TRGP · 10-Q · 2026Q2 · Full report
Commodity Derivative Volatility
Targa Resources Corp. · 2026-08-06 · Importance 57 · Surprise 64 · In source text
At June 30, 2026, commodity derivative instruments had $137.1 million of gross assets and $262.7 million of gross liabilities, producing an estimated net liability of $125.6 million. Non-hedge derivatives generated a six-month $311.6 million loss in revenue, compared with a $79.0 million loss in the prior-year period, primarily because of unfavorable natural gas forward basis-price movements. Six-month hedge-related gains reclassified from accumulated other comprehensive income into revenue were $21.6 million, and Targa expects to reclassify $43.3 million of net deferred hedge gains into pre-tax earnings over the next twelve months. A 10% increase in forward natural gas, NGL and crude oil prices would change the derivative position to a $306.2 million net liability, while a 10% decrease would produce a $55.0 million net asset.
Key facts
- As of June 30, 2026, Targa expects to reclassify commodity hedge related net deferred gains of $43.3 million included in Accumulated OCI into earnings before income taxes over the next twelve months. source
- Outstanding net derivative positions that contain credit-risk related contingent features were in a net liability position of $107.9 million as of June 30, 2026. source
- Maximum length of time over which Targa has hedged exposure to variability in future cash flows is through 2029 as of June 30, 2026. source
- Gain (loss) recognized in OCI on derivatives (effective portion) for the three months ended June 30, 2026: $126.0 million and for the six months ended June 30, 2026: $75.8 million. source
- Recognized loss in income on derivatives not designated as hedging instruments for the three months ended June 30, 2026: $(68.1) million and for the six months ended June 30, 2026: $(311.6) million (per table). source
- Pro forma net presentation total derivatives as of June 30, 2026: assets $31.3 million and liabilities $(108.3) million after collateral and netting. source
- The unfavorable impact of hedges on three months ended June 30, 2026 commodity sales was $291.6 million source
- Gain (loss) reclassified from OCI into revenues (effective portion) for the three months ended June 30, 2026: $10.3 million and for the six months ended June 30, 2026: $27.7 million. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | negative | realized | -7.0% | Recognized loss in income on derivatives not designated as hedging instruments for the three months ended June 30, 2026: $(68.1) million… |
| revenue | negative | realized | -6.6% | The unfavorable impact of hedges on three months ended June 30, 2026 commodity sales was $291.6 million |
| net_income | negative | realized | -1.5% | Recognized loss in income on derivatives not designated as hedging instruments for the three months ended June 30, 2026: $(68.1) million… |
| revenue | positive | realized | +0.6% | Gain (loss) reclassified from OCI into revenues (effective portion) for the three months ended June 30, 2026: $10.3 million and for the… |
| operating_income | positive | probable | +0.5% | As of June 30, 2026, Targa expects to reclassify commodity hedge related net deferred gains of $43.3 million included in Accumulated OCI… |
| revenue | positive | realized | +0.2% | Gain (loss) reclassified from OCI into revenues (effective portion) for the three months ended June 30, 2026: $10.3 million and for the… |
| liability | negative | realized | — | Outstanding net derivative positions that contain credit-risk related contingent features were in a net liability position of $107.9… |