Targa announces new Permian-focused midstream agreements with ExxonMobil, infrastructure investments

Targa Resources announced this week that it had executed new long-term, integrated midstream agreements with subsidiaries of ExxonMobil. The agreements further strengthen the two companies’ strategic relationship across the Permian Basin, Targa said in its August 17 announcement.

The 20-year agreements cover integrated gas-gathering and processing, as well as downstream services. They include “significant” acreage dedications in the both the Delaware and Midland sub-basins of the Permian, Targa said. In the Delaware, the agreement add new acreage dedications for integrated fee-based services, including gathering, processing, treating, natural gas liquids (NGLs) transportation, and fractionation until the end of 2046. In the Midland, the agreements add new acreage dedications and extend the companies’ existing fee-floor gathering and processing agreements until the end of 2046. The agreements in both the Delaware and Midland basins include 20-year NGL dedications to Targa’s logistics and transportation (L&T) systems, the company added.

Targa expects the new commercial agreements to add “substantial” long-term volume growth across its “integrated wellhead-to-water position”, using its existing infrastructure, new projects currently underway and planned future system expansions.

“As the largest gatherer and processor in the Permian, we continue to invest across our footprint and our execution allows Targa the unmatched ability to handle our customers’ long-term production growth plans,” stated Targa’s CEO, Matt Meloy. “We expect this expansion of our strategic relationship with ExxonMobil to meaningfully add to Targa’s strong growth rate well into the next decade and bolster our outlook for durable and growing adjusted free cash flow over the long term.”

In the announcement, Targa also provided an update to its growth plans and capital expenditure guidance for 2026. The company said that in order to accommodate its customers’ continued growth plans and the new agreements with ExxonMobil, it was announcing three new gas-processing plants in the Delaware Basin – the Wrangler, Ranger and Ranger II plants – with an aggregate capacity of roughly 825mn cubic feet (23.4mn cubic metres) per day. The three plants are expected to be in service in the first half of 2028 and Targa said it was evaluating up to five additional new processing plants in order to accommodate anticipated production growth in the area over the longer term. The company is also evaluating the timing of an additional fractionation train in Mont Belvieu, it added.

On top of this, Targa also announced a new 70-mile (113 km) gas pipeline as part of its Bull Run residue system in the Delaware Basin, known as Bull Run II. The pipeline will provide gas takeaway capacity from the newly announced plant additions to the Waha Hub and will be supported by take-or-pay commitments. Bull Run II is anticipated to enter service in the first half of 2028.

After incorporating its expected investment in the new Delaware Basin processing plants, incremental associated field capital and the Bull Run II pipeline, Targa said it was raising its capex guidance for the 2026 financial year to roughly $5.0bn.