TRGP filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements.

 TARGA RESOURCES CORP.

 CONSOLIDATED BALANCE SHEETS

 June 30, 2022
 
 December 31, 2021
 
 (Unaudited)
 
 (In millions)
 
 ASSETS
 
 Current assets:
 
 Cash and cash equivalents
 
 $
 
 154.0 
 
 $
 
 158.5 
 
 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 
 
 Inventories
 
 202.2 
 
 153.4 
 
 Assets from risk management activities
 
 80.8 
 
 43.1 
 
 Other current assets
 
 114.5 
 
 82.9 
 
 Total current assets
 
 2,164.1 
 
 1,769.8 
 
 Property, plant and equipment, net
 
 11,878.3 
 
 11,667.7 
 
 Intangible assets, net
 
 1,038.8 
 
 1,094.8 
 
 Long-term assets from risk management activities
 
 20.5 
 
 7.7 
 
 Investments in unconsolidated affiliates
 
 137.1 
 
 586.5 
 
 Other long-term assets
 
 95.5 
 
 81.7 
 
 Total assets
 
 $
 
 15,334.3 
 
 $
 
 15,208.2 
 
 LIABILITIES, SERIES A PREFERRED STOCK AND OWNERS' EQUITY
 
 Current liabilities:
 
 Accounts payable
 
 $
 
 1,901.0 
 
 $
 
 1,402.3 
 
 Accrued liabilities
 
 255.2 
 
 272.2 
 
 Distributions payable
 
 25.3 
 
 64.5 
 
 Interest payable
 
 131.8 
 
 138.5 
 
 Liabilities from risk management activities
 
 425.5 
 
 258.2 
 
 Current debt obligations
 
 414.6 
 
 162.8 
 
 Total current liabilities
 
 3,153.4 
 
 2,298.5 
 
 Long-term debt
 
 7,046.2 
 
 6,434.4 
 
 Long-term liabilities from risk management activities
 
 232.3 
 
 109.3 
 
 Deferred income taxes, net
 
 213.4 
 
 136.0 
 
 Other long-term liabilities
 
 288.1 
 
 301.6 
 
 Contingencies (see Note 14)
 
 Series A Preferred 9.5 % Stock, $ 1,000 per share liquidation preference ( 1,200,000 shares authorized, zero and 919,300 shares issued and outstanding as of June 30, 2022 and December 31, 2021), net of discount (see Note 9)
 
 — 
 
 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 
 
 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, zero shares issued and outstanding)
 
 — 
 
 — 
 
 Additional paid-in capital
 
 3,834.4 
 
 4,268.9 
 
 Retained earnings (deficit)
 
 ( 1,137.9 
 
 )
 
 ( 1,822.3 
 
 )
 
 Accumulated other comprehensive income (loss)
 
 ( 276.4 
 
 )
 
 ( 230.9 
 
 )
 
 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 
 
 Noncontrolling interests
 
 2,331.0 
 
 3,166.9 
 
 Total owners' equity
 
 4,400.9 
 
 5,178.7 
 
 Total liabilities, Series A Preferred Stock and owners' equity
 
 $
 
 15,334.3 
 
 $
 
 15,208.2 
 
 See notes to consolidated financial statements.

 4

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF OPERATIONS

 Three Months Ended June 30,
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 2022
 
 2021
 
 (Unaudited)
 
 (In millions, except per share amounts)
 
 Revenues:
 
 Sales of commodities
 
 $
 
 5,624.2 
 
 $
 
 3,091.6 
 
 $
 
 10,190.3 
 
 $
 
 6,459.3 
 
 Fees from midstream services
 
 431.6 
 
 324.3 
 
 824.6 
 
 589.4 
 
 Total revenues
 
 6,055.8 
 
 3,415.9 
 
 11,014.9 
 
 7,048.7 
 
 Costs and expenses:
 
 Product purchases and fuel
 
 5,047.3 
 
 2,709.0 
 
 9,251.5 
 
 5,545.3 
 
 Operating expenses
 
 215.8 
 
 184.8 
 
 399.3 
 
 355.8 
 
 Depreciation and amortization expense
 
 269.9 
 
 211.9 
 
 479.0 
 
 428.0 
 
 General and administrative expense
 
 71.0 
 
 63.7 
 
 138.0 
 
 125.1 
 
 Other operating (income) expense
 
 ( 0.1 
 
 )
 
 0.7 
 
 ( 0.6 
 
 )
 
 4.6 
 
 Income (loss) from operations
 
 451.9 
 
 245.8 
 
 747.7 
 
 589.9 
 
 Other income (expense):
 
 Interest expense, net
 
 ( 81.2 
 
 )
 
 ( 94.8 
 
 )
 
 ( 174.7 
 
 )
 
 ( 193.2 
 
 )
 
 Equity earnings (loss)
 
 1.4 
 
 12.8 
 
 7.0 
 
 24.6 
 
 Gain (loss) from financing activities
 
 ( 33.8 
 
 )
 
 ( 1.9 
 
 )
 
 ( 49.6 
 
 )
 
 ( 16.6 
 
 )
 
 Gain (loss) from sale of equity method investment
 
 435.9 
 
 —
 
 435.9 
 
 —
 
 Other, net
 
 0.5 
 
 0.1 
 
 —
 
 0.2 
 
 Income (loss) before income taxes
 
 774.7 
 
 162.0 
 
 966.3 
 
 404.9 
 
 Income tax (expense) benefit
 
 ( 87.1 
 
 )
 
 ( 6.6 
 
 )
 
 ( 110.1 
 
 )
 
 ( 21.6 
 
 )
 
 Net income (loss)
 
 687.6 
 
 155.4 
 
 856.2 
 
 383.3 
 
 Less: Net income (loss) attributable to noncontrolling interests
 
 91.2 
 
 99.2 
 
 171.8 
 
 180.7 
 
 Net income (loss) attributable to Targa Resources Corp.
 
 596.4 
 
 56.2 
 
 684.4 
 
 202.6 
 
 Premium on repurchase of noncontrolling interests, net of tax
 
 —
 
 —
 
 53.1 
 
 —
 
 Dividends on Series A Preferred Stock
 
 8.2 
 
 21.8 
 
 30.0 
 
 43.7 
 
 Deemed dividends on Series A Preferred Stock
 
 215.5 
 
 —
 
 215.5 
 
 —
 
 Net income (loss) attributable to common shareholders
 
 $
 
 372.7 
 
 $
 
 34.4 
 
 $
 
 385.8 
 
 $
 
 158.9 
 
 Net income (loss) per common share - basic
 
 $
 
 1.64 
 
 $
 
 0.15 
 
 $
 
 1.69 
 
 $
 
 0.70 
 
 Net income (loss) per common share - diluted
 
 $
 
 1.61 
 
 $
 
 0.15 
 
 $
 
 1.66 
 
 $
 
 0.69 
 
 Weighted average shares outstanding - basic
 
 227.8 
 
 228.6 
 
 228.1 
 
 228.5 
 
 Weighted average shares outstanding - diluted
 
 231.7 
 
 231.3 
 
 232.0 
 
 230.9 
 
 See notes to consolidated financial statements.

 5

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 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,
 
 2022
 
 2021
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 Pre-Tax
 
 Related Income Tax
 
 After Tax
 
 (Unaudited)
 
 (In millions)
 
 Net income (loss)
 
 $
 
 856.2 
 
 $
 
 383.3 
 
 Other comprehensive income (loss):
 
 Commodity hedging contracts:
 
 Change in fair value
 
 $
 
 ( 362.1 
 
 )
 
 $
 
 80.9 
 
 ( 281.2 
 
 )
 
 $
 
 ( 404.2 
 
 )
 
 $
 
 95.9 
 
 ( 308.3 
 
 )
 
 Settlements reclassified to revenues
 
 303.5 
 
 ( 67.8 
 
 )
 
 235.7 
 
 203.4 
 
 ( 47.7 
 
 )
 
 155.7 
 
 Other comprehensive income (loss)
 
 ( 58.6 
 
 )
 
 13.1 
 
 ( 45.5 
 
 )
 
 ( 200.8 
 
 )
 
 48.2 
 
 ( 152.6 
 
 )
 
 Comprehensive income (loss)
 
 810.7 
 
 230.7 
 
 Less: Comprehensive income (loss) attributable to noncontrolling interests
 
 171.8 
 
 180.7 
 
 Comprehensive income (loss) attributable to Targa Resources Corp.
 
 $
 
 638.9 
 
 $
 
 50.0 
 
 See notes to consolidated financial statements.

 6

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN 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 
 
 $
 
 —
 
 See notes to consolidated financial statements.

 7

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN 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, 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 
 
 Compensation on equity grants
 
 —
 
 —
 
 15.0 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 15.0 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 1.0 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 1.0 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 23.75 per share
 
 —
 
 —
 
 —
 
 ( 21.8 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 21.8 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 21.8 
 
 )
 
 21.8 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Common stock dividends
 
 Dividends - $ 0.10 per share
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 22.9 
 
 )
 
 22.9 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 116.7 
 
 )
 
 ( 116.7 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 2.1 
 
 2.1 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 ( 136.0 
 
 )
 
 —
 
 —
 
 —
 
 ( 136.0 
 
 )
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 56.2 
 
 —
 
 —
 
 —
 
 99.2 
 
 155.4 
 
 —
 
 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 
 
 See notes to consolidated financial statements.

 8

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN 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, 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
 
 —
 
 —
 
 27.3 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 27.3 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 3.4 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 3.4 
 
 )
 
 —
 
 Shares issued under compensation program
 
 1,099 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares tendered for tax withholding obligations
 
 ( 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
 
 —
 
 —
 
 —
 
 ( 30.0 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 30.0 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 30.0 
 
 )
 
 30.0 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 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 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 9.0 
 
 9.0 
 
 —
 
 Repurchase of noncontrolling interests, net of tax
 
 —
 
 —
 
 ( 53.1 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 857.9 
 
 )
 
 ( 911.0 
 
 )
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 ( 45.5 
 
 )
 
 —
 
 —
 
 —
 
 ( 45.5 
 
 )
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 684.4 
 
 —
 
 —
 
 —
 
 171.8 
 
 856.2 
 
 —
 
 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 
 
 $
 
 —
 
 See notes to consolidated financial statements.

 9

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CHANGES IN 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, 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 
 
 Compensation on equity grants
 
 —
 
 —
 
 29.9 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 29.9 
 
 —
 
 Distribution equivalent rights
 
 —
 
 —
 
 ( 1.3 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 1.3 
 
 )
 
 —
 
 Shares issued under compensation program
 
 878 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Shares tendered for tax withholding obligations
 
 ( 285 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 285 
 
 ( 8.6 
 
 )
 
 —
 
 ( 8.6 
 
 )
 
 —
 
 Series A Preferred Stock dividends
 
 Dividends - $ 47.50 per share
 
 —
 
 —
 
 —
 
 ( 43.7 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 43.7 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 43.7 
 
 )
 
 43.7 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Common stock dividends
 
 Dividends - $ 0.20 per share
 
 —
 
 —
 
 —
 
 ( 45.7 
 
 )
 
 —
 
 —
 
 —
 
 —
 
 ( 45.7 
 
 )
 
 —
 
 Dividends in excess of retained earnings
 
 —
 
 —
 
 ( 45.7 
 
 )
 
 45.7 
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 Distributions to noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 ( 223.8 
 
 )
 
 ( 223.8 
 
 )
 
 —
 
 Contributions from noncontrolling interests
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 —
 
 4.1 
 
 4.1 
 
 —
 
 Other comprehensive income (loss)
 
 —
 
 —
 
 —
 
 —
 
 ( 152.6 
 
 )
 
 —
 
 —
 
 —
 
 ( 152.6 
 
 )
 
 —
 
 Net income (loss)
 
 —
 
 —
 
 —
 
 202.6 
 
 —
 
 —
 
 —
 
 180.7 
 
 383.3 
 
 —
 
 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 
 
 See notes to consolidated financial statements.

 10

 TARGA RESOURCES CORP.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

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

 11

 TARGA RESOURCES CORP.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)

 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.

 Note 1 — Organization and Operations

 Our Organization

 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 infrastructure companies in North America. We own, operate, acquire, and develop a diversified portfolio of complementary domestic midstream infrastructure assets.

 In this Quarterly Report, unless the context requires otherwise, references to “we,” “us,” “our,” “the Company,” “Targa” or “TRGP” are intended to mean our consolidated business and operations. TRGP controls the general partner of and owns all of the outstanding common units representing limited partner interests in Targa Resources Partners LP, referred to herein as the “Partnership”. Targa consolidates the Partnership and its subsidiaries under accounting principles generally accepted in the United States of America (“GAAP”). Targa’s consolidated financial statements include differences from the consolidated financial statements of the Partnership. The most noteworthy differences are: 

 • 
 
 the inclusion of the TRGP revolving credit facility; 
 
 • 
 
 the inclusion of the TRGP senior unsecured notes; 
 
 • 
 
 the inclusion of Series A Preferred Stock (“Series A Preferred”); and 
 
 • 
 
 the impacts of TRGP’s treatment as a corporation for U.S. federal income tax purposes. 
 
 Our Operations

 The Company is primarily engaged in the business of:

 • 
 
 gathering, compressing, treating, processing, transporting, and purchasing and selling natural gas; 
 
 • 
 
 transporting, storing, fractionating, treating, and purchasing and selling NGLs and NGL products, including services to LPG exporters; and 
 
 • 
 
 gathering, storing, terminaling, and purchasing and selling crude oil. 
 
 See Note 18 – Segment Information for certain financial information regarding our business segments.
 
 Note 2 — Basis of Presentation

 The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by GAAP. Therefore, this information should be read in conjunction with our consolidated financial statements and notes contained in our Annual Report. The information furnished herein reflects all adjustments that are, in the opinion of management, of a normal recurring nature and considered necessary for a fair statement of the results of the interim periods reported. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior periods have been reclassified to conform to the current year presentation. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
 
 12

 Note 3 — Significant Accounting Policies

 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.

 Recently Adopted Accounting Pronouncements

 Revenue Contract Assets and Liabilities Acquired in a Business Combination

 In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . Amendments in this update require application of ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. These amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption permitted. However, an entity that elects to early adopt must apply the amendments to all business combinations that occurred during the fiscal year that includes the interim period. We early adopted the amendments on April 1, 2022 and will apply them to business combinations in 2022 and thereafter. The adoption did not have an effect on our consolidated financial statements during the six months ended June 30, 2022.
 
 Note 4 – Joint Ventures, Acquisitions and Divestitures

 DevCo Joint Ventures

 In February 2018, we formed three development joint ventures (“DevCo JVs”) with investment vehicles affiliated with Stonepeak Infrastructure Partners (“Stonepeak”) to fund portions of Grand Prix NGL Pipeline (“Grand Prix”), Gulf Coast Express Pipeline (“GCX”) and an approximately 110 MBbl/d fractionator in Mont Belvieu, Texas (“Train 6”). For a four-year period beginning on the date that all three projects commenced commercial operations, we had the option to acquire all or part of Stonepeak’s interests in the DevCo JVs (the “DevCo JV Call Right”). The purchase price payable for such partial or full interests was based on a predetermined fixed return or multiple on invested capital, including distributions received by Stonepeak from the DevCo JVs. 

 In January 2022, we exercised the DevCo JV Call Right and closed on the purchase of all of Stonepeak’s interests in the DevCo JVs for $ 926.3 million (the “DevCo JV Repurchase”). Following the DevCo JV Repurchase, we own a 75 % interest in Grand Prix Pipeline LLC, a 100 % interest in Train 6 and owned a 25 % equity interest in GCX, prior to the GCX Sale (as defined below) in February 2022. The change in our ownership interests was accounted for as an equity transaction representing the acquisition of noncontrolling interests. The amount of 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. 

 Acquisitions

 Southcross Acquisition

 In April 2022, we closed on the acquisition of Southcross Energy Operating LLC and its subsidiaries (“Southcross”) for a purchase price of $ 201.9 million (the “Southcross Acquisition”), subject to customary closing adjustments. We expect to make a final closing adjustment payment of approximately $ 4 million in the third quarter of 2022. We acquired a portfolio of complementary midstream infrastructure assets and associated contracts that have been integrated into our SouthTX Gathering and Processing operations, including the remaining interests in the two operated joint ventures in South Texas that we previously held as investments in unconsolidated affiliates and have been prospectively consolidated beginning in the second quarter of 2022. We accounted for the purchase as an asset acquisition and have capitalized $ 1.8 million of acquisition-related costs and assumed liabilities of $ 1.8 million as components of the cost of assets acquired. We allocated $ 28.1 million to our purchase of Southcross’ interest in the two operated joint ventures for purposes of consolidation. We allocated $ 169.7 million, $ 6.6 million and $ 5.3 million of the residual cost to property, plant and equipment, current assets and liabilities, net and other non-current assets, respectively.

 13

 Subsequent Event

 Lucid Acquisition

 On July 29, 2022, we closed on the acquisition of all interests in 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. At the time of this filing, it is impracticable to disclose all the information required by ASC 805, Business Combinations, as we are in the process of evaluating the purchase accounting and pro forma implications of the transaction. 

 Divestitures

 In May 2022, we completed the sale 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 during the three and six months ended June 30, 2022.

 See Note 6 – Investments in Unconsolidated Affiliates for further discussion on Southcross Acquisition and GCX Sale. 
 
 Note 5 — Property, Plant and Equipment and Intangible Assets
 
 June 30, 2022
 
 December 31, 2021
 
 Estimated Useful Lives (In Years)
 
 Gathering systems
 
 $
 
 9,542.9 
 
 $
 
 9,318.2 
 
 5 to 20 
 
 Processing and fractionation facilities
 
 6,508.0 
 
 6,388.8 
 
 5 to 25 
 
 Terminaling and storage facilities
 
 1,335.1 
 
 1,313.8 
 
 5 to 25 
 
 Transportation assets
 
 2,737.8 
 
 2,671.0 
 
 10 to 50 
 
 Other property, plant and equipment
 
 336.5 
 
 340.9 
 
 3 to 50 
 
 Land
 
 169.1 
 
 160.8 
 
 —
 
 Construction in progress
 
 525.2 
 
 347.0 
 
 —
 
 Finance lease right-of-use assets
 
 65.7 
 
 55.6 
 
 5 to 7 
 
 Property, plant and equipment
 
 21,220.3 
 
 20,596.1 
 
 Accumulated depreciation, amortization and impairment
 
 ( 9,342.0 
 
 )
 
 ( 8,928.4 
 
 )
 
 Property, plant and equipment, net
 
 $
 
 11,878.3 
 
 $
 
 11,667.7 
 
 Intangible assets
 
 2,497.6 
 
 2,642.9 
 
 10 to 20 
 
 Accumulated amortization and impairment
 
 ( 1,458.8 
 
 )
 
 ( 1,548.1 
 
 )
 
 Intangible assets, net
 
 $
 
 1,038.8 
 
 $
 
 1,094.8 
 
 During the three and six months ended June 30, 2022, depreciation expense was $ 241.9 million and $ 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.

 Impairments of Long-Lived Assets

 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. No impairments of long-lived assets were recorded for the first half of 2022 and 2021.

 Intangible Assets

 Intangible assets consist of customer contracts and customer relationships 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 million, $ 106.8 million, $ 103.0 million, $ 99.9 million and $ 97.6 million for each of the years 2022 through 2026, respectively.
 
 14

 The changes in our intangible assets are as follows:

 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

 As of June 30, 2022, our investments in unconsolidated affiliates consist of the following: 

 Gathering and Processing Segment

 • 
 
 a 50 % operated ownership interest in Little Missouri 4 LLC (“Little Missouri 4”).
 
 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 two 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. 
 
 15

 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 
 
 — 
 
 Senior unsecured notes issued by TRGP:
 
 4.200 % fixed rate, due February 2033 
 
 750.0 
 
 — 
 
 Unamortized discount
 
 ( 1.4 
 
 )
 
 — 
 
 4.950 % fixed rate, due April 2052 
 
 750.0 
 
 — 
 
 Unamortized discount
 
 ( 5.0 
 
 )
 
 — 
 
 Senior unsecured notes issued by the Partnership: (3)
 
 5.875 % fixed rate, due April 2026 (4)
 
 — 
 
 963.2 
 
 5.375 % fixed rate, due February 2027 (5)
 
 — 
 
 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 
 
 $
 
 — 
 
 Letters of credit outstanding under the Partnership senior

 secured revolving credit facility
 
 — 
 
 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 zero 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:

 Range of Interest Rates Incurred
 
 Weighted Average Interest Rate Incurred
 
 TRGP Revolver
 
 1.5% - 3.1% 
 
 2.1 %
 
 Securitization Facility
 
 1.1% - 1.7% 
 
 1.4 %
 
 16

 Compliance with Debt Covenants

 As of June 30, 2022, 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 billion of the Partnership Issuers’ senior unsecured notes was outstanding. 

 Debt Obligations

 TRGP Revolver

 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 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 accordance with the TRGP Revolver, the collateral 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. 

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

 A portion of the net proceeds from the issuance was used to fund the concurrent cash tender offer (the “March Tender Offer”) and the subsequent redemption payment of the Partnership’s 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 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 . 
 
 17

 Shelf Registration

 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.

 Contractual Obligations

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

 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 
 
 (1) 
 
 Represents scheduled future maturities of consolidated debt obligations for the periods indicated. 
 
 (2) 
 
 Represents interest expense on debt obligations based on both fixed debt interest rates and prevailing June 30, 2022 rates for floating debt. 
 
 Subsequent Events

 Senior Unsecured Notes Issuances

 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 . 

 Term Loan Facility

 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.

 18

 Commercial Paper Program

 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.

 Note 8 — Other Long-term Liabilities

 Other long-term liabilities are comprised of deferred revenue, asset retirement obligations and operating lease liabilities.

 Deferred Revenue

 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 and December 31, 2021, was $ 169.4 million and $ 171.8 million, respectively, which includes $ 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. 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 Note 14 – Contingencies.
 
 Note 9 — Preferred Stock

 Preferred Stock Dividends

 During the three and six months ended June 30, 2022, we paid $ 30.0 million and $ 51.8 million of dividends to preferred shareholders.

 Series A Preferred Redemption

 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.
 
 Note 10 — Common Stock and Related Matters

 Shelf Registration 

 In March 2022, we filed the March 2022 Shelf. The March 2022 Shelf will expire in March 2025. See Note 7 – Debt Obligations. 

 Common Stock Dividends

 In January 2022, we declared an increase to our common dividend to $ 0.35 per common share or $ 1.40 per common share annualized effective for the fourth quarter of 2021.

 19

 The following table details the dividends declared and/or paid by us to common shareholders for the six months ended June 30, 2022:

 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 
 
 (1) 
 
 Represents accrued dividends on restricted stock and restricted stock units that are payable upon vesting. 
 
 Note 11 — Earnings per Common Share

 The following table sets forth a reconciliation of net income and weighted average shares outstanding used in computing basic and diluted net income per common share:

 Three Months Ended June 30,
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 2022
 
 2021
 
 (In millions, except per share amounts)
 
 Net income (loss) attributable to Targa Resources Corp.
 
 $
 
 596.4 
 
 $
 
 56.2 
 
 $
 
 684.4 
 
 $
 
 202.6 
 
 Less: Premium on repurchase of noncontrolling interests, net of tax
 
 —
 
 —
 
 53.1 
 
 —
 
 Less: Dividends on Series A Preferred (1)
 
 8.2 
 
 21.8 
 
 30.0 
 
 43.7 
 
 Less: Deemed dividends on Series A Preferred (1)
 
 215.5 
 
 —
 
 215.5 
 
 —
 
 Net income (loss) attributable to common shareholders for basic earnings per share
 
 $
 
 372.7 
 
 $
 
 34.4 
 
 $
 
 385.8 
 
 $
 
 158.9 
 
 Weighted average shares outstanding - basic
 
 227.8 
 
 228.6 
 
 228.1 
 
 228.5 
 
 Dilutive effect of unvested stock awards
 
 3.9 
 
 2.7 
 
 3.9 
 
 2.4 
 
 Weighted average shares outstanding - diluted
 
 231.7 
 
 231.3 
 
 232.0 
 
 230.9 
 
 Net income (loss) available per common share - basic
 
 $
 
 1.64 
 
 $
 
 0.15 
 
 $
 
 1.69 
 
 $
 
 0.70 
 
 Net income (loss) available per common share - diluted
 
 $
 
 1.61 
 
 $
 
 0.15 
 
 $
 
 1.66 
 
 $
 
 0.69 
 
 The following potential common stock equivalents are excluded from the determination of diluted earnings per share because the inclusion of such shares would have been anti-dilutive (in millions on a weighted-average basis):

 Three Months Ended June 30,
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 2022
 
 2021
 
 Unvested restricted stock awards
 
 0.2 
 
 0.3 
 
 0.2 
 
 0.3 
 
 Series A Preferred (1)
 
 16.1 
 
 44.3 
 
 30.1 
 
 44.3 
 
 (1) 
 
 The Series A Preferred had no mandatory redemption date, but was redeemable at our election for a 5 % premium to the liquidation preference subsequent to March 16, 2022 . In May 2022, we redeemed all of our issued and outstanding 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 . See Note 9 – Preferred Stock for further discussion. 
 
 Note 12 — Derivative Instruments and Hedging Activities

 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.
 
 20

 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. 
 
 At June 30, 2022, the notional volumes of our commodity derivative contracts were:

 Commodity 
 
 Instrument 
 
 Unit 
 
 2022 
 
 2023 
 
 2024 
 
 2025 
 
 2026 
 
 2027 
 
 Natural Gas
 
 Swaps
 
 MMBtu/d
 
 221,773 
 
 169,283 
 
 91,849 
 
 14,341 
 
 — 
 
 — 
 
 Natural Gas
 
 Basis Swaps
 
 MMBtu/d
 
 427,554 
 
 315,000 
 
 280,000 
 
 244,267 
 
 55,000 
 
 10,000 
 
 NGL
 
 Swaps
 
 Bbl/d
 
 49,534 
 
 39,781 
 
 16,947 
 
 960 
 
 — 
 
 — 
 
 NGL
 
 Futures
 
 Bbl/d
 
 9,304 
 
 167 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Condensate
 
 Swaps
 
 Bbl/d
 
 6,497 
 
 6,007 
 
 2,548 
 
 161 
 
 — 
 
 — 
 
 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 following schedules reflect the fair value of our derivative instruments and their location on our Consolidated Balance Sheets as well as pro forma reporting assuming that we reported derivatives subject to master netting agreements on a net basis:

 Fair Value as of June 30, 2022
 
 Fair Value as of December 31, 2021
 
 Balance Sheet
 
 Derivative
 
 Derivative
 
 Derivative
 
 Derivative
 
 Location
 
 Assets
 
 Liabilities
 
 Assets
 
 Liabilities
 
 Derivatives designated as hedging instruments
 
 Commodity contracts
 
 Current
 
 $
 
 72.9 
 
 $
 
 ( 335.9 
 
 )
 
 $
 
 25.5 
 
 $
 
 ( 252.6 
 
 )
 
 Long-term
 
 18.6 
 
 ( 117.9 
 
 )
 
 6.2 
 
 ( 84.3 
 
 )
 
 Total derivatives designated as hedging instruments
 
 $
 
 91.5 
 
 $
 
 ( 453.8 
 
 )
 
 $
 
 31.7 
 
 $
 
 ( 336.9 
 
 )
 
 Derivatives not designated as hedging instruments
 
 Commodity contracts
 
 Current
 
 $
 
 7.9 
 
 $
 
 ( 89.6 
 
 )
 
 $
 
 17.6 
 
 $
 
 ( 5.6 
 
 )
 
 Long-term
 
 1.9 
 
 ( 114.4 
 
 )
 
 1.5 
 
 ( 25.0 
 
 )
 
 Total derivatives not designated as hedging instruments
 
 $
 
 9.8 
 
 $
 
 ( 204.0 
 
 )
 
 $
 
 19.1 
 
 $
 
 ( 30.6 
 
 )
 
 Total current position
 
 $
 
 80.8 
 
 $
 
 ( 425.5 
 
 )
 
 $
 
 43.1 
 
 $
 
 ( 258.2 
 
 )
 
 Total long-term position
 
 20.5 
 
 ( 232.3 
 
 )
 
 7.7 
 
 ( 109.3 
 
 )
 
 Total derivatives
 
 $
 
 101.3 
 
 $
 
 ( 657.8 
 
 )
 
 $
 
 50.8 
 
 $
 
 ( 367.5 
 
 )
 
 21

 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
 
 Current Position
 
 Counterparties with offsetting positions or collateral
 
 $
 
 78.9 
 
 $
 
 ( 425.5 
 
 )
 
 $
 
 ( 4.7 
 
 )
 
 $
 
 3.1 
 
 $
 
 ( 354.4 
 
 )
 
 Counterparties without offsetting positions - assets
 
 1.9 
 
 —
 
 —
 
 1.9 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 —
 
 —
 
 —
 
 —
 
 80.8 
 
 ( 425.5 
 
 )
 
 ( 4.7 
 
 )
 
 5.0 
 
 ( 354.4 
 
 )
 
 Long-Term Position
 
 Counterparties with offsetting positions or collateral
 
 17.5 
 
 ( 197.6 
 
 )
 
 13.8 
 
 0.1 
 
 ( 166.4 
 
 )
 
 Counterparties without offsetting positions - assets
 
 3.0 
 
 —
 
 —
 
 3.0 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 ( 34.7 
 
 )
 
 —
 
 —
 
 ( 34.7 
 
 )
 
 20.5 
 
 ( 232.3 
 
 )
 
 13.8 
 
 3.1 
 
 ( 201.1 
 
 )
 
 Total Derivatives
 
 Counterparties with offsetting positions or collateral
 
 96.4 
 
 ( 623.1 
 
 )
 
 9.1 
 
 3.2 
 
 ( 520.8 
 
 )
 
 Counterparties without offsetting positions - assets
 
 4.9 
 
 —
 
 —
 
 4.9 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 ( 34.7 
 
 )
 
 —
 
 —
 
 ( 34.7 
 
 )
 
 $
 
 101.3 
 
 $
 
 ( 657.8 
 
 )
 
 $
 
 9.1 
 
 $
 
 8.1 
 
 $
 
 ( 555.5 
 
 )
 
 Gross Presentation
 
 Pro Forma Net Presentation
 
 December 31, 2021
 
 Asset
 
 Liability
 
 Collateral
 
 Asset
 
 Liability
 
 Current Position
 
 Counterparties with offsetting positions or collateral
 
 $
 
 39.2 
 
 $
 
 ( 241.9 
 
 )
 
 $
 
 5.0 
 
 $
 
 0.3 
 
 $
 
 ( 198.0 
 
 )
 
 Counterparties without offsetting positions - assets
 
 3.9 
 
 —
 
 —
 
 3.9 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 ( 16.3 
 
 )
 
 —
 
 —
 
 ( 16.3 
 
 )
 
 43.1 
 
 ( 258.2 
 
 )
 
 5.0 
 
 4.2 
 
 ( 214.3 
 
 )
 
 Long-Term Position
 
 Counterparties with offsetting positions or collateral
 
 7.4 
 
 ( 95.1 
 
 )
 
 3.1 
 
 —
 
 ( 84.6 
 
 )
 
 Counterparties without offsetting positions - assets
 
 0.3 
 
 —
 
 —
 
 0.3 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 ( 14.2 
 
 )
 
 —
 
 —
 
 ( 14.2 
 
 )
 
 7.7 
 
 ( 109.3 
 
 )
 
 3.1 
 
 0.3 
 
 ( 98.8 
 
 )
 
 Total Derivatives
 
 Counterparties with offsetting positions or collateral
 
 46.6 
 
 ( 337.0 
 
 )
 
 8.1 
 
 0.3 
 
 ( 282.6 
 
 )
 
 Counterparties without offsetting positions - assets
 
 4.2 
 
 —
 
 —
 
 4.2 
 
 —
 
 Counterparties without offsetting positions - liabilities
 
 —
 
 ( 30.5 
 
 )
 
 —
 
 —
 
 ( 30.5 
 
 )
 
 $
 
 50.8 
 
 $
 
 ( 367.5 
 
 )
 
 $
 
 8.1 
 
 $
 
 4.5 
 
 $
 
 ( 313.1 
 
 )
 
 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, we have outstanding net derivative positions that contain credit-risk related contingent features that are in a net liability position of ($ 555.5 ) 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 and S&P, as defined in our ISDAs, we estimate that as of June 30, 2022, we would 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 of ($ 556.5 ) million as of June 30, 2022. 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.

 22

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

 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)
 
 2022
 
 2021
 
 2022
 
 2021
 
 Revenues
 
 $
 
 ( 157.7 
 
 )
 
 $
 
 ( 53.6 
 
 )
 
 $
 
 ( 303.5 
 
 )
 
 $
 
 ( 203.4 
 
 )
 
 Based on valuations as of June 30, 2022, we expect to reclassify commodity hedge-related deferred losses of ($ 362.6 ) million included in accumulated other comprehensive income (loss) into earnings before income taxes through the end of 2025, with ($ 263.3 ) million of losses 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 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, the unrealized mark-to-market losses are primarily attributable to unfavorable movements in natural gas forward prices, as compared to our positions. 
 
 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
 
 2022
 
 2021
 
 2022
 
 2021
 
 Commodity contracts
 
 Revenue
 
 $
 
 ( 19.0 
 
 )
 
 $
 
 ( 56.6 
 
 )
 
 $
 
 ( 196.1 
 
 )
 
 $
 
 ( 41.6 
 
 )
 
 See Note 13 – Fair Value Measurements and Note 18 – Segment Information for additional disclosures related to derivative instruments and hedging activities.
 
 Note 13 — Fair Value Measurements

 Under GAAP, our Consolidated Balance Sheets reflect a mixture of measurement methods for financial assets and liabilities (“financial 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, a net liability position of ($ 556.5 ) 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 of ($ 791.3 ) 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 of ($ 321.7 ) 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:
 
 23

 • 
 
 t he TR GP Revolver and S ecuritization F acility 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. 
 
 The following table shows a breakdown by fair value hierarchy category for (1) financial instruments measurements included on our Consolidated Balance Sheets at fair value and (2) supplemental fair value disclosures for other financial instruments:
 
 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 
 
 $
 
 — 
 
 $
 
 99.6 
 
 $
 
 — 
 
 Liabilities from commodity derivative contracts (1)
 
 656.1 
 
 656.1 
 
 — 
 
 656.1 
 
 — 
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Carrying Value:
 
 Cash and cash equivalents
 
 154.0 
 
 154.0 
 
 — 
 
 — 
 
 — 
 
 TRGP Revolver
 
 550.0 
 
 550.0 
 
 — 
 
 550.0 
 
 — 
 
 TRGP Senior unsecured notes
 
 1,493.6 
 
 1,321.1 
 
 — 
 
 1,321.1 
 
 — 
 
 Partnership's Senior unsecured notes
 
 5,034.4 
 
 4,761.5 
 
 — 
 
 4,761.5 
 
 — 
 
 Securitization Facility
 
 400.0 
 
 400.0 
 
 — 
 
 400.0 
 
 — 
 
 December 31, 2021
 
 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)
 
 $
 
 46.6 
 
 $
 
 46.6 
 
 $
 
 — 
 
 $
 
 46.6 
 
 $
 
 — 
 
 Liabilities from commodity derivative contracts (1)
 
 363.3 
 
 363.3 
 
 — 
 
 363.3 
 
 — 
 
 Financial Instruments Recorded on Our

 Consolidated Balance Sheets at Carrying Value:
 
 Cash and cash equivalents
 
 158.5 
 
 158.5 
 
 — 
 
 — 
 
 — 
 
 Partnership's Senior unsecured notes
 
 6,465.7 
 
 6,924.5 
 
 — 
 
 6,924.5 
 
 — 
 
 Securitization Facility
 
 150.0 
 
 150.0 
 
 — 
 
 150.0 
 
 — 
 
 (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 12 – 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 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 is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations whose contract length extends into unobservable periods.

 The fair value of these swaps is 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 is the forward commodity basis curve, which is based on observable or public data sources and extrapolated when observable prices are not available.
 
 24

 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 and December 31, 2021, we had no derivative contracts categorized as Level 3.
 
 Note 14 — Contingencies

 Legal Proceedings

 We and the Partnership are parties to various legal, administrative and regulatory proceedings that have arisen in the ordinary course of our business. We and the Partnership are also parties to various proceedings with governmental environmental agencies, including but not limited to the U.S. Environmental Protection Agency, Texas Commission on Environmental Quality, Oklahoma Department of Environmental Quality, New Mexico Environment Department, Louisiana Department of Environmental Quality and North Dakota Department of Environmental Quality, which assert monetary sanctions for alleged violations of environmental regulations, including air emissions, discharges into the environment and reporting deficiencies, related to events that have arisen at certain of our facilities in the ordinary course of our business. 

 On December 26, 2018, Vitol filed a lawsuit in the 80 th 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 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 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.

 Note 15 — Revenue

 Fixed consideration allocated to remaining performance obligations

 The following table presents the estimated minimum revenue related to unsatisfied performance obligations at the end of the reporting period, and is comprised of fixed consideration primarily attributable to contracts with minimum volume commitments, for which a guaranteed amount of revenue can be calculated. These contracts are comprised primarily of gathering and processing, fractionation, export, terminaling and storage agreements, with remaining contract terms ranging from 1 to 17 years .

 2022
 
 2023
 
 2024 and after
 
 Fixed consideration to be recognized as of June 30, 2022
 
 $
 
 227.7 
 
 $
 
 413.3 
 
 $
 
 2,357.4 
 
 Based on the optional exemptions that we elected to apply, the amounts presented in the table above exclude remaining performance obligations for (i) variable consideration for which the allocation exception is met and (ii) contracts with an original expected duration of one year or less. 

 For disclosures related to disaggregated revenue, see Note 18 – Segment Information. 
 
 25

 Note 16 — Income Taxes

 The Company records income taxes using an estimated annual effective tax rate and recognizes specific events discretely as they occur. We regularly evaluate the realizable tax benefits of deferred tax assets and record a valuation allowance, if required, based on an estimate of the amount of deferred tax assets that we believe does not meet the more-likely-than-not criteria of being realized. 

 As of June 30, 2022, our valuation allowance was $ 130.8 million, a decrease of $ 79.8 million from December 31, 2021. After the change in valuation allowance, we have a net deferred tax liability of $ 213.4 million. 

 As we begin achieving sustained profitability, increased consideration will be given to projections of future taxable income to determine whether such projections provide an adequate source of taxable income for the realization of our deferred tax assets and may result in a change to our valuation allowance in the next twelve months. We will continue to evaluate the valuation allowance based on current and expected earnings and other factors and adjust accordingly.

 In January 2022, the Internal Revenue Service (“IRS”) notified us that it will examine Targa’s net operating loss carryback previously claimed under the Coronavirus Aid, Relief and Economic Security Act. 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 purposes for the 2019 and 2020 tax years. We are responding to the information requests from the IRS on these audits. The Company is not aware of any potential audit findings that would give rise to adjustments to taxable income and does not anticipate material changes related to these audits.
 
 Note 17 — Supplemental Cash Flow Information
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 Cash:
 
 Interest paid, net of capitalized interest (1)
 
 $
 
 180.5 
 
 $
 
 182.6 
 
 Income taxes (received) paid, net
 
 1.1 
 
 1.0 
 
 Non-cash investing activities:
 
 Impact of capital expenditure accruals on property, plant and equipment, net
 
 $
 
 ( 13.3 
 
 )
 
 $
 
 ( 0.3 
 
 )
 
 Transfers from materials and supplies inventory to property, plant and equipment
 
 —
 
 0.4 
 
 Non-cash financing activities:
 
 Changes in accrued distributions to noncontrolling interests
 
 $
 
 ( 17.9 
 
 )
 
 $
 
 ( 27.7 
 
 )
 
 (1) 
 
 Interest capitalized on major projects was $ 5.5 million and $ 1.7 million for the six months ended June 30, 2022 and 2021. 
 
 Note 18 — Segment Information

 We operate in two 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 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.

 26

 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, 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. 
 
 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 
 
 (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. 
 
 27

 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)
 
 $
 
 8,253.4 
 
 $
 
 6,915.0 
 
 $
 
 0.8 
 
 $
 
 165.1 
 
 $
 
 15,334.3 
 
 Goodwill
 
 $
 
 45.2 
 
 $
 
 —
 
 $
 
 —
 
 $
 
 —
 
 $
 
 45.2 
 
 Capital expenditures
 
 $
 
 329.7 
 
 $
 
 67.8 
 
 $
 
 —
 
 $
 
 8.7 
 
 $
 
 406.2 
 
 (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. 
 
 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 
 
 (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. 
 
 28

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

 Three Months Ended June 30,
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 2022
 
 2021
 
 Sales of commodities:
 
 Revenue recognized from contracts with customers:
 
 Natural gas
 
 $
 
 1,531.7 
 
 $
 
 613.8 
 
 $
 
 2,496.0 
 
 $
 
 1,455.2 
 
 NGL
 
 4,096.4 
 
 2,499.1 
 
 7,903.0 
 
 5,093.6 
 
 Condensate and crude oil
 
 172.8 
 
 88.9 
 
 290.9 
 
 155.5 
 
 5,800.9 
 
 3,201.8 
 
 10,689.9 
 
 6,704.3 
 
 Non-customer revenue:
 
 Derivative activities - Hedge
 
 ( 157.7 
 
 )
 
 ( 53.6 
 
 )
 
 ( 303.5 
 
 )
 
 ( 203.4 
 
 )
 
 Derivative activities - Non-hedge (1)
 
 ( 19.0 
 
 )
 
 ( 56.6 
 
 )
 
 ( 196.1 
 
 )
 
 ( 41.6 
 
 )
 
 ( 176.7 
 
 )
 
 ( 110.2 
 
 )
 
 ( 499.6 
 
 )
 
 ( 245.0 
 
 )
 
 Total sales of commodities
 
 5,624.2 
 
 3,091.6 
 
 10,190.3 
 
 6,459.3 
 
 Fees from midstream services:
 
 Revenue recognized from contracts with customers:
 
 Gathering and processing
 
 247.1 
 
 168.0 
 
 453.4 
 
 284.3 
 
 NGL transportation, fractionation and services
 
 66.9 
 
 45.6 
 
 132.7 
 
 92.8 
 
 Storage, terminaling and export
 
 101.9 
 
 96.5 
 
 202.8 
 
 185.4 
 
 Other
 
 15.7 
 
 14.2 
 
 35.7 
 
 26.9 
 
 Total fees from midstream services
 
 431.6 
 
 324.3 
 
 824.6 
 
 589.4 
 
 Total revenues
 
 $
 
 6,055.8 
 
 $
 
 3,415.9 
 
 $
 
 11,014.9 
 
 $
 
 7,048.7 
 
 (1) 
 
 Represents derivative activities that are not designated as hedging instruments under ASC 815. 
 
 The following table shows a reconciliation of reportable segment Operating margin to Income (loss) before income taxes for the periods presented: 

 Three Months Ended June 30,
 
 Six Months Ended June 30,
 
 2022
 
 2021
 
 2022
 
 2021
 
 Reconciliation of reportable segment operating

 margin to income (loss) before income taxes:
 
 Gathering and Processing operating margin
 
 $
 
 474.7 
 
 $
 
 301.2 
 
 $
 
 872.3 
 
 $
 
 576.6 
 
 Logistics and Transportation operating margin
 
 322.3 
 
 291.4 
 
 674.5 
 
 640.1 
 
 Other operating margin
 
 ( 4.5 
 
 )
 
 ( 70.5 
 
 )
 
 ( 182.7 
 
 )
 
 ( 69.1 
 
 )
 
 Depreciation and amortization expense
 
 ( 269.9 
 
 )
 
 ( 211.9 
 
 )
 
 ( 479.0 
 
 )
 
 ( 428.0 
 
 )
 
 General and administrative expense
 
 ( 71.0 
 
 )
 
 ( 63.7 
 
 )
 
 ( 138.0 
 
 )
 
 ( 125.1 
 
 )
 
 Interest expense, net
 
 ( 81.2 
 
 )
 
 ( 94.8 
 
 )
 
 ( 174.7 
 
 )
 
 ( 193.2 
 
 )
 
 Equity earnings (loss)
 
 1.4 
 
 12.8 
 
 7.0 
 
 24.6 
 
 Gain (loss) on sale or disposition of assets
 
 0.6 
 
 0.4 
 
 1.6 
 
 0.2 
 
 Write-down of assets
 
 ( 0.5 
 
 )
 
 ( 1.1 
 
 )
 
 ( 1.0 
 
 )
 
 ( 4.7 
 
 )
 
 Gain (loss) from financing activities
 
 ( 33.8 
 
 )
 
 ( 1.9 
 
 )
 
 ( 49.6 
 
 )
 
 ( 16.6 
 
 )
 
 Gain (loss) from sale of equity method investment
 
 435.9 
 
 —
 
 435.9 
 
 —
 
 Other, net
 
 0.7 
 
 0.1 
 
 —
 
 0.1 
 
 Income (loss) before income taxes
 
 $
 
 774.7 
 
 $
 
 162.0 
 
 $
 
 966.3 
 
 $
 
 404.9 
 
 29
Targa Resources Corp. 10-Q

Item 1. Financial Statements
