What happened

Shares of Targa Resources (NYSE:TRGP) surged 15% by 11:15 a.m. EDT on Thursday. Fueling the midstream company's rally was its solid first-quarter report. 

So what

Targa Resources delivered strong first-quarter results despite all the turbulence in the oil market during that period. Adjusted EBITDA soared 41% year over year to $428 million while distributable cash flow rocketed 61% to $302 million. Fueling that growth was higher volumes thanks in large part to recently completed expansion projects.

A group of wells connected by a pipeline.

Image source: Getty Images.

However, while the company's expansions helped fuel volume and profit growth during the first quarter, it isn't immune to the issues facing the oil market. Because of that, it has made several adjustments to its spending plan this year to help shore up its financial situation, including slashing its dividend by 90% and reducing capital spending by 40%. These moves will help offset some of the impact lower commodity prices will have on its volumes and price-sensitive operations as well as provide it with additional financial flexibility so that it can strengthen its balance sheet.

Now what

Targa Resources has put a priority on shoring up its balance sheet so that it can more easily navigate through this downturn. That will put its finances on a better long-term footing so that it can eventually return more cash to shareholders. This optimism about what potentially lies ahead is helping fuel the stock today.