Q4 2019 Earnings Call

In which we operate?

Energy infrastructure companies like Kinder Morgan and generate lots of cash flow. And the test of good management is how that cash flows utilize since the collapse of oil prices in 2014 and 2015 and it's decidedly negative impact on the equity value of the energy segments including ours. We have prioritized getting our balance sheet in shape returning $2 to shareholders dividends buying back shares on an opportunistic basis and pursuing expansion projects when they promised a high and secure our our we believe that approach has been the correct and we will continue to follow it in the future a prime example of our thinking is our gradual increase in the dividends. We pay our shareholders. I'll remind you we've gone for fifty cents and 2017 to 8th June 2018 to a dollar and 2019 and there's promised intend to pay a dollar and a quarter for twenty twenty and all of those dividends have been amply covered by our cash flow.

Forward I assure you that we will not be.

The right decisions on behalf of our shareholders we act as principals not agents. We act like owners and we protect our owners resources again, we're consistently applying our Capital allocation prep schools in our performances demonstrated the value of applying those principles a few highlights for the fourth quarter as mentioned. We closed on the KML and kocian sale in December and converted the shares. We received earlier this month. We place three of the ten Elba liquefaction units in service by the end of the year with a fourth unit that went online last week and we expect to have all ten and serviced by mid-year off with the first unit going into service in September of last year. We received 80% of our share of project revenues Gulf Coast Express. We need a service in the third quarter of last year. The fourth quarter update is waha Basis almost immediately widened showing once again the need for an additional pipe just to put things in perspective to spread is about two to three times the value of the Tariff dead.

The capacity is valuable and frankly, we wouldn't mind holding a little ourselves on PHP. We have now acquired ninety nine plus percent of our right-of-way. This is a significant Milestone given that we are going to Texas Hill Country. We are well along in the construction of the western spread. We believe that we are close to getting our federal permit so that we can begin construction on the Eastern spreads dead set on the last call that process has taken longer than we plan but we still project today as we did last quarter and early 2021 in-service date. We believe the agencies involved have been exposed and the permit will therefore be strong. Both of our premium gas pipeline projects bring us additional opportunities in our Downstream pipes combined they bring for a day of incremental gains of the Texas Gulf Coast, we where we have our large intrastate pipelines system those projects bring opportunities for Downstream expansion and optimization as we find homes for that incremental gas.

Through our connectivity with LNG facilities and Texas Gulf Coast Power Industrial and pet cam demand. Our backlog includes about 325 million dollars to expand our improved productivity along our Texas intrastate pipelines Network to enable us to place the incremental volumes that are and will be hitting our system. We're still working with customers on a Thursday to add a pipeline called Permian pass this remains a work-in-progress. It's not in the backlog We Believe eventually is pipeline as needed, but probably not as soon as we thought this time last year in the mean time, we're continuing to talk with producers of potential partners and believe number one the long-term dynamics of needed gas takeaway capacity out of the Permian Basin are strong and that are extensive pipeline Network in Texas put us in good position to pick up this opportunity when the market is ready to sign up for it.

These permanent projects show us taking advantage of a very positive situation.

There's large Supply growth in Texas and large demand growth in Texas and we can Bridge the two and connect to our Premier Texas Interstate pipeline Network and stay entirely within the state of Texas where we have more commercial flexibility as we pointed out at the conference 70% of natural gas demand growth between now and 2030 is projected to be in Louisiana and Texas and our systems are well positioned to benefit from that. Finally our backlog now stands at 3.6 billion that's down from last quarter primarily due to us placing a processing plant in service during the quarter and removing the backlog associated with projects from the kemi backlog. We will remain disciplined here. So you can returns that are comfortably above our cost of capital. We believe our historical experience the size of our Network in the market dynamics particularly in natural gas will continue to provide the opportunity to invest into the three billion a year. That's what our track record would show but if we don't fight

That much a new opportunities. We are not going to force it as examples. I gave you show we have other opportunities to deliver value to our shareholders. We will maintain our dog with that. I turned over to Kim. Okay. Thanks Steve Well, I'm going to sound like a broken record cuz we're now up to eight quarters eight two years in a row in which natural gas volumes on our transmission pipes have exceeded the comparable prior-year by at least 10% for the fourth quarter of Transport volumes were at 14% compared to the fourth quarter of 2018 specifically was up almost 1.3 BCF a day do to increase Permian related activity and colder California weather tgp was over a half a day due to expansion projects TIG was up seven hundred and eighty million cubic feet a day due to increase DJ production and higher heating Demand on the Front Range.

Colorado hey

MLP volumes were up $542 million cubic feet a day due to the speed past expansion gcx wanted to full service and we are now routinely operating capacity of approximately 2 BCF a day and the Texas interest rates were up over five hundred million cubic feet a day on continued growth in the Texas Gulf Coast market and the additional money coming in from GTX on our gathering assets and natural gas volumes were of 8% or $265 million cubic feet a day from the fourth quarter 2018 month and that was driven primarily by higher volumes in the Eagle Ford and the Bakken are barking gathered volumes were up 18% and our Eagle certain volumes were up 22% Painesville volumes were essentially flat versus the fourth quarter of 2018. NGL transport volumes were up 23% in the fourth quarter compared to the fourth quarter of 2018.

and that was due to

You hire coaches volumes for product segment was also up nicely in the quarter as we received strong contributions from our box include a set the splitter and took over all replied product volume full flat and the quarter compared to the fourth quarter 2018 and crude volumes for also essentially flat the terminal five foot down and this quarter compared to the fourth quarter of 2018, but liquids business which accounts for nearly 80% of the segment total was impacted by the December sale of KML, but in our Houston's liquids terminals, we saw record volumes. We saw record quarterly group of a hundred and thirty-seven million barrels. That's about 1.5 million barrels a day and we average three hundred and twenty-eight thousand barrels a day and refined products going over our.

I bought business was down compared to the fourth quarter 2018 with James at our control for my petroleum Coke handling business more than offset by weakness in Colac.

finally

You know too was hurt by lower commodity prices and the volume weighted average retail price for the quarter was down $505.34 per barrel that's dead. Push that versus the fourth quarter 2018 and our weighted average crude oil price for the quarter was down 10% of $5.67 per barrel on the crew will decline that was largely driven by our Midland Fishing Baits attaches crude oil production and aggregate across all the fields was down 5% wage compared to the same period in 2018 that in GL sales volume up 4% in our CO2 operations, although we're we're down this quarter, but we still do benefit from holding billions of barrels of the original oil in place and we continue to find additional opportunities to exploit that resource base and extend the productive life wage.

Bachrach temperature

As we have for years, but we will remain disciplined in our investment approach and the higher-return thresholds for these Investments with that. I'll turn it over to David Michael. All right, thanks. So today we're declaring a dividend of $0.25 per share, which is in line with our budget to declare $1 per share for the full year 2019. That's a 25% increase over the license per share declared for 2018 earnings per share. This quarter was twenty-seven cents per share 29% from the fourth quarter of 2018 chef and our adjusted earnings-per-share in DCF per share both group four and 5% respectively from last last year's fourth-quarter the generated DCF for share of $0.59 just 2.4 times or approximately 785 million in excess is a declare dividends.

For the full year 2019. We generated DCF of $2.19 per share, which is $0.01 off of our plan of 220. We can project it on the third quarter call that either dead within the year of the low plan eat a dog was less than 3% below plan and DCF was only slightly below planned since the third quarter. We closed the Gap relative plan due to good commercial and operational performance in the fourth quarter. In fact, DCF ended the year below budget by only thirteen million dollars Which is less than half of 1% The main drivers of our performance versus budget include our elbow Island liquefaction facility coming on later than budgeted lower commodity prices and volumes and page and our perk 501g settlements partially offset by strong Permian Supply growth benefiting more than we had budgeted.

So those are the largest.

Drivers are Eva. Performance. DCF was impacted by the same items, but also benefited from favorable interest expense expenses during the year and the add-back of non-cash pension expenses.

So that was performance versus plan for the year. Now on to the details for fourth quarter versus fourth quarter 2018 revenues were down $429 million from the third quarter of Sydney from the fourth quarter of 2018. But we also had a decline in the cost of sales in the quarter of 423 million with nearly offset. The revenue declined meaning that our gross margin was about Flash from last quarter of last year. That's a good reminder that given the way that we contract particularly in our Texas intrastate business gross margin, which is revenue wage cost of sales is a better indicator than performance than Revenue alone. Additionally, we recognized a hundred and twelve million dollars of non-cash gains on derivative contracts during the fourth quarter of 2018. We treat those non-cash games, which don't on those derivative contracts that didn't settle in the. As certain items and we exclude those from our non-GAAP metrics.

but for those

Cash gains there for gross margin was up over a hundred million dollars. Over.

You'll see on the income statement that gain loss on divestitures and impairments line item that includes for the fourth quarter of 2019 and a 1.3 billion dollar game related to our KML and coaching pipeline sales partially offset by 364 million of asset impairments on our gathering and processing assets in in Oklahoma and Northern Texas driven by reduced drilling activity. And on our Tall Cotton acid and our CO2 segment driven by reduced investment expectations off the loss learning from Investments exceeding from Equity Investments line items includes for the fourth quarter 2019, a $650 impairment on our Ruby pipeline investment wage, which we took in the quarter as a result of upcoming contract expirations along with competing natural gas supplies.

That didn't come available to Common stockholders was up 127 million dollars or 26% versus Q4 2018 due in part to the KML coaching gain in the quarter that income available to Common stockholders adjusted for certain items or what we call a adjusted earnings were up twenty four million or 4% compared to the fourth quarter 2018 adjusted earnings-per-share was $0.26 for the quarter up 1% or 4% from the prior quarter.

Yes performance natural gas was up a hundred and twenty million dollars or 11% We saw operator performance from last year too. Mostly two expansion projects the M filing liquefaction facility contributing with with three units in in service last year Gulf Coast Express was playfully in the service and off multiple contributions from multiple expansion projects.

Kim covered the main drivers of the other segments for the quarter the moving to G&A and corporate charges. Those were higher by 34 million dollars due to lower overhead capitalized projects at higher non-cash pension expenses. So those are the main changes in adjusted ebitda, which was 58 million or 3% above Q4 2018 interest balance was $18 lower driven by our lower debt balance and lower Libor rate's benefiting are floating interest rate swaps.

Nothing that was partially offset by interest income that we recognized during the fourth quarter of 2018 due to sale proceeds we had on hand from the Trans Mountain sale sustaining Capital was $30 higher versus the fourth quarter of 2018. However, we had budgeted to spend more more sustained E capital in 2019, and we actually ended the year favorable to plan a sustained Capital category total of 1354000000 is up $81 million or 6% and our DCF per share $0.59 is up $0.30 or 5%

moving to the balance

We ended the quarter at four point three times debt-to-ebitda, which was a nice improvement from the 4.7 times at the end of the third quarter 2019 and from the 4.5 tons at the beginning of of 2019. It's also better than our budget of 4.5 despite even coming in a bit a bit below budget.

We remain focused on Capital discipline, which means we continue to only invest in projects that meet our high hurdle rates and we continuously review our Capital plan in 2019 in a separate resulted in more than three hundred million dollars of lower Capital spend compared to what we had budgeted looking at the net debt are adjusted net debt ended the quarter at $33, which is down 2.2 billion from the third quarter and 1.1 billion lower than year end 2019 to 2018. We didn't issue any KMI bomb in 2019. And in fact, the last KMI Bond issuance was nearly two years ago in February 2018 additionally as Steve mentioned, but I think it's worth mentioning again. Our net debt is down nine point four billion dollars since the third quarter of 2015 and nice nice progress there.

to reconcile

Change and that debt for the quarter. We had DCF of 1.354 billion.

We have one point five billion of proceeds from the coaching sale.

We sold our share of camels preferred Equity 215 million of which were was in our net debt.

We contributed six hundred million dollars of growth capital and contributions to our joint ventures. We paid dividends of 570 million and we had a 250 million dollar working capital source of cash, which is mainly interested expensive rules. And that that reconciles you approximately to the 2.2 billion dollar decrease in depth of the quarter.

For the full-year reconciliate reconciliation to the one point one two billion dollars lower debt. We at DCF of 4.993 billion. We had one point six seven dollars off of divestitures mostly mostly represented by the sale. We removed the 215 million dollars of preferred Equity. We had growth capex in off of 2.92 billion. We paid dividends of 2.2 billion pay taxes on the Trans Mountain sale of 340 million and we had a approximately eight hundred million dollars working capital use of cash and that gets you to the main pieces of the the 1.12 billion decrease in that debt for the year.

Turn it back to Steve. All right, so a couple quick reminders before we start the questions number one is as I'm sure many of, you know, we will have our investor annual investor Conference next week. And so David and a name and Kim and and I and others will be going through the details of twenty twenties. So we'll kind of ask you to to to wait for that more detailed presentation in terms of the twenty-twenty plans off and then secondly as we've done the last several times as a courtesy to all the callers will ask that you limit your question to one to one question with a follow-up, but if you've got additional unanswered questions give back and we will come back to you. Okay? All right Denise with that. Let's open it up for questions. Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your phone and record your name. Clearly. Your name is required to introduce your question. If you need to withdraw your question, please press star to thank you and God.

Our first question does come from cheniere.

With UBS your line is open. Hi, good afternoon. Everyone. I'll keep my questions light given the analyst day next week, maybe two to start off. You've been very faithful to say no programmatic buy back in the past and you reiterated it today and you just want to use it with respect to opportunism opportunistic buyback. Is there a plan to either Chef today or next week? If you plan to complete the authorization by a certain point in time, you know, just a little bit more color respect that how you thinking about the buy back over long term, but not really, I mean the guidance that were given is very consistent with what it's been all along which is we we evaluate these decisions based on return. We do look to birth purchase opportunistically not programmatically, we've never published any kind of Target price et cetera. And and so, you know you put that together and you say we're not going to announce a specific day.

Timing for the conclusion of the program either but we have used about 525.

A million of the two billion dollar program we have used it opportunistically and we are pleased with the results of our share repurchases under the program today.

Okay, fair enough and and maybe as a follow-up. I was just wondering if you can expand a little bit on the changes in the backlog that you put out in your prepared remarks has already been removed from it with it coming on line. And we're there any changes to your CO2 Outlook with respect to the backlog or everything's kind of yes. So elbow. Well we've been doing on Elba is since we put the first unit Choice service and that's really I mean, that's really when the balance of plant was complete and and when the the substantial 80% our share of the revenues started we started reflecting God by pulling it off the backlog as the units were coming on the correct address. Okay, and then we have also put in service in our natural gas group as I mentioned a a processing plant in the Bakken area, which it that went into service. And so then that came off the bath.

biggest Chunk in that movement

and that's really the

The next question comes from Jeremy with JPMorgan is open good afternoon. Just wanted to start off with a question with m&a actually, and it seems like I could be in a position to do different things right here. We saw earlier this week Magellan announced terminal sales at evaluation that appears to be you know, quite robust given where a lot of things trade today off and just wondering how you guys think about kind of hopefully optimization within that context given the private Equity bid there on the other side. It seems like you know growth is slowing in certain parts of mid-stream. Maybe there's the potential to kind of roll up other players out there and it'll Kinder is, you know been successful at growing things up in the past. Just wondering how you think about those two different angles and if anything to make sense if you guys going off,

Was rich said at the start our approach to our business into this industry is conservative. And so we we spend a lot of time and did a lot of work to get our balance sheet in the in the shape that it's in June and we're really not interested in in hurting our leverage metrics through through m&a or through anything else for that matter. Like we've always looked around at opportunities and we would continue to do so, but they would need to meet pretty substantial return criteria similar to what other uses of capital would be and and so that that kind of those that opportunity unless something really valuable comes along you mentioned the the recent announcement on an asset purchase and sale between Midstream operators Thursday. We did close a very small acquisition of a pipeline in South Texas. That was a very nice fit into our Texas intrastate system, and we certainly and we did that at attractive terms on an attractive return for that club.

Invested and so we'll keep our eyes open for things like that.

Gotcha it in just as far as the prices that you see out there. I mean is that something that that you pursue just given how it was so, you know higher than where a lot of guys, you know, I am right now or

on the sales side

Well, you mentioned you mentioned the private Equity bid that's out there. And and that's a phenomenon that that certainly we've we've observed as well which which means there's competition for those things and and really Jeremy, I think it comes back to we're just going to be very judicious with our shareholders money here and we're going to do things that we can do that. We are very very confident are going to produce value for us.

The next question comes from from Credit Suisse is open.

Hey, good afternoon. Everyone, maybe start with the project backlog Steve appreciate your comments around Capital discipline think that should be pretty welcome by the market. But when I look to the backlog, it's about a year-and-half a growth here going forward. And so just curious how we should think about how and when you you start to replenish that backlog and when you'll be in a position to sanction more projects outside of Permian pass.

Yeah, sure.

And actually something I should have said in response to shares comment is as I sat and talking about the backlog. There was also to share about fifty five million or so of KML backlog that came out as well. So that's an addition to the processing plant with the other explanation for the the change quarter-to-quarter. You know, look we don't we don't approach Capital Investments with the idea of replenishing a backlog and so the the information or the guidance that we can give you is if you look at over very long period of time ten years plus and and you look at what we've been able to find a a on our Network. It's been between two and three billion dollars show you this it's in Kim's presentation the detail on this it's been between two and three and the mean has been 2.5 next year. We've got two point four in in the budget that we that bounced in in December . We'll keep looking for those opportunities and find them as they what we've seen what we've experienced is that the opportunity to do those Investments that attractive returns.

So the opportunities that really are.

Our Network as it stands right now and we've got a very vast Network and I think we'll continue to find Opportunities there but they'll be up down. They could be in the low twos or they could be like they were in this past year around 3, but we we don't aim to replenish the backlog. We follow kind of what we see coming down the pike including things like Permian past and that's what gives us some confidence that are kind of two to three historical is probably still in the ballpark for us over the next little while.

Got it. That's that's fair. Appreciate that second question just to round ESG you guys been leaders here in in Midstream and looks like you're getting credit for that. And so I guess want to point to meet with some large investors come out and said in the last two weeks aiming to really sharpen their focus on ESG and and screeding screening investments in that manner. So just curious. How much do you really drives your decision-making on an asset asset basis? Would you ever consider selling something or buying something in order to fill in the SG standard and specifically I'm thinking about is something like your cold terminals, right? If if you felt like that could be harmful to your TV brand, Would that be something you would consider selling?

yeah, so part of the G which is governance, which is

For shareholders and doing the right things with their money. And and so we have not we have not looked at it from the perspective of investment. We're very very waited to natural gas. And that's a good business for us. And it's a a big part of the solution going forward is as Rich mentioned, but I do want to acknowledge what you said. We have tried to be leaders in this and we've done I think a very good job of our business units our operations. This isn't just some corporate thing. This is something that is permeated through our operations and we have earned the number two ranking in our sector wage for how we manage risk. Now that jobs not done we have to keep going but we do things for example, like look at scenarios of continued methane emissions reductions that we've really over achieved the target there if you will not there's not really such a thing as overachieving it but I mean, we had a Target in the one future Group, which is a 1% limit across the entire month.

Saying from production through distribution and the transmission and storage sectors allocation of that 1% is 3 1% and we're at .02% off and so we've really done a very good job there and that's good operational blocking and tackling. And by the way that's in our shareholders best interests to because we get paid to move methane not to lose it off. So that's been a multi-decade process and that's an example of how we incorporated into the way we do business and and the way we think of things but we're not going to go out and do a dilutive renewable acquisition Nora we going to do a an economic divestiture from our Investor's standpoint. We're keeping an eye on the G as well, I guess.

The next question comes from Tristan Richardson with SunTrust is open.

Good morning afternoon guys. Just project question on Permian High wages to clarification. Can you talk about the expected timing of Permitting on the federal side that you mentioned would allow the Eastern spread to kick off make it a point of not speaking for federal Regulators. So all I can say is based on how fully the record is developed and based on certain statutory time lines that are both 10 to the authorizing legislation. We expect it to be soon and that's why I use the word soon and and not not a more specific one.

Okay, and then follow up just has the commercial discussion around Permian past changed now that the market in the world is seen how short-lived that narrow spread was.

Certainly, everybody's noticed that I think I would say that you know, we first saw as we reported when we came out in the in the third quarter. We saw em, I would tie it to after the after producers came out with their second quarter a guidance, which was after we did our second quarter and they tightened up on their Capital plans et cetera that there was definitely a cooling off of what had been some fairly active commercial discussions that we thought might have even led us to an F decision, you know last year and that clearly has been delayed. I don't think it's cool to me for life than since then and I think people do recognize that that gas additional gas take away is going to be needed and something that I thought was interesting that one of the fundamentals the guys wrote about is, you know, the Permian 97% of the value in the well is in the oil and the liquids that are produced and well prices Thursday.

Still pretty good and the Permian?

Has been completely D bottle back to the point where Midland is trading above WTI. So that suggests if you can economically produce oil you're going to need to find a way to put the gas away and we already have a consumer or a high basis differential between waha and ship and so I think you know as people start to evaluate their Capital plans and think about what's economic to do and and not they're they're going to ultimately need some additional takeaway capacity. We can't guarantee that we're going to get it but we think we're well-placed for it.

The next question comes from Keith Stanley your line is open from Wolf research.

Hi, thanks. Just wanted to follow up on that emanate topic the last call you guys had cited some inbound interest that attractive multiples on some assets. Just curious if you're still getting interest in specific assets. And with a lot of optimism. You can execute on a creative sales this year. Yeah, so this kind of came up in Jeremy's question where he pointed to the boss i p e bed and what I would say is that you know, there is there is a differential between how private Equity investors the money which private Equity investors place on the cash flows for certain assets that we generate and what it appears the public markets place and you can see that in evidence of what the multiple wasn't coach and you can see it across multiple was when Utopia that's out there for sure. But like these other things I think what you're hearing is a theme for us is you know, we are we are going to be careful and conservative. We're going to walk want to make sure dead.

That those numbers really work for us. And so Keith. We're not giving any guidance and really can't practically give you any guide.

Send something being monetized this year or at any particular time.

Okay, thanks. That's it for me. The next question comes from Michael with Goldman Sachs. Your line is open like how you doing? Hey guys congrats on a good quarter real quick question just curious of the last 30 to 60 days how your conversations with producer customers have been given how weak natural gas prices, especially over the past couple of weeks have been and how do you think about how that flows through both your Gathering business, but even some of the Long Haul pipes that have significant producer can parties, you know, instead of regulated utility counterparty thinking like Ruby obviously given the impairment but even some of the smaller ones like Fayetteville express or or Ami Pete.

Okay, so in there but I think there are two things one is the conversation is fundamentally different with an oil producer who is also producing natural gas like the people in the Permian for example, right? And so that's where a lot of that incremental growth and gas production that we expect. We see we've seen this I others have seen it a shift in where the growth is going to come from away from kind of some of the drive that plays in more towards the associated gas place like what you see in the Permian and the Bakken on the other hand. I mean, there's no doubt that with gas prices where they are. The dry gas producers are under under some strain and not being very careful and thoughtful about how they are managing their business and those folks are our customers and we're in good contact with them and it's it's not those are not discussions about growth. So well, some of them are but they're they're more discussions about making sure that we continue to have adequate credit support and that we're being constructed where we can be etcetera, but the dry case dry gas

Is our more challenged and the associated gas that's coming out of the Bakken. I mean, I think the next solution.

In the back and really needs to be incremental residue gas takeaway capacity out of there and we already talked about the Permian. So no more. They're now on the the other assets that you mentioned specifically we talked a bit about Ruby. That's a challenge to asset challenged of war the reasons we did. Well, it's it's coming from the Rockies Rockies is over piped in terms of export capacity basis that's been the case for a while now and there are alternative sources from Canada for example to serve the market in the Northwest. So that's just that's a challenge asset and have VP is challenged as well. But MEP, you know, it's been a little bit of ups and downs, but we're seeing nice positive spreads that we're able to transact at that's a bit more of a there's a multi zonal system. It gives us access to a lot more Supply and delivery interconnects and and takeaways so that asset has improved.

Improved some from the process that we had. No doubt.

Roll off there and that rolled off last year rolled out into a much more challenge spread environment, but there's still positive economic value on that asset. And so those that's kind of the rundown on those three got it. Thanks T. Just one quick follow-up any update on the JV you talked about with tall grass and and you know kind of in the Rockies and that neck of the woods with multiple assets involved been a little quiet on that front. Yeah. We took really haven't been able to make anything work there in terms of We did an Open Season to secure some Contracting to re-contract some expiring pass Double H, which will go through Pony Express on its way to Cushing we weren't able to do any other conversion upstream or or other expansion team projects, but we do still have pipe in the ground in the west that we are looking at alternatives on and and and continue to look at Alternatives though.

the next question comes from

Usually children with Bank of America your line is open. Good evening everyone. Thanks for taking my question. First one. I wanted to touch briefly on your life export Market Outlook. I think some Global forecasts out there seem to paint the picture of the LNG Supply growth overwhelming Global demand growth over the next couple of years. How concerned are you about risks to your overall Nat gas supply to LNG export facilities in the US. We're very happy with the LNG customers that we have and I think the facilities that are coming out of the ground are coming online and the way our contract structures work is we're getting paid for the capacity whether it's used or not, but they are using it so we're not we're not exposed to and the way we structured everything even on Elba our contractual structure on Elba is our contractual structure is such that we are not exposed to the vagaries of birth.

commodity prices in in natural gas

So I think we obviously we're we're interested in seeing additional energy infrastructure get built and we'd like to be the ones to serve it where you know, depending on the day forty to fifty percent of the throughput that goes through to LNG exports and that's been a nice growth story for us and we'd like to see that continue to grow but we're not exposed to again not exposed to the global LNG price because they are contracts are structured.

Got it, and maybe a quick follow-up on the m&a discussion earlier. If you were to be able to do sizable asset sales this year. What would be the priority for the use of those proceeds?

Again, we make those we've gotten to a a milestone obviously on the balance sheet as we pointed out and and the way we've looked at uses of cash is, you know, further debt reduction a share repurchases dividends or or projects and we make those determinations based on what we expect the returns to be from them. And that mostly comes down to after you've secured your balance sheet. You've secured your dividend and we're meeting as we what we projected in 2017. Then you you look at the trade-off between a share repurchase and a project and you make adjustments for the different nature of those two assets are those two Investments and you do the best return opportunity risk-adjusted return opportunity that you face.

the same order of

We've talked about before gotcha.

There are no other questions at this time. Okay. Thank you very much for sharing part of your day with us. Have a good evening. Thank you for being patient and you may disconnect at this time.