Targa Resources (TRGP) has cemented its midstream partnership with ExxonMobil (XOM) in a series of deals that will result in new Permian processing and pipeline investments, and could significantly lift TRGP’s long-term growth outlook.
On Aug. 17, Targa announced 20-year fee-based agreements with Exxon covering the Delaware and Midland basins through 2046. In the Delaware, TRGP will provide natural gas gathering, treating and processing along with NGL transportation services. In the Midland, XOM is expanding acreage dedications and extending its existing fee-floor G&P agreements with TRGP.
Importantly, the agreements include new NGL dedications to Targa assets in the Permian, enabling the company to monetize these volumes downstream for fractionation and potential exports.
To meet future demand, Targa announced three new gas processing plants in the Delaware (Wrangler, Ranger and Ranger II) totaling 825 MMcf/d of capacity. All the plants are expected to come online in 1H28. TRGP said it is evaluating up to five more processing plants in the area to service XOM, plus an additional fractionation train in Mont Belvieu.
Targa also committed to build Bull Run II, a new 70-mile residual gas pipeline connecting the new Delaware plants to the Waha hub. The project is one of four intrabasin lines the company is constructing in the Permian to transport growing gas volumes to Waha. TRGP expects to start Bull Run II in 1H28.
The deals provide Exxon room to grow as the major pursues a peer-leading development program in the Permian. XOM has guided to a 9% CAGR through 2030 and stands heads and shoulders above other Permian operators for its rapid growth this year. XOM reported record Permian oil and gas production of 1.8 MMboe/d in 2Q26, and management expects its output to double in the basin from 2024 to 2030, reaching ~2.5 MMboe/d.
Exxon is Targa’s top counterparty in the Permian, delivering 42% of the gas volumes on TRGP’s Midland assets, according to the ‘Gathering & Processing’ dashboard in Energy Data Studio (see figure above). XOM accounts for 13 of the 68 rigs East Daley is currently tracking on Targa’s Permian G&P systems.
Not all of Exxon’s volumes will flow through TRGP assets, but the agreement positions Targa to capture a meaningful share of Exxon’s long-term Permian growth ahead of an anticipated acceleration in natural gas demand. – Will Warren Tickers: TRGP, XOM.
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