Note 4 — Acquisitions and Joint Ventures

Badlands Acquisition

In March 2025, we completed the acquisition of Blackstone’s 45% interest in Targa Badlands LLC (“Targa Badlands”) for aggregate consideration of $1.8 billion in cash, with an additional $0.4 million of capitalized transaction costs (the “Badlands Transaction”). As a result of the acquisition, we own 100% of the interests in and earnings of Targa Badlands effective January 1, 2025. The change in our ownership interest 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 $70.5 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.

Dovetail Acquisition

In December 2025, we completed the purchase of all of the membership interests in Dovetail Midstream, LLC (“Dovetail”), a wholly-owned subsidiary of Riley Exploration Permian, Inc (“Riley”) and the purchase of certain compressor assets from Riley for aggregate cash consideration of approximately $122.8 million, subject to customary closing adjustments (the “Dovetail Acquisition”). The assets acquired in the Dovetail Acquisition primarily consist of compression and natural gas gathering infrastructure in Eddy County, New Mexico. Subject to certain volume-based performance thresholds, additional cash of up to $60.0 million may be payable to Riley over a five-year period from the acquisition date.

The Dovetail Acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations, which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. The preliminary valuation of the acquired assets and liabilities was prepared using fair value methods and assumptions, including projections of future production volumes, commodity prices, and other cash flows, market-participant assumptions (e.g., discount rate and exit multiple), tangible asset replacement costs, and other management estimates. The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs, as defined in “Note 11 – Fair Value Measurements.” These inputs require judgments and estimates at the time of valuation.

We are in the process of finalizing valuations related to property, plant and equipment, goodwill, and contingent consideration. The final valuation will be completed no later than one year from the acquisition date.

Stakeholder Acquisition

In January 2026, we completed the acquisition of all of the membership interests in Stakeholder Midstream, LLC (“Stakeholder”) for a purchase price of $1.25 billion (the “Stakeholder Acquisition”), subject to customary closing adjustments. We acquired a portfolio of complementary Permian Basin midstream infrastructure assets, including approximately 480 miles of natural gas pipelines, approximately 180 MMcf/d of cryogenic natural gas processing and sour treating capacity, carbon capture activities generating 45Q tax credits, and a small crude oil gathering system. The Stakeholder assets have been integrated into our Permian Delaware operations. The acquisition had an effective date of January 1, 2026. We used $650.0 million in borrowings from our Commercial Paper Program and $600.0 million from our Securitization Facility to fund the Stakeholder Acquisition.

The Stakeholder Acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations, which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. The preliminary allocation of the purchase price, which is subject to certain adjustments, was based upon preliminary valuations from estimates and assumptions that management believes are reasonable; however, management’s estimates and assumptions are subject to change upon the completion of the final valuations or as information necessary to complete the fair value analysis is obtained. The valuation of the acquired assets and liabilities was prepared using fair value methods and assumptions, including projections of future production volumes, commodity prices, and other cash flows, market-participant assumptions (e.g., discount rate and exit multiple), expectations regarding customer contracts and relationships, tangible asset replacement costs, and other management estimates. The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs, as defined in “Note 11 – Fair Value Measurements.” These inputs require judgments and estimates at the time of valuation. We are in the process of finalizing valuations related to the Stakeholder Acquisition, including the fair value of the property, plant and equipment and identifiable intangible assets acquired. The final valuation will be completed no later than one year from the acquisition date.

The preliminary value of property, plant and equipment is determined using the cost approach and is primarily comprised of Gathering and Processing assets that will be depreciated on a straight-line basis over an estimated weighted-average useful life of 20 years. The associated useful lives of property, plant and equipment were based on the period over which the assets are expected to contribute directly or indirectly to our future cash flows.

The preliminary value of intangible assets is comprised of customer relationships, which represent the estimated value of existing long-term contracts with customers and the expected continuation of those relationships through future renewals, that will be amortized in a manner that closely resembles the expected benefit pattern of the intangible assets over an estimated useful life of 12 years. The associated useful lives of intangible assets were based on the period over which the assets are expected to contribute directly or indirectly to our future cash flows. The preliminary fair value of customer relationships was determined at the date of acquisition based on the present value of estimated future cash flows using the multi-period excess earnings method. The significant assumptions used by management in determining the fair value of customer relationships intangible assets include future revenues, discount rate, and customer attrition rates.

The results of operations attributable to the assets and liabilities acquired in the Stakeholder Acquisition have been included in our consolidated financial statements as part of our Permian Delaware operations in our Gathering and Processing segment since the date of the acquisition. Revenues and Net Income attributable to the assets acquired for the period January 1, 2026 through March 31, 2026 were $59.7 million and $9.8 million, respectively. We expensed $8.9 million of acquisition-related costs.

Unaudited Pro Forma Financial Information

The summarized unaudited pro forma information reflects certain adjustments directly attributable to the Stakeholder Acquisition, including those due to conforming the acquiree’s presentation of revenue to Targa’s accounting policies, incremental depreciation and amortization related to the stepped-up fair value of assets acquired, recognition of incremental interest expense related to debt issued in connection with the acquisition, and recognition of transaction costs incurred. The pro forma information includes the income tax effects of the adjustments. The unaudited pro forma information does not reflect any anticipated cost savings, synergies or integration costs related to the Stakeholder Acquisition.