[Operator Instructions] Our first question comes from Jeremy Tonet with JPMorgan Securities.

Just wanted to touch on how you see the volume trajectory at this point. If you could drill in on what type of curtailments you see on the system and what could come back over, I guess, the balance of the year? And just thinking, I guess, some of your competitors say that they're seeing activity picking up quicker than they expected. I'm wondering how you see activity in your system and the trajectory into '27.

Jeremy, this is Jen. I think as I tried to describe in my scripted remarks, volumes are -- volume growth is going really, really well across the Targa system. We had a really good start to the first half of the year, which is pretty remarkable when you think about the weather impacts in the first quarter. And then as we described on our May earnings call, about 200 million cubic feet to 400 million cubic feet a day of shut-ins on any given day during the second quarter. So to have 450 million cubic feet a day of growth quarter-over-quarter, I think, is really reflective of the producers and the activity in and around our systems. As we look forward, July was another really strong month of volume growth. So as I said, for the year now, I'd say that we are tracking ahead of expectations with a view of continued volume growth across the back half of the year. I think largely, the growth that we're seeing is consistent with what we expected, again, maybe a little bit ahead. But we've got really active producers across the system that I think are feeling supported by a macro backdrop now with both higher crude oil prices and now with the egress situation in the Permian at least temporarily resolved benefiting from higher gas prices. So it's just a really supportive environment of both an expectation for continued activity back half of '26. And then that, of course, I think, means we're well supported for the continued growth into '27 and beyond.

Got it. And then just wanted to go back, I guess, to any thoughts you could share on the cadence of gas processing plant additions, how you see that going forward each year? Is it 3 a year? Would you expect 3 for '28? Or how should we think about that at this point?

I think you've seen a quick cadence of plant adds for us over the last several years here already this year, getting 2 plants online in the Midland Basin. That's a little bit lumpier for us having 2 plants come online as quickly sort of back-to-back as they did, but part of that was an exceptional job by our engineering and operations team to get East Pembrook online earlier than expected. We've now got 5 plants that are under construction, indicated on the call this morning that we're evaluating the next time or the next -- the appropriate time to move forward with our next Midland plant. So as we look forward, we put out an illustrative framework now a couple of quarters ago that demonstrated continued cadence of, call it, 3 plants a year if we assume high single-digit, low double-digit Permian growth. I think where we are today with the commercial success that we've had over the last couple of years is accelerated from there. Ultimately, whether that cadence continues to be accelerated going forward will be a function both of the existing contracts that we've already got in place as well as continued commercial success. I'm biased, but I think we've got by far the best commercial team in the business. And I can assure you that they are not resting on their laurels and are continuing to go out and identify new opportunities to add to the contracts that we already have in place with existing and new producers. So we'll be continuing to work that angle as well. So I think we just feel really good, Jeremy. But ultimately, the pace of growth will drive is it 3 plants, is it more plants? But feel really well positioned for just continued growth going forward.

Our next question comes from Spiro Dounis with Citi.

I want to go back to your comments around the integrated footprint. If I include East Driver, that's about 6 announced plants adding about 240,000 barrels a day of NGLs to the system. It sounds like you're covered on the egress side, frac arguably starting to look a little tight again if you announce another plant. And then on export, I think that's probably where we could see the need for another expansion sooner rather than later. So curious how you're thinking about downstream infrastructure needs and what a seventh or eighth plant coming online in 2028 might do to the need to expand downstream again?

Spiro, I think we've got really good operating leverage when we think about Speedway coming online in the third quarter of 2027 and our ability to expand Speedway from, call it, 500,000 barrels a day to 1 million barrels a day by just adding incremental pumps as our volume growth continues to ramp, a very cost-efficient way to add a lot of capacity. So I think we've got good operating leverage there. We are in a really good spot to baseload Speedway with a lot of volumes given everything that we've announced since that came into service. And as you pointed out, on the LPG export side, a lot of operating leverage there when that expansion comes online in the third quarter of 2027 as well. So I think you really hit all the key points, which is we need to evaluate the timing of our next fractionator. We feel like we're in good position right now with Train 11 online, highly utilized from start-up to like Trains 12 and 13 will be as well. But we'll evaluate the right timing of that next frac. Otherwise, on the residue side, I feel like we're in a good spot with all the intra-basin activity that we've got underway to really build out our residue capabilities. So ultimately, I think it will continue to be more of the same, which is with the additional plant adds, when do we need another frac. But we do have, I think, material operating leverage across both NGL and transportation and exports once we get those 2 big projects online in the third quarter of 2027.

Got it. That's great to hear. Maybe just to go back to the guidance quickly. And you talked about this a little bit with Jeremy, but it does seem to imply a decline in the second half of the year to hit the high end, which does seem conservative to us. Certainly appreciate the point that Waha marketing gains are probably moderating here, but you had a lot of positive commentary about producer activity and curtailments really coming back and would have thought that had been enough to offset. Could you -- so maybe just walk through some of the assumptions and maybe put a finer point on what you're not counting on that could lead to a positive surprise?

Yes. Spiro, Matt here. No, good question. Look, the first half of the year was really strong underlying volume performance, which Jen talked about. But we also pointed to $250 million of optimization margin that we weren't counting on. And with the basis narrowing, part of that margin comes from our transport position. So we forecast that pretty conservative in the back half of the year. We have -- we don't have a very significant assumption for continued marketing gains as we go forward from here. And so that's why you're seeing perhaps a conservative view of the second half of this year. But with the volumes that we've seen across our system, Jen talked about the strength that we've had so far this year. Most of the shut-ins have returned. July was a really good month. We've had really good August so far. And we actually still have some volume shut in on our system that are going to come back and add even more volumes in the back half of the year. So I think we feel really good about the underlying volume trajectory. It's just going to be moderated and offset by perhaps lower marketing opportunities in the back half of the year.

Our next question comes from Jackie Koletas with Goldman Sachs.

First, I just wanted to touch again on the NGL business and extending your platform. Peers are actively expanding the ethane export capacity on the Gulf Coast. I mean where would you say are the economics currently for expanding into ethane capacity at Galena Park? Are you comfortable continuing to rely on the LPG business? Or is there a scale that you can see on ethane export solution?

Jackie, this is Jen. I think it was probably, gosh, 8 or 9 years ago that we first mentioned publicly that we are evaluating ethane export opportunities. Given the vast amount of ethane in our system, I think it puts us in a really good position with a lot of supply. We've managed that supply position thus far by selling into the domestic markets and have really strong relationships with our domestic customers and also with some of our peers that are exporting some of those volumes to the rest of the world. I think that's worked really well for us thus far. But of course, we're always evaluating opportunities across the entire value chain and ethane exports is no different. We've got a growing supply portfolio as a result of all of our gathering and processing plant adds and then the incremental fracs bringing more ethane into our system. I think our team has done a great job of increasing our domestic connectivity to make sure that we're very comfortable with where those volumes ultimately will find a home. But certainly, that's something that we continue to evaluate, and we'll continue to evaluate it going forward. But I don't think we feel like it's something that we have to do. I think if it's complementary to what we do and if it makes sense and if it can provide returns that are commensurate with where we can invest across the rest of our portfolio, then we'll certainly continue to consider expanding.

That's very clear. And then just as a follow-up, you mentioned very strong volume recovery. As we see volume growth continue and prices begin to rebound, how do you contemplate the ability to move off of fee floors into '27 and how that may frame up your long-term outlook from here?

I think moving off of fee floors would be very much welcome across the Targa system, we've been below fee floors for a long time, really only having maybe less than a handful of months over the last couple of years where we have benefited from margin above fee floor levels. I think certainly, with the incremental egress on the natural gas side, you're seeing gas prices move higher. Our fee floors are a combination of both gas and NGL prices. So ultimately, it will depend where sort of the entire barrel moves. But I think that from our perspective, we do believe with all of the tailwinds around the incremental demand for natural gas and NGLs in the U.S. and globally, we're likely to see some price tailwinds as we move forward. And ultimately, that would be certainly additive to our performance as we move through the next several years.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Maybe following up on what's been discussed here a little bit. Can you follow up on the plant cadence? Can you speak to what are the variables that can surprise the upside to this 3 plant per year model, right? Is it more of the Permian macro versus specific commercial wins? And specifically, given the commercial discussion that you've had here in '25 and obviously, year-to-date '26, are you tracking ahead of that expectation of 3 plants per year or that framework for '28 and onwards here, again, kind of going on your improving backdrop commentary?

Yes. No, good question, and we're always challenging ourselves for what -- how to kind of think about that. I think it's a combination of what you talked about. I think overall, just trends in the Permian Basin with just strong activity, increasing GORs is going to put us in good position to continue to add multiple plants a year for years to come. But then on top of that, which is a bit more episodic, is our larger commercial wins and other opportunities. And as Jen said, we think we have the best commercial team in the business. So as we continue to have commercial wins, you've seen us talk about that in 2024 and 2025. We're having a good year so far in 2026 and would expect to continue to add more acreage dedications, more volumes from our commercial success. So I think in any environment, we're going to be adding multiple plants a year. I think that is already outlined, and we have 5 plants coming on and already announced, and we're evaluating the timing of the next plant in the Midland, and we're evaluating more plants in the Delaware for future timing. So we feel really good about adding significant volumes, but I think it's a combination of all those factors.

Awesome. And maybe a related point here. With the Permian Basin continuing to consolidate, can you speak to how you're structuring your commercial strategy going forward, right? Are you pursuing a more volumetric-centric strategy on the G&P front to attract more volume on your system and improve like more of a system-wide ROIC with your downstream assets, if you will? I mean how are you thinking about that, especially given the improving volume writ large we just alluded to?

I think that we have exceptional relationships with our producers and are always trying to add to our portfolio of producers that we have on our systems, Julien. And so part of what we pride ourselves is a willingness to be creative and work with each individual producer to meet their needs whether that's a result of the needs that they have from consolidation or for any other reason. So for us it's a portfolio approach. We work with each individual producer to try to figure out what their needs are and then best meet those needs and then that all comes together in thinking through what therefore that we need from an infrastructure perspective to support that outlook of growth that portfolio of producer customers will provide for us. So I think it's really much each producer is different. We work very well with each of the producer customers that we have, are always trying to figure out how to best position our producer customers for success as well as Targa. And that's really, I think, put us in a really good position to both continue to service existing customers and add contracts with existing customers and then go out and win new business as well.

Our next question comes from Gabriel Moreen with Mizuho.

I had a quick question on LPG exports with all the volume you were able to squeeze out during the quarter. And I think some of the co-loading you mentioned with butane allowing you additional capacity. Does that mean that excess capacity becomes underwritable under long-term contracts? And then maybe you can speak a little bit to some of the new contracts you're signing, enter pricing, just directionally speaking. Thank you.

Gabriel, this is Ben. Yes, you hit on it. We had a great second quarter on the export side. I'd like to say thanks to our internal team who really worked hand-in-hand with our customers to utilize every minute the dock space that we could and get product out to the world. You also hit on part of the record was us being able to load more butane given the global demand for butane. So that did help us move some additional volume across the dock in the second quarter. As we look forward, we came into the second quarter highly contracted. We remain highly contracted. We're contracted through LEP 4 start-up and for years thereafter. And part of that has been the current environment that's been very strong. We came into this year with a lot of really good discussions underway. Those have only improved with the conflict. We're seeing people that weren't necessarily targeting U.S. supply now targeting U.S. supply. And so we have been able to underwrite some of this current environment into our long-term outlook for our exports.

Yes. And just to add on to that, too, with the increased demand for butane across our dock, we are being -- we are working in more of our longer-term contracts, more butane loadings contracted as opposed to having that open capacity. So it's been nice on that front as well.

Our next question comes from Manav Gupta with UBS.

Congrats on a great quarter. I just wanted to understand, can you help us with the post-Speedway material inflection in free cash flow. So how should we think about those incremental -- usage of those incremental free cash flows once Speedway does come online?

Manav, this is Jen. I think that for us, it's going to continue to be really the approach that we've taken over the last several years, which is we'll continue to invest in the business. We'll materially increase our common dividends per share. We'll opportunistically repurchase stock, and we'll have a really strong to strengthening balance sheet. I think we're really excited about that inflection when you think about Speedway and our LPG export facility coming online in the third quarter of 2027, which will finally sort of put us in a position to offer our shareholders and prospective shareholders a value proposition that has a really attractive growing EBITDA business and sort of underlying fundamental operational position, combined with also an increasing free cash flow position, too. So I think that's a spot that we're really excited about getting to. But it's really a function of our continued investment in our business has created opportunities for us to grow our EBITDA to the point where we will be able to both invest in our business and have free cash flow. And that inflection is really what is going to occur when we get Speedway and our LPG export facility online.

Perfect. My quick follow-up here is a little bit. On the last earnings call, Exxon talked about 40 different technologies that they're deploying in Permian, and they're basically saying those are stackable. And what they say is it will materially improve recovery within the Permian. And Chevron through its advanced chemicals is saying they are seeing material decline in terms of rates when they have deployed these chemicals. So I'm trying to understand, besides the price and other things, do you see technology driving significantly higher Permian volumes? Because once Exxon and Chevron catch on to it, others would also. So trying to understand, are you seeing anything out there in a technological perspective, which could drive higher Permian recovery, which would benefit you guys?

Manav, I think that the producers are the best sources of information around the technologies that they're using and the results that they are driving through those technological improvements. I think we certainly have a view that as we've seen over the last couple of decades, technology will continue to drive improving results and efficiencies for our producer customers, and we'll be a big beneficiary of that. I think there's a lot of talk about helpful technologies now and expected into the future, and that will provide an incremental tailwind for us. So I think there's a lot of reasons that we feel very convicted about our opportunities to grow our volumes as we look out over the next short, medium and long term. Technology is probably a smaller part of that, but it will certainly be a nice to have as our producers continue to make technological improvements.

Our next question comes from Burke Sansiviero with Wolfe Research.

Just one quick one for me today. So G&P volumes were up 7% quarter-over-quarter and then gross margins were up 4%. So per unit margins went down. Any color on what pushed that per unit margin lower? And where should we see it trend from here?

Yes, I can start. I mean we have done a really good job at moving our G&P contracts to fee-based contracts. That said, we still have some part of our G&P contracts that are commodity sensitive. And so that was a slight headwind. And then there are gains, fuel gains, fixed recovery gains, some other gains, which can affect results as well. But overall, a really strong quarter for our G&P, but I'd say it's largely commodity price, which was a slight offset to our G&P business in the quarter.

Our next question comes from Jason Gabelman with TD Cowen.

I was hoping you could elaborate on a couple of points that have already been touched on. First, on the processing plant growth, it seems like the lead time from sanctioning to starting up is somewhere between 20 to 24 months. Is that still what you're seeing? And how are you managing some of the pressure points in the supply chain?

This is Pat. Yes, lead times definitely have gotten extended. And a lot of it is around the electrical infrastructure for plant. It's some of the vessels that are needed for the plant build. But frankly, we've adapted to that. We have good line of sight on our volume growth. I'd say it's more like 18 to 24 months is kind of the time frame that we look at. Construction part of that is really 10 to 12 months, depending upon is it sweet sour, what the required AGI well, et cetera. But frankly, lead times on compression, lead times on certain components of plants certainly are extended, but it hasn't affected our ability to perform in any way.

Great. That's helpful. And then my follow-up is just I want to understand a bit more the kind of trade-off between the lower marketing margins and then the improvement on Waha prices as it feeds through your fee floors. And I know you've been hesitant to kind of provide any guidance on what commodity price levels result in an increase of fee floors. But just as we sit here where prices are right now, would you expect the net impact from lower marketing margins in 3Q to be offset by an uplift in fee floors? Or is that a net tailwind or headwind based on where commodity prices sit right now versus 2Q?

Jason, I'd say that, that will be a headwind for us third quarter versus second quarter in terms of just the strength of marketing benefits that we had in the second quarter. It wasn't just on the natural gas side with Waha, as Ben talked about. We also had very strong LPG export marketing benefits in the second quarter, which helped us too. So as we think about the third quarter, I think the biggest beneficiary of higher Waha prices will be our producers, which ultimately puts us in the best possible position. We like when our producers are incentivized to continue to be active, and I think with higher crude prices along with higher gas prices, there's a really supportive macro backdrop for our producer customers. But for us, I think we will continue to likely be below fee floor levels, sort of in the aggregate across the portfolio in the third quarter. We do have an expectation that gas prices will continue to potentially increase with the demand pull that we are seeing for volumes out of the Permian. And that'll be a tailwind over time for us.

And our final question comes from Sunil Sibal with Seaport Global.

So first, a clarification. I think you suggested that you're still seeing some shut-ins in volumes in Permian. So I just wanted to clarify, is that primarily price related? Or are there any other issues which might be causing that?

Sunil, I'd say that we generally have shut-ins across our assets when producers are shutting in volumes for frac protection and things like that. So I'd say that where we are right now in early August, the vast, vast majority of what I'd call price-related shut-ins are back on our system. We've got a little bit that's still coming back on that will provide a little bit more of a tailwind for us here in the third quarter. But I'd say the vast majority are back online now.

Okay. And then on the gas egress side, I think you touched upon a couple of projects in which you are participant kicking in late in '26 and '27. So I was curious, when you think about the base earnings, which you talked about from your gas marketing business, should we expect that base earnings also to move up as those projects come online? Or is that all capacity that will essentially help you move on the G&P side of things and is all talked about there -- taken care of there, I mean?

We will benefit in terms of our equity earnings as a result of the 17.5% interest that we have in those projects, benefiting from higher equity earnings when those projects come online. In terms of the gas marketing business, that's really where the margin that's reported there is related to our ability to utilize our vast network of infrastructure in place to move volumes to different markets on behalf of our producers and Targa. So a little bit apples to oranges. So I think in terms of the projects coming online that I talked about with Blackcomb and Traverse, there, we've got a 17.5% equity interest and certainly will be a beneficiary when those projects are online and have ramped fully. And then on the gas marketing side, ultimately, the forward performance will depend on what we see as opportunities in the market. And I think we've had a really strong last several years related to gas marketing. I think we've hopefully demonstrated that we've done a good job of managing the risks across our enterprise such that if Waha gas prices are low, our infrastructure allows us to potentially be a beneficiary of that type of environment. We have an expectation that gas may get tight again in the future. So we would have those assets in place to be a beneficiary there. Otherwise, we're always trying to figure out how to move gas to higher-priced markets and utilize our assets to do so. And our gas marketing team does a really good job of that quarter in and quarter out. I think what we are just trying to highlight is that the last several quarters and second quarter in particular, we would -- there was material outperformance as a result of the dynamics that we were seeing in the market.

Yes. If I can ask a clarification. It seems like one of your customers recently announced a big behind-the-meter power generation project in Permian to support the data center demand. Is that something that you're seeing more widespread in your operations? And how does that impact your strategy on the gas marketing side?

Yes, sure. No, there's multiple projects out there to support data centers and other needs for gas for power generation. And so we're actually in our gas marketing team having conversations about potentially being a supply for some projects in and around the Permian. We continue to have discussions. And I'd say that is somewhat of an opportunity for us. We think multiple projects like the one you referenced and others are likely to get done and be some additional demand for gas in the region.

This concludes the question-and-answer session. I would now like to turn it back to Tristan Richardson for closing remarks.

Great. Thanks, everyone, for joining the call this morning, and we appreciate your interest in Targa Resources.

This concludes today's conference call. Thank you for participating. You may now disconnect.