 LaSalle (2)		4.2		(0.3	)		—			(3.9	)		—		—
Cayenne		12.5		2.2			—			—			—		14.7
Total	$	586.5	$	7.0		$	(21.1	)	$	(436.8	)	$	1.5	$	137.1

	Payments Due By Period
			Less Than						More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years

Long-term debt obligations (1)	$	7,084.4	$	—	$	—	$	550.0	$	6,534.4
Interest on debt obligations (2)		1,936.8		268.5		537.1		537.1		594.1
	$	9,021.2	$	268.5	$	537.1	$	1,087.1	$	7,128.5


	June 30, 2023		December 31, 2022
Deferred revenue	$	200.1	$	198.8
Asset retirement obligations		104.3		97.9
Operating lease liabilities		39.6		28.6
Other liabilities		15.0		15.9
Total other long-term liabilities	$	359.0	$	341.2


Commodity	Instrument	Unit	2022		2023		2024		2025		2026		2027		Instrument	Unit	2023			2024		2025		2026		2027
Natural Gas	Swaps	MMBtu/d		221,773		169,283		91,849		14,341		0		0	Swaps	MMBtu/d		155,692			103,512		49,774		3,406		—
Natural Gas	Basis Swaps	MMBtu/d		427,554		315,000		280,000		244,267		55,000		10,000	Basis Swaps	MMBtu/d		673,329			356,918		256,658		102,500		25,000
NGL	Swaps	Bbl/d		49,534		39,781		16,947		960		0		0	Swaps	Bbl/d		40,805			26,376		15,647		1,042		—
NGL	Futures	Bbl/d		9,304		167		0		0		0		0	Futures	Bbl/d		(1,065	)		16,779		4,356		—		—
Condensate	Swaps	Bbl/d		6,497		6,007		2,548		161		0		0	Swaps	Bbl/d		6,124			4,126		2,738		193		—


		Fair Value as of June 30, 2022					Fair Value as of December 31, 2021						Fair Value as of June 30, 2023					Fair Value as of December 31, 2022
	Balance Sheet	Derivative		Derivative			Derivative		Derivative			Balance Sheet	Derivative		Derivative			Derivative		Derivative
	Location	Assets		Liabilities			Assets		Liabilities			Location	Assets		Liabilities			Assets		Liabilities
Derivatives designated as hedging instruments
Commodity contracts	Current	$	72.9	$	(335.9	)	$	25.5	$	(252.6	)	Current	$	151.9	$	(33.9	)	$	158.7	$	(93.8	)
	Long-term		18.6		(117.9	)		6.2		(84.3	)	Long-term		42.8		(6.9	)		24.2		(30.9	)
Total derivatives designated as hedging instruments		$	91.5	$	(453.8	)	$	31.7	$	(336.9	)		$	194.7	$	(40.8	)	$	182.9	$	(124.7	)
Derivatives not designated as hedging instruments
Commodity contracts	Current	$	7.9	$	(89.6	)	$	17.6	$	(5.6	)	Current	$	42.3	$	(17.2	)	$	21.2	$	(226.3	)
	Long-term		1.9		(114.4	)		1.5		(25.0	)	Long-term		5.7		(17.2	)		0.3		(109.2	)
Total derivatives not designated as hedging instruments		$	9.8	$	(204.0	)	$	19.1	$	(30.6	)		$	48.0	$	(34.4	)	$	21.5	$	(335.5	)
Total current position		$	80.8	$	(425.5	)	$	43.1	$	(258.2	)		$	194.2	$	(51.1	)	$	179.9	$	(320.1	)
Total long-term position			20.5		(232.3	)		7.7		(109.3	)			48.5		(24.1	)		24.5		(140.1	)
Total derivatives		$	101.3	$	(657.8	)	$	50.8	$	(367.5	)		$	242.7	$	(75.2	)	$	204.4	$	(460.2	)

	Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
Derivatives in Cash Flow	Three Months Ended June 30,					Six Months Ended June 30,
Hedging Relationships	2022		2021			2022			2021
Commodity contracts	$	25.2	$	(232.6	)	$	(362.1	)	$	(404.2	)


	Gain (Loss) Reclassified from OCI into Income (Effective Portion)
	Three Months Ended June 30,					Six Months Ended June 30,
Location of Gain (Loss)	2023		2022			2023		2022
Revenues	$	49.8	$	(157.7	)	$	95.0	$	(303.5	)


	Location of Gain (Loss)	Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated	Recognized in Income on	Three Months Ended June 30,					Six Months Ended June 30,
as Hedging Instruments	Derivatives	2023		2022			2023		2022
Commodity contracts	Revenue	$	145.2	$	(19.0	)	$	323.2	$	(196.1	)

			2022				2023				2024 and after
Fixed consideration to be recognized as of June 30, 2022			$	227.7			$	413.3			$	2,357.4


	2023		2024		2025 and after
Fixed consideration to be recognized as of June 30, 2023	$	226.4	$	459.6	$	2,388.5

	Three Months Ended June 30, 2021
	Gathering and Processing		Logistics and Transportation		Other			Corporate and Eliminations			Total
Revenues
Sales of commodities	$	147.3	$	3,014.8	$	(70.5	)	$	—		$	3,091.6
Fees from midstream services		171.8		152.5		—			—			324.3
		319.1		3,167.3		(70.5	)		—			3,415.9
Intersegment revenues
Sales of commodities		1,184.7		92.6		—			(1,277.3	)		—
Fees from midstream services		0.6		7.4		—			(8.0	)		—
		1,185.3		100.0		—			(1,285.3	)		—
Revenues	$	1,504.4	$	3,267.3	$	(70.5	)	$	(1,285.3	)	$	3,415.9
Operating margin (1)	$	301.2	$	291.4	$	(70.5	)
Other financial information:
Total assets (2)	$	8,494.2	$	6,687.2	$	46.8		$	183.6		$	15,411.8
Goodwill	$	45.2	$	—	$	—		$	—		$	45.2
Capital expenditures	$	114.0	$	14.8	$	—		$	(13.3	)	$	115.5

	Six Months Ended June 30, 2021
	Gathering and Processing		Logistics and Transportation		Other			Corporate and Eliminations			Total
Revenues
Sales of commodities	$	289.8	$	6,238.6	$	(69.1	)	$	—		$	6,459.3
Fees from midstream services		291.3		298.1		—			—			589.4
		581.1		6,536.7		(69.1	)		—			7,048.7
Intersegment revenues
Sales of commodities		2,154.4		175.2		—			(2,329.6	)		—
Fees from midstream services		2.1		15.3		—			(17.4	)		—
		2,156.5		190.5		—			(2,347.0	)		—
Revenues	$	2,737.6	$	6,727.2	$	(69.1	)	$	(2,347.0	)	$	7,048.7
Operating margin (1)	$	576.6	$	640.1	$	(69.1	)
Other financial information:
Total assets (2)	$	8,494.2	$	6,687.2	$	46.8		$	183.6		$	15,411.8
Goodwill	$	45.2	$	—	$	—		$	—		$	45.2
Capital expenditures	$	183.5	$	25.2	$	—		$	(9.7	)	$	199.0


	Gathering and Processing		Logistics and Transportation		Other			Gathering and Processing		Logistics and Transportation		Other
	(In millions)							(In millions)
Three Months Ended:
June 30, 2023								$	502.5	$	408.0	$	151.9
June 30, 2022	$	474.7	$	322.3	$	(4.5	)		474.7		322.3		(4.5	)
June 30, 2021		301.2		291.4		(70.5	)

Six Months Ended:
June 30, 2023								$	1,040.9	$	937.1	$	327.7
June 30, 2022	$	872.3	$	674.5	$	(182.7	)		872.3		674.5		(182.7	)
June 30, 2021		576.6		640.1		(69.1	)


	Three Months Ended June 30, 2023								Three Months Ended June 30, 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)		15.3	$	1.73		$	26.4			16.7	$	(3.29	)	$	(54.9	)
NGL (MMgal)		164.9		0.11			17.7			164.4		(0.47	)		(77.9	)
Crude oil (MBbl)		0.6		(3.67	)		(2.2	)		0.5		(51.00	)		(25.5	)
						$	41.9							$	(158.3	)