Targa Resources beats profit estimates on record Permian volumes, boosts dividend

By Sumit Saha

Nov 5 (Reuters) - Pipeline operator Targa Resources TRGP.N beat estimates for third-quarter adjusted core profit on Wednesday, boosted by record natural gas and liquids volumes from the Permian Basin.

Its shares rose 6.6% in afternoon trading, as the company also announced plans to raise annual dividend by 25% to $5 per share in 2026.

U.S. midstream companies such as Targa and Kinder Morgan KMI.N are benefiting from a surge in oil and gas production in the Permian Basin, as well as rising natgas demand driven by LNG exports and soaring power generation tied to AI operations, cryptocurrency mining and data centers.

Targa said it expects full-year adjusted core profit around the top end of its $4.65 billion to $4.85 billion target.

Citi analyst Spiro Dounis said that while the growth outlook had come under some investor scrutiny amid the broader macro environment, the company now appears to be tracking above the high end of its guidance range.

Targa's quarterly Permian natgas inlet volumes rose about 11% to 6.62 billion cubic feet per day (cfpd) from a year earlier, while natgas liquids pipeline transportation volumes surged about 23% to 1.02 million barrels per day.

The company is seeing 10% growth in its Permian volumes for the current year, and it expects strong low-double-digit growth in 2026.

Targa announced the construction of a 275 million cfpd natgas processing plant in the Permian Delaware in New Mexico.

The plant is expected to begin operations in the first quarter of 2027.

It is also moving ahead with the Forza natural gas pipeline in the Permian Delaware, with operations expected to begin in mid-2028.

Targa has been expanding its infrastructure footprint with new projects aimed at keeping pace with record output from the Permian Basin.

The Houston, Texas-based company reported an adjusted core profit of $1.27 billion for the third quarter, compared with estimates of $1.21 billion, according to data compiled by LSEG.