Q3 2019 Earnings Call

Calvin in 19, we have increased our adjusted EBITDA guidance range to $11 billion to $11.1 billion.

We are lowering our full year 2019 growth capital guidance to approximately $4 billion.

For 2020, we expect organic growth capital expenditures to be approximately $4 billion, excluding expected expenditures related to the pending Sim group acquisition.

And we expect to provide 2020 adjusted EBITDA guidance later this year or early next year.

Now taking a closer look at the same group acquisition, which we see as a strategic acquisition and a transaction that will provide immediate benefits and consistent with our plans to improve our financial position.

On September 16, we announced that we entered into a definitive merger agreement to acquire Semgroup Corporation for total consideration, including the assumption of debt of approximately $5 billion based on the closing price of energy transfer common units on September 13 2019.

On October 16, we received early termination of HSR and the shareholder meeting and vote or now scheduled for December 4th 2019.

We expect the transaction to close shortly after receipt of the vote.

This acquisition is expected to be immediately accretive to distributable cash flow per common unit and would increase our portion of fee based cash flows from fixed fee contracts.

We expect the combination of these complementary assets to provide increased connectivity for energy transfers crude oil and NGL transportation businesses.

We have along the successful track record of integrating companies and asset teams. We're highly confident we will achieve significant synergies integration teams from both companies are fully engaged in the integration planning process.

We expect to generate more than $170 million of annual run rate synergies, which includes.

Financial savings of more than $50 million within the first year by utilizing energy transfers lower borrowing costs.

As you know one.

Two significant crude oil supplies received at our needle in terminal much of which has delivered from our Permian Express and Bakken pipeline systems.

And we will also replace large cost with new pipeline revenue.

Having pipeline access to the DJ basin, a larger Cushing present and expanded presence at St. James as well as access to Houston ship channel dogs expands our connectivity increases our reached and is expected to generate opportunities for other aspects of our portfolio as well.

Looking.

More closely at the Ted Collins pipeline. This approximately 75 mile crude oil pipeline between the Houston ship Channel and later in Texas is expected to serve as a strategic connection between two of the largest crude oil terminals and United States and will provide immediate access to over 1 million barrels.

Per day of existing crude oil export capacity with plans to expand to over 2 million barrels at these terminals.

It is expected to have an initial capacity of more than 500000 barrels per day and commercial operations are expected to begin in 2021.

In conjunction with the combined companies other oil transportation assets. This pipeline will provide energy transfers customers with best in class access to the eastern ship channel the Gulf Coast refinery complex.

And saying Jane's markets in addition energy.

Transfers vast network of product lines.

Which channels over 4 million barrels per day will allow customers have flexibility.

To access its previously announced VLCC project plan from its nasal and terminal.

We are advancing discussions on this project and as his project gets closer to half I'd, we will provide more specifics.

Before going into a more detailed discussion around third quarter earnings growth Capex and liquidity update I want to provide an update regarding the latest developments on other growth projects.

Let's start with the Bakken pipeline capacity optimization.

As we have mentioned the Bakken pipeline receive sufficient market interest during the December 2018 open season for us to move forward with plans to further optimize the system capacity.

More recently in July we announced a binding supplemental open season to solicit additional shipper commitments for transportation service on the system.

As a result of increase interest as well as the same group acquisition announcement and the Ted Collins pipeline project, we have extended and modified the current supplemental open season to include hop go as a bit destination for shippers.

The initial phase of the Bakken pipeline optimization.

Above its current capacity of 570000 barrels per day will be based on commitments made by shippers that we have already received as well as commitments made during the current open season. This capacity to serve the commitments received.

He is expected to be in service in early 2021.

In the meantime, and upon completion of the permitting phase we expect to provide up to approximately 30000 barrels per day of incremental capacity by mid 2020 utilizing our current says.

Some configuration.

And as Bakken volumes and customer demand continue to grow in the future.

We will be in position to efficiently increase the system capacity up to 1.1 million barrels per day overtime.

Now looking at PE, one two and three Toplines, which are part of our Permian Express joint venture with Exxon Mobil. It continued to operate a capacity during the third quarter.

And the PE for expansion, which added an additional 120000 barrels per day of capacity to our Permian Express pipeline system from Colorado City to needle in Texas went into full service on October Onest and is operating at full capacity as well.

Now looking at our Mariner East system as a reminder, we placed the initial capacity of in two into service December 29, 2018, and volumes continue to ramp up in the third quarter of this year.

In October we completed modifications to any one and Marcus hook to enhance the reliability of the system and allow for improved flows through the facility.

Consistent with the second quarter volumes during the third quarter remained strong across the Mariner system, reaching as much as 300000 barrels per day of Ngls through the Marcus Hook industrial complex.

Additionally.

So executed an additional agreement for butane transportation with a local NGL distribution facility in Pennsylvania.

International LPG arbitrage economics remain strong in the third quarter, demonstrating the strength of this terminal in efficiently, reaching the best markets for our customers.

Our further expansion efforts and Marcus hook are underway and progressing nicely with increase facility capacity expected for fall 2020.

Due to the permit var Emmy to access now expected to be completed in mid 2020.

Even with the delayed in service date, we will still be able to meet our contractual commitments.

The next tranche of volume ramp ups on the Mariner East system are expected to occur in the spring coinciding with the startup of the northeast NGL season, which drives increased customer demand.

However, because of modifications. We recently completed we do expect to ramp up additional ethane volumes. This winter.

Looking at the Lone Star assets.

As a reminder, the 150000 barrels per day for Acsix went into service in mid February and has been full since March.

On Fracs, seven and eight both of which will be 150000 barrels per day, we continue to expect them to be in service in the first quarter of 2020, and the second quarter 2021, respectively. We anticipate both fracs will ramp up to full capacity very quickly.

Bone completion of Frac, seven and eight our total frac capacity at Mont Belvieu will be over 1 million barrels per day.

And on our 24 inch 352, now Lonestar Express expansion.

Will add over 400000 barrels per day of NGL pipeline capacity from the Permian Basin to the Lone Star Express 30 inch pipeline South of Fort Worth, Texas, We continue to expect to be in service by on before our original estimate of the fourth quarter of 2020.

In addition, we continue to further develop our storage capabilities at Mont Belvieu.

Now at Nader Len.

We are continuing to expand our interconnectivity to increase our competitive footprint and create a REIT asset foundation to ensure growth.

As mentioned on our last call. We started loading our first barge with natural gasoline in July we are looking to further expand our natural gasoline export operations at this facility and have already started building out storage at needle and to allow us to achieve better rates of return on natural gasoline exports in it.

Question, our 200000 barrels per day LPG expansion project in New Zealand is progressing well and we will further integrate our Mont belvieu assets and our needle in assets to expand our LPG export capabilities.

We expect this expansion to be in service in the third quarter form 20.

On orbit, which is our joint venture with satellite petrochemical for which we are constructing a new ethane export terminal on the us Gulf coast to provide ethane to satellite.

Construction continues to progress as scheduled in China. Our partners have made significant progress on the construction of their facilities and we continue to expect all facilities in us in China to be ready for commercial service in the fourth quarter of 2020.

Our partners expect to have over 10000 employees working on the cracker tanks and related facilities in China by the end of 2019.

Now, let's turn to our processing plants in West Texas.

Our 200 Mmcf per day Arrowhead three processing plant.

In the Delaware Basin went into service in early July and is projected to be full by year end. In addition, we will bring on an additional 200 mmcf per day processing plant in the Permian basin by the end of this year and expected to be full by mid 2020. This plan has already fully subscribed.

And once in service will bring our toll processing capacity in the Permian basin to more than 2.7 Bcf per day.

On the Red Bluff Express pipeline Phase one went into service in May 2018, and Phase II was completed in August of this year head of schedule.

We began collecting revenues on phase two during the third quarter and expect revenues on the system to grow over the next couple of years.

As the contractual commitment step up.

For the month of October .

Red Bluff Express volumes averaged nearly 500000 Indian Bts per day and additional volumes came into the system. This month.

The majority of these volumes are also flowing.

Through our while highway says header, thereby generating additional revenues downstream.

In late September we completed a de bottlenecking project in central taxes that consisted of looping approximately 20 miles of existing pipe with 42 inch pipeline.

And provided an incremental 500000 Mcf per day of capacity to the Kt in Beaumont markets.

These volumes have began flowing as a result to this project, which is backed by fee based commitments.

On the product side, the JC Nolan diesel pipeline has an initial capacity of 30000 barrels per day and transports diesel from EBIT taxes to a newly constructed terminal in Midland, Texas area.

This is a 50 50.

Joint venture agreement with Sunoco LP.

The project utilizes existing pipelines, which.